No. 86-404 

IN THE SUPREME COURT OF THE STATE OF MOPTANA 

1987 

ROZEL CORPORATION, a Montana 

corporation, 

Pet,itioner and Appellant, 

-vsDEPARTMENT OF PUBLIC SERVICE REGULATION, 

PUBLIC SERVICE COMMISSION, an agency of 

the State of Montana, and THREE RIVERS 

DISPOSAL, a Montana partnership, 

Respondents and Respondents. 

APPEAL FROM: District Court of the Eighteenth Judicial District, 

In and for the County of Gallatin, 

The Honorable Joseph B. Gary, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Bryan, Atkins, Anacker; John P. Atkins argued, Pozeman, 

Montana 

For Respondents: 

Robin McHugh argued for Public Service Commission, 

Helena, Montana 

Joseph W. Sabol argued for Three Rivers, Rozeman, 

Montana 

Submitted: January 16, 1957 

Decided: March 31, 1957 

Filed: MAR 3 1 1987 

*, Clerk 
Mr. Chief Justice J. A. Turnage delivered the Opinion of the 

Court. 

Rozel Corporation appeals a May 6, 1986, order of the 

Eighteenth Judicial District Court, Gallatin County, which 

upheld a final order of the Public Service Commission (PSC) . The PSC final order denied Rozel's application to begin a 

garbage service in the Bozeman area. We affirm the District 

Court. 

Rozel presents two issues for our review: 

1. Did the District Court err in holding that the 

PSC's regulation of entry into the garbage-hauling business, 

without regulation of rates, did. not violate the "Unfair 

Trade Practices" statutes, Title 30, Chap. 14, Parts 1 and 2, 

MCA? 

2. As applied to the denial of Rozel's application, 

does S 30-14-105(1), MCA, which exempts the PSC from the 

purview of the Unfair Trade Practices and Consumer Protection 

Act, violate Article XIII, Section l(2) , of the Montana 

Constitution? 

In August 1984, appellant Rozel applied to the PSC for 

a Class D Certificate of Public Convenience and Necessity, so 

that he could begin a garbage-hauling service in Gallatin 

County and Big Sky, Montana. Respondent Three Rivers Disposal is currently the only private garbage service in the area. 

Three Rivers filed a protest to Rozel's application. The PSC 

held a public hearing on the matter on November 15 and 16, 

1984. 

On March 11, 1985, the PSC issued a 23-page final order 

denying Rozel's application. The order cited the satisfactory service of Three Rivers, the lack of demand for Rozel's 

additional service, and the potential adverse effect of 

Rozel's service upon Three Rivers' service. The heart of the 
PSC's reasoning is contained in Findings 52 and 53, where it 

states a preference for service stability over competition: 

52. Some witnesses did contend that. 

competition in the area would tend to 

decrease garbage rates. This may very 

well be true in the short run. However, 

history indicates that in the past it 

also led to severe financial difficulties for the companies involved and 

resulted in the ultimate failure of each 

of those companies. Customers in the 

area have benefited from periods of 

competition and relatively low rates; 

perhaps even below cost at times. 

However, ---- they have also been subjected 

- to a very unstable and unhealthy 

industry. 

- 

53. Given that there does not appear to 

be any unmet demand and that service 

appears to be adequate and prices reasonable, it seems that --- what the area 

really needs at this time ----- is a period of 

stability. This is not to say that tG 

public should be prepared to tolerate 

unmet demand or inadequate service or 

unreasonable rates should they occur in 

the future. The existing carrier remains on notice tha.t the commission 

retains the power to reexamine the 

situation and grant a new authority 

should the circumstances merit it. 

[Emphasis added.] 

The PSC did not consider the fitness and ability of 

Rozel to meet any perceived additional need. Based upon the 

"public convenience and necessity" and the "impact to existing transportation services," the PSC concluded that Gallatin 

County and Big Sky did not require another garbage carrier. 

On April 26, 1985, pursuant to the Montana Administrative Procedure Act, Rozel petitioned the District Court for a 

review of the PSC order. The District Court heard the case 

on April 21., 1986. On May 6, 1986, the District Court found 
no violation of federal antitrust laws or the Montana Unfair 

Trade Practices and Consumer Protection Act. The District 

Court also found that the PSC order did not violate due 

process or equal protection, and that the decision of the PSC 

was not arbitrary or capricious. On July 15, 1986, the 

District Court denied Rozel's motion for reconsideration, 

because forty-five days had passed since the District Court 

had filed its order. Rozel appeals the District Court's May 

6, 1986, order. 

Issue 1: 

Did the District Court err in holding that the PSC's 

regulation of entry into the garbage-hauling business, without regulation of rates, did not violate the "Unfair Trade 

Practices" statutes, Title 30, Chap. 14, Parts I and 2, MCA? 

Our standard of review of PSC determinations is defined 

in S 2-4-704 (2), MCA: 

The 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 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; 

(el clearly erroneous in view of the 

reliable, probative, and substantial 

evidence on the whole record; 
(f) arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion; 

or 

On this issue, Rozel's argument can be reduced to three 

sentences: The PSC -- does not have the authority to regulate 

rates of garbage-haulers. Therefore, the PSC should not have 

the authority to regulate entry into the garbage-hauling 

business. Conversely, if the PSC regulates entry, it should 

also regulate rates. Rozel blends the partial language of 

several statutes to reach this summary conclusion. Rozel 

argues that without rate regulation, the public is subject to 

monopolistic garbage-haulers. Rozel generally asserts that 

the PSC acted in excess of its statutory authority, in violation of § 30-14-101 et seq., and 30-14-201, et seq., MCA. 

However, Rozel fails to cite any specific instance of excess 

or statutory violation. 

The PSC contends that the regulation of entry into the 

garbage-hauling business by the PSC does not violate the 

Consumer Protection Act, 30-14-101 et seq., MCA, because 

the Act does not cover actions of the PSC. The PSC asserts 

that S 30-14-105 (1) , MCA, specifically exempts the PSC from 

the scope of the Consumer Protection Act, by stating: "Exemptions. Nothing in this part shall apply to: actions or 

transactions permitted under laws administered by the Montana 

public service commission acting under statutory authority of 

this part or the United States." 

The PSC argues that the word "part" in S 30-14-105(1) 

actually means "state" in order to avoid an absurd result; 

for if S 30-14-105(1) is read literally, then the actions of 

the PSC are exempt from the Consumer Protection Act only when 

those actions are taken pursuant to the authority of the 
Consumer Protection Act. However, the Act grants no such 

authority to the PSC. Therefore, the plain meaning of 

(S 30-14-105(1) is that the actions and transactions of the 

PSC, acting under its statutory authority of Title 69, "Public Utilities and Carriers," are exempt from the Consumer 

Protection Act. This interpretation accords with the federal 

model act from which the Consumer Protection Act was drafted, 

where the word "state" is used in place of "part." 

Respondent Three Rivers contends that the new enactment 

of (S 69-12-323 (2) (b) , MCA, "Decision on application, " containing the phrase "may include a consideration of competition," provides the PSC with the necessary tool to handle 

potentially harmful monopoly situations. The language is 

permissive, but not mandatory, thereby indicating that 

competition may be beneficial in some cases, but not -- all 

cases. The legislature chose to partially regulate the 

garbage industry in Montana. It has thereby certified a 

policy of limited entry into the garbage transportation 

business and recognized that open competition, under some 

circumstances, may be harmful to the existing carrier and the 

consuming public. Three Rivers adds that B 30-14-201 et 

seq., "Unfair Trade Practices Generally", deals with and is 

applicable to any person, partnership, firm, corporation, 

joint stock company or other association engaged in business 

within this state, but it is not applicable to the State of 

Montana itself or any agency of state government. 

In analyzing this issue, we note that $ 69-12-301 (51, 

MCA, would classify Rozel as a Class D motor carrier: "Class 

D motor carriers embraces all motor carriers operating motor 

vehicles transporting (including pickup and disposal) ashes, 

trash, waste, refuse, rubbish, garbage, and organic and 

inorganic matter." Through the authority bestowed upon it in 

Title 69, the PSC controls entry into the garbage-hauling 
business. However, the PSC does not regulate the rates 

charged by Class D carriers and does not regulate the quality 

of the service provided. We find that the express authority 

to regulate entry is not concomitant with the implied requirements to regulate rates. The only function that the PSC 

is authorized to perform is the granting or denial of the 

Class D certificate to do business. 

Section 69-12-323(2), MCA, outlines the factors the PSC 

must use when considering an application for a Class D 

certificate: 

(a) In determining whether a certificate 

should be issued, the commission shall 

give reasonable consideration to the 

transportation service being furnished . . . and shall give due consideration 

to the likelihood of the proposed service being permanent and continuous 

throughout 12 months of the year . . . (b) For purposes of Class D certificates, - a -determination - of public convenience and necessity may include a . - - consideration of competition. [~mphasis -. - 

added. ] 

The PSC interpreted S 69-12-323 (2) (a) as requiring it 

to address three factors when considering Rozel's 

garbage-hauling application. These three factors were: 1) 

public convenience and necessity, 2) applicant fitness, and 

3) existing competition. 

The PSC observed that garbage-hauling competition would 

be against the public interest, in its final order finding 

no. 49: 

. . . In each instance [competition] 

required that a consolidation occur in 

order to continue the provision of 

service; only to see a new competitor 

rise and the cycle repeat itself. . . The Commission is concerned that a grant 

-- of this application would -- only cause 
that cycle to repeat itself once -- more. 

[Emphasis added. 1 

The evidence offered to the PSC in this case established the devastating impact which past garbage company 

competitors brought upon each other, and consequently the 

consumer. The consumer reaped the initial benefits of the 

competition price war by an immediate reduction in garbage 

rates. However, the consumer ultimately paid for this fleeting benefit with an unstable garbage carrier attempting to 

provide services to the community without proper maintenance 

and inventory. The PSC properly concluded that renewing this 

situation by granting Rozel's application was not in the 

public interest. 

Although the action of the PSC can be deemed 

anti-competitive in nature, its authority to take such action 

was conferred upon it by the legislature in Title 69. The 

state has the power to engage in economic regulation, even if 

such regulation is adverse to competition. New Motor Vehicle 

Board of California v. Orrin W. Fox Co. (1978), 439 U.S. 96, 

111, 99 S.Ct. 403, 412, 58 L.Ed.2d 361. 

Our scope of judicial review is limited by 

§ 2-4-704 (2), MCA, to matters of law, not fact. This Court 

may not consider the weight of the evidence. We hold that 

the PSC acted within its discretionary and statutory authority. Because the PSC procedure was proper, we affirm the 

District Court. 

Issue 2 

As applied to the denial of Rozel's application, does 

S 30-14-105 (I), MCA, which exempts the PSC from the purview 

of the Unfair Trade Practices and Consumer Protection Act, 

violate Article XIII, Section l(2) of the Montana Constitution, which states: "The legislature shall provide protection 
and education for the people against unfair practices by 

either foreign or domestic corporations, individuals, or 

 association^^^? 

This issue is not properly before this Court. This 

issue was first raised in Rozel's motion for reconsideration, 

which was denied because forty-five days had elapsed. As we 

have often held, a party may not change its theory on appeal 

from the theory advanced in the trial court. Chamberlain v. 

Evans (1979), 180 Mont. 511, 517, 591 P.2d 237, 240. In 

addition, we have repeatedly stated that: "This Court will 

not review a matter raised for the first time on appeal." 

Peter v. Newkirk (Mont. 1981), 633 P.2d 1210, 1212, 38 

St.Rep. 1526, 1528. 

We affirm the order of the District Court. 

We, concur : 

J v 

Justices