Nos. 00-226, 00-227 and 00-340 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

 

2002 MT 259 

POWDER RIVER COUNTY; BIG HORN COUNTY; 

PHILLIPS COUNTY; ROSEBUD COUNTY; BUD 

FLETCHER, a taxpayer in Powder River County; and 

JAMES V. SCHIFFER, a taxpayer in Rosebud County, 

Plaintiffs and Appellants, 

v. 

THE STATE OF MONTANA and THE DEPARTMENT 

OF REVENUE OF THE STATE OF MONTANA, 

Defendants and Respondents, 

and 

WESTERN ENERGY COMPANY, et al., 

Intervenors and Respondents. 

APPEAL FROM: District Court of the Sixteenth Judicial District, 

In and for the County of Rosebud, 

Honorable John W. Larson, Judge Presiding 

COUNSEL OF RECORD: 

For Appellants: 

Larry G. Schuster (argued), Attorney at Law, Great Falls, Montana 

For Respondents: 

Stephen R. McCue (argued) and David Woodgerd, Tax Counsel, 

Helena, Montana (Department of Revenue) 

Elizabeth S. Baker (argued), Hughes, Kellner, Sullivan & Alke, 

Helena, Montana (Intervenors) 

Heard and Submitted: May 24, 2001 

 Decided: November 21, 2002 

Filed: 

__________________________________________ 

Clerk 
2 

Justice Jim Rice delivered the Opinion of the Court. 

¶1 Plaintiffs, four counties and two individual taxpayers, 

instituted two declaratory judgment actions in 1993, challenging 

the validity of the local government severance tax on net proceeds 

of oil and natural gas and of the coal gross proceeds tax 

established by House Bill 28 (HB 28), passed by the Legislature in 

Special Session in June 1989. The two actions, one filed in 

Rosebud County (Supreme Court Cause No. 00-226) and the other in 

Powder River County (Supreme Court Cause No. 00-340), contained 

identical parties and verbatim Complaints, and the Sixteenth 

Judicial District Court, Powder River County, consolidated both 

actions. Venue was subsequently changed to Rosebud County. In 

1996, the identical Plaintiffs filed the third action in Rosebud 

County (Supreme Court Cause No. 00-227), challenging on similar 

grounds the validity of Senate Bill 412 (SB 412), enacted as the 

Montana Oil and Gas Production Tax Act of 1995, § 15-36-301, et 

seq., MCA (1995), asserting that the 1995 legislation carried forth 

the same tax discrimination commenced under HB 28. The District 

Court did not consolidate the third action with the previous two. 

¶2 The District Court in Rosebud County entered three judgments 

in consolidated actions 00-226/00-340. It granted partial summary 

judgment in favor of the Defendants and against the Plaintiff 

Counties on numerous issues in September 1996. In March 2000, 

after a bench trial, the District Court entered judgment in favor 

of the Defendants and against Big Horn County on the County’s 

impairment of obligation of contract claim. It subsequently 
3 

granted summary judgment on all remaining issues in favor of the 

Defendants and against the Individual Plaintiffs in May 2000. In 

the 1996 action (00-227), the District Court granted summary 

judgment in favor of Defendants on all issues in March 2000. 

¶3 The above actions are consolidated for purposes of disposition 

on appeal as the named parties and counsel are identical, because 

each action challenges the Legislature’s constitutional authority 

to change the type and amount of taxes collected to fund local 

governments, and each action arose out of the system of taxation 

for coal, oil and gas adopted by the Legislature in HB 28 and SB 

412. 

ISSUES

¶4 We restate the issues on appeal as follows: 

¶5 1. Did the District Court err in concluding that 

classification of property for taxation is not statutorily or 

constitutionally mandated in Montana?

¶6 2. Did the District Court err in concluding that HB 28 and 

SB 412 did not violate the Appellants’ rights to equal protection 

and due process of the law?

¶7 3. Did the District Court err in its Findings of Fact and 

Conclusions of Law regarding Big Horn County’s impairment of 

obligation of contract claim? 

¶8 4. Did the Department of Revenue’s activities in “Project 

95" constitute legislation in contravention of the Separation of 

Powers Doctrine? 

BACKGROUND

¶9 In 1989, this Court decided Helena Elementary School Dist. No. 

1 v. State (1989), 236 Mont. 44, 769 P.2d 684. In Helena we held 

that Montana’s system of public school funding then in effect 
4 

violated Article X of the Montana Constitution because it did not 

provide an equal educational opportunity to public school students. 

¶10 In response to our ruling, the Legislature met in special 

session in June 1989, to revise the State’s system for public 

school funding. Various bills were considered and the Legislature 

eventually enacted HB 28 into law as Chapter 11, June Special 

Session Laws of 1989. The Legislature amended various parts of HB 

28 in the May 1990 Special Session and in regular session in 1991. 

 The tax laws that the Plaintiffs now challenge were an integral 

part of HB 28. 

¶11 Prior to the passage of HB 28, annual coal gross proceeds were 

classified as Class Two property under Montana’s statutory 

classification scheme and taxed at 45 percent of value in addition 

to being subject to local mill levies. The coal gross proceeds 

tax, therefore, varied from year to year and from county to county. 

 

¶12 Prior to HB 28, net proceeds of oil and natural gas were 

classified as Class One property. The net proceeds tax on oil and 

natural gas wells drilled prior to June 30, 1985, were also subject 

to local mill levies. This net proceeds tax also varied from year 

to year and from county to county. The net proceeds on wells 

drilled after June 30, 1985, were not subject to local mill levies 

and were taxed at a flat rate of 7 percent for oil and 12 percent 

for natural gas, regardless of the county in which the well was 

located. 
5 

 

¶13 HB 28 imposed numerous tax changes in support of state 

equalization aid funding. Among these changes, HB 28 imposed a 40 

mill statewide levy on each county on all taxable property within 

the state. It also increased county elementary levy from 28 mills 

to 33 mills and increased the levy for high schools from 17 to 22 

mills, for a total statewide increase on all taxable property of 50 

mills. 

¶14 HB 28 exempted coal gross proceeds and oil and gas net 

proceeds from the 50 mill statewide levy and from local mill 

levies. In lieu of the net proceeds tax on oil and gas, HB 28 

imposed a new local government severance tax (LGST) on the gross 

taxable value of oil and natural gas, other than on new 

production1

–a LGST of 8.4 percent on oil and a LGST of 15.25 

percent on gas–regardless of the county in which the well was 

located.. 

¶15 HB 28 also removed the power of counties to levy or assess any 

mills against the reported coal gross proceeds. Rather, HB 28 

imposed a statewide levy of 5 percent against the value of reported 

coal gross proceeds. The taxes collected from the new LGST on oil 

1

“The term ‘new production’ means the production of natural 

gas, petroleum, or other crude or mineral oil from any well 

drilled after June 30, 1985, or that has not produced natural 

gas, petroleum, or other crude or mineral oil during the 5 years 

immediately preceding the first month of qualified new 

production.” Section 15-23-601(2), MCA (1991). 
6 

and natural gas and from reported coal gross proceeds were to be 

distributed in the same manner as property taxes in support of 

school funding equalization aid. 

¶16 In 1993, the Plaintiffs filed identical complaints, one in 

Powder River County and the other in Rosebud County, challenging HB 

28. The Plaintiffs specifically challenged the Legislature’s 

decision to tax coal gross proceeds and oil and gas net proceeds in 

support of school equalization funding via a lower fixed tax rate 

than the statewide 50 mill increase imposed on all other taxable 

property in the state. The County Plaintiffs focused their efforts 

in Rosebud County, challenging the new tax system as an 

unconstitutional impairment of the obligation of contract related 

to the 1984 Big Horn County General Obligation Bonds (Bond Claim). 

 The Individual Plaintiffs focused their efforts in Powder River 

County, challenging the new taxation, as applied to them, on equal 

protection and due process grounds. The District Court, Judge 

Rapkoch presiding, consolidated the two matters and, on December 

14, 1993, granted leave for eight producers of oil and gas and six 

producers of coal to intervene in the action (Intervenors). 

¶17 In the Complaint, the Plaintiffs requested that the District 

Court declare unconstitutional the LGST on oil and gas production 

and the fixed tax rate on coal gross proceeds, and, in lieu of 

these taxes, requested that the District Court extend the newly 

enacted statewide and school mills to include all oil and gas 

production properties and coal gross proceeds for the tax years of 

1990 through the time of filing the Complaint. The Plaintiffs also 
7 

requested that the District Court, as a remedial measure, order 

that the repealed tax statutes for net proceeds of oil and natural 

gas and for coal gross proceeds be enforced anew for the same tax 

years at issue. 

¶18 The 1995 Legislature, in regular session, repealed both the 

state and local government severance taxes on oil and natural gas, 

§§ 15-36-101, et seq., MCA (1993), as well as the oil and gas net 

proceeds tax, §§ 15-23-601 through -631, MCA (1993), among other 

oil and gas taxes similarly repealed. The Legislature enacted SB 

412 and replaced these various repealed taxes with the Oil and Gas 

Production Tax Act (Production Act)–a single production tax based 

on the type of well and type of production–which became effective 

on January 1, 1996. Section 15-36-301, et seq., MCA (1995). 

¶19 In February 1996, the same plaintiffs who initiated the first 

two actions filed a third action against the same defendants, 

alleging that the Production Act did nothing to remedy the flaws in 

HB 28 regarding oil and gas production, but carried forth the same 

“flat tax” discrimination and unconstitutional tax exemptions for 

oil and gas as originally enacted in HB 28. 

¶20 The Department of Revenue and the Intervenors filed motions 

for summary judgment, and the District Court, on September 11, 

1996, entered partial summary judgment against the Counties on all 

but one of the Counties’ constitutional claims. The District Court 

preserved for trial only the Big Horn County’s obligations of 

contract claims and preserved for later ruling the constitutional 

challenges of the Individual Plaintiffs. 
8 

¶21 The District Court held a bench trial on September 14 and 15, 

1999, and entered its Findings and Conclusions on March 1, 2000, 

concluding that the enactment of HB 28 was a valid and 

constitutional exercise of legislative authority and did not 

substantially impair Big Horn County’s obligation of contract with 

its bondholders. 

¶22 The District Court entered an order resolving the Individual 

Plaintiffs’ challenges to HB 28 in May 2000, concluding that the 

Individual Plaintiffs essentially voiced identical constitutional 

objections as the Counties and neither presented nor argued legal 

or factual issues distinct from the Counties’ objections. The 

District Court granted summary judgment in favor of the Defendants 

and against the Individual Plaintiffs on all claims. 

¶23 Finally, the District Court granted summary judgment in favor 

of the Defendants against all Plaintiffs in the third action, 

concluding that SB 412, the Production Act, was constitutional. 

DISCUSSION

¶24 As a preliminary matter, we address the Respondents’ assertion 

that the District Court’s order of May 2000, adjudicating the 

claims of the Individual Plaintiffs, is improperly appealed, and 

thus improperly before this Court. Although the Rosebud County 

action (Supreme Court Cause No. 00-226; Big Horn County’s Bond 

Claim) and the Powder River action (Supreme Court Cause No. 00-340; 

Individual Plaintiffs’ claims) were consolidated into a single 

action by the District Court, the District Court adjudicated the 

former via bench trial, findings and conclusions entered in March 
9 

2000, and it adjudicated the latter via a grant of summary judgment 

in May 2000. 

¶25 Prior to the District Court’s May 2000, order, the Appellants, 

on April 24, 2000, filed a notice of appeal from the District 

Court’s March 2000, judgment, on Big Horn County’s Bond Claim. 

Prior to filing their notice of appeal, on April 11, 2000, the 

Appellants sought a writ of mandamus from this Court to compel the 

District Court to enter a decision on the remaining issues 

involving the claims of the Individual Plaintiffs. This Court 

summarily denied the writ on April 25, 2000. 

¶26 In May 2000, the District Court entered its findings and 

conclusions on the Individual Plaintiffs’ claims, claims that the 

District Court had explicitly reserved for later ruling. The 

Appellants thereafter filed a second notice of appeal. The 

Respondents argue that the Appellants’ initial, April 24, 2000, 

notice of appeal, divested the District Court of jurisdiction to 

enter any further judgments or orders, and that the District 

Court’s order of May 2000, is thus improperly before this Court. 

¶27 It is axiomatic that when notice of appeal has been filed, 

jurisdiction passes from the District Court and vests in the 

Supreme Court. Powers Mfg. Co. v. Leon Jacobs Enterprises (1985), 

216 Mont. 407, 411, 701 P.2d 1377, 1380 (citation omitted). After 

notice has been filed, the District Court retains jurisdiction only 

to correct clerical errors and jurisdiction over ancillary matters, 

as well as some jurisdiction over matters involving appeal such as 

undertaking of costs, stay of judgment, and matters involving 
10 

transcript on appeal. Powers, 216 Mont. at 411-12, 701 P.2d at 

1380 (citations omitted). 

¶28 It is also axiomatic, however, as stated in Rule 1, 

M.R.App.P., that an appeal can be taken only from a final judgment 

or special order made after final judgment. In the Matter of B.P., 

2000 MT 39, ¶ 15, 298 Mont. 287, ¶ 15, 995 P.2d 982, ¶ 15; Kirchner 

v. Western Montana Regional Comm. Health Ctr. (1993), 261 Mont. 

227, 229, 861 P.2d 927, 928-29. “A final judgment is one which 

constitutes a final determination of the rights of the parties; any 

judgment, order or decree leaving matters undetermined is 

interlocutory in nature and not a final judgment for purposes of 

appeal.” In the Matter of B.P., ¶ 15 (citing Litigation Relating 

to Riot (1997), 283 Mont. 277, 280, 939 P.2d 1013, 1015-16); see 

also Howard Gault & Son, Inc. v. First Nat. Bank of Hereford

(Tex.Civ.App. 1975), 523 S.W.2d 496, 498 (noting that “[a] judgment 

is considered final only if it determines the rights of the parties 

and disposes of all of the issues involved so that no future action 

by the court will be necessary in order to settle and determine the 

entire controversy”). 

¶29 In the present controversy, the District Court consolidated 

the Counties’ and the Individual Plaintiffs’ claims together into a 

single action. Because the District Court’s March 2000, order, 

adjudicating Big Horn County’s Bond Claim left undetermined the 

issues of the Individual Plaintiffs, the appeal taken therefrom was 

interlocutory in nature, because settling and determining the 
11 

entire controversy, as consolidated, required further adjudication 

by the District Court. 

¶30 We thus find no merit in the Respondent’s assertion that the 

Individual Plaintiffs’ claims are not properly before this Court. 

To the contrary, we conclude that only after the May 2000, order of 

the District Court, was this appeal properly taken from the final 

judgment of the consolidated actions. The Appellants’ April 24, 

2000, notice of appeal, was premature, and pursuant to Rule 1(b), 

subsection (2), M.R.App.P., improperly sought to appeal an 

interlocutory order. 

¶31 We thus hold that the Individual Plaintiffs’ claims, in 

Supreme Court Cause No. 00-340, are properly before this Court. 
12 

ISSUES

¶32 1. Did the District Court err in concluding that 

classification of property for taxation is not statutorily or 

constitutionally mandated in Montana?

¶33 At the heart of the Appellants’ challenge to the validity of 

HB 28 and SB 412 is the greater tax burden for school equalization 

aid placed on all classified taxable property as compared to the 

burden placed on coal, oil and natural gas for the same aid. The 

Appellants assign error to this based upon a number of statutory 

and constitutional grounds. The Appellants assert that HB 28 and 

SB 412 are invalid based upon their inconsistency with § 15-6-101, 

MCA, that they violate Article VIII, Section 5(1)(c), of the 

Montana Constitution, and that they are inconsistent with 

principles related to property taxation which have been followed by 

this Court for more than eighty years. 

¶34 Specifically, the Appellants assert that § 15-6-101, MCA, 

requires the Legislature to levy taxes on property exclusively via 

Montana’s statutory tax classification system. That section 

provides: 

Property subject to taxation – classification. (1) All 

property in this state is subject to taxation, except as 

provided otherwise. (2) For the purpose of taxation, the 

taxable property in this state shall be classified in 

accordance with this part. 

The Appellants assert that because HB 28 and SB 412 provided for taxation of coal gross 

proceeds and the net proceeds of oil and gas without creating and placing said property into a 

new class or reclassifying the property into an existing class, that both laws are invalid 

merely by their inconsistency with § 15-6-101, MCA. 
13 

¶35 Second, the Appellants assert that Article VIII, Section 

5(1)(c), of the Montana Constitution limits the Legislature to 

exempting only classes of property from taxation. Section 5(1)(c) 

provides: 

Property tax exemptions. (1) The Legislature may exempt 

from taxation: 

. . . 

 (c) Any other classes of property. 

Specifically, the Appellants assert that Section 5(1)(c) requires 

the Legislature to classify property prior to enacting an exemption 

for that property. Further, because this section speaks only of 

classes, they assert that any exemption must be a “full” class 

exemption, exempting a particular class from any and all taxation. 

¶36 Interpreting § 15-6-101, MCA, together with Article VIII, 

Section 5(1)(c), the Appellants assert that coal, oil and gas could 

only have been properly taxed or exempted from taxation if the 

property was first statutorily classified and then fully exempted, 

as a class, from a particular area of taxation. In the instant 

case, HB 28 removed coal, oil and gas from their original 

classification and imposed a fixed tax rate on coal gross proceeds 

and net proceeds of oil and gas without creating a new class for 

the property and without reclassifying the property into an 

existing class. HB 28 then exempted these proceeds from the 

statewide increase of 50 mills on all taxable property for state 

equalization aid and further removed these proceeds from the reach 

of local mill levies. 
14 

¶37 Because these proceeds from now unclassified property still 

contributed to state equalization aid apart from the 50 mill 

increase, the Appellants assert that this property was accorded, as 

they characterize it, a “partial” tax exemption rather than the 

constitutionally required “full” tax exemption. Further, as a full 

tax exemption was not accorded the property, the Appellants 

characterize this “partial” tax exemption as holding coal, oil and 

gas “harmless” from the 50 mill increase, while all other taxable 

property in the state is “harmed” by contributing to state 

equalization aid with the increased statewide and local mills. 

¶38 Finally, because HB 28 and SB 412 imposed a fixed tax rate on 

coal, oil and gas, exempting these proceeds from the mill increase 

without classifying or reclassifying the property, the Appellants 

assert that HB 28 imposed a “flat tax system” on this property, 

contrary not only to the requirements of § 15-6-101, MCA, and 

Article VIII, Section 5(1)(c), of the Montana Constitution, but 

also in contravention to this Court’s eighty year old rejection of 

“uniformity” of taxation. The principle of uniformity of taxation, 

they argue, was rejected by this Court in 1919, and by comparison, 

urge this Court to reject the “flat tax system” imposed by HB 28 

and SB 412 just as it has rejected uniformity of taxation. It is 

with this final argument that we begin our analysis, as it will 

provide a framework for analyzing the current statutory taxation 

scheme and the constitutional limitations placed upon the 

Legislature by Montana’s 1972 Constitution. 

A. Uniformity of Taxation
15 

 

¶39 The Appellants contend that in the 1919 case of Hilger v. 

Moore (1919), 56 Mont. 146, 182 P. 477, this Court rejected 

uniformity of taxation in favor of a system of taxation based upon 

classification, and that the framers of our 1972 Constitution 

joined in rejecting uniformity when they deliberately removed the 

two uniformity clauses as they existed in the 1889 Montana 

Constitution. They assert that Montana’s tax classification system 

imposes widely diverse effective tax rates via classification and 

local mill levies, and that a “flat tax system,” or “uniformity” of 

taxation, is inconsistent with the classification system. Then, 

without distinction, the Appellants assert the contrary, that 

although this Court and the framers of our 1972 Constitution 

rejected uniformity, the framers also “viewed the concept of 

uniformity to be secured by Equal Protection of the Law . . . .” 

To understand the Appellants’ seemingly contrary assertions, we 

begin with the genesis of Montana’s tax classification system and 

the concept of uniformity under Montana’s 1889 and 1972 

Constitutions. 

¶40 Initially, we recognize that any restraint on the power of the 

legislature to impose taxation has its uttermost source in the 

Constitution, as the power to tax is inherent in the sovereign 

state and requires no grant of authority.2

 As we have previously 

2

Conversely, the government of the United States is one of 

enumerated powers, powers given by “the People of the United 

States.” See the preamble to the United States Constitution. 

“In this respect [the United States Constitution] differs from 

the constitutions of the several States, which are not grants of 

powers to the States, but which apportion and impose restrictions 

upon the powers which the States inherently possess.” 1 Cooley, 
16 

 

held, the Montana Constitution serves only as a limitation on the 

power of the legislature to tax. State v. Toomey (1958), 135 Mont. 

35, 43, 335 P.2d 1051, 1055; State ex rel. Tillman v. District 

Court (1936), 101 Mont. 176, 181, 53 P.2d 107, 110; Hilger, 56 

Mont. at 163-64, 182 P. at 479. One such limitation is that the 

legislature must enact general tax laws for the purpose of levying 

taxes. Art. VIII, Sec. 1, Mont. Const (1972). “It is a basic 

premise of the law of taxation that the foundation for levying and 

assessing a tax depends upon the existence of a valid legislative 

act specifically designating the imposition of the tax. Nothing is 

taxable unless clearly authorized by statute.” Connick v. Judge

(1975), 167 Mont. 357, 361, 538 P.2d 1024, 1027 (citing Swartz v. 

Berg (1966), 147 Mont. 178, 181-82, 411 P.2d 736, 738). The 

legislature, therefore, by the enactment of statute, possesses all 

powers of law-making in this state except only in so far as those 

powers are curtailed in the Constitution. “He who seeks to limit 

the power of the lawmakers must be able to point out the particular 

provision of the Constitution which contains the limitation 

expressed in no uncertain terms.” Hilger, 56 Mont. at 163, 182 P. 

Constitutional Limitations, 8th ed., pp. 11-12 (1927). Also 

see Martin v. Hunter’s Lessee (1816), 14 U.S. 304, 4 L.Ed. 97: 

“[I]t is perfectly clear that the sovereign powers vested in the state governments, by their 

respective constitutions, remained unaltered and unimpaired, except so far as they were 

granted to the government of the United States. These deductions do not rest upon general 

reasoning, plain and obvious as they seem to be. They have been positively recognised by 

one of the articles in amendment of the constitution, which declares, that ‘the powers not 

delegated to the United States by the constitution, nor prohibited by it to the states, are 

reserved to the states respectively, or to the people.’ The government, then, of the United 

States, can claim no powers which are not granted to it by the constitution, and the powers 

actually granted, must be such as are expressly given, or given by necessary implication.”

 14 U.S. at 325-26, 4 L.Ed. at 102.
17 

at 479. “To determine, therefore, whether a statute is valid, it 

is not necessary to seek the source of the power to enact it.” 

Toomey, 135 Mont. at 43, 335 P.2d at 1055 (citations omitted). 

¶41 Important in our discussion of the Appellants’ challenge is 

the fact that neither Montana’s 1889 or our current constitution 

contains any provision that either requires or prohibits a tax 

classification system. In fact, no provision in either 

constitution limited the Legislature to one specific system of 

taxation, but merely contained provisions which limit what the 

Legislature may accomplish or enact within any given system of 

taxation. 

¶42 The Legislature enacted Montana’s first classification system 

for taxable property in 1919 by Chapter 51 of the Laws of 1919, and 

it was challenged that same year by the actions of the County 

Treasurer of Lewis and Clark County, W.A. Moore (Moore). According 

to this new system, all property not otherwise exempted by statute 

or by the Constitution was grouped into seven classes to be taxed 

according to a fixed percentage of the “true and full value” of the 

property–ranging from 100 percent of value of Class One property to 

7 percent of value of Class Five property. 

¶43 After the enactment of the classification system of taxation, 

Moore continued to compute taxes in Lewis and Clark County based 

upon a property’s fully assessed value rather than computing the 

taxes based upon a fixed percentage of its fully assessed value 

under the new classification system. Hilger, 56 Mont. at 162, 182 

P. at 478-79. David Hilger (Hilger) owned personal property within 
18 

Lewis and Clark County which undisputedly belonged to Class Two 

property, and as such, only 20 percent of its true and full value 

was to be used as a basis for the imposition of taxes. Hilger, 56 

Mont. at 162-63, 182 P. at 478-79. Moore’s computation of Hilger’s 

property tax based upon 100 percent of its true and full value 

prompted Hilger to bring suit. Moore argued that two provisions of 

the Montana Constitution precluded a classification system for 

taxable property, specifically, that classification violated the 

Constitution’s uniformity clauses in Article XII, Sections 1 and 

11, and denied Montana’s taxpayers equal protection under the 

Fourteenth Amendment of the United States Constitution. 

¶44 Article XII, Section 1, of the 1889 Constitution provided: 

The necessary revenue for the support and maintenance of 

the state shall be provided by the legislative assembly, 

which shall levy a uniform rate of assessment and 

taxation and shall prescribe such regulations as shall 

secure a just valuation for taxation of all property, 

except that specially provided for in this article . . . 

. [Emphasis supplied.] 

Article XII, Section 11, of the 1889 Constitution provided: 

Taxes shall be levied and collected by general laws and 

for public purposes only. They shall be uniform upon the 

same class of subjects within the territorial limits of 

the authority levying the tax. 

¶45 The Hilger Court provided a distinction which is important in 

understanding the Appellants’ contrary assertions noted above. 

“Uniformity” in taxation systems exists in three forms. Two forms, 

arising from the above-cited provisions of the 1889 Constitution 

and discussed later herein, co-exist within a tax classification 

system. The third form is entirely contrary to a classification 

system. The latter can be referred to as the “uniformity rule of 
19 

general property taxation,” or “uniform ad valorem system.” 

Hilger, 56 Mont. at 164, 182 P. at 479. This system of taxation 

requires that all taxpayers owning property of the same assessed 

value would pay precisely the same amount of tax, without reference 

to the character of the property. Moore asserted that Article XII, 

Section 1, of the Montana Constitution not only precluded a 

classification system of taxation, but also, that Section 1 

required the uniform ad valorem system. 

¶46 The Hilger Court concluded that this type of uniformity, 

contrary to Moore’s assertions, had never prevailed in Montana. 

Hilger, 56 Mont. at 171, 182 P. at 482. In upholding the newly 

enacted classification system, the Hilger Court stated that: 

This court has repeatedly laid down the doctrine that 

diversity of taxation [referring to a tax system of 

classification] . . . is not inconsistent with a perfect 

uniformity and equality of taxation in the proper sense 

of those terms; and that a system which imposes the same 

tax upon every species of property, irrespective of its 

nature or condition or class, will be destructive of the 

principle of uniformity and equality in taxation and of a 

just adaption of property to its burdens. 

Hilger, 56 Mont. at 173, 182 P. at 483 (citing Pacific Express Co. 

v. Seibert (1892), 142 U.S. 339, 351, 35 L.Ed. 1035, 12 S.Ct. 250, 

253). 

¶47 Although adopting strong language from the United States 

Supreme Court, the Hilger Court opined that “experience alone will 

demonstrate” whether a classification system of taxation will meet 

its objective of fairly taxing property in proportion to its use, 

productivity, utility, and its general setting in the economic 

environment, and “realize the hopes of its advocates.” Hilger, 56 
20 

Mont. at 173, 182 P. at 483. Thus, contrary to the 

characterization by the Appellants, the Hilger Court did not reject 

a uniform ad valorem system of taxation in favor of classification, 

but rather, held that such a uniform system was not required under 

the 1889 Constitution, and also recognized that a classification 

system of taxation was not prohibited, but permissible, under the 

1889 Constitution, remaining subject, of course, to the 

Constitution’s two uniformity clauses. 

¶48 Interestingly, the Hilger Court needed to look no further than 

the Constitution for evidence that absolute uniformity did not 

prevail in Montana. The most notable example, Article XII, Section 

3, of the 1889 Constitution, provided for limitations on taxation 

of mining property–what the Court called an “artificial and 

arbitrary rule for the assessment and taxation of certain mining 

property without reference to its actual cash value . . . .” 

Hilger, 56 Mont. at 171, 182 P. at 482. The Court had noted two 

years earlier that the purpose of Section 3 was to provide a 

special method for the assessment and taxation of mining property, 

because although “falling generally within the definition of 

‘property,’ . . . [it] could not be justly dealt with by the method 

provided for other real property, and therefore must be valued and 

taxed by a method which would accomplish the desired result.” 

Northern Pacific Ry. Co. v. Musselshell County (1917), 54 Mont. 96, 

104, 169 P. 53, 55; reaffirmed in State ex rel. Hinz v. Moody

(1924), 71 Mont. 473, 480, 230 P. 575, 578. In State v. Camp Sing

(1896), 18 Mont. 128, 139-40, 44 P. 516, 517, the Court noted, 
21 

 

interestingly, that “[m]ines and mining claims in the state are 

liberally protected from what might be, perhaps, deemed excessive 

taxation.” 

¶49 However, the conclusion that the uniform ad valorem system of 

taxation was not required in Montana did not mean that the two 

uniformity clauses in the 1889 Constitution were somehow declared 

ineffective, as Appellants argue. The two uniformity clauses 

remained fully effective, continuing to limit the legislature’s 

ability to tax notwithstanding the type of taxation system that may 

be enacted, whether it be a uniform ad valorem system or a 

statewide system of classification. In other words, Sections 1 and 

11 continued to require uniformity within the new system of 

classification. 

¶50 We turn then, to the concept of uniformity as it was required 

within a classified taxation system under the 1889 Constitution. 

Article XII, Section 1, provided in part that the legislature 

“shall levy a uniform rate of assessment and taxation” and “shall 

prescribe such regulations as shall secure a just valuation for all 

property, except that specially provided for in this article.” The 

latter portion was construed by this Court in Northwestern Mut. 

Life Ins. Co. v. Lewis & Clark County (1903), 28 Mont. 484, 495, 72 

P. 982, 985, and found to require universal taxation3

 of all 

3

Unlike Montana’s current Constitution, its 1889 

Constitution required that all property in the state be taxed. 

The requirement that all property be taxed–the requirement of 

“universal taxation”– is not an imposition of any particular 

system of taxation (e.g., classification of property). The 

requirement of universal taxation of all property merely removed 

from the Legislature any discretion to provide for tax-exempt 
22 

 

property unless an exemption was provided therefor within the 

Constitution itself. Regarding the former portion of Section 1, 

the Hilger Court found two distinct requirements regarding 

uniformity: uniformity both of assessment and of taxation. 

“Assessment was the process by which persons subject to taxation 

were listed, their property described, and its value ascertained 

and stated. Taxation consisted in determining the rate of levy and 

imposing it.” Hilger, 56 Mont. at 165, 182 P. at 480. 

property via statute. The only property exempt from taxation 

were those made expressly exempt by the Constitution itself. 

¶51 The second uniformity clause, set forth in Article XII, 

Section 11, provided in part that taxes “shall be uniform on the 

same class of subjects within the territorial limits of the 

authority levying the tax.” As previously noted, the Court 

concluded that rather than prohibiting the Legislature from 

enacting a classification system of taxation, this clause “contains 

a distinct recognition of the right to do so.” Hilger, 56 Mont. at 

168, 182 P. at 481. 

¶52 Construing the two uniformity clauses together within a 

classified system, the following rule was gleaned therefrom: The 

Legislature shall prescribe a uniform mode of assessment as shall 

secure a just valuation of all taxable property and all taxes shall 

be uniform upon the same class of property. Hilger, 56 Mont. at 

170, 182 P. at 481-82. In other words, in order to secure a just 

valuation of all property, the method of assessing value must be 
23 

uniform, and subsequently, after the property has been justly 

valued via a uniform method, property within the same class must be 

uniformly taxed, that is, taxed at the same percentage. Hilger, 56 

Mont. at 170, 182 P. at 481-82. Clearly, uniformity in the form 

provided by the two uniformity clauses prevailed in Montana and 

remained effective constitutional limitations on the state’s 

inherent power to tax. 

¶53 Therefore, we cannot agree with the Appellants’ contention 

that this Court rejected uniformity of taxation in Hilger. The 

question resolved in Hilger was whether Montana’s 1889 Constitution 

permitted a tax classification system, not whether the Constitution 

prohibited uniform ad valorem taxation. And, even if the question 

in Hilger had been the latter, the constitutional limitation of 

uniformity of taxation was clearly expressed by Sections 1 and 11, 

and required uniformity in assessment and uniformity in taxation 

regardless of the enacted system of taxation. Classification 

survived constitutional scrutiny, but the new classification system 

remained subject to the two Article XII uniformity clauses. 

¶54 We also do not agree with the Appellants that the framers of 

Montana’s 1972 Constitution somehow “joined in rejecting uniformity 

of taxation” by deliberately excluding any uniformity clauses in 

the 1972 Constitution. The Revenue and Finance Committee 

eliminated all of Section 1 and the second sentence of Section 11 

of the 1889 Constitution, thus removing the requirement of 

universal taxation of all property, and specifically recognizing 

that uniformity of taxation was already required and protected by 
24 

the Equal Protection clause of the Fourteenth Amendment, making 

unnecessary a specific constitutional limiting provision regarding 

uniformity of taxation. See Montana Const. Convention, Revenue and 

Finance Committee Proposal on Const. Revision, Vol. II, pp. 579-80, 

582. Contrary to the Appellants’ assertion, uniformity was not 

rejected. It was specifically recognized as protected by the 

United States Constitution. 

¶55 In urging this Court to reject uniformity in any form wherever 

it may occur, the Appellants attempt to draw a parallel between the 

uniform ad valorem system and the fixed tax rates on coal, oil and 

gas imposed by HB 28 and SB 412, and invite this Court to reject 

this “uniformity of taxation” on these extractive minerals just as 

this Court “rejected” the uniform ad valorem system in Hilger. As 

already established herein, the Hilger holding did not reject the 

ad valorem system. Further, it should be clear at this point that 

there is no meaningful comparison between absolute statewide 

uniformity of taxation based solely on assessed value and the 

imposition of a statewide fixed percentage rate of taxation on one 

or two types of property. There is no parallel between a statewide 

uniform ad valorem system and a statewide fixed percentage rate on 

property in a classified system, as an equal protection violation 

in the former will have little similarity to an equal protection 

violation in the latter. Addressing the issue before it, the 

Hilger Court found no equal protection violation in the classified 

property system. “While it is possible to lay the burdens of 

taxation so unevenly as to deprive some taxpayers of the equal 
25 

protection of the law, the mere fact that property is classified 

for the purpose of taxation does not bring the statute classifying 

it within the inhibition of the Fourteenth Amendment.” Hilger, 56 

Mont. at 174, 182 P. at 483. 

¶56 This Court’s “rejection” in Hilger of the uniform ad valorem

system was no more than a recognition that Montana’s 1889 

Constitution did not require such a taxation system. Montana’s 

Constitution neither limited the Legislature to the uniform ad 

valorem system nor to any other system, but specifically 

acknowledged in Article XII, Section 11, the ability of the 

Legislature to enact a classification system. Therefore, this 

Court’s decision in Hilger, “rejecting” the uniform ad valorem

system of taxation, does not require a similar rejection of HB 28’s 

or SB 412’s imposition of a fixed percentage rate on coal gross 

proceeds and net proceeds of oil and natural gas, nor does this 

suggested comparison of the two raise the specter of an equal 

protection violation, as it is nothing more than a suggested 

comparison of two entirely dissimilar methods of taxation. 

B. Statutory Inconsistency

¶57 With this background, we turn now to the Appellants’ argument 

that HB 28 and SB 412 are invalid based upon their inconsistency 

with § 15-6-101, MCA. The Appellants acknowledge that Montana’s 

classification scheme is statutory and not required by Montana’s 

Constitution, but direct this Court to Allegheny Pittsburgh Coal 

Co. v. County Com’n of Webster County (1989), 488 U.S. 336, 109 

S.Ct. 633, 102 L.Ed.2d 688, as an example of a state failing to 
26 

apply the state’s tax law system to certain types of property, 

thereby violating the Fourteenth Amendment Equal Protection clause. 

 

¶58 In Allegheny, the county tax assessor assessed the property of 

Allegheny and its successors at roughly eight to thirty-five times 

more than comparable neighboring property for a period of more than 

ten years between 1975 and 1986, consistently undervaluing the 

similarly situated neighboring property. Allegheny, 488 U.S. at 

341, 109 S.Ct. at 637, 102 L.Ed.2d at 695-96. The county 

assessor’s sole method of appraisal was to fix the appraised value 

at the declared consideration at which the property last sold. 

Allegheny and its successors were subjected to higher and higher 

appraised value each time the property was sold. The assessor made 

adjustments in the assessments of property not recently sold, but 

the adjustments were minimal and resulted in unequal taxation 

between the similarly situated properties. 

¶59 The United States Supreme Court held that this practice 

resulted in gross disparities in the assessed value of generally 

comparable property and therefore denied Allegheny and its 

successors equal protection of the laws guaranteed by the 

Fourteenth Amendment. Allegheny, 488 U.S. at 338, 109 S.Ct. at 

635, 102 L.Ed.2d at 693. The Supreme Court referenced West 

Virginia’s constitutional uniformity requirement, but made no 

mention of West Virginia’s state law system of taxation. Regarding 

the county assessor’s method of assessing appraised value, the 

Supreme Court merely clarified that no particular method was 
27 

required, stating that where “two methods are used to assess 

property in the same class [it] is, without more, of no 

constitutional moment.” Allegheny, 488 U.S. at 343, 109 S.Ct. at 

637, 102 L.Ed.2d at 697. The fulcrum of the equal protection 

violation was merely that “[t]he county’s adjustments to the 

assessments of property not recently sold [were] too small to 

seasonably dissipate the remaining disparity between these 

assessments and the assessments based on a recent purchase price.” 

Allegheny, 488 U.S. at 344, 109 S.Ct. at 638, 102 L.Ed.2d at 697. 

¶60 We find that Allegheny is of no precedential value on the 

issue raised by the Appellants, as it does not speak of or hold 

that West Virginia failed to properly apply any statutorily 

mandated state law system of taxation. We are left, therefore, 

merely with the question of whether HB 28 or SB 412 are invalid 

based solely upon an inconsistency with § 15-6-101, MCA. 

¶61 As noted above, § 15-6-101, MCA, provides that, for purposes 

of taxation, taxable property in this state shall be classified in 

accordance with said part. Coal gross proceeds and net proceeds of 

oil and gas, however, were not statutorily classified pursuant to § 

15-6-101, MCA, but specifically taxed according to the rates 

provided in the newly enacted statutes. E.g. §§ 15-23-607, 15-23-

701, et seq., and 15-36-101, MCA (1991). 

¶62 That the taxation of coal, oil and gas via particular 

statutes, absent classification, is in apparent conflict with the 

mandatory classification language of § 15-6-101, MCA, does not make 

the more particular provisions of the challenged statutes invalid. 
28 

 As noted above, the Legislature is limited in its inherent power 

to tax only insofar as that power is limited by the Constitution, 

with one such limitation being the enactment of statutes to 

authorize taxation. Connick, 167 Mont. at 361, 538 P.2d at 1027; 

Toomey, 135 Mont. at 43, 335 P.2d at 1055; Art. VIII, Sec. 1, Mont. 

Const. (1972). 

¶63 The Legislature’s constitutional power to tax is not 

frustrated by the enactment of conflicting taxation statutes, as a 

conflict between two statutes is not a reason for one to invalidate 

the other. General rules of statutory construction provide that 

when a general and particular provision are inconsistent, the 

particular provision is superior to the general, so that a 

particular legislative intent will control a general intent to the 

extent that there is any opposition between them. Section 1-2-102, 

MCA. State v. Placzkiewicz, 2001 MT 254, ¶ 18, 307 Mont. 189, ¶ 

18, 36 P.3d 934, ¶ 18; In re Marriage of Kotecki, 2000 MT 254, ¶ 

14, 301 Mont. 460, ¶ 14, 10 P.3d 828, ¶ 14. “Particular 

expressions qualify those which are general.” Section 1-3-225, 

MCA. 

¶64 The conflict between the § 15-6-101, MCA, and the newly 

enacted statutes for the taxation of coal, oil, and natural gas, is 

subject to the same rules of statutory construction– the latter are 

the more particular and, therefore, superior to the former, as the 

latter control the specific taxation of coal, oil, and natural gas. 

See Placzkiewicz, ¶ 18 (holding that the specific statute of 

limitations for postconviction proceedings in Title 46, Chapter 21, 
29 

 

controls over the catch-all statute of limitations provisions in 

Title 27, Chapter 2); see also Weston v. Cole (1998), 233 Mont. 61, 

63, 758 P.2d 289, 291 (holding that the shorter two-year period for 

filing a particular tort action such as assault and battery, § 27-

2-204(3), MCA, controls over the more general three-year statute of 

limitations for tort actions in § 27-2-204(1), MCA). 

¶65 Applying general rules of statutory construction, we conclude 

that the conflict existing between the statutory provisions in HB 

28 and SB 412 and § 15-6-101, MCA, does not invalidate the more 

specific statutes taxing coal gross proceeds and net proceeds of 

oil and gas.4

C. “Partial” Tax Exemption

4

The Appellants also assert an equal protection violation 

because the state imposed § 15-6-101, MCA, the enabling statute 

for Montana’s classification system, upon all taxable property in 

Montana other than coal gross proceeds and net proceeds of oil 

and natural gas. This particular challenge to the statute will 

be addressed under Issue 2. 

¶66 Finally, the Appellants assert that Article VIII, Section 

5(1)(c), of the 1972 Montana Constitution is a limiting provision, 

prohibiting the Legislature from exempting any property from 

taxation unless the property is first classified and then made 

fully exempt as a class. In other words, the Appellants argue that 

the Legislature has the power to exempt coal, oil and gas from 

taxation, but it cannot merely remove the property from its 
30 

 

previous class and exempt it. They argue that the Legislature must 

insert one additional step–the Legislature should have created a 

new class, declared this property a part of that class, and then 

provide a full exemption to that class rather than allowing it to 

still contribute to state equalization aid funding for public 

schools. Because coal, oil and gas continued to contribute to 

school funding at a lower rate than statutorily classified 

property, the Appellants refer to the tax rate on these extractive 

minerals as a “partial” tax exemption. We now address, therefore, 

the question of whether the Legislature must statutorily classify 

property before creating an exemption for that property. 

¶67 In arriving at a proper interpretation of any provision of our 

Constitution, we must bear in mind that the division of our 

Constitution into Chapters and Sections is a matter of convenience, 

and is not of significance in applying the rules of construction; 

and also that “every provision dealing with the same subject matter 

must be considered in determining the meaning of any expression 

whose meaning is in doubt.” State ex rel. Hinz v. Moody (1924), 71 

Mont. 473, 480-81, 230 P. 575, 578 (citation omitted). 

¶68 We reiterate that the Montana Constitution is a limitation on 

the inherent, sovereign power of the state under our federal 

system, rather than a grant of, or enumeration of power, unless by 

express words it declares otherwise.5

 Board of Regents of Higher 

5

 As stated by Revenue and Finance Committee in the 

Introduction to Proposed Article VIII: “From a pure, theoretical 

viewpoint, the Constitution does not have to say a thing about 
31 

 

Ed. v. Judge (1975), 168 Mont. 433, 444, 543 P.2d 1323, 1330; State 

v. Toomey (1958), 135 Mont. 35, 43, 335 P.2d 1051, 1055; State ex 

rel. Tillman v. District Court (1936), 101 Mont. 176, 181, 53 P.2d 

107, 110. The Revenue and Finance Article of the Montana 

Constitution (Article VIII) contains no provision limiting the 

Legislature to any particular, mandatory system of statewide 

taxation. Rather, Article VIII, Section 1, provides only that 

“[t]axes shall be levied by general laws for public purposes.” 

Unlike the 1889 Montana Constitution, the 1972 Constitution no 

longer contains the limitation of universal taxation. See Bucher 

v. Powell County (1979), 180 Mont. 145, 589 P.2d 660 (discussing 

Legislature’s current broad discretion to exempt property); but 

compare Cruse v. Fischl (1918), 55 Mont. 258, 263, 175 P. 878, 880 

(construing Article XII, Section 2, of the 1889 Constitution to 

prohibit any tax exemption not enumerated in the Constitution).6

 

Because Montana’s current Constitution no longer contains the 

limitation of universal taxation, neither is it necessary for it to 

enumerate specific tax exempt property, as was necessary under 

taxation. That suggestion was made to the committee on at least 

two occasions. The reason is simple–the power to tax is an 

inherent power of the state, a power already possessed by the 

state without any grant of authority. Anything in a state 

Constitution on the subject of taxation is either redundant 

(reiterating a power already possessed by the state) or 

restrictive.” Montana Const. Convention, Revenue and Finance 

Committee Proposal on Const. Revision, Vol. II, p. 579. 

6

 Interpreting Article XII, Section 2, this Court stated in 

Cruse v. Fischl: “There cannot be a difference of opinion 

concerning the meaning of the language employed in section 2 . . 

. . The legislature may extend [tax] exemption[s] to the 

property enumerated, but it cannot go further or include any 

other.” 55 Mont. at 263, 175 P. at 879-80. 
32 

 

Montana’s 1889 Constitution. Indeed, the exemptions listed in 

Article VIII, Section 5, of Montana’s 1972 Constitution are 

permissive and non-exclusive, and with or without Section 5, there 

is no constitutional limitation on Montana’s inherent sovereignty 

to choose which property to tax and which property to exempt from 

taxation.7

 Unlike tax exempt property prior to 1972, all tax 

exemptions are statutorily based rather than constitutionally 

based. 

7

 In addition to the clear language of Section 5, the 

Revenue and Finance Committee eliminated Article XII, Section 1, 

from Montana’s 1889 Constitution, noting: “The state already 

possesses the power to levy particular kinds of taxes and license 

fees. The Constitution does not need to list those tax programs. 

 The committee also did not feel that the Constitution should 

require taxation of all property. 

“For 80 years, the Constitution required taxation of all 

property . . . . The requirement of complete property taxation 

often encouraged dishonesty. The proposed article removes those 

problems–the legislature shall decide what property to tax and 

how to tax it. The legislature may decide that other types of 

taxation are more equitable and may reach kinds of property not 

touched by the property tax now.” Montana Const. Convention, 

Revenue and Finance Committee Proposal on Const. Revision, Vol. 

II, pp. 579-80. 
33 

¶69 The Appellants would have this Court construe the permissive 

language of Section 5(1)(c) to require that tax exempt property 

remain within a system of classification even in the unlikely event 

that the Legislature, exercising its inherent power, were to adopt 

an entirely different system of taxation. Indeed, the Appellants 

essentially argue that Section 5(1)(c) limits the Legislature to 

adopting a de facto classification system of taxation prior to 

exercising its power to exempt property from taxation. 

¶70 To determine the meaning of a constitutional provision we 

employ the same rules of construction employed to construe 

statutes. Great Falls Tribune Co., Inc. v. Great Falls Pub. Schs. 

(1992), 255 Mont. 125, 128, 841 P.2d 502, 504. In construing 

Section 5(1)(c), this Court pays particular heed to the caveat that 

neither statutory nor constitutional construction should lead to 

absurd results if reasonable construction will avoid it. Grossman 

v. Dept. of Natural Resources (1984), 209 Mont. 427, 451, 682 P.2d 

1319, 1332 (citation omitted). In arriving at an appropriate 

interpretation of the strictly permissive provision of Article 

VIII, Section 5, we conclude that, as the Legislature is not 

constitutionally limited to a classification system of taxation, 

neither does Article VIII, Section 5(1)(c), limit the Legislature 

to providing tax exemptions for property exclusively within a 

classification system. Consequently, absent an equal protection 

violation, there is no constitutional violation if and when the 

Legislature imposes taxation on property, via statute, and does so 

without classifying the property according to § 15-6-101, MCA. The 
34 

Legislature is limited in its power to exempt property from 

taxation only by the requirement to exempt via statute (Article 

VIII, Section 1), and in the requirement to impose taxation in a 

manner which does not violate equal protection and due process of 

the laws. 

¶71 Accordingly, the decision of the District Court is affirmed. 

¶72 2. Did the District Court err in concluding that HB 28 and 

SB 412 did not violate the Appellants’ rights to equal protection 

and due process of the law?

¶73 Resolution of this issue involves a question of constitutional 

law. The standard for reviewing conclusions of law is whether they 

are correct. Hampton v. Lewis and Clark County, 2001 MT 81, ¶ 19, 305 Mont. 

103, ¶ 19, 23 P.3d 908, ¶ 19 (citing Lane v. Farmers Union Ins., 1999 MT 252, ¶ 15, 296 

Mont. 267, ¶ 15, 989 P.2d 309, ¶ 15). The constitutionality of a legislative enactment is 

prima facie presumed, and every intendment in its favor will be presumed, unless its 

unconstitutionality appears beyond a reasonable doubt. The question of constitutionality is 

not whether it is possible to condemn, but whether it is possible to uphold the legislative 

action which will not be declared invalid unless it conflicts with the constitution, in the 

judgment of the court, beyond a reasonable doubt. State v. Lilburn (1994), 265 Mont. 258, 262, 

875 P.2d 1036, 1039, cert. denied, 513 U.S. 1078, 115 S.Ct. 726, 130 L.Ed.2d 630 (1995);

Stratemeyer v. Lincoln County (1993), 259 Mont. 147, 150-51, 855 P.2d 506, 509, cert. 

denied, 510 U.S. 1011, 114 S.Ct. 600, 126 L.Ed.2d 566 (1993) (citing Fallon County v. State

(1988), 231 Mont. 443, 445-46, 753 P.2d 338, 339-40). 
35 

 

¶74 Every possible presumption must be indulged in favor of the constitutionality of a 

legislative act. Davis v. Union Pacific R. Co. (1997), 282 Mont. 233, 240, 937 P.2d 27, 31 

(citing State v. Safeway Stores, Inc. (1938), 106 Mont. 182, 199, 76 P.2d 81, 84). The party 

challenging a statute bears the burden of proving that it is unconstitutional beyond a 

reasonable doubt and, if any doubt exists, it must be resolved in favor of the statute. Grooms 

v. Ponderosa Inn (1997), 283 Mont. 459, 467, 942 P.2d 699, 703 (citing Heisler v. Hines 

Motor Co. (1997), 282 Mont. 270, 279, 937 P.2d 45, 50). 

¶75 The Appellants’ equal protection challenge is based upon the 

fact that HB 28 imposed, and SB 412 carried forth, a statewide 50 

mill increase to provide state equalization aid for school funding 

on all taxable property in the state other than coal, oil and gas, 

thus subjecting classified property to a 95 mill statewide tax 

while continuing to burden coal, oil and gas with the previous 45 

mill tax, plus an increase of less than 50 mills.8 Utilizing such 

language as “school tax discrimination,” “effective tax rate 

discrimination,” “revenue neutrality,” and “revenue shifting,” the 

Appellants assert that the 50 mill increased burden on all taxable 

property in the state other than the extractive minerals, violates 

all classified property owners equal protection and due process of 

the law. This burden shift, the Appellants argue, is “invidious” 

and “constitutionally disproportionate in every sense” because the 

8

 The tax increase on coal gross proceeds and net proceeds 

of oil and natural gas for school equalization aid consisted of 

the aforementioned LGST of 8.4 percent on oil, the LGST of 15.25 

percent on natural gas, and the statewide levy of 5 percent on 

reported coal gross proceeds. See ¶¶ 13-14. 
36 

50 mill statewide increase “simply loaded up on classified property 

in a disproportionate sense” by not applying the state system of 

taxation, pursuant to § 15-6-101, MCA, to all taxable property. 

¶76 The District Court granted summary judgment for the 

Respondents and against the Appellants, concluding that the 

Appellants did not meet the burden of demonstrating beyond a 

reasonable doubt that HB 28 and SB 412 lacked a rational basis for 

precluding coal gross proceeds and oil and gas net proceeds from 

the statewide mill increase. 

¶77 The Appellants first assert that the District Court erred in 

applying the rational basis test because, they argue, without tax 

classification of coal, oil and gas pursuant to § 15-6-101, MCA, 

the rational basis tier of equal protection analysis does not 

apply. The Appellants direct this Court to Montana Stockgrowers 

Ass’n v. Dept. of Revenue (1989), 238 Mont. 113, 777 P.2d 285, to 

support this contention. However, as discussed below, Montana 

Stockgrowers does not support the assertion that the rational basis 

tier does not apply, and the Appellants do not suggest an 

alternative tier or alternative analysis to be applied in this 

instance. We acknowledge that this Court adopted a middle tier 

level of scrutiny in Butte Community Union v. Lewis (1986), 219 

Mont. 426, 712 P.2d 1309, when analyzing Article XII, Section 3(3), 

of the Montana Constitution. Lewis did not involve a fundamental 

right or a suspect class, yet we adopted middle tier scrutiny in 

that instance “because although a right to welfare is not contained 

in our Declaration of Rights, it is sufficiently important that 
37 

Art. XIII, Section 3(3) directs the Legislature to provide 

necessary assistance to the misfortunate. A benefit lodged in our 

State Constitution is an interest whose abridgment requires 

something more than a rational relationship to a government 

objective.” Lewis, 219 Mont. at 434, 712 P.2d at 1313. 

¶78 As in Montana Stockgrowers, we decline to adopt middle tier 

scrutiny where there is no constitutional mandate or self-executing 

provision at issue which can be enforced by this Court. Montana 

Stockgrowers, 238 Mont. at 117, 777 P.2d at 288. In the instant 

case, the requirement of tax classification is statutory and is not 

a requirement based upon a provision in the Montana Constitution. 

There is, therefore, no reason to apply middle-tier scrutiny to the 

equal protection analysis. See Lewis, 219 Mont. at 434, 712 P.2d 

at 1313. In addition, both in its briefing and in oral argument, 

the Appellants concede that the “class” against which the equal protection 

violation is claimed is “all classified property taxpayers” in the State of Montana. As a 

classified property tax system is not a constitutional limitation, nor are “all classified 

property taxpayers” a suspect class, we conclude that the District Court did not err in 

adopting and utilizing the rational basis level of scrutiny. 

¶79 To survive scrutiny under the rational basis test, a 

classification must be reasonable, not arbitrary, and it must bear 

a fair and substantial relation to the object of the legislation, 

so that all persons similarly circumstanced shall be treated alike. 

Montana Stockgrowers, 238 Mont. at 117-18, 777 P.2d at 288 

(citation omitted). Any classification is permissible which has a 
38 

reasonable relation to some permitted end of governmental action, 

and where there is a difference between various properties, the 

differences need not be great or conspicuous in order to warrant 

separate tax classification. Montana Stockgrowers, 238 Mont. at 

118, 777 P.2d at 289 (citation omitted). “It is not essential to a 

valid classification [of property] that it depends upon scientific 

or marked differences in the subjects classified. It suffices if 

it is practical, and it is not reviewable unless palpably 

arbitrary.” Hilger, 56 Mont. at 175, 182 P. at 484. Subject to 

these qualifications, the state has wide discretion, and if 

classification is neither capricious nor arbitrary, and rests upon 

real differences and some reasonable consideration of difference or 

policy, there is no denial of the equal protection of the law. 

Allegheny Pittsburgh Coal Co. v. County Com’n of Webster County

(1989), 488 U.S. 336, 344, 109 S.Ct. 633, 638, 102 L.Ed.2d 688, 

697; Hilger, 56 Mont. at 175, 182 P. at 484. 

¶80 We first note that in the extensive briefing in the three 

consolidated cases and in oral argument, the Appellants suggested 

no specific level of constitutional scrutiny and offered nearly no 

equal protection and no due process analysis. The Appellants 

repeatedly place before the Court the undisputed fact that all 

classified property is taxed at a higher rate than coal, oil and 

gas for school equalization aid funding. Rather than providing a 

traditional constitutional analysis, the Appellants merely assert 

repeatedly that the different level of taxation is 

“constitutionally disproportionate in every sense” and that such 
39 

taxation is “invidious.” The Appellants assert that the 

constitutional violation is simply “inherent” in two respects: 

first, because coal, oil and gas are not classified pursuant to § 

15-6-101, MCA, and second, because 95 mills is 211 percent higher 

than 45 mills. In other words, in the language of the Appellants, 

the “refusal to apply the state tax law system [§ 15-6-101, MCA], 

implicates the Fourteenth Amendment,” and 95 mills compared to 45 

mills is “constitutionally disproportionate” and “invidious.” This 

is the extent of the offered analysis. 

¶81 Notwithstanding the limitations in their analysis, we will 

address the Appellants’ concerns. The Appellants first direct this 

Court to Larson v. State (1975), 166 Mont. 449, 534 P.2d 854, for 

the proposition that the mere exclusion of the extractive minerals 

from this state’s statutory classification system is, by itself, a 

violation of the Appellants’ equal protection and due process 

rights. In Larson, the state attempted to tax property in Lewis 

and Clark County via an appraisal plan not applied to any other 

county in the state, resulting in higher assessed property values 

compared to similarly situated property in neighboring counties. 

This Court determined that the absence of a statewide plan, as 

required by statute, prevented the lawful implementation of a plan 

specific only to Lewis and Clark County. Larson, 166 Mont. at 455, 

534 P.2d at 857. 

¶82 Because Larson was decided based upon violation of a statute 

requiring a uniform method of appraisal, the Court declined to 

fully discuss what it defined as “patent” violations of the Montana 
40 

Constitution’s equal protection and due process provisions. The 

statute at that time, § 84-429.12, R.C.M. 1947 (see also § 15-7-

103(1)(b), MCA), required a general and uniform method of 

appraising city and town lots. Without constitutional analysis, 

the Larson Court simply stated that “Article II, Sections 4 and 17, 

1972 Montana Constitution compel the same result, . . . [as] 

violations of statutory uniformity requirements generally result in 

violations of equal protection-due process requirements.” Larson, 

166 Mont. at 455, 534 P.2d at 857 (citation omitted). 

¶83 Larson is of little precedential value, in this instance, 

because, unlike the statute requiring uniformity of assessment in 

Larson, § 15-6-101, MCA, although generally providing for taxation 

via a system of property classification, contains no internal 

uniformity requirement. Equally significant, the taxation of 

particular property via a more specific statute (i.e., the statutes 

providing for the taxation of oil, coal and natural gas), without 

statutory classification of that property is, without more, no 

constitutional violation provided that the Legislature’s 

classification is practical and neither capricious nor palpably 

arbitrary. Montana Stockgrowers, 238 Mont. at 118, 777 P.2d at 

289; Hilger, 56 Mont. at 175, 182 P. at 484. 

¶84 Even similarly situated taxpayers may, for a short time, pay 

divergent taxes as part of a statewide reappraisal plan, which, 

without more, does not constitute an equal protection or due 

process violation. General adjustments as a substitute for 

individual reappraisal over a short period of time to equalize the 
41 

treatment of similarly situated property is permissible, provided 

that seasonable attainment of rough equality is achieved. 

Roosevelt v. Dept. of Revenue, 1999 MT 30, ¶ 45, 293 Mont. 240, ¶ 

45, 975 P.2d 295, ¶ 45. But to avoid constitutional infirmity, the 

process of reappraisal must be part of a uniform statewide 

appraisal plan and must achieve seasonal attainment of equality in 

the tax treatment of similarly situated property owners, lest the 

state violate equal protection and due process of the laws. 

Roosevelt, ¶ 45; Larson, 166 Mont. at 455-56, 534 P.2d at 857-58. 

¶85 We conclude, therefore, that the mere exclusion of coal, oil 

and natural gas from classification pursuant to § 15-6-101, MCA, 

combined with its taxation via separate statutory provisions, does 

not, by itself, constitute either an equal protection or due 

process violation. 

¶86 We turn then, to the Appellants only other constitutional 

argument–that HB 28 imposes “invidious” and “disproportionate” 

taxation. The Appellants do not offer a definition or an analysis 

for what constitutes invidious tax treatment, other than suggesting 

that HB 28 and SB 412 somehow impose it. This Court adopted the 

“invidious” language in Pacific Power & Light Co. v. Dept. of 

Revenue (1989), 237 Mont. 77, 773 P.2d 1176, from the United States 

Supreme Court case of Lehnhausen v. Lake Shore Auto Parts Co.

(1973), 410 U.S. 356, 93 S.Ct. 1001, 35 L.Ed.2d 351. It appears 

from the analysis in Lehnhausen and from Allied, to which it cites, 

that “invidious” is synonymous with “palpably arbitrary,” a 

standard used to determine whether legislation is rationally 
42 

related to its objective. See Allied, 358 U.S. at 527-29, 79 S.Ct. 

at 441-42, 3 L.Ed.2d 480, 485-87. From this then, it appears that 

the Appellants at least implicitly acknowledge that HB 28 need only 

be rationally related to its objective in order to survive 

constitutional scrutiny. However, the Appellants make no attempt 

to prove beyond a reasonable doubt that either HB 28 or SB 412 do 

not have such a rational basis. 

¶87 The Respondents proffer that the Court need look no further 

than the Introductory clause to Chapter 11 of HB 28, which states 

that the intent of the Legislature was to “enhance equality of 

educational opportunity for students in the elementary schools and 

secondary schools of Montana by revising the school funding laws to 

provide greater equalization of funding available to school 

districts and to promote equalization of school district 

expenditures per student.” The Respondents suggest that imposition 

of the LGST and the coal gross proceeds tax furthered this purpose 

by reducing disparity in school funding between resource-rich 

counties and counties without substantial coal, oil or gas 

production in the tax base. 

¶88 The Respondents additionally offer the Minutes from the Senate 

Committee on Education and Cultural Resources, which indicate that 

the need to obtain a stable tax structure would be served by 

removing coal, oil and gas from the local mill levy structure and 

providing a statewide rate of taxation. The Minutes also reflect 

testimony that providing a statewide rate of taxation would make 

Montana’s coal, oil and gas industries more competitive by 
43 

implementing a tax structure similar to that of other states. 

Minutes, Sen. Comm. on Educ. & Cult. Res., June 21, 1989. 

¶89 However, as the Appellants provide no traditional 

constitutional analysis, do not attempt to prove beyond a 

reasonable doubt that HB 28 and SB 412 are not rationally related 

to a reasonable government objective, suggest no level of scrutiny 

apart from the rational basis test, and do not directly respond to 

the Respondents’ proffered rationale for the constitutionality of 

each Bill, this Court needs to go no further than to presume the 

constitutionality of HB 28 and SB 412. Davis v. Union Pacific R. Co. (1997), 

282 Mont. 233, 240, 937 P.2d 27, 31 (citing State v. Safeway Stores, Inc. (1938), 106 Mont. 

182, 199, 76 P.2d 81, 84); State v. Lilburn (1994), 265 Mont. 258, 262, 875 P.2d 1036, 1039;

Stratemeyer v. Lincoln County (1993), 259 Mont. 147, 150-51, 855 P.2d 506, 509 (citing

Fallon County v. State (1988), 231 Mont. 443, 445-46, 753 P.2d 338, 339-40). Of legislative 

action, this Court asks not whether it is possible to condemn the action, but whether it is 

possible to uphold it, and we will not declare a statute invalid unless it conflicts with the 

constitution, in our judgment, beyond a reasonable doubt. Davis, 282 Mont. at 239, 937 P.2d 

at 30. This Court will not further develop the Appellants’ nascent arguments nor further 

entertain the Appellants’ equal protection or due process challenge. 

¶90 We hold that the District Court did not err in concluding that 

HB 28 and SB 412 do not violate the Appellants’ constitutional 

right to equal protection and due process of the laws. 
44 

¶91 Finally, the Appellants assert that the 1995 Act, continuing 

to levy 95 mills against classified property is not a “general tax 

law” as required by Article VIII, Section 1, of the Montana 

Constitution, which provides that taxes “shall be levied by general 

laws for public purposes.” The Appellants direct this Court to 

State ex rel. Woodahl v. Straub (1974), 164 Mont. 141, 520 P.2d 

776, for the proposition that levying taxes by general laws 

requires that a tax be applied equally to all property in the 

state. Thus, they argue that HB 28 is not a general law because it 

does not levy taxes for school equalization aid at the same rate on 

coal, oil and gas and on otherwise classified property. 

¶92 Article VIII, Section 1, in requiring that taxes be levied by 

general laws, does not impose such a broad limitation as to require 

every tax law to be equally applied to all property in the state. 

Neither did this Court hold in Woodahl that a general law requires 

such uniform statewide taxation as argued by the Appellants. In 

Woodahl we noted that the legislation challenged therein was 

clearly a general law since it required all property to be levied 

at the same rate. Woodahl, 164 Mont. at 148, 520 P.2d 780. We did 

not, however, conversely state that a general law required a 

statewide uniform levy. Article VIII, Section 1, merely limits the 

Legislature by requiring the enactment of a general law, via 

statute, to authorize the levy of taxes. Clearly, the Legislature 

enacted SB 412 as a general tax law for the public purpose of 

school funding equalization aid. Such enactment does not exceed 
45 

the constitutional limitation placed upon the Legislature by 

Article VIII, Section 1. 

¶93 3. Did the District Court err in its Findings of Fact and 

Conclusions of Law regarding Big Horn County’s impairment of 

obligation of contract claim? 

¶94 In 1980, the voters in Big Horn County petitioned the County 

Commissioners for the issuance of County General Obligation bonds 

for the purpose of financing and constructing a retirement center 

and nursing home, and in November of 1980, the electors approved 

the measure. Big Horn County subsequently issued General 

Obligation bonds in 1981 to fund the construction of the Heritage 

Acres Retirement Center, and issued County General Obligation 

Refunding bonds in 1984 to satisfy the indebtedness of the 1981 

bonds. The General Certificate for the bonds reflected that Big 

Horn County had approximately $109,319,684 of taxable value. Coal 

gross proceeds constituted approximately $71,838,929 of the total 

taxable value. The taxable value of Big Horn County was irrevocably pledged to the 

payment of the bonds, and it is this tax power, the County argues, that was rescinded by HB 

28 when it imposed a fixed tax rate on coal gross proceeds and exempted the proceeds from 

local mill levies, thereby constituting impairment of the obligation of contract in violation of 

Article II, Section 31, of the Montana Constitution and Article I, Section 10 of the United 

States Constitution. 

¶95 The District Court conducted a bench trial on this issue on 

September 14 and 15, 1999. In March 2000, the District Court 

entered its Findings of Fact and Conclusions of Law, finding that 
46 

although the fixed tax rate imposed in HB 28 reduced the taxable 

value of Big Horn County by 73 percent from 1989 to 1990, the 

County also received substantially similar tax revenues from 1989 

through 1995 as a result of taxes levied on coal production before 

and after the enactment of HB 28. The District Court concluded 

that, as Big Horn County’s tax revenues were substantially similar 

before and after HB 28 and because the 1984 bonds were paid in full 

in December 1993, Big Horn County’s obligation with its bondholders 

was not substantially impaired, nor did the enactment of HB 28 

violate the Montana or the United States Constitution.

¶96 The County asserts that the reduction in taxable value of Big Horn County 

constitutes an alteration of the contract’s original terms, and that an alteration of this 

magnitude is conclusive that the bond contract was substantially impaired. 

¶97 The contract terms in question provide in part that: 

[T]he Board of County Commissioners will annually levy an 

ad valorem tax on all of the taxable property in the 

County sufficient to pay the interest hereon as it falls 

due and also to pay and discharge the principal of this 

Bond at maturity. [Emphasis supplied.] 

The contract further specifies that: 

For the prompt and full payment of such principal and 

interest, as the same respectively become due, and full 

faith, credit, and taxing powers of the County have been 

and are hereby irrevocably pledged. 

¶98 The County asserts that these terms were altered because ad 

valorem taxation could no longer be applied to coal. The County 

essentially argues that the “irrevocably pledged” language required 

the County’s tax base to remain in relative stasis until the bonds 

were paid in full, and that HB 28 partly removed this “irrevocably 
47 

pledged” tax base. This, the County contends, resulted in 

substantial impairment of the County’s ability to perform according 

to the precise terms of the contract, even if full and timely 

payment was not impaired. HB 28, the County argues, prevented it 

from performing according to the contract terms, and, apart from 

the successful repayment of the bonds, the reduced taxable value 

constituted unconstitutional impairment of the obligation of 

contract. 

¶99 The County contends that the District Court erred by incorrectly 

focusing on evidence that the bonds were, in fact, fully and timely paid, rather than 

focusing on the County’s evidence that its taxable value had decreased, that coal taxes 

could not support the County’s tax base, and that classified property was more heavily 

burdened. 

¶100 The Intervenors respond that the only salient facts necessary 

to a finding of no substantial impairment of contract are not in 

dispute. They assert that both the 1981 and the 1984 Bonds were 

fully paid in a timely fashion and that Big Horn County received 

substantially similar tax revenues as a result of taxes levied on 

coal production before and after the enactment of HB 28. The 

Intervenors further note that no bondholder ever challenged Big 

Horn County’s payment of the bond proceeds and that the County does 

not dispute the District Court’s factual finding that Big Horn 

County had sufficient tax revenue to pay its bonded indebtedness 

and that it did, in fact, pay its bonds in full. The Intervenors 
48 

respond that, based upon these facts, there can be no substantial 

impairment of contract. 

¶101 To reach a conclusion in this matter, however, this Court need 

not go beyond the fact that both the 1981 and the 1984 Bonds were 

fully and timely paid. It is axiomatic and this Court has 

consistently held that the existence of a justiciable controversy 

is a threshold requirement in order for a court to grant relief. 

Shamrock Motors, Inc. v. Ford Motor Co., 1999 MT 21, ¶¶ 17-19, 293 

Mont. 188, ¶¶ 17-19, 974 P.2d 1150, ¶¶ 17-19. If, because of 

intervening circumstances from the time the action is commenced, 

the district court is unable to grant meaningful relief or restore 

the parties to their original position, there no longer exists a 

justiciable controversy and the issue before the court is moot. 

Shamrock, ¶ 19; Awareness Group v. Board of Trustees of School 

Dist. No. 4 (1990), 243 Mont. 469, 475, 795 P.2d 447, 450-51 

(citations omitted). “To maintain an action the plaintiff must 

show that he has a right to be enforced or a wrong to be prevented 

or redressed, . . . but he is without standing where it is not 

shown that his rights have been, or are about to be, invaded.” 

Holt v. Custer County (1926), 75 Mont. 328, 330, 243 P. 811, 811 

(holding that the constitutionality of a statute can never be 

called in question by a person whose interests have not been, or 

are not about to be, prejudicially affected by its operation). 

¶102 The test of whether a justiciable controversy exists contains 

three elements: 
49 

First, a justiciable controversy requires that parties 

have existing and genuine, as distinguished from 

theoretical, rights or interests. Second, the 

controversy must be one upon which the judgment of the 

court may effectively operate, as distinguished from a 

debate or argument invoking a purely political, 

administrative, philosophical or academic conclusion. 

Third, [it] must be a controversy the judicial 

determination of which will have the effect of a final 

judgment in law or decree in equity upon the rights, 

status or legal relationships of one or more of the real 

parties in interest, or lacking these qualities be of 

such overriding public moment as to constitute the legal 

equivalent of all of them. 

Northfield Ins. Co. v. Montana Ass’n of Counties, 2000 MT 256, ¶ 

12, 301 Mont. 472, ¶ 12, 10 P.3d 813, ¶ 12 (citations omitted). 

¶103 As Big Horn County fully and timely paid the Bonds in this matter, we conclude 

that none of the above requirements exist and that the issue of impairment of obligation 

of contract in this matter presents no justiciable controversy and is therefore moot. 

¶104 The decision of the District Court is affirmed accordingly. 

¶105 4. Did the Department of Revenue’s activities in “Project 95" constitute 

legislation in contravention of the Separation of Powers Doctrine? 

¶106 In 1994 and 1995, the Department of Revenue engaged in a 

project – dubbed “Project 95”–wherein it spent more than a year 

working with representatives from large and small industry, county 

commissioners, school officials, and representatives from oil and 

gas companies to build a consensus on how best to achieve a 

simplification of the tax system as applied to oil and gas. The 

Department’s work on Project 95 eventually became the basis for the 

Department drafting SB 412, which the 1995 Legislature eventually 

enacted as § 15-36-301, et seq., MCA, the Oil and Gas Production 

Tax Act. 
50 

¶107 The County asserts that neither the Legislature nor the 

Governor granted the Department of Revenue, as an executive agency, 

any power to conduct activities which would eventually result in a 

proposed Senate bill or the subsequent passage of the bill into law 

by the Montana Legislature, nor did either request the Department 

to conduct a study for this purpose. The County argues that the 

Department’s activity in Project 95 was internally initiated rather 

than requested, and that the Department set out to change the tax 

law relating to oil and gas to serve, apparently, its own purposes. 

 The County urges this Court to condemn the Department’s actions 

under the Separation of Powers Doctrine of the Montana Constitution 

and to invalidate SB 412 because of the Department’s participation 

via research and drafting. 

¶108 The District Court determined that nothing in the Constitution 

precludes interim activity by citizens, executive agencies or other 

groups directed toward future legislative amendments, and that the 

Legislature, indeed, must rely upon such interim activities for the 

development and refinement of the bill it will consider in its 

short biennial session. The District Court concluded that 

executive involvement in the legislative branch is expressly 

required by the Montana Constitution, Article VI, Section 9, and 

that the Department did not exceed its power via Project 95. 

¶109 The Respondents set forth a similar position, arguing that 

Article VI, Section 9, of the Montana Constitution provides the 

constitutional basis for the Department’s activities in preparing 

SB 412. Article VI, Section 9, provides: 
51 

Budget and messages. The governor shall at the beginning 

of each legislative session, and may at other times, give 

the legislature information and recommend measures he 

considers necessary. The governor shall submit to the 

legislature at a time fixed by law, a budget for the 

ensuing fiscal period setting forth in detail for all 

operating funds the proposed expenditures and estimated 

revenue of the state. [Emphasis supplied.] 

¶110 The Respondents argue that Project 95 was not a “legislative 

adventure” beyond the constitutional purview of the Department of 

Revenue, but rather, that the Department initiated activity in 

furtherance of the Governor’s constitutional duty to propose 

legislation to the Legislature. The Respondents further direct 

this Court to § 15-1-203, MCA, as the enabling statute for the Department’s 

action, which provides: 

Study of other tax systems. The department may investigate the tax 

systems of other states and countries and formulate and recommend 

legislation for the better administration of the fiscal laws so as to secure 

just and equal taxation and improvement in the system of taxation and the 

economic expenditure of public revenue in the state. 

The Respondents argue that the statute is an express legislative directive to the 

Department to engage in precisely the activity encompassed within Project 95 and the 

“shepherding” of SB 412 through the legislative process. 

¶111 The principle behind the separation of powers doctrine is that 

each branch of government is separate and distinct and is immune 

from the control of the other two branches of government in the 

absence of express constitutional authority to the contrary. State 

ex rel. Morales v. City Comm’n of Helena (1977), 174 Mont. 237, 

240, 570 P.2d 887, 889 (citation omitted). This doctrine is found in the 
52 

1972 Montana Constitution in Article III, Section 1, and is essentially identical to this 

state’s previous separation of powers provision, Article IV, Section 1, in the 1889 

Montana Constitution. Article III, Section 1, provides: 

Separation of powers. The power of the government of this state is 

divided into three distinct branches–legislative, executive, and judicial. 

No person or persons charged with the exercise of power properly 

belonging to one branch shall exercise any power properly belonging to 

either of the others, except as in this constitution expressly directed or 

permitted. 

¶112 Each branch of government is made equal, coordinate, and 

independent. However, as this Court previously stated in Coate v. 

Omholt (1983), 203 Mont. 488, 662 P.2d 591, by independence, “we do 

not mean absolute independence because ‘absolute independence’ 

cannot exist in our form of government. It does mean, however ‘. . 

. that the powers properly belonging to one department shall not be 

exercised by either of the others.’” Coate, 203 Mont. at 492, 662 

P.2d at 594 (citing State v. Johnson (1926), 75 Mont. 240, 249, 243 

P. 1073, 1077); see also State ex rel. Hillis v. Sullivan (1913), 48 Mont. 320, 330, 137 

P. 392, 395. 

¶113 That the government is separated into three distinct powers 

does not mean that there is or can be no connection or the 

slightest degree of dependence of one branch upon another. 

Sullivan, 48 Mont. at 330, 137 P. at 395. Although in theory the 

doctrine effects an absolute separation of the three branches, it 

has never been accepted as an absolute principle in practice. See
53 

State v. Johnson (1926), 75 Mont. 240, 249, 243 P. 1073, 1077 

(citations omitted). 

¶114 The doctrine is designed to prevent a single branch from claiming or receiving 

inordinate power, not to bar cooperative action among the branches of government. 

See Brown v. Heymann (N.J. 1972), 297 A.2d 572, 578 (citations omitted). Indeed, such 

cooperation between the branches has been correctly stated to be as essential in a free 

government as their separation. See City of Waukegan v. Pollution Control Board (Ill. 

1974), 311 N.E.2d 146, 148 (citing Field v. People ex rel. McClernand (1839), 3 Ill. (2 

Scam.) 79, 83-84); Heymann, 297 A.2d at 578 (“the doctrine necessarily assumes the 

branches will coordinate to the end that government will fulfill its mission”). 

¶115 It is the exclusive power of the Legislature to enact the laws 

of this state, and it is the exclusive power of the executive 

branch to enforce the laws as enacted, subject only to the limitations which 

are contained in the Montana Constitution. The Montana Constitution does not 

provide that the legislative power of enactment must exclusively possess essential 

research, consensus building and the drafting of proposed bills, nor does it place a 

limitation upon the Executive branch which prevents it from providing such research, 

drafting and consensus building. Rather, as noted above, the Montana Constitution 

explicitly contemplates cooperation between the two branches in Article VI, Section 9. 

Although such cooperation does not need to be “enabled” by any particular 

constitutional or statutory provision, we note, however, that § 2-7-104, MCA, requires 
54 

the Department of Revenue to undertake precisely the type of study in which it engaged 

in Project 95: 

Revenue studies – report to the governor and legislature. The director of 

revenue shall study fiscal problems and tax structures of state and local 

governments and submit the studies to the governor and, as requested, to 

the legislature, a legislative committee, or a member of the legislature. 

¶116 The statute requires mandatory submission of such studies to 

the Governor without request, and mandatory submission to the Legislature upon 

request. It is of no constitutional import, contrary to the County’s arguments, that the 

Department may take up and the Legislature receive such a study absent a request. 

¶117 Project 95 was not an encroachment by the executive branch 

into powers exclusively held by the legislative, and the Department’s actions in 

formulating SB 412 does not void the statute as properly enacted by the Legislature. 

The County does not suggest that the Department of Revenue itself enacted SB 412. 

¶118 We hold that the District Court did not err when it concluded 

that the Department of Revenue, in researching and drafting the 

proposed SB 412, did not violate the separation of powers provision 

of the Montana or United States Constitution. 

¶119 The decisions of the District Court are affirmed in their 

entirety.

/S/ JIM RICE 

We concur: 
55 

/S/ TERRY N. TRIEWEILER 

/S/ PATRICIA COTTER 

/S/ JIM REGNIER 

/S/ W. WILLIAM LEAPHART 

/S/ JAMES C. NELSON 

/S/ THOMAS C. HONZEL, District Judge 

sitting in place of Chief Justice Karla M. Gray