No. 81-354 INTHE SUPREME COURT OF THE STATE OF MONTANA 1982

STATE EX REL.

### , MONTANA WILDERNESS ASSOCIATION, et al., Petitioner and Appellant,

BOARD OF NATURAL RESOURCES AND CONSERVATION OF THE STATE OF MONTANA, etal., Respondents and Respondents.

Appeal from: DistrictCourt of the First Judicial District, In and for the County of Lewis & Clark, The Honorable J. M. Salansky, Judge presiding.

Counsel of Record: For Appellant: Goetz, Madden & Dunn, Bozeman, Montana WilliamL. Madden argued, Bozeman, Montana

For Respondents: James F. Walsh, Pamela I<. Merrell, Butte, Montana Donald MacIntyre argued, Dept. ofNatural Resources, Helena, Montana Richard J. Andriolo argued, Bozeman, Montana Corette, Smith, Pohlman & Ailen, Butte, Montana R. D. Corette, Jr., argued, Butte, Montana Amicus Curiae: Schulz, Davis & Warren, Dillon, Montana

Submitted: December 2, 1981 Decided: July 91 1982

Filed: 

## L7ji,jL 

## 9

# -1982

ClerkMr. Chief Justice Frank I. Haswell delivered the Opinion of the Court. The Board of Natural Resources & Conservation (BNRC) granted the Montana Power Company (MPC) permission to construct a 161KV electrical transmission line from Bozeman to Ennis 

### to Dillon with a 161KV spur from Ennis 

### to Big Sky. Montana Wilderness Association, Inc. (MWA) and Environmental Information Center, Inc. (EIC) appealed BNRC1s decision 

### to the District Court of Lewis & Clark County. The ~istrict Court affirmed. MWA and EICnow appeal the ~istrict Court decision tothiscourt. On June 4, 1974, MPC filed with the Board an application for a Certificate of Environmental Compatibility and Public Need, pursuant to the provisions of the Utility SitingAct of 1973, seeking authorization for construction and operation of 155miles of 161KV electric transmission lineextending from Clyde Park 

### to

a substation in the Upper Yellowstone

### valley, then 

### to Big Sky, and then to a substation outside of Dillon. Additionally, approximately 17milesof 69 KV electric transmission- was proposed from the substation in the Upper Yellowstone Valley to Gardiner. The Utility SitingAct

### was amended by the legislature effective ~pril 21, 1975, and became known as the "Montana Major Facility SitingAct". On June 30, 1975, MPC filed an amended application requesting, in lieuof the linespreviously subsubmitted, approval of 198

### miles of transmission lines all of which were 

### to be treated as one project 

### or facility, consistingof the following: a) Clyde Park to Emigrant--161 KV line; b) Emigrant 

### to Gardiner--69 KV line; 

### c) Clyde Park to Bozeman--161 KV line; d) Bozeman to Ennis--161 KV line; and e) illo on to Ennis to Big Sky--161 KV line. Pursuant 

### to the mandates of the Montana Environmental Policy Act (MEPA) and the Siting Act (Section75-20-216, MCA)

. the Department of Natural Resources and conservation (Department) studied and evaluated the proposed facility and 

### its effects. The Department published 

### a draftenvironmental impact statement in

..

I... _ - ,.. : -.a: ;w..... -January of 1976 and, after reviewing comments from MPC, various

1 government agencies and interested members of the public, the Department published its final EIS inApril of 1976. The Department

### 's recornmendation was to approve the request except that construction of the 161 KV transmission line to Big Sky

was to be routed 

### from Bozeman to Big Sky through the Gallatin 8 2 Canyon corridor, rather than from Ennis to Big Sky through Jack Creek/Cedar Creek Corridor. On April 10, the first prehearing conference washeld with Joe Sabol, a Bozeman attorney and Chairman of the Board, as hearings officer. On April 20, 1976, the Board commenced formal "certification proceedings" on the application, deeming the matter a contested case within the Montana Administrative Procedure Act (IYAPA)

# . Pretrial discovery and conferences followed and on May 7, 1976, MWA gave notice of its intent to become a party 

### to the proceedings. On May 12, the date of the second preconference hearing (alsopresided over by Sabol)

## , MWA member Rick Applegate filed

an affidavit of disqualification, requesting that Sabol disqualify himself from participating as 

### a hearingsofficer and voting member of the Board. The reasons given fordisqualification included charges that Sabol had previouslypublicly

### criticized the MWA (implicitlyreferring 

### to an articlewhich appeared

on February 

### 15, 1976, in the Bozeman newspaper) and that Sabol, being a paid legal representative of Ski Yellowstone, Inc. (a proposed 

### resort whose future energy demands werelikely

### to be an issue in the proceeding, according 

### to the affidavit) could not render an impartial judgment. Sabol voluntarilywithdrew as hearings officer on September 1, 1976, but refused to relinquish hisvoting position on the Board and the Board voted unanimously 

### to deny the request that he be disqualified. On September 23 and 24, public hearings 

### were held before the Board where the prefiled written testimony of witnesses wasI admitted, oral examrnation taken and exhibits supporting and opposing MPC'S application introduced. According to the deposition of Donald HacIntyre (counsel for DNRC) and Applegate, Sabol spoke 

### to MacIntyre in the lobbyduring one of the 

### recesses and, according to Applegate, told MacIntyre not to examine MWA's wit

### nesses because Madden (appellants' attorney) was building a record for appeal. After the September hearings, the parties each filed proposed Eindings of fact and conclusions of law with appropriate exceptions there to -

### --- = filed by the opposing parties. Sabol's 

### term on the Board terminated on December 31, 1976, and on April21, 1977, the parties presented their final oral arguments to the Board. On October 28, 1977, the Board rendered 

### its decision and granted the certificate to MPC, authorizing construction along the corridorpreferred by MPC. Particularly, the Board found the Ennis-Jack Creek-Big Sky corridor to be preferable to the Ennis-Cedar Creek-Big Sky and Gallatin Canyon corridors, rejecting the Department's recommendation of using the Gallatin Canyon route. On December 1, 1977, MWA and EIC filed 

### a petition with the District Court of the FirstJudicial District, seeking review of that part of the Board's decision approving construction of the line from Bozeman to Ennis to Dillon, with a 161 KV spur from Ennis 

### to Big Sky through the Jack Creek corridor. The segment of the line from Bozeman eastward has already been constructed and 

### is not here in issue. After various motions and the filing of extensive briefs by the parties, the trial court heard final arguments and deemed the case submitted on December 13, 1979. On July 14, 1981, the - District Court entered an order disposing of all issues raised by MWA and EIC in favor of MPC. This appeal followed. On August 7, 1981, MPC obtained from the Board an order approving centerline location for construction of the line.Appellants, 

### by motion dated August 10, 1981, applied 

### to this Court for a stayof construction activities pending appeal and for an expedited briefing schedule. Wedenied the stay but granted an expedited briefing schedule. The issues on appeal can be stated in thismanner: 

### I. Are the environmental impact str'atements inadequate as

a matter of law? 2. Are the Board's findings, conclusions and Certificate of Environmental Compatability and PublicNeed in conformity with statutoryrequirem'entsand supported by the evidence? 3. Did Sabol's involvement deny MWA and 

### EIC a hearing before a fair and impartial tribunal inviolation of due process requirements? Atthe outset, we must determine the proper standard of review of thisappeal. Our standard of review is governed by the Montana Administrative Procedure Act. Section 2-4-704, 

### MCA, provides in part: 

### "(2)The court may not substitute its judgment for thatof the agency as to the weight of the evidence on questions of fact. The court

### may aff

### irmthe decision of the agency

### or remand the case 

### for further proceedings. The court may reverse ornodify the decision if substantial rights of the appellant have been prejudiced because the administrative findings, inferences, conclusions 

### or decisions are: "(a) in violation of constitutional 

### or statutory provisions; "(b) in excess of the statutory authority of the agency; 

### "(c)made upon unlawful procedure; "(d) affected by other error of law; "(e)clearlyerroneous in view of the reliable, probative and substantial evidence on the whole record; "(f)arbitraryor capricious or characterized by abuse 

### of discretion 

### or clearlyunwarranted exercise of discretion; 

### or "(g) because findings of fact, upon issues essential 

### to the decision, 

### were not made although requested." -4-Ir Appellants urge that the scope of review based on the above statute is whether the draft and final environmental impact statements are 

### "in violation of the constitutional 

### or statutory provisionsn 

### or "affected by other 

### error of lawn, citing section and 2-4-704(2) (a)Rd), MCA, supra. Appellants also 

### cite Trout Unlimited v. Morton (CCA 9, 1974), 509 F.2d 1276, for the 

### asser- 1- tion that appellate courts are not bound by the "clearly erroneous" standard that governs findings of an agency ortrial court. In Trout Unlimited, supra, the federal appeals court said the following regarding the correct standard: "The proper standard by which to review the

adequacy of the EIS has been the subject of some confusion in this court. The nature of the con£ usion has been whether the~dministrative Procedure Act, 5 U.S.C. 

### S 706(2)(A), the 

### 'arbitrary, capricious, an[dl abuse of discretion' standard, 

### orS 706(2)(D)

## , the 'without observance of procedure required by law' standard or some third sta'ndard not preciselyconforming to either

## s 706(2)(A)or

## s 706(2)(D) is the proper standard. See Environmental Defense Fund v. Armstrong, 487 F.2d 814 (9thCir. 1973); Life of the Land v. Brinegar, 485 F.2d 460 (9thCir. 1973); Jicarilla Apache Tribe of Indians v. Morton, 471 F.2d 1275 (9thCir. 1973). This confusion 

### was eliminated from our lawby Lathan v. Brinegar, 506 F.2d 677 (9th Cir. 1974). We held that the 

### S 706(2)(D)standard was the proper one because NEPA is essentially a: "'procedural statute. Its purpose is 

### to assure that, by following the procedures that it prescribes, agencies willbe fullyaware of the impact of their decisions when they make them. The procedures required by NEPA, 42 U.S.C.A. 

### S 4332(2)(C), 

### are designed 

### to secure the accomplishment of the vital purpose of NEPA. That result can be achieved only if the prescribed procedures are faithfully followed; grudging pro forma compliance willnot do. We 

## - think that the courts willbetter perform their necessarily limited role in enforcing NEPA if they apply 

### S 706(2)(D) in reviewing environmental impact statements for compliance withNEPA



# . ..' Lathan v. Bririegar, supra, 

### at 692-."509 F.2d at 1282. We have previously discussed our scope of review of an agency decision under the Montana Administrative Procedure Act at

some length inNorthern Plains Resource Council v. Board of Natural Resources and Conservation (1979), 181Mont. 500, 594 

# - -P.2d 297, 36 St-Rep. 666. We emphasized how court review 

### of agency decisions is limited: "This Court recently set forth three basic principles underlying section 82-4216 which a District Court must consider indetermining what the scope of review of an administrative decision should be: (I)that limited judicial review of administrative decisions strengthens the administrative process by encouraging the fullpresentation of evidence at the initialadministrative hearing; (2) judicial economy requires court recognition of the expertise of. administrative agencies 

### in the field of their responsibility; and (3)limited judicial review is necessary 

### to determine that a fair procedure was used, that questions of lawwere properly decided, and that the decision of the administrativebody was supported by substantial - evidence. Vita-Rich Dairy, Inc. v. Department 

# - of Business Regulation (1976), 170Mont. 341, 

## - 553 P.2d 980." 181Mont at 509 

## ,594 P.2d at 

# - 303, 36 St.Rep. at 67. We alsoquoted from the case of Vermont Yankee Nuclear Power Corp. v. National Resources Defense Council, Inc. (1978), 435 U.S. 519, 98 S.Ct. 1197, 55 L.Ed.2d 460: 

### "

## ' 

# ..

# .the role of a court in reviewing the sufficiencyof an agency's consideration of environmental factors is a limited one, limited both by the 

### time atwhich the decision

### was made and by-the statutemandating review. "'"Neither the statutenor its leaislative historycontemplates thata court-should substi- 

### -- tute its iudqment for thatof the aaencv as to 

# --- a 

## ---- 2 * 

### -- the environmental consequencesof its actions." 

## -- [Citation omitted.]

### ' Vermont Yankee, 435 U.S. at I 555, 98 S.Ct. at 1217. (Emphasls supplied.)" 181Mont. at 511 

## ,594 P.2d at 304, 36 St.Rep. 

## -- at672. We are not persuaded by appellants that

### we should move from our position taken inNorthern Plains. It is an accurate statement of what kind of court review should be given 

### to agency decisions. Furthermore, we note the mandates of the Montana review statute cited above (section 2-4-704 (2)

## , MCA) which contains a clear indication that the legislature intended that a court reverse or modify the lower decisionwhere the agency decision is clearlyerroneous, arbitrary, 

### or capricious, resulting in the appellants' rightsbeing substantially prejudiced

# .With regard to the first issue on appeal, appellants claim the draft and final EIS's are inadequate asa matter of law on several grounds: the failure to consider the need for and 

### alternatives to the proposed facility in the Upper Madison/Lower Ruby valleys and atBig Sky; the failure 

### to consider the "no action" alternative; the failure 

### to undertake an adequate cost/benefi

### t ' : analysis; and the contention thatdeficient Environmental Impact Statements cannot be rendered adequate by reference to the record outside the documents. Wewillconsider each in turn. Appellants firstcharge that the failure to consider the need for, and alternatives to, the facility in the Upper Madison/Lower Ruby valleys renders the EISIslegally inadequate. Chapter Three of the draft EIS discusses the need of the proposed facility and outlines the needs for the areas of Big Sky, Bozeman, Yellowstone National Park and, the YellowstoneValley. Chapter Four addresses alternative transmission methods generally and specific transmission a1ternatives to the four above areas. .Inneither chapter is there a discussionof the Upper Madison/Lower Ruby valleys. Appellants refer to several points in the record where thisdeficiencywas noted by various individuals. The Department, in its briefs to the DistrictCourt and 

### to thisCourt,acknowledges that the EIS's contain no adequate consideration of alternatives to a 161 KV line serving the Upper Madison/Lower Ruby valleys. The Department justifies this omission 

### by stating that MPC failed 

### to comply with the Siting Act and the rules adopted pursuant thereto in identifying in MPC's application the need for a facility 

### to serve the demand in the Upper Madison/Lower Ruby valleys. It is true there is no separate sectionof the draft EIS devoted to consideration of a1 ternatives 

### to the proposed 

### electrical transmission line serving the Upper ~adison/LowerRuby valley

area. However, Chapter Three of the draft

### EIS contains 

### sta-

-7-

..tistics and data on the needs of the Upper Madison/Lower Ruby valley including regulation statistics, existing transmission sprinkling linedata, a map showing a significantgrowth in/irrigation perwhich would mit£ilings/constitute. additional electrical demand, a showing that Vigilante ~1ectricCooperati~e which uses MPC transmission lines in the area projects almost doubling the electrical load a 1. between 1972 and 1978, and/table showing substantial increases in peak electrical loads at substations in the area. Chapter Four 

### of the draft EIS discusses alternatives 

### to MPC's proposed 161kilovolt transmission line asa whole including expansion of MPC's Madison hydroelectric plants, upgrading and additions to existing transmission facilities, and underground transmission lines. Chapter Six includes an analysis of environmental impacts on the Upper Ma4ison/Lower Rcby valley. We note what the federal courtshave said with regard to environmental impact statements under the ~ational Environmental Policy Act. InTrout Unlimited v. Morton, supra, the Ninth Circuit Court of Appeals stated: "That is, in our opinion an EIS is in compliance with NEPA when 

### its form, content, and preparation substantially (1)provide decisionmakers with an environmental disclosure sufficientlydetailed to aid in the substantive decision whether to proceed with the project in the lightof its environmental consequences, and (2)make available to the public, inf~rmation of the proposed project s environmental impact and encourage public participation in the development of that information." 509 F.2d at1283. In Life of the Land v. Brinegar (9thCir. 

### 1973), 485 F.2d 460, 472, the court addressed what kind of consideration of alternatives is mandated by 

### NEPA: "NEPA1s'alternatives1 discussion 

### is subject 

### to a construction of reasonableness. N.R. D.C. 

## , Inc. v. Morton, supra, 458 F.2d at834. Certainly, the statute should not be employed as

a crutch 

### Eor chronic fault£ inding. Accordingly, there is no need for an EIS to consider an alternative whose effect cannot be reasonably ascertained, and whose implementation 

### is deemed 

### remote and speculative. Id. at 834. Rather, the EIS need only 

### set formthose alternativess 'sufficient to permit a reasoned choice.' Id. at 

## - 836." Xhile it would have been preferable if the environmental impact statements in thiscase had separatelyconsidered the need 

### for the facility in the Upper Madison/Lower Ruby valleys and alternatives thereto, the basic information 

### to enable the Board to reach an informed decision was before the Board. The 

### EIS's '- substantially complied with the mandates of MEPA and provided the Board "with an environmental disclosure sufficientlydetailed to aid in the substantive decision whether 

### to proceed with the project," Trout Unlimited, supra. 

### We find no grounds forreversal

### or modification of the Board's decision inour limited review under section 2-4-704, MCA, discussed above. Appellants' next claim 

### is that the EIS's fail to adequately address the need for, and alternatives 

### to, the proposed facilityatBig Sky contending that there

### was no investigation of the basis of MPC1sprojected load which would justify additional electrical transmission service. Appellants reason that analysis of conservation alternatives 

### is required by both the Siting Act and NEPA, citing section 75-20-503(1) (a)and (f) ,MCA, and 

### two cases, Environmental Defense Fund v. Corps of Engineers (5th Cir. 1974) 492 F.2d 1123and Libby Rod and Gun Club v. Poteat (D.C. Mont. 1978), 457 F.Supp 1177, aff'd inpart and revld inpart (9thCir. 1979) 594 F.2d 742. Sections 75-20-503 (l)(a)and (f)

## , MCA, provide as follows: "Environmental factorsevaluated. In evaluating long-range plans, conducting 5-year 

### sitereviews, and evaluating applications for certificates, the board and department shallgive consideration 

### to the following 

### list 

### of environmental factors, where applicable, and may by rule add 

### to the categories of this section: 

### "(1) energy needs:

a(a) growth in demand and projections of need;

"(f) conservation activities which could reduce the need for

### more energy;

### We have reviewed the nature of the project in Corps of Engineers, supra, as outlined in both the Fifth Circuit Court opinion and the DistrictCourt opinion (348F.Supp. 916) and fail to seehow the case either supports or weakens appellants'position. Corps of Engineers involved challenges to the Tennessee-Tombigbee Waterway, a navigation project, extending fromDemopolis, Alabama, to the Tennessee River. Nowhere dowe find discussion regarding electrical transmissions facilities and projected loads. Although the court rejected the Corps' defense that the development of alternatives need only takeplace where a project involves detrimental environmental impacts,we do not find that statement dispositive here. Poteat, supra, involved the proposed construction of addtional electrical generating units ("LAURD")at Libby Dam. In the District Court opinion, JudgeMurray addressed the Corps' projected load forecasts and the conservation alternative: "Thepeak-power deficit forecasts relied upon by the Corps reflect the years 1974-75,yet LAURD was not projected for completion until 1982-83. The current forecasts for the early 19801s,as projected by Bonneville PowerAdministration

(BPA)and the Pacific Northwest Utilities Coordinating Council show a surplusof peaking power and a shortage of base-load power, even without LAURD

# .

"Thereference to the alternative of conservation ismuch too conclusory. The Corps discusses the importanceof conservation,but dismisses it as a viable alternative to LAURD, saying 'there is not at present sufficient evidence towarrant delaying the on-line dates of Libby Additional Units.' Recent studiesby the BPA and the General Accounting Office indicate there is evidence to conclude that conservation in the Pacific Northwest will have a considerable impact. This information should be explored and analyzed in greater depth by the Corps in preparing a new EIS." 457 F.Supp. at 1188-89. The Department justifies its failure to conduct an independent investigationof MPC's load projections by stating that, in 1975, theDepartmentdetermined that its legalmandate did not extend to denying increased electrical energy to Montana consumers on the basis of the ultimate use of the elecelectrical tricity,or to setting a maximum amount of

### / energy that existing

### electric consumers may consume. The Department concedes, however, that it has, subsequent 

### to 1975, refined its procedures such that the concerns raised by appellants would be addressed. Additionally, applicantsare now required, by-AdministrativeRules ef Montana,

. section 36.7.304(l)(b)(ii) and (b)(B)

### to provide 

### to the Department the assumptions underlying load growth projections and how conservation measures may eliminate the.need for the proposed facility: "36.7.304 CONTENT OF APPLICATIONS FOR ELECTRIC TRANSMISSION 

### LINESAND GAS OR 

### LIQUID 

## --- TRANSlYISSION LINES An a~nlication for a facir litydefined In subsections 75-20-104 (10) (b)and 75-20-104 (10)(c)of the Act which is an electric transmission line

### or gas or liquid transmission line shall contain the following:



### "(b) Applications for electric transmission lines not based solelyon transient stability considerations shall include the following:



### "(ii) 10-year historical and 10-year projected load growth data ateach point of distribution inthe area needing additional facilities. These data shallbe provided in tabular and

not be limited to, assumptions about: populaEnTrowth: chanqes in

### electrical use per house

### -- hold:-industrial.-corn~rcial.and aaricbltural

a 

## - use of electricalenergy and power; economic 

# -- conditions affecting industrial 

## - and commercial activity; conservation; and renewable alternative energy use. The effect upon demand of chanqes in the averaqe price and rate structure for

### electric energy ;hail be assessed.

"(B) An explanation shall be given of the effectsof the applicant's energy conservation 

### orpromotion programs, if any, on past and presentenergy consumption rate and on future energygrowth rates. ' 

## - The applicant shallassess thepotential forconservationand a reduction in 

## - -- 

## -

romotional activities forreducing 

### or elimina- :inq theneed for theproposed facllEy. The 

## ---- 7 application shall lnclude a discussion 

### of the consistencyof the proposed facilitywith state, regional, and national energy and conservation 

### policies and programs;" (~mphasis added.) The alternatives, in addition 

### to conservation, thatappellantscontend were not sufficiently treated by the EIS's include on-site diesel generating facilities, waste heatsources, wind power, solar power and the use of more insulation. Although the Department might be well advised 

### to look behind any 

### load growth projections to determine their validity and legitimacybecause an applicant's projections may very wellbe self-serving to a certain degree (tojustify the proposed project), failure to do so is not fatal in thiscase,as MPC's load projections did not form the basis of the Board's decision. We further note that, in the final 

### EIS, the Department specifically states that MPC's load projections did not control its decision and discusses the discrepancybetween the projections and actual need: "The Department is not basing its decision



## - -- - regarding the need for an additional linetoBig 

## ---- --- Sky on the accuracy of the applicant's load pro7.- 

## -- -- jectlons forBig Sky. A comparison of Table 2, 

## --- which contains the historical peak load data for Big Sky, with Big Sky projections shown inTable 3-7 of the Draft EIS (page 23) demonstrates that growth 

### is not occurring as projected. Table 2 data indicate that the peak load for winter 1975-1976 willlikelybe about 9048 KW, the same as the 1974-1975 winter peak. The projected values from Table 3-7 of the Draft EIS 

### were 10,950 KW for winter 1974-1975 and 12,455 

### KW for winter 1975-1976. With 

### respect 

### to comparisons between the actual Big Sky peak loads and the applicant's projections, the applicant has stated: 

### "'The construction schedule of Big Sky must be considered when analyzing load projections

# . The estimates prepared by 

### Mr. Hildreth (of MPC) were based on information supplied by Big Sky which showed construction of over 700 condominium units and over 50 residences by the 1975-1976 season. The Draft Impact Statement, Clyde Park-Dillon, on Page 21, indicates that 37 homes have been built to date and 564 condominiums built to date. (MPC March 15, 1976).' "The



## -precise timing of development atBig Sky and 

## -- 

## - the finalpeak loadtowhich it willgrow are 

## - -- 

## ---- not certainties. However. themaior con

## - sideration

## - atpresent is that additional 

### -- transmission capacity

### to Big 

### Sky is already 

## -- 

# - needed." ( ~mphasis added.) In the final 

### EIS in the instant case, we note the Departnent did address the need for additional power atBig 

### Sky:"With respect to Big Sky, Department studies indicate that Big Sky peak demand has in the past reached the capacity of the existing 69 KV line. Table 3-1 on page 13of the Draft EIS Lists the capacity of the Big Sky-Bozeman line as 9 !4W. Table 2 contains the historical Big Sky peak demand data supplied by the applicant. The Big Sky load atthe Jack Rabbit substation, which is the total Big Sky load (MPC March 15, 1976), was 9048 KW in December 1974, December 1975, and January 1976. Because

# - thecapacityof the existinq linehasbeen reached, and because 

### --- growthectricaldemand

# - willcontinue 

### -- atBig Skv the~epartment must recognize the need for 4! 

### - 

## --- addrtional transmission capacity

## -- to Big 

### Sky." (Emphasis added.) The final EIS

### also reflects thatother alternatives 

### were examined: "The need foradditional transmission capacity



## --- toBig Sky, which the Department inthis

### case 

### ----- acknowledges, does not necessarLlyindicatea -7 

### needfornew-transmission lines. Other alter

## --- natives exist: additionof voltage compensation equipxent, upgrading the existing lineby increasing conductor sizewhile retaininq the existing Goltage level, and rebuilding the existing line ata higher voltage level. Neither of the first

### twoof these alternatives would provide sufficient capacity to meetthe peak projected long-term demand atBig Sky, nor would a combination of the two. Their implementation would therefore mean unnecessary additional expense to allMontana Power Company electrical consumers. Either upgrading the existing line to 161 KV 

### or building a new 161KV linewould result in less energy 

### loss during transmission 

### (seepage 59 of the Draft EIS)

## ,and provide capacity beyond the projected maximum peak power demand of 32 MW atBig Sky. Constructionof a new 161KV transmission line 

### ----- is themost appropriatealternative, however, 

### to 

## --- - meet the need for the additional transmission 

## ----- capacity (see Section I.C. 3.)

# ."(Emphasis added.) For the foregoing reasons we hold that the Environmental not Impact Statements in this 

### case are/grossly insufficient 

### as 

### a matter of law in their treatment of the need for and alternatives to the proposed transmission line. The primary function of the EIS is 

### to provide the decision-maker with environmental reports sufficientlydetailed 

### to allow a knowledgeable judgment and 

### to allow public feedback in the development of that information. We cannot say that the Board's decision

### was arbitary, capricious



### or clearlyerroneous in view of the EIS1sand documents that 

### ithad before it. Appellants next attack the EIS's on the grounds that they failed to address

### or discuss the alternative of a second 69 KV linegoing through the GallatinCanyon in addition to the existing one. Appellants contend that this a1 ternative came into being when it developed during the hearings that the additional



# . 15megawatts projected by MPC was to serve only peak demands at peak ti~nes of the year. Hearings ofEicer ~ndriolo suggested the possibility of two 69 KV lines to the Board in the September 16, 1977, hearing. In the draft EIS, we find there is consideration of higher kilovolt lines being routed from the Bozeman-Hot Springs substation through the Gallatin Canyon to Big Sky. The Department found, howe*rer, that sole reliance on one substation would present reliabilitydisadvantages (incase of an outage atthat substation) which would not be present in a transmission line from Dillon 

### to Ennis to Big Sky. Two 69 

### RV lines from Bozeman 

### to Big Sky would suffer the same infirmities as a higher kilovolt linealong the same route. The Dillon area receives 

### its power from three different

sources and, in an emergency, Big Sky could be served by the Madison hydro plant near Ennis. 

### In case of an outage atany one substation, electricity from the other 

### areas could be drawn upon to prevent a total pwer failure. The fact that the EIS's did not specifically consider the possibility of a second 69 KV line through

### alla at in Canyon does not render them insufficient as a matter of law. Again, it 

### is not required thatan agency perform

an exhaustive study of everypossible alternative: "What is required is information sufficient 

### to permit a reasoned choice of alternatives 

### so far asenvironmental aspects areconcerned

# ." NRDC v. Morton (1972 D.C.Cir.), 458 F.2d 827, 836. Appellants further contend that the Department should have addressed the "no actiona alternative in considering

### MPCVspro-\ posed a1 ternative, It is clear that agencies must consider the "no action" alternative, see Poteat, supra, and Life of the Land v, Brineqar, supra. However, this claim of appellants is similar to that attacking the Departmentq s purported acceptance of MPC's load projections and our response thereto 

### is relevant here. It is 

### clear



## ... that the Departxient has correctly reversed its earlier psition in that it now considers ways that the need for 

### a proposed facility can be eliminated, ARM, section 36.7.304(1) (b)(ii)& 

### (b)(B), supra. Here the Department implicitly determined that the "no action" alternative would not be satisfactory, 

### is as in the final EIS this/stated. "The current need foradditional electricity at



## - -- Big Sky has been established, and according

# to - -- the Sky Master Plan, the corporation desires increased development, and, hence, increased electrical consumption

# ." (Emphasis added.) Appellants next challenge the EIS's on the ground that theydo not contain an adequate cost/benefit analysis, viz., the Department should have considered the relative costs and benefits of the proposed facility in comparison with available alternatives. Appellants quote House Joint Resolution No. 73 which provides in pertinent part. "That all agencies of Stategovernment are hereby directed to achieve forthwith the full implementation of the Montana Environmental Policy Act including the economic analysis requirements of Sections 69-6504 through 69-6514



# ..

# .and aBE IT FURTHER RESOLVED, thateconomic analysis shall accompany environmental impact statements asrequired by the foregoing Sections of the act and shall encompass an analysisof the 

### costs and benefits to whomsoever they may accrue, including considerations of employment, income, investment, energy, the social costs and benefitsof growth, opportunity 

### costs and the distribution effects ,

# .."

A joint resolution is not binding as law 

### on thisCourt, but we give it consideration as a clearmanifestation of the (1959)

### , legislative construction of MEPA. State v. Tbomey/ 135Mont. 35, (19261, 335 P.2d 1051; State ex 

### rel. Jones v. Erickson/ 

### 75 Mont, 429, 244

### The cost-benefit analysis required by MEPA, as construed by the legislature, encompasses a broad consideration of several factors categorized in House Joint ResolutionNo. 73,approved March 16, 1974. A reasonable cost-benefit economic analysis undertaken pursuant to these criteriawould, in effect, accomplishmost of the purposes sought to be served by an environmental impact statement. Appellants concede,however, that the Department's draft EIS undertakes an analysis of the indirect costs and benefits of MPC's proposal although not of the type appellants suggest. Neither the Siting Act nor MEPA explicitly requires such type of analysis. It should also be noted that after the draft EIS appeared, the Department promulgated rules which require EIS's prepared by the Department to include the following: "(e) economic and environmental benefits and costs of the proposed action (ifa benefit-cost analysis is considered for the proposed action, it shallbe incorporated by reference or appended to the statement to aid in evaluating the environmental consequences); 

### "(f) the relationship between local short-term uses ofman's environmentwith the effects onmaintenance and enhancement of the long-term productivity of the environment;" MPC argues thatMEPA does not require a formaland mathematically expressed cost-benefit analysis,citing Cady v. Morton

(9thCir. 1975), 527F.2d 786. On thispoint we hold therehas been sufficient compliance with MEPA so that the EIS is not insufficient as a matter of law. Although this area could have been more fully explored by the Department in preparing the EIS, 

### the ETS's, 

### when viewed in 

### their entirety, sufficientlyapprised the Board members of the project's cost and benefits to enable the Board to render a knowledgeable decision.Appellants next charge that

### a deficientEIS cannot be rendered sufficient by reference to the record outside the documents. The trial court concluded that 

### "

# ..

# .the entire SitingActprocess and the Board's decisionbased upon the entire record is the functional equivalent of an Environmental Impact Statement." e. Since we have held that the environmental impact statements are not insufficientas a matter of law, we need not address nor determine the issue of functional equivalency. In sum, ule hold that the record before us establishes that the Board*sdecision was not clearlyerroneous, arbitrary

### or capricious; that substantial evidence supports the Board's findingsand order; and that appellants rights

### were not substantiallyprejudiced! We observe that tested by hindsight, 

### it is not uncommon 

### to uncover technical shortcomings in an environmental impact statement 

### or to point out areas therein thatmight have been investigated 

### or analyzed in

### more detail. However, where appellant's rights arebeing prejudiced by substantial deficiencies in an EIS, it is 

### no less an obligation of appellants to spell out in some detail such deficiencies to enable the Department to correct the same prior 

### to the Board hearing and adjudication which was not done here. Otherwise the whole processof certification would be needlesslydrawn out and postponed to the point that such certification would become economically prohibitive, a mockery, and illusory. With regard 

### to the second issue (whether the Board's findings, conclusions and Certificateof Environmental Compatability and Need are statutorilyadequate and supported by the evidence), we reiterate the circumscribed nature of our standard of review under MAPA. 

### We willreverse 

### or modify the decisionbelow if the judgment is clearlyerroneous or arbitraryor capricious

### or characterized by an abuse of discretion, Section 2-4-704(2) (e) & (f)

## , MCA. InWestern Bank 

### of Billings v. Montana\ StateBanking Board (1977), 174Mont. 331, 340, 570 P.2d 1115, 1120, we state: "This Court has repeatedly held that its function on appeal is 

### to determine whether there is substantial evidence in the record to support the judgment. Strong v. Williams (1969), 154 Mont. 65, 460 P.2d 90." Appellants' contend therewas insufficient evidence in the record on the need for a 161 KV line in the Upper Madison/ Lower Ruby valleys and at Big Sky; that therewas no evidence 

### to support the finding and conclusion that the proposed line and routing constituted the minimum environmental impact; that the Board failed to comply with MAPA inissuing its findingsof fact, and conclusions of law; and that the Board's Certificateof Environmental Compatability and PublicNeed violates section 75-20-303(3), MCA, of the SitingAct. Appellants firstcontend that there was insufficientevidence of need for the 161 KV line in the Upper ~adison/~ower Ruby valleys. The Board's finding of need regarding this 

### states as follows: "Although the need for the Bozeman 

### to Ennis and Dillon segment of the transmission facilities is not as immediate as the Gardiner-Clyde .-

# - -, Park seaments of the link. existinatrans- - -- 2 -- - mission facilities inthe ~ub~ and Madison 

## ---- Valleys arereachins theirca~acitv limitsand 

## - 

# -- - with population growth 

## - and increased electrical demands due to intensive sprinkler irrigation a 

## -- definiteneed existsforan additionalreliable 

## --- electrical transmission facility. The completion of thisleg of the project 

### also provides for a fully integrated electrical transmission system to serve the entire area. Conversion of existing facilities in the Madison and Ruby Valley areas would provide only short-term solutions thatwould result in economic waste. The best long-term solution 

### to the electrical needs of the area and projected growth patterns is achieved through a 161 KV system proposed by the applicant with the 69 KV system from migrant to Gardiner

# ." (~mphasis added.) Appellants concede that there is evidence 

### to support the underlined portion of the above finding but argue that there 

### is

no support 

### for the contention that 

### a 161 KV facility 

### is requiredto meet these needs. Although there was a substantial con£

### lict in the record concerning the amount of power actually needed in the Upper Madison/Lower Ruby valleys, there was substantial evidence 

### to support the Board's decision. It was the function of the Board 

### to resolve these conflicts and we may not substitute

ourjudgment for thatof the Board on the weight of the evidence 

## .-

- on questions of fact, section 2-4-704 (2), MCA. Substantial evidence supported the Board's determination that a 161 KV facility

was needed in the Upper Madison/Lower Ruby valleys. The record 

### is replete with facts indicating that the existing transmission lines 

### were overloaded; that only

### a 161 KV linewould provide long-term, cost-effective service and that the needs of Vigilante Electric Cooperative which used MPC electrical transmission lines required a 161

### KV line. Appellants next contend that there was insufficient evidence of need for a 161 KV line 

### to Big Sky and that the evidence does not support the following findingsmade by the Board; that available load growth information forMPC's systems supports their forecast covering future load growth forboth peak and average energy; that conservation activities willnot materially reduce the demand forpower in the service area; that the benefitsderived from the utilizationof 

### waste heat do not outweigh the advantages of the electric transmission line; thatnew technolog

### ies (undergrounding, on-site generation, 

### solar energy, wind power and total energy systems) have not reached a point where they present a feasible economic and environmental alternative to

. the proposed facility; and that there 

### are no viable sources of alternative energy. Wedisagree. Wehold there was substantial evidence to support the Board

## 's findings. The Board's finding No. 17 contains underlying facts (which 

### were before the Board) from which the Board could conclude that therewillbe significantfuturedevelopment and consequentelectrical need atBig Sky as

### well as the Gallatin Canyon area 

### as

a whole (which willalso be served by the proposed line): "That the Big Sky Resort and Gallatin Canyon area can be considered asa separate area for growth consideration and projections. Big Sky's master plan shows a projected 2,700 condominiums and 1,263 lots. Atpresent, only21%of the condominiums areconstructed and 52%of the lots 

### are developed while not allof the.condominiums have been sold 

### or are in use. In addition, Big Sky is based on an '.all 

### electric'' concept and electricity is needed for the hostels, medical center, firedepartment, restaurants and other commercial facilities as well as the ski lift, swimming pools and golf course. While growth of theBig Sky facilityhas declined considerably- 

## -- 

## - due to theeconomic market, futuregrowth can be 

### --- -- anticipatedof a substantial nature. Inaddi- T- 

### -- tion

# to theBlg Sky resort, satellitedevelop

## ----- merits such as ICBI which has purchased 45 acres 

### --- 

## -- and has an optionon 111 acresnear Big Sky 

## --- 7- 

## --- plans 

## - 200 residentlal condominiums, together with shopping 

## - and commercial facilities. In view of thisactivity, additionaldevelopmGt in 

### -- - theGallatinCanyon areacan alsobe 

## --- anticipated." (Citationsomitted--emphasis added.) In finding No. 18, the Board noted that the projections had 

### twice been revised due to adverse economic conditions but stressed the increased needs of the GallatinCanyon area and other areas adjacent 

### to Big Sky. Next, there was substantial evidence adduced atthe hearing from which the Board could conclude thatconservation activities would not materiallyreduce the demand forpower. Appellants urge that twice asmuch insulation could cut the heating load atBig Sky in half. However, one witness stated that the Big Sky condominiums 

### were better insulated than 

### most Montana buildings. From the design plans of Big Sky, which 

### were contained in the draft EIS, the Board could have reasonably concluded that conservation practices atBig Sky had progressed 

### to such a point thatmore of such practices would not materially reduce the need for 

### more power. The Board made the following findings with regard to the

use of waste heat and on-site electrical generation: "20. On-site generationby 

### a gas turbineZ generator 

### or diesel power generation with utilization of waste heat has been proposed by the Montana Wilderness ~ssociation asan alternative for a power line to Big Sky. Fuel 

### costs

# -- foron- sitegenerationswould be fourteen 

### timesasmuch 

# - -- asfuel costs associatedwithproduction 

### - of aectrl'cit ata central station such as Co strrp Further, on-site generationwould not



# +-- re1ieve-the reliability problems which would be relieved by a loop systemcoming in from the Ennis area and connecting with the existing line up the Gallatin Canyon. Nor would :it have the benefit of serving the related developments in the area such asICBI and other developments in the Gallatin Canyon area. Although utilization of waste heat apoears 

### tobeatTrethat

- 

## - 

# - L a. 

### --- should be considered infuture developments, 

## - the benefitstobe derivedtherefrominconnection 

# -- with theBlq Sky project arenot

## so significant 

## ---- --- as

### tooutweigh the advantagesof theelectric 

### -- 

## - -- transmission line. "21. Inview of the energy crisis inthepetro

## ---- -- leum industrv it is not feltthaton-site - - --4 

## --- generation would be a feasiblelong-term alternative. 

### ~ai= emphasis 

### is beinq placed - - upon util ization-of electrical power without the undue consumption of our natural petroleun resources and on-site diesel 

### or gas turbine generating facilitieswould be.detrimental 

### to thispolicy. Coal would not serve as a feasible alternative foron-site generation due 

### to the transportation requirements and environmental problems encountered in an 

### area of thistype by the utilization of coal for the production of electrical energy. No available hydroelectric 

### site exists in the general 

### area." (Emphasis added.) In finding No. 28, the Board found that, although new technologies such asundergrounding, 

### solar and wind power might be used to minimize adverse environmental effects, the development of the same had not reached a point where they presented a viable economic alternative 

### to MPC1s proposed facility. These findings

### were supported by evidence of fuel 

### costs from which the Eoard could have concluded thaton-site generation

. was not 

### a financiallyfeasible alternative. Similarly, evidence thatwaste heat in a total energy system is used indowntown Manhattan and in several buildings inMissoula does not require the Board to accept thatmethod 

### as desirable atBig Sky and therefore reject the proposed transmission line. The 

### same reasoning obtains for the alternatives of 

### solar and wind power as well. Appellants related attackon 

### the ~oard's findings that* I

I -. \ there 

### are no viable sources of energy 

### to replace thatwhich would be provided by the electrical transmission line is disposed of by these considerations also, 

### i.e. the Board 

### is not bound 

### to recommend that Big Sky use alternate sources of energybecause others have used them success£ ully. Appellants further challenge the findingsrelating 

### to the 

# .- route for the transmission linewith the least amount of adverse environmental impact. The Board found that on the Bozeman 

### to Ennis 

### to Dillon segment of the line, the preferred corrider route

was that of the applicant's, while on the Big Sky segment of the line, the Ennis-Jack Creek-Big Sky corridor was the 

### most preferred route, the Ennis-Cedar Creek-Big Sky 

### corridor the next nost preferred corridor and the Gallatin Canyon route, from

aozeman to Big Sky, the third most preferred route. Appellants claim that such findings are either unsupported by the evidence



### or entirely contrary to it. Wedisagree. For example, the Board had before it evidence showing the Gallatin Canyon areawas

### more highlypopulated than the Jack Creek or Cedar Creek area. Thus a bigger transmission line through GallatinCanyon area would be viewed by



### more ,people and be aestheticallyless pleasing. The Board also had before it charts and statements showing the number and duration of outages that had occurred atBig Sky inrecent years and the fact that any transmission line through Gallatin Canyon would probably use the Bozeman-Hot Springs substation. Thus an outage atthat substation would have a considerablygreater impact on Big Sky than if the 

### resort were served by another energy resource aswell, i.e. electricity coming from the Dillon/Ennis area through Jack Creek 

### or Cedar Creek. The draft

. ETS contains additional support for the Board1s conclusion favoring MPC1s proposed route from Bozeman to Dillon. Appellants next argue that the Boardls findingsand conclusions fail 

### to comply with sections 2-4-623(1),(3),(4), MCA,

### of YAPA which provide: 

### "Finalorders

## -- notification --availability. (1) ,

# .

# .Findings of fact, if set forth in statutory language, shall be accompanied by a concise and explicit statement of the underlying facts supporting the findings.

"(3) 

### Each conclusion of law shall be supported by authority or by a reasoned opinion. "(4) If, in accordance with agency rules, a party submitted proposed findings of fact, the decision shall include a ruling upon each proposed finding.

### " Appellants contend that the findings are in violation of section 2-4-623(4), MCA, because allparties here submitted proposed findings of fact and conclusions of law and the Board did not explicitly rule on each finding and each conclusion. This argument exalts form over substance. We do not construe the statutes so narrowly or technically. To do sowould place an

onerous burden on the Board, especiallywhen it is remembered that usually these types of hearings involve multiple parties representingvarious interests and each party normally submits its own findings and conclusions. The findings and conclusions here implicitly rule on the findings and conclusions submitted by the parties and we find them to be sufficient in this case. Moreover we have previously held that section 2-4-623(4), MCA, does not require a separate,express ruling on each required finding as long as the agency's decision and order in such proposed findings are clear,Montana Consumer Counsel v. Public Service Commission and Montana Power Co. (1975), 168 Mont. 180,

Appellants also claim that a number of the Board's findings merely "parrot"several sections of the Siting Act without setting forth the underlying facts, in violation of section 2-4-623(1), MCA, supra. We agree that some of the findings do track several statutes in the SitingAct. This alone does not-0-- '. render them insufficientprovided the underlying factual basis is apparent. While each finding 

### is not immediately followed by the supporting underlying facts, when the findings and decision are viewed asa whole, it willbe seen that the findings are adequately factuallysupported. It would be an unnecessary and idle act to remand for correction of any technical deficiency where

p. the record discloses an underlying factual basis for each finding. The law does not require idle acts. Section 1-3-223,

Appellants contend thateach of the Board Isconclusions of law are not supported by authority 

### or by reasoned opinion and therefore violate section 2-4-623(3), MCA, supra. We disagree. Again, while it 

### is true that each conclusion of law 

### is not immediately followed by an authority 

### or opinion, such is not required. The conclusions here 

### are sufficiently supported by reasoned opinion 

### to render their basis reasonably ascertainable. These conclusions are supported by the findings of fact which 

### we have previously approved. Appellants1alsoargue that the Board IsCertificate of Environmental Compatabili ty and Public Need violates section 75-20-303(3) 

## ,MCA, which provides: "(3) Any certificate issued by the board shall include the following: "(a) an environmental evaluation statement related 

### to the facilitybeing certified. The statement shall include but not be limited 

### to analysisof the following information:

a(i) the environmental impact of the proposed facility; "(ii)any adverse environmental effectswhich cannot be avoided by issuance of the certificate; "(iii)problems and objections raised by other federal and 

### state agencies and interested groups; "(iv)alternatives 

### to the proposed facility; "(v) 

### a plan formonitoring environmental effectsof the proposed facility and 

### "(vi)a time

### limitasprovided insubsection (41,iu'ring which construction of thefacilitymust be completed; "(b.) a statement signed by the applicant showing agreement 

### to comply with the requirements of thischapter and the conditions of the certificate

# ."
While the pages of the Certificate itself do not comply with the above statute, we note that, in the second paragraph, the Certificate fully incorporates by reference the Board

### 's findings, conclusions and order. Taken together these 

### two documents fulfill the requirements of section'75-20-303 (3), MCA, supra. Directing 

### our attention to the third issue, appellants argue that they 

### were denied the due process guarantee of 

### a fair and impartial tribunal because of Sabol's participationinthe proceedings both as a board member and a - hearing officer. Appellants allege that Sabol had a pecuniary interest in the outcome of the 

### case because he was retained aslegal counsel by Ski Yellowstone, Inc., during his term of chairrnan of the Board of Natural Resources and Conservation. Appellants claim this created a conflict of interest in thatwhatever the Board decided in connection with providing additional electrical transmission facilitiesand services 

### to Big Sky would establish a precedent in any future facility siting request concerning Ski Yellowstone, Inc. Appellants' second ground forSabolls alleged bias involved a newspaper articleon February 15, 1976. 

### In the 

### article Sabol was quoted as saying that 

### some environmental groups


### were losing credibilityby opposing alldevelopment projects and MWA was specificallymentioned. The 

### article appears below: 

### "SOME ENVIRONMENTAL GROUPS LOSING CREDIBILITY, SABOL SAYS By Larry Wills Chronicle Staff 

### Writer "The Chairman of the 'Board of Natural Resources has charged that 

### someenvironmental groups are losing credibility in opposing alldevelopment projects. Joe Sabol, a Bozeman attorney, and head of the volunteer stateboard that reviews allmajor utility construction charged that 

### some groups 

### are automaticallyopposed 

### to alldevelopments nonatter how good 

### or bad they may be. '1 think it is 

### time that these groups re-assess their positions on 

### some proposals, he said. 'Some proposals aregood, and 

### some arenot, but they areopposed to allprojects, and are creating a polarization of attitudes, Sabol charged. The attorney said the opposition to allprojects is a loss of perspective and concentrates on the trivia' that surrounds a project, Sabol made his charges during an informal press conference concerning demands that he resign his resource board position due to conflict of interest. The charges from the Montana Wildlife Federation and the Nontana Wilderness Association stemmed from Sabol's working for the Ski Yellowstone development, and 

### also sitting as chairman of the resource board. Sabol said flatlyhe saw no conflict, and would not quituntil he believed there was a conflict of interest. He said he did not take the job as Ski Yellowstone attorney until he was assured that the position was not in conflict, and that the project itself was satisfactory in hisown mind. He also said he received assurances from the governor that the 

### twopositions would not be in conflict. Sabol also said the SkiYellowstone issue has never come up atboard meetings, and thatno Ski Yellowstone official has ever approached him as a member of thatboard. The attorneywas asked to quithispost inlet- 

## - - ------ ters that the MWA and Wildlifegroup sentto 

## ----- -- Gov. Judge. 

# - Sabol defended the resort as one that is better than most in alleviating bad environmental effects, and said the proposal should be recognized for its accomplishments. Referring to 

### twoenvironmental groups' opposition of the 

### resort, Sabol said, 'They can't find anything wrong with the 

### merits of Ski Yellowstone, so they attack the people

## ,' The letters were sent 

### to Judge afterSabol wrote the governor and Wes Woodgerd, head of the Fish and Game Commission objecting 

### to 'propaganda' against the resort planned on the north shore of Hebgen Lake. Sabol objected 

### to a grizzlybear presentation which the attorney said implied the 

### resort would interfere with the bears' habitat. Sabol charged there 

### is no proof that the Hebgen 

### area is habitat for the bear. Alsoquestioned was a Fish and Game employee's 'free lancing' articles while on the state payroll. The attorney referred to articles printed in a Denver paper against the resort. The net result of the three-year delay for the resort, Sabol said, 

### is that it is driving other developers out of the state. The proposal is still under study by the GallatinNational 

### Fotest. 'The legislature and the environmentalists have done what they 

### set out 

### to do, minimizedevelopment,

## ' he said

# ." (Emphasis added.) Appellants also claim thatduring a recess in the Board hearing on September 24, 1976, Sabol instructed the attorney for the Department of Natural Resources and Conservation not 

### tso cross-examine the witnesses for MWA because 

### its counsel was trying to make a record for appeal. Appellants argue this

?. demonstrates actual bias on the part of Sabol, We note that Sabol participated ashearings officer for the Board from April 10, 1976, to September 1, 1976. During this period 

### twopreconference hearings 

### were held on April 10, 1976, and Nay 12, 1976. Atthe second prehearing conference, Rick Applegate, a MTJA and EICmember, filed an a£fidavit seeking disqualification of Sabol asa hearing office and member of the Board considering MPCvsapplication. On September 1, 1976, Sabol removed himself ashearings officerbut declined 

### to remove hiaself as a member of the Board. The Board voted unanimously 

### to deny the attempted disqualification. Appellant 

### cites Withrow v, Larkin (1975), 421 U.S. 35, 95 S.Ct. 1456, 43 L.Ed.21 712, for the proposition that the constitutional due process guarantees apply 

### to administrative agencies

aswell 

### as the courts. While it is true that language supporting thatpremise appears inWithrow, the actual holding of that

### case involves the question of whether the Wisconsin Doctors Examining Board had the power to investigate unprofessional conduct 

### as well

asadjudicate it. Nowhere inWithrow do 

### we find any facts 

### similarto the case atbar, 

### i.e., where the alleged bias of one of the decision makers 

### is at issue. Appellant also cites Taylor v, Hayes (1974), 418 U.S. 488,94 S.Ct. 2697, 41L.Ed.2d 897, for authority that actual bias 

### is unnecessary and that the appearance of bias is sufficient. 

### he facts inTaylor were that at the conclusion of a Kentucky murder trial, the presiding judge sentenced one of the lawyers 

### to four and one-half years in prison for nine counts

### of contemptoccurring during the trial and barred him from practicing before that court. The Supreme Court found that 

### to so 

### rule without 

### a notice and hearing violated the lawyer's procedural due process rights. The court also found that the lawyer's contempt 

### trial should be before a different judge because the original 

### trial judge had become embroiled in a running controversy with the

C. lawyer.This Court has stated its position clearlywith regard to biased decisionmakers: 

### "[Itis] thiscourt's desire to zealouslyguard the right to Eair and impartial hearings. It 

### is not necessarily the factof bias that concerns us but the possibili-hat bias might exist

# . . "[W]e do warn

# .. . all administrative boards and tribunals that they should zealouslyguard against any appearance of unfairness inthe conduct of their hearings." Stateex rel. Fish v. Industrial Accident Board (1961), 139Mont. 246, 248-49, 251, 362 P.2d 852, 853, 855. Inc

# . Accord, Graham v. Tree Farmers/(l963), 142Mont. 483, 385

Nonetheless, the holdings both inGraham and Fish, supra, state that substantial rights of the aggrieved party must have been prejudiced before the court willcensure an administrative board for the conduct of a hearing. The Supreme Court inGraham, supra, stated: "We 

### are constrained here, while disapproving the use of Mr. wood 

### as 

### a hearingsofficer, inview of the preponderance of proof in thisrecord, to failto 

### see where

### any differentresult could be 

## --- - reached and forthatreason 

### we feelthe

### error to 

## - --- be such that it does not call fora reversal

### and 

## - ErE 

### heariE7sFfFaZTEeclaimant is con- 

# - ---- cerned. (Emphasis added.) 142Mont. atT9r 385 p.2d at 90. In taking 

### a closer look at the possible in£luence of Sabol's activitieson the Board's ultimate decision, 

### we find the following: Sabol presided at the firstprehearing conference on April 10, 1976, at which time the routing and need for the transmission lines 

### as well 

### as witnesses and discovery were discussed among the various lawyers. Sabol 

### also presided 

### overthe second prenearing conference on May 12, 1976. Atthis conference the lawyers exchanged witness 

### lists and discussed depositions, the order of appearance of the parties and deadlines for exchanging interrogatories and written statements. During the summer of 1976, the Department moved 

### to bifurcate the hearing into 

### two hearings. Also, both MWA and MPC.moved 

### to have the Board view the Gallatin Canyon area and MWA added the Ennis to Big Sky route as well. All three motions were argued atthe September I, 1976, hearing and the motions 

### to view 

### were granted but the motion to bifurcate was denied. It was at this September 

### 1 hearing that Sabol removed himself as hearings officer with Andriolo being substituted for him. The actualhearingson the issuance of the Certificateof Environmental Compatability and PublicNeed took place on September 23 and 24, 1976. It was during a 

### recess at the September 24 hearing that Sabol allegedly told the Department attorney not 

### to cross-examine the MWA witnesses. Saboltsterm 

### as

a Board member expired on December 31, 1976. On February 9, 1977, Andriolo issued an order that all parties' proposed findings of fact and conclusions of lawbe submitted by March 1, 1977, with arguments thereon on April 21, 1977, before the Board. On September 16 and October 28, 1977, the Board discussed.and approved Andriolots findings and conclusions. The statutesrelating to the Board's and hearings examiner'sduties 

### are set out below: "(9) At the conclusion of the hearing, the hearing examiner shall declare the hearing closed and shall, within 60 days of thatdate, prepare and submit to the board and in the case of a conjunctive hearing, within 90 days to the board and the board of health ordepartment of health proposed findingsof fact, conclusions of law, and a recommended decision

# ." Section 75-20-220(9). "75-20-301. decisionof board--findings necessary forcertification. 

### (1)Within 60 days after submrsslo 

### n of the recommended decision by the hearing examiner, the board shallmake complete findings, issue an opinion, and render adecision upon the 

### record, eithergranting 

### or denyinq the application 

### as filed 

### or granting it upon such 

### terms, conditions, 

### or modifications of the construction, operation, 

### or maintenance of the facility as the board considers appropriate

# . "

While we do not approve of the alleged directions not 

### to cross-examine the MWA witnesses, we fail to 

### see how, on the record before us, the Board would have reiched 

### a differentresult had Sabol removed himself entirely from the proceedings, Graham, supra. He did not participate in the Board's deliberation 

### or discussion of the final decision, asevidenced by sections75-20-220(9) and 75-20-301(1), 

### set out above. Under these statutes the Board's deliberationsoccur after the hearings examiner submits hisproposed findings and conclusions and a recanmended decision. Thiswas done in 1977, afterSabollsterm on the Board expired. The Board's decision

### wasnot rendered until October 26, 1977, and carried with fourBoard members voting in favor of MPC1s application, onemember against it, and the chairman did not vote. We fail 

### to see how Sabol's alleged biasprejudiced the substantial rightsof the appellant. Similarly, we fail 

### to see how Sabollsconnection with Ski Yellowstone, Inc. resulted in the appellants1receiving any 

### less than a fairhearing and decision. The argument that a "precedent" willbe setby granting MPC its transmission lines 

### to Big Sky 

### is tenuous atbest and the fact that 

### a developer must bear the first

### cost of conservation alternatives in lieu of additional electrical transmission facilitiesxdoes not persuade us that

Sabol had a pecuniary interest in the present proceedings. With regard to the newspaper article appearing in the Bozeman Daily Chronicle, we note that none of the 

### cases cited by appellants (which deal with a member of a hearing panel criti-

. cizing a party alreadybefore it)are on point in the instant

case. 

### Here Sabol's comment appeared February 

### 15, 1976, and theC -s firstprehearing conference was not until April 

### 10, almost~two months later. They do not reflect any prejudgment of the issues

, placed before the Board in thiscase. Appellants argue that Sabol improperly interfered with the conduct of the September 24, 1976, hearing by the alleged ex 

# - partecontact in the lobby during one of the 

### recesses with Department of Natural Resources and Conseryation attorney MacIntyre. However, the depositions of Doug MacIntyre and Applegate indicate that appellantswanted the DNRC to conduct 

### "friendly cross-examination", i.e. the MWA and DNRC occupied similarpositions in the proceedings and 

### were aligned on the corridor issue--50th advocated the existing Gallatin Canyon corridor rather than the Jack Creek/Cedar Creek route. We have previously held that no substantial rights 

### are prejudiced by a hearing officer's decision 

### to limitcross-exanination 

### to those issues on which routes 

### are adverse, because the "cross-examination" of nonadverse parties in realitybecomes just more direct examination. Northern Plains, supra. Although neither party has raised the issue, section 75-20-220(1), MCA, 

### merits some discussion. That statuteprovides inpart: "75-20-220. Hearing examiner--restrictions-- duties. (1) If the board appoints a hearing exaniner to conduct any certification proceedings under thischapter, the hearing examiner may not be a member of the board, an employee of the department, 

### or a member 

### or employee of the department of health 

### or board of health." Under this statute, a hearing examiner may not be 

### a member of the Board and Sabol was chairman of the Board 

### atthe timehe was appointed hearing examiner. However, 

### close examination of the enactment of the above statute and the factsof thiscase reveal that the statutedid not apply to thisproceeding. MPC filed 

### its applicationon June 6, 1974, for 

### a 161 KV line from Clyde Park 

### to Dillon. On June 30, 1975, MPC filed an amendedappLication increasing.the 

### total mileage of transmissione 

# -- under theamended application, lines requested and/the linewas 

### to consist of the five segments set out atthe beginning of thisopinion. The Department, by letter dated May 30, 1975, agreed to treat the amended application as relating back to the original (June 6, 1974) application. That 

### letter contained the following statements: "The project application shall

# ..

# .be deemed 

### to have been filed on June 6, 1974. 

# .

# . [TIhe Department

# . ..will not treat thez+amended applications asconstituting a substantial change and, therefore, willnot treat the amended applications as a new application.

# .."

Section 75-20-220(1) was included aspart of the amendments to the Utility Siting Act and it was expressly provided that those amendments would onlyapply to applications received by the Department afterJanuary 1, 1975. 1975 Laws, Ch. 494, 25. MPC's application was filed on June 6, 1974, and, due 

### to the rela tionbackdiscussed above, the amended application was deemed 

### to have been filed on thatdate 

### also. Thus the statute 

### is not applicable to the proceedings here, Furthermore, the parties and the hearing examiner agreed that they were operating under the Utility Siting Act and not the amendments thereto, In the transcript of the third preconf

### erecce hearing conducted September 14, 1976, 

### we find the following interchange: "HEARINGS EXAMINER: 

# .

# .. "Now the firstthing, it 

### is my understanding thateverybody is agreed that the hearing willbe conducted under the provisions of the Utility Siting Actof 1973rather than the Major Facility SitingAct which was enacted in 1975, I believe. Is that correct? "MR. WALSH [representingMPC] :That is correct.

"HEARINGS EXAMINER: And how about you, Bill? Is that agreeable to you? "MR. MADDEN [representingMWA$ : That is correct.. "HEARINGS EXAMINER: And how about you, Jim? Is that agreeable to you? "MR. 

### MOORE [representing American Fork Ranch] : Yes.

### In the transcript of the September 23 hearing 

### we also find this: RHEARINGS 

### EXAMINER: Thank you, Mr. Sabol. This is a hearing under the Utility Siting Actof 1973, and the proceedings under this, atthis hearing 

### will allbe in conformity with thatparticular Act

# ."

For the above reasons, it is ouropinion that section MCA

## , 75-20-220(l) ,/did not apply 

### to these proceedings.

t. Affirmed. 

# ~~.p.~~ Chlef Justice

We concur 

# H

Justices

Mr. Justice John C. Sheehy,deeming himself disqualified,did not participate.

### Mr. JusticeFrank B. Morrison, Jr., dissenting: I 

### respectfully dissent. The draft environmental impact statementsare grossly inadequate for failure to analyze need and explore alternative sources for satisfactionof need. Montana's Environmental PolicyAct (MEPA),section 75- 1-201,MCA, 1981,requirespreparation of an environmental impact statement concerning the followingmatters: (1) the environmental impact of the proposed actions; (2) any adverse environmental effects which cannotbe avoided should theproposal be implemented; (3) 

### alternatives to theproposed action; (4) 

### the relationshipbetween local short-term uses of man's environmentand the maintenance and enhancement of long-termproductivity; (5) 

### any irreversibleand irretrievable commitments of resources which would be involved in the proposed action should itbe implemented. TheMontana Major Facility SitingAct recognizes that certainutility "facilities,"as defined by the Act, have an effectupon the environment to the extent that construction isprohibited "without a certificate of environmental compatibility and public need" acquired pursuant to the provisions of theAct. Section 75-20-102,MCA, 1981. Section 75-20- 301(2), MCA, of theAct provides that 

### a certificate of environmentalcompatibility and public need may notbe approved by the Board of Natural Resources, except upon a finding and determinationby the Board of,

### among other things: (1) the basis of need for the facility; (2) the nature of the probable environmental impact;(3) 

### that the facility represents the minimum adverse environmental impact,considering the state of available technology and the nature and economics of the various alternatives; (4) 

### each of the criteria listed in 75-20-503. Section 75-20-503,MCA, enumeratesmore than 60 environmental factors to be studied in determining whether a proposed facility should be approved. That section requires, in part, that the followingbe considered: energy needs including growth in demand and projections of need; availability and desirability of alternative sources of energy in lieu of the proposed facility;conservation activities which could reduce the need formore energy. The Facility SitingAct imposed upon the Departmentof Natural Resources the responsibility for undertaking technical studies and evaluations of the statutorily mandated environmental factors. Section 75-20-503 and 75-20-216(4), MCA, 1981. The Departmentof Natural Resources has the responsibility to formalize its technical studies in an environmental impact statementwhich itmust file with the Board, to be used by the Board in making findings and determinations required under section 75-20-301,MCA. The "report"required of the Departmentof Natural Resources under the Facility SitingAct, section 75-20- 216(4),MCA, serves as the basic technical and evidentiary documentupon which the Board must rely inmaking its findings and determinations under section 75-20-301,MCA, as to whether a certificate should be granted or denied. Any substantial deficiencies in the required documents should invalidate the Board's findings and decision. Both the SitingAct and MEPA 

### require the Department's

### draft and final environmental impact statements to consider the need for alternatives to the proposed facility. In this case, the environmental impact statements make no attempt to consider either the need for or alternatives to a 161KV 

### facility to service Montana Power Company's projected electrical demands in the Upper Madison/Lower Ruby Valleys. The DEIS did not adequately study the need for,and alternatives to, a 161KV facility at Big Sky,Montana. The existing 69KV line servicing Big Sky has a capacity of 9 megawatts which could, withmodification, be increased to a maximum capacity of 12-15megawatts. In its application for

a certificate to construct the 161KV transmission line to Big Sky,Montana Power Company submitted that such a facility

was needed to serveprojected electrical loads at Big Sky of 30

### megawatts. A 161KV linehas a carrying capacity of 200 megawatts. The Department's draft environmental impact statements accept Montana Power Company's load growth projections without question. Neither documentmakes any attempt to evaluate the basis of the projected load. There is no analysis of the types of energy demands at Big Sky which are expected to increase and, therefore,which could justify additional electrical transmission service. Such an analysis is critical. Energy demands for heat are not constant. They occur only during the winter and are heaviest only at certain times of the day. Furthermore,energy demands for heat do not require electrical service in that they can be met through other lower grade energy sources, including better conservationpractices. Thesematters were not studied. The evidenceproduced at the hearing before the ~oard of Natural Resources disclosed that all but 5megawatts of required electricalpower could be met through conservation

### alternativesnot requiring additional electrical service. 5megawatts is well within the capacity of on-site diesel generation or a smaller transmission line. A 161KV 

### line, with a carrying capacity of 200megawatts, 195megawatts in excess of that actually needed at Big Sky, seems clearly to notbe needed. The failure of the draft environmental - 

### impact statements to address the actual need and existing alternatives renders them totally deficient. The District Court recognized the gross inadequacies in the draft environmental statements but held such deficiencies to not constitute a basis for reversal of the Board's decision. The DistrictCourt said "thatthe entire siting actprocess and the Board's decision based upon the entire record is the functional equivalent of an environmental impact statement." No authority is cited for this proposition. The Facility SitingAct requires that "the Department shallmake a report to the Board which shall contain the Department's studies,evaluations, recommendation and other pertinent documents resulting from its study and evaluation



# . . ." Section 75-20-216(4), MCA, 1981. The functionof the statement is to perform technical analysis and provide expert documentation to the Board because the Board lacks technical expertise to perform this function itself. The Federal Courts have refused to adopt the rationale here adopted by the trial court. In Environmental Defense Fund, Inc. v. Froehlke (8thCir. 1972), 473 F.2d, 346, the Corps. of Engineers argued that although discussion of alternatives in its EIS was deficient, the EIS should be considered sufficientwhen viewed against the entire record. In rejecting this argument, the 8th Circuit Court of Appeals said:

### "TheCorps. argues that despite these omissions, its impact statement should be considered sufficient because 'at every step of theway, from preauthorization studies through detailed project planning,which includes recent environmental and mitigation studies, the voices of fish and wildlife interests have been heard, considered and reported to Congress.' We disagree. Nothing less than a complete impact statement can serve the importantpurposes of section 102(c)(iii)of MEPA. As the Districtof Columbia Circuit Court stated inNatural Resources Defense Counsel, Inc. v. Morton, 458 F.2d 827, 834

(D.C. Cir. 1972), 'it is the essence and thrust of EPA that the pertinent Statement serve together in oneplace a discussion of the relative environmental impact of alternatives.

### '

"A statement which includes a detailed discussion of all reasonable alternatives to a proposed project and their effects [case citation omitted] insures that agency officialswill be acquaintedwith the tradeoffs which will have to be made if any particular line of action is chosen." The rationale adopted by the District Court to render the DEIS deficiencies harmless error,has the effect of nullifying the statutory requirement for environmental impact study. Unlike the District Court, themajority here attempts to defend the DEIS as adequate. Not even the Department which prepared the statements candefend them. Themajority admits: "TheDepartment, in its briefs to the District Court and to this Court, acknowledges that the EIS's contain no adequate consideration of alternatives to a 161KV line serving the Upper Madison/Lower RubyValleys. The Department justifies this omission by stating thatMPC failed to complywith the Siting Act and the rules adopted pursuant thereto in identifying inMPC's application the need for a facility to serve the demand in the Upper Madison/Lower RubyValleys." Themajority then proceeds to gloss over the deficiencies in a 

### style that approaches advocacy. Apparently, the law now will forgive and approve the Department's deficiencies

### that result from omissions in the Utility's application. The decision here has established a precedentwhich substantially weakens the Facility SitingAct and tends to judicially erode the environmental protection assurances afforded by the Montana Legislature. Iview the course of action now being taken by this Court to be premised upon expediency. It is true that the process is cumbersomebut had the Montana Power Companymade a completeapplication, and had the Departmentof Natural Resources thereafter rendered draft environmental impact statements in conformitywith law, these problems would not have arisen. By 

### this decisionwe reward the wrongdoers. k 

### I reqister a strenuousdissent.

### Mr. Justice Daniel J. Shea,dissenting:

I 

### join in the dissent of JusticeMorrison. Because of time exigencies, I am unable to write a more detailed dissent at this time, other than what I statebelow. Time permitting, Iwill add a more detailed statement of why I 

### dissent. The situation is thatMPC has been permitted, without a showing of need or of alternatives, to expand the power available to Big Sky from 

### a 69 KV 

### line to a 161 KV line, in a situation where even in the untested application, the MPC has projected that Big Sky will need only 30 KV. 

### The current 69 

### KV line to Big Sky has a capacity of 

### 9 megawatts. With modification, this line could be increased to a maximum capacity of 12-15megawatts. The application of the MPC, accepted without questionby the agency responsible for the environmental impact study (theDNRC), projects a need at Big Sky of 30

### megawatts. This 30

### megawatt projection

was not substantiated by the MPC application,nor did the environmental impact studymake any attempt to justify the load growth projection to 30 

### megawatts. Yet theMPC application is for a 161KV line--which has a carrying capacity of 200 

### megawatts, or almost five times the projected load growth stated in the application. As stated by Justice Morrison, all but 5megawatts could, as disclosed in the hearing,be met through application of conservation alternatives which do not require additional electrical services. How, then, can the environmental impact statementbe 

### sufficient when it fails to address the need and the existing alternatives to the projected energy demand of Big Sky? Itwas error, as JusticeMorrison points out, for the District Court to hold that the environmental impact statement could be given life by instead looking to

### the "Board's decision on the entire record," including the deficient environmental impact statement. Justice Morrison correctly concludes, on the other hand, that the environmental impact statementmust stand on its own, and here it cannot stand. Nor can I

### understand the total failure of the DNRC to demand from MPC, that it complywith the information required to be in an application for a permit. Here the DNRC admitted that the MPC applicationwas deficient, and that it did nothing to make the application sufficient. Rather, the DWRC proceeded with the environmental impact studywithout

ever obtaining and evaluating either the need for the 161 KV 

### line or the alternatives to supplying power for the projected needs of Big Sky. The fault in notmaking an adequate application can be laid directly at the doorsteps of the MPC. But the DNRC should not have started its environmental impact study until ithad a complete or substantially complete application. Furthermore, if the studywas startedwithout noticing this rather glaring omission, once noticed, it was the duty of the DNRC to notify the MPC to complete its application and to furthernotify the MPC that the study could not be finished until the applicationwas complete and the DNRC had evaluated the additional informationprovided in the application. Here thatwas not done. Rather, the DNRC proceeded with the studywithout ever compelling the MPC to complywith the clear directives of the Montana Environmentalprotection Act

as to alternatives (section75-1-201(3)

### ,MCA) and need

(section75-20-102(1), MCA). The DNRC can hardly be said to have been protecting the constitutional rights of Montanacitizens to a clean and healthy environment when it made its impact study without directing the MPC to comply, and without itself complying with these statutes. Nor did the District Court or this Court fulfill its duty by approving an environmental impact statement so glaringly deficient.