Court Opinion

ID: 884278
Source: CourtListenerOpinion
Date Created: 2013-06-05 03:01:05.748286+00
Date Added: 2024-06-11T15:12:50.839905
License: Public Domain

96-383

                                                                                         No.        96-383

                                                          IN THE SUPREME COURT OF THE STATE OF MONTANA

                                                                                       1997

                                                    GROUSE MOUNTAIN ASSOCIATES, LTD,
                                                                d/b/a GROUSE MOUNTAIN LODGE,

                                                            Plaintiff/Petitioner and Respondent,
                                                                          v.

                                                                     MONTANA DEPARTMENT OF PUBLIC
                                                         SERVICE REGULATION, MONTANA
                                                         PUBLIC SERVICE COMMISSION,

                                                             Defendant/Respondent and Appellant,

                                                ROCKY MOUNTAIN TRANSPORTATION, INC.,

                                                                        Intervenor and Appellant.

               APPEAL FROM:                          District Court of the Eleventh Judicial District,
                                                             In and for the County of Flathead,
                                                       The Honorable Ted O. Lympus, Judge presiding.

                                                                   COUNSEL OF RECORD:

                                                   For Defendant-Appellant:
                                 Martin Jacobson, Special Assistant Attorney General, Montana Public
                               Service                   Commission, Helena, Montana

                                                       For Intervenor-Appellant:
                                        Bradley J. Luck, Lucy T. France, Garlington, Lohn & Robinson,
                                             Missoula,                Montana

                                                           For Respondent:
                                      Debra D. Parker, Mikel L. Moore, Murphy, Robinson, Heckathorn &
                                       Phillips,                Kalispell, Montana

                                                                               Heard:   April 28, 1997
                                                                               Submitted:   May 1, 1997
                                                                               Decided: July 18, 1997
                                                                               Filed:

                                                            __________________________________________

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                                                                                          Clerk

                    Justice William E. Hunt, Sr. delivered the Opinion of the Court.

             Appellant Montana Public Service Commission (PSC) and Intervenor/Appellant
Rocky Mountain Transportation, Inc., (Rocky Mountain) appeal from the decision issued
   by the Eleventh Judicial District Court, Flathead County, reversing upon judicial
                                              review
    PSC's declaratory ruling that Grouse Mountain Lodge (Grouse Mountain) is a "motor
                              carrier" subject to PSC regulation.
                                    We affirm the District Court.
                                 There are two issues for our review:
          1.      Did the District Court properly employ the applicable standard of review
              of the PSC's declaratory ruling and final order on reconsideration?
         2.      Did the District Court err when it determined that Grouse Mountain is not
                            subject to PSC motor carrier regulation?
                                           BACKGROUND
          Grouse Mountain is located in the picturesque mountains surrounding Whitefish,
     Montana. The year-round recreational activities around Grouse Mountain attract
                                              guests
   to the lodge from all over the country. Grouse Mountain owns four passenger vans
                                                with
which it transports its guests between the lodge and The Big Mountain ski resort (Big
 Mountain), downtown Whitefish, Glacier International Airport, and the Amtrak railway
 station. Grouse Mountain does not advertise or offer transportation services to the
 general public. Transportation between the lodge and the airport, railway station,
                                                 and
        Big Mountain is free for lodge guests. Guests must pay a nominal fee for
                                         transportation
                           between the lodge and downtown Whitefish.
           In February, 1993, a rival Whitefish-area business person filed a complaint
                                              in the
  Eleventh Judicial District Court, Flathead County, alleging that Grouse Mountain's
                                               guest
transportation was subject to PSC motor carrier regulation and requesting that Grouse
     Mountain be enjoined from further guest transportation until it had obtained an
appropriate certificate of authority from PSC. In response to this complaint, Grouse
    Mountain filed with the PSC a petition for a declaratory ruling that it was not
                                           subject to
  regulation. The District Court stayed the complaint pending a resolution of Grouse
                                      Mountain's petition.
        In a 3-2 decision, the PSC determined that Grouse Mountain's transportation was
  in part subject to motor carrier regulation and ruled that: Grouse Mountain has a
                                            principal
    non-transportation hotel business; Grouse Mountain may transport its registered
                                             guests
      to and from the lodge and points of connection with common carriers, and this
  transportation is incidental to the principal non-transportation business; Grouse
                                            Mountain
    cannot lawfully transport registered guests to and from the lodge and any other
                                             places

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  without obtaining a certificate of convenience and necessity from the PSC because
                                               such
    transportation is not incidental to the principal non-transportation business.
                                              Grouse
 Mountain moved the PSC to reconsider its ruling, but also submitted an application
                                               for
a class "C" certificate of public convenience and necessity, requesting authority to
            transport lodge guests to all points and places in Flathead County.
              In another 3-2 decision, the PSC issued its order on reconsideration,
                                        affirming its
       prior ruling. PSC then scheduled a hearing on Grouse Mountain's class "C"
                                        application,
      which was contested. After the hearing, PSC issued a certificate of public
                                         convenience
    and necessity which authorized Grouse Mountain to transport guests to points of
                 connection with common carriers and the City of Whitefish.
         Grouse Mountain appealed PSC's initial declaratory ruling and subsequent order
  on reconsideration to the Eleventh Judicial District Court, Flathead County. The
                                            District
   Court reversed the PSC, holding that: Grouse Mountain is not a "motor carrier;"
                                             Grouse
Mountain's transportation activities do not exhibit the characteristics of a "motor
                                           carrier;"
  Grouse Mountain provides "accommodative transportation," which is expressly exempt
      from regulation; and, finally, that even if Grouse Mountain's transportation
                                          activities
 were arguably within the scope of regulated motor carriage, it would be exempt from
   regulation according to the "primary business" test. PSC, and Rocky Mountain, as
                     Intervenor, appeal from the District Court's order.
                                     STANDARD OF REVIEW
              The PSC's conclusion that Grouse Mountain is subject to motor carrier
                                          regulation
     is a conclusion of law subject to review in the first instance by the District
                                              Court.
     Section 2-4-501, MCA;     2-4-702, MCA. The standard of review applicable to the
  PSCþs conclusion is whether the PSC correctly interpreted the law in reaching that
  conclusion. Steer, Inc. v. Department of Revenue (1990), 245 Mont. 470, 474, 803
P.2d
601, 603.
                                           ISSUE ONE
        Did the District Court properly employ the applicable standard of review of the
                PSC's declaratory ruling and final order on reconsideration?
           The parties do not dispute the standard applicable to the District Court's
                                              review
 of the PSC's decision. In Steer, Inc, this Court held that a district court should
                                              review
 an agency's decision to determine whether the agency's interpretation of the law is
correct. Steer, Inc., 803 P.2d at 603. The PSC contends, however, that the District
  Court improperly employed this standard. Specifically, PSC argues that the court
                                             did not
sufficiently defer to the PSC's interpretation of its own regulations. In addition,
                                                PSC

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   argues that its ruling had the force of law through the "reenactment doctrine."
                                           Finally,
    PSC argues that the exemptions from motor carrier law claimed by Grouse Mountain
                     should have been narrowly construed by the court.
        As to PSCþs first argument, we note that neither we nor the District Court must
   defer to an incorrect agency decision. As discussed more fully below, the court
                                           properly
 determined that the PSCþs decision was incorrect. PSCþs second argument regarding
                                              the
  þreenactment doctrineþ misses the point. PSC essentially contends that the latest
  legislative enactments with respect to the law regarding motor carrier regulation
                                             were
  enacted in light of the PSCþs declaratory ruling, are not inconsistent with that
                                          ruling or
      with prior, similar rulings, and are therefore an implicit adoption of PSCþs
                                       interpretation
 of the relevant statutes. However, there is nothing in the legislative enactments
                                             that
 would indicate an adoption of any of the specific aspects of the PSCþs ruling that
                                              are
 under review, particularly the PSCþs application of the þprimary businessþ test to
                                              the
   facts here. Finally, with respect to PSCþs third argument, that exemptions from
   regulations are to be given narrow interpretation, we note that the PSC has not
                                         articulated
  what a narrow interpretation of the relevant rules and regulations would reveal,
                                            except
to say that the District Courtþs ultimate conclusions were incorrect. This argument
                                            is not
                                         persuasive.
            We hold that the District Court utilized the proper standard of review,
                                          reviewing
      the PSCþs conclusions to determine whether they were the result of a correct
     interpretation of the law. We also hold that the court properly applied this
                                          standard.
                                          ISSUE TWO
           Did the District Court err when it determined that Grouse Mountain is not
                                           subject
                             to PSC motor carrier regulation?
        The PSC's authority to regulate motor carriers comes from title 69, chapter 12
                                              of
 the Montana Code. See         69-12-201, MCA. Within that title and chapter, too, are
 statutory definitions of motor carriers subject to PSC regulation. Section 69-12-
                                             101,
                              MCA, provides in relevant part:
            Definitions. Unless the context requires otherwise, in this chapter the
                                   following definitions apply:
                                                 ....
                  (8) "Motor carrier" means a person or corporation, or its lessees,
         trustees, or receivers appointed by any court, operating motor vehicles upon
             any public highway in this state for the transportation of passengers,
            household goods, or garbage for hire on a commercial basis, either as a

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                          common carrier or under private contract, agreement, charter, or
                                                    undertaking.

          The characteristics of a "motor carrier" are described in    69-12-106, MCA:
                Acts indicative of status as motor carrier. Any person or corporation
              maintaining a public motor vehicle stand or by sign, symbol, or device or
               vehicle or clothing or by advertisement holding forth transportation for
               compensation or soliciting the transportation of persons or property for
              compensation among the public or soliciting for trips for compensation or
            providing transportation service to the public under the guise of leasing or
                 buy-sell arrangements shall be deemed, prima facie, a "motor carrier"
               subject to this chapter. The burden of proof shall be on such person or
                                 corporation to disprove such status.

                  Section 69-12-105, MCA, creates an exception to PSC regulation:
                         Nature of accommodative transportation. An accommodative
                transportation movement by a person not in the transportation business is
                    not a service for hire even though the persons owning the property
                   transported or persons transported share in the cost or pay for the
                                                 movement.

         In addition, this Court created an exception to PSC regulation in Board of
                                          Railroad
  Commissioners v. Gamble-Robinson Co. (1941), 111 Mont. 441, 111 P.2d 306. In that
case, this Court held that the PSC did not have regulatory authority over businesses
                                            that
 used motor vehicles as an incident to their principal business. This Court stated:
                 Thus, the question is whether in enacting the statute the legislature
            meant merely to supervise and regulate those engaged in the business of
        transporting persons and property for hire, or also to supervise and regulate
           all those engaged in other businesses and using motor vehicles purely for
          the incidental purpose of delivering their own goods in the course of such
          business. The former would seem to be the clear intent, since the title of
            the Act expressed an intention to supervise, regulate and control "motor
             carriers engaged in the transportation by motor vehicles of persons and
                property for hire" etc. "To engage" is "to embark in a business."
              (Webster's New International Dictionary, Merriam-Webster, 2d ed.) The
              defendants are engaged in wholesaling just as ranchers are engaged in
              ranching. They are not ordinarily understood to be "engaged in" every
          occupation or activity purely incidental to their business. One engaged in
          either of those businesses and using motor vehicles for purposes incidental
         thereto cannot properly be said to be engaged in the transportation of goods
                                               ....

    Gamble-Robinson, 111 P.2d at 309-10. This "incidental to" rule, or "primary
                                      business"
 test, has been codified in the PSC's administrative rules. See Rule 38.3.1001(3),
                                         ARM.
The PSC's rules state that a person is not a motor carrier subject to regulation if
                                          his
 transportation activities are incidental to his principal business. Rule 38.3.1001
                                         (1),

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ARM.   Transportation activities are incidental when they are in furtherance of, in
                                           the
    scope of, and subordinate to the principal business. Rule 38.3.1001(2), ARM.
      Therefore, an entity is not subject to PSC motor carrier regulation if it does
                                           not
    meet the definition of "motor carrier," if the transportation it provides is
                                     accommodative
 only, or, if the transportation it provides is merely incidental to its principal
                                        business.
We affirm the District Courtþs determination that Grouse Mountain is not subject to
                                           PSC
  motor carrier regulation based on the District Courtþs, and our, conclusion that
                                          Grouse
   Mountain's transportation activities are incidental to its principal business.
          The key terms which constitute the codified "primary business test" are
                                       defined as
                                         follows:
             (a) "Principal Business" means a business which, in relation to the
       transportation which is purported to be incidental, is clearly the predominate
            undertaking or enterprise. It must have a clear economic purpose or
           objective, identifiable with certainty, in terms of supplying goods or
                                            services.

            (b) "In the furtherance of " means directly benefiting the principal business
              by transporting materials, goods, or other property, personnel, customers,
           clients or other passengers, when such transportation assists in the principal
            business in achieving its economic purpose or objective. It does not include
             a benefit to the principal business through transportation merely generating
                                   additional profit or like thing.

                 (c) "In the scope of" means directly within the bounds of the economic
              purpose or objective of the business. It does not include a transportation
                             activity that is merely a tangent or appendage.

               (d) "Subordinate to" means lesser than, minor in comparison to, dependent
              on, existing because of, and controlled by. It can include transportation
            important to, even essential to, the principal business. It does not include
                        transportation which is a significant enterprise itself.

     Rule 38.3.1002(1), ARM.   There is no dispute that Grouse Mountain's principal
                                          business
is as a hotel or resort. Nor is there dispute that Grouse Mountain's transportation
                                             is
      subordinate to the principal resort business. Moreover, the PSC has already
                                         determined
       that Grouse Mountainþs transportation to common carriers is not subject to
                                        regulation.
 Grouse Mountainþs guest transportation to the airport and to the railway station is
     therefore not at issue here. However, the PSC contends that Grouse Mountain's
  transportation of guests between the lodge and Big Mountain and downtown Whitefish
    is neither in furtherance of nor in the scope of the principal resort business
                                       because such

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 business is essentially providing lodging, food, and beverages to paying guests. We
                                       disagree.
       The PSC strictly describes Grouse Mountainþs business. Indeed, Grouse Mountain
   itself, in its petition for declaratory ruling, stated that it provides lodging,
                                       food, and
   beverages for paying guests. Later, however, in its motion for reconsideration,
                                         Grouse
 Mountain explained that its earlier description of itself was incomplete, and that
                                       the scope
of its business as a guest resort and conference center is much broader than that of
                                           a
       provider of food and lodging. In its brief in support of its motion for
                                   reconsideration,
  Grouse Mountain quoted excerpts from its brochures and other promotional materials
    which illustrate that Grouse Mountain offers more than just lodging, food, and
                                       beverages
                                    to its guests:
        Grouse Mountain is a four-season resort with activities as spectacular as the
                                    surrounding scenery.

                                                                                        ....

              Our concierge will be pleased to suggest and make arrangements for almost
           anything youþd like to do: hike, bike, fish, ski, boat, visit Glacier National
             Park, ski the Big Mountainþs 4000 powdered acres or sail Flathead lake ....

                                                                                        ....

                Grouse Mountain Lodge is in the Flathead Valley ... golf, skiing, sight-
                seeing, wildlife, sailing, fishing, restaurants, shopping, Glacier Park,
               Whitefish Lake, The Big Mountain, Flathead Lake and more. Itþs all either
                              right outside our door, or just minutes away.

Grouse Mountain also explained that it offers ski packages in which þtransportation
                                           to
    and from [Big] Mountain ... [is included].þ Finally, Grouse Mountain stated:
                If the record before this commission did not adequately describe or
            underscore the recreational component to Grouse Mountainþs business,
              Grouse Mountain has done itself, its guests and this commission a
         disservice. An accurate description of its business must include not only
          its food, lodging and beverage service, but also its vital service as a
       facilitator which assists its guests in experiencing the special recreational
                     activities available to them in the Flathead Valley.

        In its order on reconsideration, the PSC acknowledged that þGrouse Mountain
promotes and packages recreational ventures for its guests,þ and that þa large part
                                         of
  Grouse Mountainþs business turns on the existence of recreational opportunities.þ
Nevertheless, the PSC maintained its position that Grouse Mountainþs transportation
                                         to
 Big Mountain and downtown Whitefish is not exempt from regulation under the primary
                                   business test.

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           On the one hand, the PSCþs characterization of Grouse Mountainþs business is
      simply unrealistic and too restrictive. Grouse Mountain is not a chain motel
                                         astride an
 anonymous stretch of interstate, where perhaps a description limited to þprovider of
 lodging, meals, and beveragesþ would be appropriate. Grouse Mountainþs proximity to
Big Mountain, Glacier Park, and downtown Whitefish is what sets it apart and, indeed,
  is what attracts guests and conventioneers alike. As integral to Grouse Mountainþs
   business as is its provision of food and lodging, so too, perhaps more so, is its
                                          ability to
    provide its guests with the variety of recreational experiences available in the
                                            popular
  Flathead region, particularly Big Mountain and the City of Whitefish. As a resort
                                             in the
    Flathead Valley of the Northern Rockies, Grouse Mountainþs principal business can
    appropriately be described as providing food and lodging, as well as recreational
                                experiences, for its guests.
          Under this description, it is clear that Grouse Mountainþs transportation of
                                               its
  guests to and from Big Mountain and downtown Whitefish is incidental to its primary
       business. Transportation to Big Mountain and downtown Whitefish is þin the
                                         furtherance
  ofþ its principal business in that it directly promotes or advances the business of
 providing local recreational experiences. Moreover, transportation of guests to Big
           Mountain and downtown Whitefish, minutes away from Grouse Mountain, is
     geographically þin the scope ofþ its principal business. Finally, transporting
                                           guests to
     these sites, rich in recreational opportunities, is þin the scopeþ of providing
                                         guests with
                              local recreational experiences.
          On the other hand, even if we were to accept the PSCþs limited description of
  Grouse Mountainþs business, we would reach the same result, for many of the reasons
   already stated. In our view, providing guests of a mountain lodge with access to
                                              local
  recreational experiences is þin the furtherance ofþ the business of providing food
                                               and
    lodging. The recreational experiences are what bring guests to Grouse Mountain,
                                              where
    they eat, sleep, and drink. In this way, transporting guests to Big Mountain and
      downtown Whitefish promotes and advances Grouse Mountainþs business. Moreover,
transporting guests to these two areas would be, geographically speaking, as much þin
    the scope ofþ Grouse Mountainþs business as would transporting guests to and from
   Glacier International Airport, which the PSC determined was exempt from regulation
under the primary business test. In addition, the transportation would otherwise be
                                               þin
  the scope ofþ Grouse Mountainþs business because of the close relationship between
         attracting guests to the lodge and providing guests with food and lodging.
          Whether, technically speaking, Grouse Mountainþs business is merely providing
        food and lodging to its guests, or whether its business includes providing
                                        recreational
 experiences to its guests, the result is the same: Grouse Mountainþs transportation
                                             of its

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 paying guests to Big Mountain and downtown Whitefish is exempt from PSC regulation,
  pursuant to the þprimary business test.þ In reversing the PSCþs decision to the
                                      contrary,
 the District Court properly determined that the PSCþs interpretation of the law was
                                     incorrect.
                                         Affirmed.
                                                       /S/ WILLIAM E. HUNT, SR.

                                                                            We Concur:

                                                                  /S/        J. A.          TURNAGE

                                                                 /S/        JAMES C. NELSON

                                                                      /S/       JIM REGNIER

                                                             /S/        W. WILLIAM LEAPHART

                                              /S/ DISTRICT JUDGE WILLIAM NELS SWANDAL
                                              sitting for Justice Terry N. Trieweiler

                  Justice Karla M. Gray, concurring in part and dissenting in part.

        I concur in the Court's opinion on issue one. I respectfully dissent from that
    opinion, however, on issue two. It is my view that the District Court erred in
                                        reversing
   the PSC's determination that Grouse Mountain's transport of its guests to the Big
    Mountain and downtown Whitefish was motor carriage subject to PSC regulation. I
    would reverse the District Court on that issue and reinstate the PSC's decision.
         It is important to recognize that the PSC's original determination--and its
                                         order on
  reconsideration--were based on the facts as Grouse Mountain set them forth in its
                                         petition
 for declaratory ruling. Central among those facts were that, in Grouse Mountain's
                                            own
words, Grouse Mountain "operates a hotel in Whitefish, Montana" and that its "primary
 business is providing lodging, food and beverages to paying guests." Thus, the PSC
      proceeding did not center on Grouse Mountain as a provider of recreational
                                      activities in
   the greater Flathead area. That notion was first raised after the PSC issued its
 declaratory ruling when, in its motion for reconsideration, Grouse Mountain posited
                                           that
 it was, in actuality, a provider of recreational activities; in other words, Grouse
                                         Mountain
  sought to change the entire basis of the proceeding after the fact by changing its
     description of its primary business. The PSC recognized that the existence of
 recreational activities in the area was important to Grouse Mountain's business, but
declined to change the nature of Grouse Mountain's primary business. It noted that,
                                             as

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a business, Grouse Mountain owns and operates facilities to provide lodging, meal and
beverage service; conversely, Grouse Mountain does not, as a business, own or operate
     facilities which provide recreational activities in the greater Flathead area.
        In ruling on Grouse Mountain's petition for judicial review, the District Court
    accepted Grouse Mountain's expansive new characterization of its business, thus
 permitting Grouse Mountain to "change the rules after the game." This Court follows
 suit, and in doing so permits Grouse Mountain to effectively amend its petition for
 declaratory ruling after the PSC had rendered its decision. I would join the PSC in
     rejecting this ploy by Grouse Mountain and confine our review to whether the
                                         transport
     of guests to the Big Mountain and downtown Whitefish by Grouse Mountain, whose
     primary business is that of hotel, meal and beverage service, subjects Grouse
                                          Mountain
   to regulation as a motor carrier under applicable regulations, statutes and case
                                             law.
            Applying the PSC's recently adopted regulations regarding the "principal
                                         business"
  test to Grouse Mountain as a hotel business, I would conclude--as did the PSC--that
                                           Grouse
Mountain did not bring itself within those regulations so as to avoid falling within
                                              the
      statutory definition of a "motor carrier" contained in    69-12-101, MCA. In
                                        determining
   whether Grouse Mountain's transporting of guests to the Big Mountain and downtown
 Whitefish is incidental to its principal hotel business under      38.3.l001, ARM, the
                                           pivotal
questions are whether that transportation is "in furtherance of, in the scope of, and
       subordinate to" the principal business. (Emphasis added.) The use of the
                                        conjunctive
           "and" indicates that all three of the specified criteria must be met.
         Here, it is undisputed that the transportation at issue is "in the furtherance
                                           of" the
principal business, as defined in      38.3.1002(1)(b), ARM; it directly benefits Grouse
 Mountain's hotel business by transporting customers and clients in order to "assist
                                              the
  principal business in achieving its economic purpose or objective." It is my view,
     however, that Grouse Mountain's transportation services to the Big Mountain and
    downtown Whitefish are not "in the scope of" its principal business. " 'In the
                                         scope of'
      means directly within the bounds of the economic purpose or objective of the
                                         business.
        It does not include a transportation activity that is merely a tangent or
                                        appendage."
        Section 38.3.1002(1)(c), ARM. The economic purpose or objective of Grouse
  Mountain's business is to provide rooms, meals and beverages at a profit. Ferrying
  guests to locations some distance away from the hotel facility simply does not come
 directly within that economic purpose or objective; indeed, given the proclivity of
                                            people
       on vacation to purchase meals and beverages at whatever location they find
                                        themselves,
    the transportation Grouse Mountain provides easily could be said to be directly
                                           adverse

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 to its economic objective.   In any event, it is--at best--"a tangent or appendage"
                                         to the
  principal business. Thus, Grouse Mountain does not satisfy the "in the scope of"
   criterion and, as a result, it is not excluded from regulation by the PSC under
                                    38.3.1001, ARM.
         It is also my view that Grouse Mountain's transportation activities do not
                                        meet our
 Gamble-Robinson test or any statutory exclusion or exemption from the definition of
"motor carrier" contained in     69-12-101, MCA. Since the Court mentions these other
 authorities, but does not apply them, I will refrain from belaboring the point by
                                         setting
   forth the analysis under each which would properly result in a conclusion that
                                         Grouse
    Mountain's transportation activities relating to the Big Mountain and downtown
                                       Whitefish
                         are subject to regulation by the PSC.
       I recognize that the kinds of transportation services Grouse Mountain provides
                                           are
 probably being provided by many other hotel businesses. I also recognize that some
  might question the propriety of laws and regulations governing such transportation
activities in today's society. However, the wisdom of those laws and regulations is
                                           not
       the issue before us in this case; the issue is whether Grouse Mountain's
                                   transportation of
    guests to the Big Mountain and downtown Whitefish renders it a "motor carrier"
                                        pursuant
 to applicable statutes and regulations. I conclude that it does and, therefore, I
                                          would
                       reverse the District Court on this issue.
                                                               /S/ KARLA M. GRAY

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