NO. 89-492 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1990 

STATE ex rel. H. R. ROBERTS and 

ELIZABETH ROBERTS, d/b/a H. R. 

ROBERTS & SONS, INC., 

Relators and Appellants, 

PUBLIC SERVICE COMMISSION OF 

THE STATE OF MONTANA, 

Respondent and Respondent, 

and 

WATKINS AND SHEPARD TRUCKING, INC., 

Intervenor and Respondent. 

APPEAL FROM: District Court of the First Judicial District, 

In and for the County of Lewis and Clark, 

The Honorable Jeffrey M. Sherlock, Judge presiding. 

COUNSEL OF RECORD: 

For Appellants: 

W. William Leaphart argued, Helena, Montana 

For Respondents: 

C;; 

C ., Robin McHugh argued, Helena, Montana 

i. -I Stanley T. Kaleczyc argued, Helena, Montana 

Submitted: March 13, 1990 

Decided: April 13, 1990 9 
Chief Justice J. A. Turnage delivered the Opinion of the Court. 

H. R. Roberts and Sons appeals from an order of the First 

Judicial District Court, Lewis and Clark County, denying the 

appellant's petition for declaratory judgment and writ of mandamus. 

We affirm. 

ISSUES 

1. Did the District Court err in holding that B 69-12- 

324 (2), MCA, does not provide an exemption for all Class C carriers 

operating under government contracts? 

2. Did the District Court err in not holding that the Montana 

Procurement Act preempts the Public Service Commission public 

convenience and necessity hearing requirement for the winner of a 

competitive bid, state contract? 

3. Did the District Court err in holding that 5 69-12-324, 

MCA, does not deny equal protection when it allows state contracted 

solid waste carriers to obtain certificates without a public 

convenience and necessity hearing while requiring state contracted 

commodities carriers to go through the hearing process? 

FACTS AND PROCEDURE 

Appellant H. R. Roberts and Sons [hereinafter Roberts] 

underbid intervenor Watkins & Shepard Trucking, Inc. [hereinafter 

Watkins], by $150,000 on a statewide, three-year contract to haul 

United States Department of Agriculture surplus commodities forthe 

Montana Office of Public Instruction [hereinafter OPI] school lunch 
program. Watkins held the contract for the previous nine years and 

was the only carrier in Montana with the requisite USDA Commodities 

Class C certificate. Roberts held a Class C certificate, but under 

Public Service Commission [hereinafter PSC] procedure, could not 

obtain a USDA commodities endorsement until it had a commodities 

contract. 

The OPI awarded Roberts the contract on June 16, 1989, on 

condition that Roberts obtain the USDA commodities endorsement by 

August 1. Roberts immediately applied to the PSC arguing that 

5 69-12-324, MCA, exempted all government contracted Class C 

carriers from the requirement of a public convenience and necessity 

hearing. The PSC refused to exempt Roberts. The agency interpreted § 69-12-324, MCA, as exempting only federally contracted 

passenger carriers and state contracted solid waste carriers. 

The PSC set a hearing for August 23--the earliest practical date 

under its notice and hearing regulations. 

On July 14, Roberts filed the action now on appeal and Watkins 

intervened. Roberts asked the District Court to issue a writ of 

mandamus ordering the Public Service Commission to either issue the 

commodities endorsement without a hearing or to hold the hearing 

before the August 1 deadline. Roberts also requested a declaratory 

judgment that the exemption statute violated equal protection 

guarantees by giving preferential treatment to waste carriers over 

commodities carriers. 
The District Court denied the writ of mandamus and entered 

declaratory judgment against Roberts. Following the August 1 

deadline, the OPI rejected both Roberts1 and Watkinsl bids and, 

under the noncompetitive provisions of 5 18-4-306, MCA, awardedthe 

contract to Watkins as the sole source of contract services. 

Roberts now appeals the District Courtls decisions. 

HEARING EXEMPTION 

Montana law requires the PSC to provide public notice and to 

hold a hearing on public convenience and necessity whenever a motor 

carrier applies for any class of certificate. Section 69-12-321, 

MCA. Section 69-12-324, MCA, grants exemptions from the hearing 

requirement. Roberts argues that the plain language of the 

exemption statute covers all Class C carriers operating under state 

or federal contracts. The PSC argues that the plain language of 

the statute exempts only federally contracted passenger carriers 

and state contracted solid waste carriers. 

Subsections (1) and (2) of the statute read as follows: 

(1) The presentation of the written contract 

to the commission shall be deemed sufficient 

proof of public convenience and necessity in 

accordance with the terms and conditions 

contained within the United States government 

or state government contracts. Subject to the 

provisions of this section, a transportation 

movement is considered to be: 

(a) the transportation for hire of persons 

between two points within the state by a motor 

carrier pursuant to the terms of a written 

contract between the carrier and the United 
States government or an agency or department 

thereof; or 

(b) the transportation for hire of solid waste 

between two points within the state by a motor 

carrier pursuant to the terms of a written 

contract between the carrier and the state 

government or an agency or department thereof. 

(2) The Class C certificate of public convenience and necessity issued pursuant to the 

terms and conditions of the United States 

government or state government contract may be 

issued by the commission upon receipt of an 

executed copy of the United States government 

or state government contract. The certificate 

of public convenience and necessity may be 

issued thereafter without requiring the commission to fix a time and place for public 

hearing. 

Section 69-12-324, MCA. 

The procedure for interpreting the statute is clear. 

The judicial function in construing and applying statutes is to effect the intention of the 

legislature. In determining legislative 

intent, the Court looks first to the plain 

meaning of the words used in the statute. If 

intent cannot be determined from the content 

of the statute, we examine the legislative 

history. 

Thiel v. Taurus Drilling Ltd. (1985), 218 Mont. 201, 205, 710 P.2d 

The PSC asserts that the statute is plainly unambiguous. I1[I]t 

is not necessary to resort to legislative history to interpret 69- 

12-324. The PSC has frankly been astounded by the statutory 

exegesis that the Roberts and the District Court have undertaken 

in an effort to grasp the meaning of a law that the PSC considers 
plain on its face." We disagree with the PSC. Section 69-12-324, 

MCA, is so poorly written that its plain language appears to have 

no effect whatsoever. Subsections (1) and (2) speak of presenting 

I1the1l written contract without identifying the contract to which 

they refer. Subsections (I) (a) and (1) (b) define I1transportation 

m~vement~~--a term which cannot be found anywhere else in the Motor 

Carrier Act. Subsection (2) speaks of issuing a Class C certificate even though one of the two categories purportedly covered-- 

solid waste carriers--is statutorily defined as a Class D carrier. 

Section 69-12-301(5), MCA. Like the District Court, we find it 

necessary to engage in some "statutory exegesisft to determine what 

the legislature intended. 

The current confused nature of the exemption statute, and the 

present issue, appear to be the direct result of numerous amendments and procedural recodification of the exemption statute and 

related provisions of the Montana Motor Carrier Act. The Act 

originally defined Class C carriers as including all carriers 

operating under contract. Section 3847.2, RCM (1935). Section 

3847.10, RCM (1935), required Class C carriers to apply for a 

certificate of convenience and necessity which could be issued only 

after a public hearing. The 1971 Legislature added a subsection 

to the statute, then codified at B 8-110, RCM (1947), exempting 

from the hearing requirement Class C carriers operating under 

United States government contracts to transport persons or 
commodities. Act approved February 27, 1971, ch. 69, 5 1, 1971 

Mont. Laws 506, 508-09. The 1975 Legislature amended the new 

subsection extending the exemption to carriers operating under 

state contracts to haul solid waste. Act approved March 27, 1975, 

ch. 179, 5 1, 1975 Mont. Laws, 315, 316. The 1977 Legislature 

amended the Act's classification system creating the D classification for waste carriers. Act approved March 25, 1977, ch. 138, 

5 1 1977 Mont. Laws 466, 467. During the 1979 change from the 

Revised Codes of Montana to the Montana Code Annotated, the hearing 

exemptions were recodified in 69-12-324, MCA. In 1983, the 

Legislative Audit Committee rewrote 5 69-12-324, MCA, and other 

statutes as part of a Sunset Audit of the PSC statutes. Act 

approved April 19, 1983, ch. 588, 5 15, 1983 Mont. Laws 1394, 1402. 

All of this legislative tinkering has produced three underlying problems which obscure the meaning of the exemption statute. 

First, the enumeration of the current exemption statute gives the 

false impression of an exemption for all government contracted 

Class C carriers. The original exemption in 5 8-110(2), RCM 

(1947), contained three unnumbered paragraphs. The first paragraph 

provided that the transportation of passengers or commodities under 

United States government contract was subject to all provisions of 

the Montana Motor Carriers Act except that presentation of such a 

contract was sufficient proof of convenience and necessity. The 

second paragraph provided that a certificate could be issued 
without convening a hearing. The third paragraph provided the 

duration of the certificate and is not presently at issue. In the 

original exemption statute, the second and third paragraphs merely 

filled out the procedural details of the exemptions provided in the 

first paragraph. 

During the 1979 general recodification, the three paragraphs 

were enumerated (I), (2), and (3). Roberts now contends that 

subsection (2) creates an exemption in addition to those set out 

in subsection (1). However, as Watkins argues, the supplementary 

function of subsection (2) is still apparent in the current version 

of the paragraph. Subsection (2) refers twice to Ifthe . . . 

government contract.I1 llThell refers to the contract originally 

described in subsection (1). 

Second, subsection (2)'s reference to Class C carriers gives 

the impression that it creates an exemption in addition to those 

granted in the first paragraph. Roberts argues that because 

subsection (2) refers to Class C carriers, it creates an exemption 

separate from that extended to solid waste carriers who are 

statutorily defined as Class D carriers. The PSC argues that, when 

they transport under state contract, solid waste carriers change 

from Class D to Class C. Regardless of how the PSC categorizes 

them, under the plain language of the statutes, contracted solid 

waste carriers fall within both classes; Class C covers all 
contract carriers, 69-12-3Ol(4), MCA, and Class D covers all 

solid waste carriers, 9 69-12-301(5), MCA. 

The exemption statute confuses the classifications. It has 

always referred only to Class C carriers. When the 1975 Legislature extended the exemption to state contracted solid waste 

carriers, they fell only under Class C. Section 8-102(a), RCM 

(1947). However, when the 1977 Legislature created the new D 

classification, it failed to provide a corresponding amendment to 

the exemption statute. Furthermore, when the 1977 Legislature 

created Class Dl it passed a companion statute prohibiting Class 

A, B, and C carriers from hauling waste. Act approved March 25, 

1977, ch. 138, 5 2, 1977 Mont. Laws 466, 467. The result was an 

exemption statute which purported to exempt solid waste carriers 

but referred to them as Class C carriers--a classification that was 

statutorily prohibited from carrying solid waste. 

The 1983 Sunset Audit of the PSC statutes produced an oblique reference to the exemptions statute which partially corrected 

the inconsistencies. It amended the prohibition against waste 

hauling by Classes A, B, and C to read: 

Except as provided in rthe exemption - statute1, no Class A, B, or C carrier will be 

authorized or permitted to transport . . . waste . . . . 

Act approved April 19, 1983, ch. 588, 5 16, 1983 Mont. Laws 1394, 

1403 (emphasis indicates amendment). In spite of the plain 
language of the classification statutes, the Audit Committee 

apparently assumed that Class D carriers become Class C carriers 

when operating under government contract. 

Third, the Audit Committee also exacerbated the confusion by 

defining the term "transportation movement," in subsection (1) of 

the exemption statute. Prior to 1983, the statute provided that, 

with the exception of the hearing requirement, the transportation 

of passengers and commodities under United States government 

contract, and the transportation of solid waste under state 

government contract, Ifshall be deemed a transportation movement 

subject to the provisions of this chapter. l1 Section 69-12-324 (1) , 

MCA (1981). The obvious purpose of the phrase was to ensure that, 

even though the carriers were exempted from the hearing requirement, they were still subject to all other provisions of the 

Montana Motor Carrier Act. In an apparent attempt to simplify the 

statute, the Audit Committee turned this phrase on its head. Act 

approved April 19, 1983, ch. 588, 5 15, 1983 Mont. Laws 1394, 1402. 

It now reads, llSubject to the provisions of this section, a 

transportation movement is considered to be . . . . Instead of 

making the designated contract carriers subject to the provisions 

of the Motor Carrier Act, it now defines "transportation m~vement~~ 

as including the designated contract carriers. The definition has 

no apparent purpose since I1transportation movementI1 appears nowhere 
else in the current or previous versions of the exemption statute, 

the Motor Carrier Act, or the administrative regulations. 

The end product of these piece-meal amendments is a set of 

statutes which is, in various parts, inconsistent, contradictory, 

and superfluous. The meaning of the exemption statute is so 

obscure that Roberts can now make a plausible argument that it 

exempts fromthe hearing requirement all Class C contract carriers. 

The bottom line, however, is that the District Court was correct; 

there is no evidence that the legislature ever intended to create 

such an exemption. To the contrary, during the 1983 Sunset Audit, 

the PSC presented the legislature its uncontested interpretation 

of 69-12-324, MCA, as exempting only federally contracted 

passenger carriers and state contracted solid waste carriers. 

Mont. Public Service Commln. Summary of the Legislative Audit Comm. 

Bill: S.B. 436, at 4, House Admin. Comm., March 14, 1983; Mont. 

Public Service Commln. Statement in Support of S.B. 436, exhibit 

no. 4, Senate Business and Industry Comm., February 19, 1983. 

We hold that whatever 9 69-12-324, MCA, does, it does not 

create a blanket exemption from the public convenience and necessity hearing for all government contracted Class C carriers. 

We invite, with some trepidation, the legislature to again 

consider the Motor Carrier Act. Carriers such as Roberts should 

be able to determine their rights and responsibilities by reading 
the plain language of the statutes. Presently that is not the 

case. 

PREEMPTION 

The Montana Procurement Act [hereinafter MPA] and the PSC1s 

public convenience and necessity hearing serve distinct purposes. 

The MPA requires state agencies to purchase most supplies and 

services through a competitive bid procedure. Section 18-4- 

302(1), MCA. The MPA is intended, among other things, to promote 

free enterprise competition. Section 18-4-122(7), MCA. In the 

PSC1s public convenience and necessity hearing, on the other hand, 

competition is not a factor. Section 69-12-323 (2) (a), MCA, 

requires the PSCto address three issues before granting additional 

operating authority. 

a) First, the Commission must determine that 

I1public convenience and necessity require the 

authorization of the service proposed." This 

necessarily will include consideration of the 

existing service. 

b) Second, the Commission must consider the 

ability and dependability of the applicant to 

meet any perceived additional public need. 

c) Third, the Commission must consider the 

impact that the proposed service would have 

upon existing transportation services. 

In re Application of Sullivan (Deplt. of Public Service Regulation, 

July 2, 1985), Docket No. T-8752, Order No. 5388, at 5. Roberts 

argues that because the MPA promotes competition whereas the PSC 
protects the existing carrier, the MPA preempts the PSC1s hearing 

requirement. 

We disagree with Roberts. Having a contract to operate is not 

equivalent to having a license to operate. The competitive policy 

of the MPA and public convenience and necessity hearing are 

complementary. The MPA ensures that the carrier will provide the 

services at the lowest reasonable price while the PSC hearing 

ensures that the carrier is capable of performing the contract and 

that a new carrier is in the public's best interests. To be 

awarded an MPA contract, the bidder must be a "responsible bidder,I1 

with 'Ithe capability in all respects to perform fully the contract 

requirements and the integrity and reliability which will assure 

good faith performance. It Sections 18-4-301 (7) and -303 (6) , MCA. 

By awarding the contract to Roberts subject to issuance of a Class 

C commodities endorsement, the OPI implicitly recognized that 

Roberts had not yet demonstrated its ability to perform and its 

desirability as a replacement carrier. Furthermore, as the more 

specific statutes, the Motor Carrier Act governs over the MPA in 

the regulation of motor carriers. See 3 1-2-102, MCA. 

We hold that award of a contract under the Montana Procurement 

Act does not in itself excuse the winning carrier from a public 

convenience and necessity hearing under the Motor Carrier Act. 
EQUAL PROTECTION 

Roberts argues that by exempting state contracted solid waste 

carriers but not state contracted commodities carriers from the 

PSC hearing requirement, 5 69-12-324, MCA, violates its right to 

equal protection. In State v. Jack, this Court identified three 

issues that must be considered in determining whether a statute 

violates the right to equal protection: 

(1) whether the statute is a legitimate and 

proper exercise of governmental authority; (2) 

the basis of the classification and an identification of the persons covered thereunder; 

and (3) the proper standard of review or scope 

of judicial inquiry regarding the relationship 

between the classification and the objectives 

of the law. 

Jack (1975), 167 Mont. 456, 459, 539 P.2d 726, 728. Roberts does 

not contend that the regulation of motor carriers is not a 

legitimate exercise of state authority. 

The parties do disagree on the basis of the classification. 

The PSC argues persuasively, and the District Court agreed, that 

the legislature has very good reasons for regulating contract 

carriers in a distinct manner from common carriers. We agree with 

Roberts, however, that that classification is not at issue in the 

present case. Here, 5 69-12-324, MCA, distinguishes between 

different contract carriers. Specifically, the statute grants an 

exemption to state contracted solid waste carriers while denying 

an exemption to state contracted commodities carriers. 
The third issue is whether this classification has a rational 

basis. See Jack, 167 Mont. at 461, 539 P.2d at 729. We hold that 

it does. Unlike commodities carriers, solid waste carriers are 

subject to oversight by the Department of Health and Environmental 

Sciences. The legislature gave that Department broad authority to 

establish and administer waste disposal systems, 9 75-10-104, MCA, 

including regulation of solid waste transportation, 75-10- 

204(3), MCA. The Department has established minimal standards for 

solid waste transportation, see 5 16.14.523, ARM, and has the 

authority to inspect carriers, 5 16.14.525, ARM, and to enforce 

compliance, 3 16.14.526, ARM. When a contract to haul solid waste 

is issued, the public's need for a new carrier and the carrier's 

ability to perform in compliance with the Department's regulations 

should already have been determined. 

The OPI has the authority to enter contracts for the distribution of commodities and, theoretically, to regulate and oversee 

their performance. Sections 20-10-201 (3) (a) , and -203, MCA. 

Issuing transportation contracts, however, is a small adjunct to 

the OPI1s primary function of providing educational services. The 

OPI is not an agency expected to oversee motor carriers. 

We hold that the difference between the agencies' abilities 

to evaluate and regulate transportation companies provides a 

reasonable basis for granting an exemption to state contracted 

solid waste carriers and not to state contracted commodities 
carriers. The disparate treatment does not violate Roberts's right 

to equal protection. 

CONCLUSION 

Roberts has been caught in a classic Catch-22 created by 

conflicting PSC and OPI requirements. PSC procedures prevented 

Roberts from obtaining a commodities endorsement until it had a 

contract. OPI requirements made the contract conditional on 

Roberts securing the endorsement by August 1--a deadline PSC 

procedures made impossible. In this situation, Roberts could never 

replace the existing carrier regardless of how capable or cost 

effective a carrier it might be. 

The solution, however, is not for this Court to rewrite the 

regulatory legislation as Roberts suggests. The solution is for 

the agencies to consider their overlapping requirements and to 

tailor their procedures accordingly. The OPI could have taken bids 

on their commodities contract at an earlier date. The PSC could 

have initiated its notice and hearing procedure when Roberts 

entered a bona fide bid. The agencies' lack of foresight and 

flexibility may have harmed the appellant and cost taxpayers an 

extra $150,000 by effectively nullifying Roberts's low bid. 

Affirmed. 
We concur: 

# 

Hon. L. k. Gulbrandson, Retired 

sitting in of 

C. Sheehy 
Justice John Conway Harrison, specially concurring. 

While I concur with the majority opinion in this case, I find 

the result appalling to appellant Roberts. He found himself in a 

"Catch-22" situation, caught between two departments of State 

government whose internal regulations prevented him from getting 

the bid to which he was entitled. Had the Office of Public 

Instruction possessed the foresight to check with the Public 

Service Commission, Roberts would have been able to meet the time 

specifications. 

As noted in the opinion, this is caused by the piecemeal 

amendments of our statutes which are, in various parts, 

inconsistent, contradictory and superfluous. In this opinion we 

ask that the legislature again try to correct such a holding as 

this by amending the Motor Carrier Act so that carriers such as 

Roberts can determine their rights and responsibilities, and at the 

same time bring some relief to the taxpayers who face the 

additional costs resulting from the holding in this case.