05
- 035 

### IN THE SUPREME COURT OF THE STATE OF MONTANA 2007 MT 350 QWEST CORPORATION, Petitioner and Appellee , v. MONTANA DEPARTMENT OF PUBLIC SERVICE REGULATION, MONTANA PUBLIC SERVICE COMMISSION, Respondent and Appellant.
APPEAL FROM: District Court of the First Judicial District,

In and For the County

of Lewis and Clark, Cause No. CDV 20 03
- 464 Honorable Tho ma s C. Honzel, Presiding Judge COUNSEL OF RECORD:

For Appellant: Monica Tranel, Robin A. McHugh, Special Assistant Attorneys General, Helena, Montana For Appellee : John Alke , Hughes, Kellner, Sullivan & Alke, Helena, Montana Submitted on Briefs: December 29, 2005 Decided: December 19, 2007 Filed:

_________________ _________________________ Clerk December 19 20072

Justice James C. Nelson delivered the Opinion of the Court. ¶1 Qwest Corporation (Qwest) petitioned the District Court for the First Judicial District, Lewis and Clark County , to review twoorders i ssued by the Montana Public Service Commission (the PSC) requiring Qwest to file information substantiating the accuracy of its rates. The District Court f ound in Qwest’s favor, vacated the PSC’s orders and remanded the matter to the PSC. The PSC appeals. We reverse. ¶2 The PSC presents the following issues on appeal: ¶3 1. Whether the PSC’s actions were ripe for review by the District Court. ¶4 2. Whether the investigation undertaken by the PSC in this case was subject to review under § 2
- 4
- 701, MCA. ¶5 3. Whether the PSC may investigate utilities in any manner necessary to effectuate its statutory duties. ¶6 4. Whether the PSC’s investigation of Qwest violated the PSC’s administrative rules. ¶7 Because we reverse the decision of the District Court and hold that this case i s not ripe f or judicial review, we do not address Issue 4 as it is now moot.

Factual and Procedural Background ¶8 Qwest is a regulated public utility pursuant to § 69
- 3
- 101, MCA. It o ffers regulated telecommunications services as defined at § 69
- 3
- 803, MCA. The PSC is the state agency that administers Montana laws governing rates and services of public utilities operating in Montana, such as Qwest. Pursuant to § 69
- 3
- 203, MCA, Qwest3

must file an annual report with the PSC containing information about Qwest’s annual
revenues and earnings. ¶9 On March 14, 2003, PSC issued a “Notice of Investigation” to determine whether the ratescharged by Qwest are “reasonableand just”pursuant to § 69
- 3
- 201, MCA. The PSC indicated in the notice that revenues earned by Qwest since 2001 may be in excess of itsauthorized rate of return. Qwest did not respond to the notice
. The PSC issued its “Second Notice of Investigation and Request for Information” on April 24, 2003, directing Qwest to state whether its 2001 annual report contained ac curate information, and if it did not, directing Qwest to demonstrate why by providing information in a form that would meet the minimum filing requirements contained in Admin. R. M. 38.5.2803 through 38.5.2820. ¶10 Qwest responded to the second notice on May2 2, 2003, stating that it could not represent to the PSC that the information contained in its 2001 Annual Report was accurate because Qwest was currently undergoing an external audit. Qwest pointed out that the PSC “seems to seek a specific correlation between [the information in itsannual report] and the detailed cost of service information which a party seeking a rate change would file in compliance with the [PSC’s] minimum filing standards.” Qwest also pointed out that using 2001 financial datato prepare a rate case filing for 2003 violated the PSC’s own administrative rules establishing ratecase filing requirements. ¶11 On June 16, 2003, the PSC issued its Order No. 6493 directing Qwest to submit the information re quested for the PSC’s investigation. In response, Qwest filed a Motion for Reconsideration stating that the PSC’s order was unlawful because Qwest’s current4

rates were established by previous orders of the PSC and were, therefore, prima facie lawful; because the PSC had the burden to prove that Qwest ’s rates were unjust and unreasonableand the investigation attempted to shift that burden to Qwest ; and because ordering Qwest to use 2001 financial data in a 2003 rate case violated the PSC’s own administrative rules. The PSC denied Qwest’s Motion for Reconsideration in its Order No. 6493a issued July 10, 2003. ¶12 On August 6, 2003, Qwest petitioned for judicial review under § 2
- 4
- 701, MCA (Cause No. CDV 2 003
- 464). In its petition, Qwest asserted that its current rates had previously been approved by the PSCand that the PSC’s orders unlawfully required Qwest to file a rate case reproving the reasonableness of its existing rates . Qwest also asserted that the PSC’s investigation was an unlawful attempt to shift the burden of proof in the rate case to Qwest . That same day, the PSC filed a complaint in the District Court seeking to compel Qwest’s compliance and reque sting that the court assess civil fine s and penaltiesagainst Qwest for failing to comply with the PSC’s orders (Cause No. BDV 2003
- 465)
. ¶13 The PSC mo ved to consolidate the actions and Qwest mo ved to stay BDV 2003
- 465 (the PSC ’sc om

plaint proceeding) pending the outcome of CDV 2 003
- 464 (the proceeding on Qwest’s petition for judicial review). The District Court denied the PSC’s
motion to consolidate and granted Qwest’s motion for a stay of the PSC’s complaint proceeding pending resolution of Qwest’s petition for judicial review. ¶14 In a Memorandum and Order issued October 14, 2004, the District Court determined that the issues presented were ripe for review. The court also determined that5

theP SC’s orders unlawfully imposed a rate case filing requirement upon Qwest in violation of Montana statute and the PSC’s own administrative rules. The District Court remanded to the PSC and the PSC appeals
. Standard of Review ¶15 When reviewing an agency decision, we apply the same standard as did the district court. Montana Power Co. v. Public Service Com’n , 2001 MT 102, ¶ 18, 305 Mont. 260, ¶ 18, 26 P.3d 91, ¶ 18 (citing S ynek v. State Compensation Ins. Fund, 272 Mont. 246, 250, 900 P.2d 884, 886 (1995)). Under § 2
- 4
- 704(2), MCA, a reviewing court: may not substitute its judgment for that of the agency as to the weight of the evidence on questions of fact. The court may affirm the decision of the agency or remand the case for further proceedings. The court may reverse or modify the decision if substantial rights of the appellant have been prejudiced because: (a) the administrative findings, inferences, conclusions, or decisions are: (i) in violation of constitutional or statutory provisions; (ii) in excess of the statutory authority of the agency; (iii) made upon unlawful procedure; (iv) affected by other error of law; (v) clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record; (vi) arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion . . . . In addition, questions of law are reviewed to determine if the agency’s interpretation of the law is correct. Ruby Mountain Trust v. DO R , 2000MT 166, ¶ 13, 300 Mont. 297, ¶ 13, 3 P.3d 654, ¶ 13 (citing Steer, Inc. v. Department. of Revenue , 245 Mont. 470, 474, 803 P.2d 601, 603 (1990)). Issue 1. ¶16 Whether the PSC’s actions were ripe for review by the District Court.6

¶17 The PSC assertsthat the District Court adjudicated issue s that the PSC neither decided at the agency level nor argued to the District Court. H ence, the PSC argues that the issues adjudicated by the c ourt were not ripe for review. ¶18 Qwest argueson the other hand that the PSC’sorders are orders of compulsion, issued in a contested case proceeding which the District Court determined violated Montana law. Qwest asserts that the legal issues raised by the orders are not hypothetical
or abstract as theP SC has already filed an original action in the District Court against Qwest seeking to enforce the challenged orders through mandatory injunction and the imposition of civil fines. C onsequently, Qwest argues that because it has no other adequate remedy, the PSC’s orders are ripe for review. ¶19 The ripeness doctrine is “a principle of law, grounded in the federal constitution as well as in judicial prudence, that requires an actual, present controversy, and therefore a court will not act when the legal issue raised is only hypothetical or the existence of a controversy merely speculative.” Montana Pow er Co. , ¶ 32 (citing Pearson v. Virginia City Ranches Ass’n , 2000 MT 12, ¶ 30, 298 Mont. 52, ¶ 30, 993 P.2d 688, ¶ 30; Portman
v. County of Santa Clara , 995 F. 2d 898, 902
- 03 (9th Cir. 1993) )
. “ [T]he ripeness requirement is designed ‘ to prevent the courts, through avoidance of premature adjudication, from entangling themselves in abstract disagreementso ver administrative policies, and also to protect the agenci es from judicial interference until an administrative decision has been formalized and its effects felt in a concrete way by the challenging parties
. ’ ” Ohio Forestry Associationv. Sierra Club , 523 U.S. 726, 732
- 33, 118 S. Ct.7

1665, 1670 (1998) (quoting Abbott Laboratories v. Gardner, 387 U.S. 136, 148
- 49, 87 S. Ct. 1507, 1515 (1967)). ¶20 Furthermore, in deciding whether an agency’s decision isripe for judicial review, it is necessary to examine “both the ‘fitness of the issues for judicial decision’ and the ‘hardship to the parties of withholding court consideration.’ ” Ohio Forestry , 523 U.S. at 733, 118 S. Ct. at 1670. Thus, a reviewing court “must consider: ( 1) whether delayed review would cause hardship to the plaintiffs; (2) whether judicial intervention would inappropriately interfere with further administrative action; and (3) whether the courts would benefit from further factual development of the issues presented.” Ohio Forestry , 523 U.S. at 733, 118 S. Ct. at 1670. ¶21 Applying these three factors f rom Ohio Forestryto the present case, we conclude that the PSC’s actions are not ripe for review. First, Qwest would not suffer any hardship if judicial review is not taken at this juncture. Contrary to Qwest’s assertions, the PSC did not demand that a rate case be initiated. The PSC was simply seeking information as to the accuracy of Qwest’s 2001 annual report. Qwest is obligated to provide the information requested and nothing more. What the PSC might do with the information requested from Qwest isnot an appropriate matter for review. A n agency’s decision is not ripe for review if no legal consequences, rights or duties flow from an agency’s actions because those actions are merely a step that could lead to a recommended change of the status quo. Ecology Center v. United States Forest Service , 192 F.3d 922, 925 (9th Cir. 1999) ; s ee also W

estern Seafood Co. v. City of Freeport, 346 F. Supp. 2d 892, 902
- 03 (S.D. Tex
. 2004) (holding that administrative agency’s application for a permit to8

develop a marina not ripe for review because claim of harm was only speculative that permit might be used in the future to accomplish an unlawful purpose). ¶22 Moreover, judicial review of a preliminary step that has no binding legal consequences is not available even where the initiation of proceedings is serious and may have severe consequences. Ewing v. Mytinger & Casselberry, Inc. , 339 U.S. 5 94, 600 , 70 S. Ct. 8 70, 873 ( 1950). In order to be final and thereby subject to review, agency action must mark “the consummation” of the agency’s decision making process. Whitman v. American Trucking Associations, 5 31 U.S. 457, 4 78, 121 S. Ct. 903, 915 (2001) (citing Bennett v. Spear, 520 U.S. 154, 177
- 78, 117 S. Ct. 1154 , 1168 (1997)). ¶23 In the present case, there are no irremediable adverse consequences that flow from the PSC’s investigation , thus we conclude that delayed judicial review will not cause a hardship to Qwest. ¶24 Second, judicial intervention at this juncture would inappropriately interfere with further administrative action by the PSC. O ne of the basic purposes of the PSC is to investigate public utilitie s, however, an investigation is not a final agency action . While the PSC could dos everal things with the information it requested, including negotiating with Qwest to reach a mutually agreeable solution; initiating a contested case proceeding;
or simply doing nothing, it is not appropriate for courts to speculate on future actionsor to interfere with the process of obtaining theinformation. When premature reviewwould deny an agency the opportunity to apply its expertise, courts should decline review. Ohio Forestry , 523 U.S. at 7 35, 118 S. Ct. at 1 671
. Thus, we conclude that judicial9

interference at thisinvestigatory stage would frustrate the PSC’s ability to review the information and

tomake decisions about the best possible course of action. ¶25 Third, there is no specific f actual record before this Court
. The only action taken by the PSC was an initiation of an investigation, yet the District Court reviewed is sues on which the PSC had not rendered any decision. Judicial appraisal of agency action stands
on surer footing when it take sp lace in the context of a specific factual record. Toilet Goods Assoc iation v. Gardner, 387 U.S 158, 164, 8 7 S. Ct. 1 520, 1524 (1967). Moreover, depending on the PSC’s actions, review in this case may turn out to be unnecessary. Certainly both the District Court and this Court would benefit from further factual development of the issues presented. ¶26 Accordingly, we hold that the P SC ’s actions were not ripe for review by the District Court. Issue 2. ¶27 Whether the investigation undertaken by the PSC in this case was subject to review under § 2
- 4
- 701, MCA. ¶28 Section 2
- 4
- 701, MCA, provides:

Immediate review of agency action. A preliminary, procedural, or intermediate agency action or ruling is immediately reviewable if review of the final agency decision would not provide an adequate remedy. ¶29 The PSC argues on appeal that the District Court’s review of this action under § 2
- 4
- 701, MCA, was erroneous because the PSC ’s request for information was not necessarily a prelude to further actionby the PSC. In addition, the PSC contends that,
even if a final agency action were pending, the District Court erred by not making any10

findings that review of a final decision would not provide Qwest with an adequate remedy. ¶30 Review under § 2
- 4
- 701, MCA, is available when a determination is made that a final agency decision will not provide an adequate remedy justifying immediate review. Shoemaker v. Denke , 2004 MT 11, ¶ 30, 319 Mont. 238, ¶ 30, 84 P.3d 4, ¶ 30 (citing Gilpin v. State , 249 Mont. 37, 39, 812 P.2d 1265, 126 6
- 6 7 (1991)). When an agency has not adjudicated the issues raised on appeal, there is no final agency action upon which a district court can assume jurisdiction. Marble v. Dept. of Health & Human Serv
. , 2000 MT 240, ¶ 28, 301 Mont. 373, ¶ 28, 9 P.3d 617, ¶ 28. ¶31 Qwest’s justification for seeking intermediate review under § 2
- 4
- 701, MCA, was that if it did not challenge the lawfulness of the PSC’s orders, Qwest would eventually suffer harm. H owever, Qwest did not allege any concrete harm. Instead, Qwest’s allegation of harm presumes a rate case that would reduce Qwest’s rates. According to the PSC, this potential financial harm would actually correct a situation in which Qwest is collecting revenues above what it i s authorized to collect and would not actually “harm” Qwest. ¶32 Judicial review under § 2
- 4
- 701, MCA, is not justified where the only allegation of harm is speculation that further agency action maytake place, and if it takes place, it mayhavel egal consequences. C ourts may intervene in agency process only when a specific final agency action has an actual or immediately threatened effect. Lujan v. National W

ildlife Federation , 497 U.S. 871, 894, 110 S. Ct. 3177, 3191 (1990)( citing Toilet Goods , 387 U.S. at 164
- 66, 87 S. Ct. at 1524
- 26).11

¶33 Accordingly, we hold that the investigation undertaken by the PSC in this case was not subject to review under § 2
- 4
- 701, MCA. Issue 3. ¶34 Whether the PSC may investigate utilities in any manner necessary to effectuate its statutory duties. ¶35 The District Court concluded that although the PSC possesses the power to request information from Qwest, it may not force Qwest to do so “in this manner, ” i.e ., by requiring Qwest to provide information “in the form that would meet the minimum filing requirements contained in ARM 38.5.2803 through 38.5.2820.” The court determined that § 69
- 3
- 110(2), MCA, establishes that Qwest’s rates are prima facie lawful and any party that wishes to challenge the existing rates must carry the burden of proof. Here, the court concluded that the PSC’s orders were unlawful because they attempted to reverse the burden of proof. The District Court stated that “[i]f the PSC desires to show Qwest’s rates are unjust and unreasonable, the PSC may collect the information it needsand carry its burden forward” (emphasis added). However, that is precisely what the PSC is trying to do in this case, “collect the information it needs.” ¶36 The PSC argues that the District Court’s conclusions that the PSC may not ask for information from Qwest “in this manner” is premised on the court’s acceptance of Qwest’s argument that by requiring Qwest to provide the information in the form that would meet the minimum filing requirements contained in Admin. R
. M
. 3 8.5.2803 through 38.5.2820, the PSC was forcing Q west to file a rate case , and that the PSC intended to use the information in a manner that would be unlawful.12

¶37 Qwest is reading too much into the PSC’s request. While the cited rules are entitled “Minimum Rate Case Filing Requirements for Telephone Utilities , ”that does not mean that because the PSC ordered Qwest to file information in conformity with those rules , the PSC was forcing Qwest to file a rate case. On the contrary, the PSC’s enabling statutes authorize the PSC to obtain information from utilities in any manner necessary to perf orm its duties. To that end, § 69
- 3
- 106(1), MCA, provides: The [PSC] shall have authority to inquire into themanagement of the business of all public utilities, shall keep itself informed as to the manner and method in which the same is conducted, and shall have the right to obtain from any public utility all necessary information to enable the [PSC] to perform its duties. [Emphasis added.] And, § 69
- 3
- 203(2), MCA, provides:

The [annual] reports must be in the form prescribed by the [PSC ] and must contain all the information that the [ PSC ] c onsiders necessary for the proper performance of its duties. The [ PSC ]m ay at any time request information omitted from the reports or not provided for in the reports whenever, in the judgment of the [ PSC ] , the information is necessary. [Emphasis added.] ¶38 Moreover, this C ourt has stated that administrative agencies have broad investigatory power in Montana and an agency should not be denied access to information necessary to perform its statutory investigative duties
. MontanaH uman Rights Div. v. City of Billings , 199 Mont. 434, 444
- 45, 649 P.2d 1283, 1288
- 89(1982). ¶39 Accordingly, we hold that the PSC’s statutory dutyto investigate utilities maynot be hindere d by limiting its ability to obtaininf ormation in a specific manner. ¶40 Reversed.13 /S/ JAMES C. NELSON

We Concur: /S/ W. WILLIAM LEAPHART /S/ PATRICIA COTTER /S/ JOHN WARNER /S/ JIM RICE