Court Opinion

ID: 4543495
Source: CourtListenerOpinion
Date Created: 2020-06-23 22:07:23.076087+00
Date Added: 2024-06-11T12:47:13.840049
License: Public Domain

ORriNiAi                                                              06/23/2020

            IN THE SUPREME COURT OF THE STATE OF MONTANA                            Case Number: DA 19-0299

                                        DA 19-0299

 SIGNAL PEAK ENERGY,LLC,                                                  FILED
             Plaintiff and Appellant,                                     JUN 2 3 2020
                                                                        Bovven Greenwood
                                                                      Clerk of Suprerne Court
       v.                                                                Stat© nf Montana

                                                                   ORDER
 MONTANA ENVIRONMENTAL INFORMATION
 CENTER,STATE OF MONTANA BOARD OF
 ENVIRONMENTAL REVIEW,ELLEN PFISTER,
 and STEVE CHARTER,

             Defendants and Appellees.

       In this matter, Signal Peak, LLC (Signal Peak) has appealed from an order granting
summary judgment to Defendants Montana Environmental Information Center (MEIC),
State of Montana Board ofEnvironmental Review(BER),Ellen Pfister (Pfister), and Steve
Charter (Charter) (collectively, Defendants) on Signal Peak's complaint for declaratory
relief concerning a discovery dispute that arose in a BER contested case. However, upon
a review of the parties' briefing and the administrative record, we have concluded that
procedural irregularities and unresolved administrative issues prohibit the Court from
proceeding on the appeal, including reaching the merits of pending constitutional issues,
and that the case must be remanded for further proceedings before the agency.
      On August 11, 2016, MEIC filed a Notice of Appeal and Request for Hearing
("AM3 appeal") with BER challenging the Department ofEnvironmental Quality's(DEQ)
issuance of a coal mining permit to Signal Peak in 2013. Pfister and Charter had provided
comments during the permitting process, are members of MEIC, and separately own
surface lands located above the mining operations proposed by Signal Peak in its AM3
application. After a series of discovery disputes between the parties that required the
extension of discovery deadlines, the hearing examiner issued a scheduling order in the
AlvI3 appeal that required remaining discovery to be completed by April 30, 2018.
      On March 30, 2018, Signal Peak issued deposition notices and subpoenas duces
tecum for Pfister and Charter,requiring they produce any written communications between
them and entities or associations concerning impacts to water resources located on their
surface lands. MEIC moved to quash the deposition notices and subpoenas on April 17,
2018, arguing that the depositions were inappropriate, unduly burdensome, overbroad by
seeking information that had not been before the DEQ in the permitting process,
improperly seeking privileged communications between MEIC and its members, and
violative of Pfister's and Charter's constitutional rights to associate and petition the
government for redress of grievances. Pfister and Charter joined MEIC's objections, and
Signal Peak opposed the motion to quash.
       The hearing examiner conducted a hearing on the motion on May 23, 2018, which
essentially was a discussion between counsel for the parties and the examiner. Except for
a later order simply staying the discovery deadlines pending resolution ofthe litigation that
the parties would subsequently commence in the District Court, no written order was
entered by the hearing examiner regarding the discovery issues and objections raised by
the parties. The record captures only counsel's discussion with the hearing examiner about
the requested depositions, particularly, the hearing examiner's concern about the
constitutional issues raised within MEIC's motion to quash the depositions:
      [A]s a preliminary matter, I have one issue that's burning for me that I want
      you all to address. . . based on Montana Supreme Court case law, and
      specifically there is the Jarussi case and there are several others that discuss
      the separation of powers issue between MAPA and agencies deciding
      constitutional issues. In my understanding, I have no jurisdiction to decide
      constitutional issues and my inclination, unless you folks can convince me
      otherwise, is that that is a question for the District Court to resolve;

       So I guess what I need from you then, from potentially everybody, is a
       practical solution about how we're going to deal with this First Amendment
       problem and the jurisdiction piece of it;

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      [I]f we can fashion a solution here that [will] deal with the concerns without
      having to go to District Court, that would obviously be preferable. But if
      you're going to go to the District Court anyway if the decision is anything
      other than a grant ofthe motion to quash, then you might need to bring the
      First Amendment problems to District Court and you can deal with them
      anyway. So practically,Ineed you all to tell me whether you want a decision
      from me on this or whether you want me to stay the underlying decision, or
      the underlying case while you go to District Court... I will give you all until
      next Friday. I'm not going to issue an order on this, so just orally I will give
       you until next Friday to provide me with supplemental briefing all at the same
      time. ... My inclination is to not address the First Amendment or to make a
      record as to why           not addressing it, why I don't think it has to be
      addressed, it can be avoided, and then to make the ruling on the burden and
       the other issues. [(Emphasis added)].

       The hearing examiner inquired whether IVIEIC would withdraw its constitutional
challenges, apparently believing this would permit the examiner to enter an order on "the
other issues," namely, the non-constitutional grounds raised for quashing the deposition
and subpoenas, but IVIEIC declined, stating that the "First Amendment concerns here are
paramount."    MEIC did advance alternative, non-constitutional arguments that the
subpoenas sought privileged communications, sought information not presented to DEQ
that would be "reopenine the record, were retaliatory, and overly burdensome. In the
discussion, Signal Peak and MEIC appeared to agree that the discovery requests could be
modified to be less burdensome, but also appeared to view the constitutional issues as
primary. The hearing examiner ordered supplemental filings and,on June 1,2018,the date
the supplemental submissions were due, Signal Peak filed a status report that concurred
with MEIC that "the [h]earing [e]xaminer and the Board of Environmental Review lack
jurisdiction to decide the constitutional issue that the [Defendants] advanced in [their]
Motion to Quash," but contended the Defendants had "presented no legitimate ground for
the putative deponents to avoid their obligations to respond to discovery."
       As noted, no written order was entered by the hearing examiner on either the
constitutional or non-constitutional issues raised by the Defendants' motion to quash, and

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after careful review of the record, we can discern no oral ruling on these issues either. In
its briefing to this Court, Signal Peak offers that the hearing examiner "implicitly declin[ed]
to quash the subpoena on the other grounds raised by MEIC, not[ing] that the remaining
constitutional issue could only be addressed by thejudiciary, not by the executive branch,"
but we are hard pressed to discern even an implicit ruling. Rather, it appears the hearing
examiner was focused on resolution of the "jurisdiction piece of it," that is, the
constitutional issues that the agency did not have jurisdiction to resolve, and directed the
parties to proceed to the courts for a decision on those issues. Despite expressing an
inclination, the hearing examiner never did "make the ruling on the burden and the other
issues." If Signal Peak's assessment of an implicit ruling was correct, Signal Peak would
have been the prevailing party before the hearing examiner, and yet it was Signal Peak, not
MEIC,that initiated litigation by filing a Complaint for Declaratory Judgment before the
District Court seeking a declaration that "complying with discovery would not infringe the
Defendants' constitutional rights and order the Parties to abide by applicable rules and
respond to discovery." More importantly, no one in this matter seemed to recognize that
resolution of the non-constitutional objections to the discovery by the hearing examiner
was a prerequisite to reaching the constitutional objections. A ruling that the depositions
were improper on these non-constitutional grounds may well have mooted the
constitutional objections.
       At a minimum,the hearing examiner was presented with arguments concerning: the
legality of additional discovery at this stage ofthe proceeding; the scope and burden ofthe
requested subpoenas and depositions; the potentially privileged communications that
would be encompassed by requests for communications between Pfister, Charter, and the
associations; and the standing of MEC to file a motion to quash on behalf ofits members.
As a consequence of the failure to resolve these non-constitutional discovery issues, this
Court has been presented with arguments about administrative procedure for which there
is no final ruling from the agency, or any ruling at all, that provides the agency's decision
and rationale, including its interpretation of governing statutes and regulations. For

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example, the'parties argue at length about the scope ofreview for BER proceedings, with
Signal Peak contending that "the BER is not 'confined to the record' relied on by DEQ,
but must receive evidence on any issue raised in the permitting process," citing Admin.
R. M. 1.3.217-221 and 1.3.230(2020), and MEIC v. DEQ,2005 MT 96,¶¶ 13, 22-25, 326
Mont.502, 112 P.3d 964. Defendants respond that"the only relevant analysis [for a permit
appeal] is that contained within the four corners of the [technical review]. . .. BER is
unambiguous that extra-record evidence is not allowedr citing § 82-4-227(3)(c), MCA,
Admin. R. M. 17.24.405(6), and an administrative decision in In re Bull Mountains,
No. BER 2013-07 SM, 56-57 (Mont. BER, Jan. 14, 2016). The District Court decided
these administrative issues without the benefit ofan agency decision or rationale about the
agency's application of its regulations, and then proceeded to decide the constitutional
issues.
          While it is correct that the agency cannot resolve constitutional issues, Jarussi v.
Board ofTrustees, 204 Mont. 131, 135-136,664 P.2d 316, 318 (1983), the administrative
scope of review issue presented here, as well as the discovery issues that lie within the
hearing examiner's discretionary governance, such as whether requested depositions are
overly burdensome, must first be addressed and resolved by the agency before judicial
review of any constitutional questions can be undertaken. Otherwise, the parties are
seeking an advisory opinion from the courts on constitutional questions that may never be
ripe or dispositive. "We have repeatedly recognized that courts should avoid constitutional
issues whenever it is possible to decide a case without reaching constitutional
considerations." In re G.M, 2008 MT 200, ¶ 25, 344 Mont. 87, 186 P.3d 229 (internal
citation omitted). Further, "[t]he well-settled principle undergirding the exhaustion
doctrine is that `no one is entitled to judicial relieffor a supposed or threatened injury until
the prescribed administrative remedy has been exhausted.'" Shoemaker v. Denke, 2004
MT 11, ¶ 18, 319 Mont. 238, 84 P.3d 4 (internal citation omitted). Consequently, it is
necessary to remand this matter for completion ofthe necessary administrative process by
the agency. Therefore,

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      IT IS ORDERED that this appeal is DISMISSED WITHOUT PREJUDICE. The
judgment ofthe District Court is VACATED.
      IT IS FURTHER ORDERED that this matter is REMANDED to BER for further
proceedings consistent with this order.
      The Clerk is directed to provide a copy of this Order to counsel of record, to the
Thirteenth Judicial District Court, and BER.
      DATED this 23 -ray of June, 2020.

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