NO. 85-554
IN THE SUPREME COURT OF THE STATE OF MONTANA
1986
KINGSBURY DITCH CO.,
Petitioner and Respondent,
DEPARTMENT OF NATURAL RESOURCES
AND CONSERVATION, et al.,
Respondents and Appellants.
F..PPEALFROM: District Court of the First Judicial District,
In and for the County of Lewis & Clark,
The Honorable W. W. Lessley, Judge presiding.
COUNSEL OF RECORD:
For A.ppellant:
Jardine, Stephenson, Blewett & Weaver; K. Dale
Schwanke argued for Pondera Canal, Great Falls,
Montana
Candace West, Dept. of Natural Resources, Helena,
Montana; Donald D. MacIntyre argued for Dept. of
Natural Resources, Helena, Montana
For Respondent:
Loble & Pauly; Lester Loble argued for Kingsbury
Ditch Co., Helena, Montana
Submitted: September 11, 1986
Decided: October 9, 1986
-
OCT 9 ~ 8 6
Filed:
Clerk
Mr. Justice William E. Hunt, Sr., delivered the Opinion of
the Court.
Kingsbury Ditch Company filed an application with the
Department of Natural Resources and Conservation (DNRC) to
change the point of use of a water right as required by the
Water Use Act of 1973, 5 85-2-402, MCA (1983). Pondera
County Canal and Reservoir Company and many others filed
objections to the proposed change, and a hearing date was
set. During the course of the proceedings, the DNRC hearing
examiner made several procedural rulings. Kingsbury asked
the Water Court to review two of those rulings. The Water
Court reversed both rulings. The DNRC and Pondera appeal.
We vacate and remand.
Pondera raises this issue on appeal. Did judicial
review properly lie from the interlocutory rulings of the
hearing examiner? Both appellants raise the following two
issues: (1) Whether the District Court erred in ordering
that the burden of proof must be placed on the objector in a
contested case hearing for a change of use application before
the DNRC? (2) Whether the District Court erred in ordering
the hearing examiner to impose discovery sanctions prior to
hearing to assure compliance with petitioner's request for
discovery?
Kingsbury Ditch Company has a pre-1973 water right.
Subsequent to the passage of the Water Use Act of 1973, they
applied for DNRC approval to change the point of use of that
water right as required by 5 85-2-402, MCA (1983). Public
notice of the proposed change was given and a prehearing
conference was scheduled. The hearing examiner detailed the
issues for the prehearing conference in her order of October
18, 1983. The order read:
The issues i n the Hearing will be whether the
.
Applicant has shown existence of the statutory
criteria for change in place and method of use
pursuant to MCA 5 85-2-402. The Objectors --
have the
burden of proof - - - that their rights - -be
to show will
adverseq affected by the change proposed by the
Applicant. (Emphasis added.)
This order was clarified by another order issued by the
hearing examiner on October 19, 1984. It read:
[A! s in all administrative proceedings, - the
Applicant bears the burden - pursuasion (sic) on
of
all ultimate issues, i.e.: the scope of the
existing right subject to the change request, and
lack of adverse affect to other appropriators. The
Objectors herein bear the burden of production on
the scope [and] existence of their riqhts, and the
kind and character of adverse affect alleged.
(Emphasis added.)
After the prehea.ring conference was sched.uled, the
hearing examiner ordered all parties to participate in
discovery. Kingsbury served a discovery request on all
parties on December 21, 1983. On December 23, 1983 the
hearing examiner, in response to Kingsbury's motion, issued
an order for discovery, requiring all parties to respond
within 30 days to Kingsbury's discovery request. On January
27, 1984, Kingsbury moved the hearing examiner to dismiss the
objections of the objectors who failed to respond to the
discovery request.
The hearing examiner stated that she has discretion as a
hearing examiner to order discovery and impose sanctions for
failure of a party to comply with her order. She noted that
numerous objectors were unrepresented by counsel, and their
ability to respond. to discovery requests was limited. One
such objector who attended the prehearing status conference
indicated a willingness to respond to the discovery request
but an understandable inability to comprehend exactly what a
response should entail. The hearing examiner ruled that
dismissal is a harsh sanction, especially against one
unrepresented by counsel in an administrative proceeding
where water users typically appear pro E. Further, there
had been no allegations of bad faith on the part of
non-responsive parties. She held there was a less drastic
means to protect Kingsbury's fundamental right to fairness
and procedural due process. She denied the motion to dismiss
the objections without prejudice and ruled that if the
objectors appeared at the hearing with substantive testimony
of which Kingsbury was unaware, a continuance sufficient for
Kingsbury to meet the evidence would be granted.
Kingsbury sought judicial review of these two orders in
the District Court. Judge Loble deemed himself disqualified
and Judge Lessley assumed jurisdiction. The facts on appeal
were stipulated to and following briefing Judge Lessley
reversed both orders.
He ruled:
[Tlhe Hearing Examiner below will return to her
original Order ...
namely "The objectors have the
burden of proof to show that their rights will be
adversely affected by the change proposed by the
Applicant."
and
[Blefore the time set for the next hearing in this
Cause, the Examiner shall prepare such Orders as
are necessary to assure compliance with
Petitioner's request for Discovery; that such Order
will. carry the condition of Sanctions for failure
to comply.
On appeal, Pondera argues judicial review was not
appropriate. Pondera contends that pursuant to MAPA, the
only types of administrative orders that are subject to
judicial review are final decisions in which the aggrieved
party has exhausted his administrative remedies. Section
2-4-702, MCA. The exception to that rule is $ 2-4-701, MCA,
which allows review of a "preliminary, procedural, or
intermediate agency action or ruling ... if review of the
final agency decision would not provide an adequate remedy."
Pondera contends adequate relief is available by way of a
review of the final agency decision.
Pondera also argues that pursuant to $ 2-4-704, MCA,
when judicial review is undertaken, the reviewing court may
reverse or modify "if substantial rights of the appellant
have been prejudiced" by administrative findings which are:
violative of constitutional or statutory provisions; in
excess of the statutory authority of the agency; made upon
unlawful procedures; affected by other error of law;
arbitrary or capricious; characterized by abuse of discretion
or clearly unwarranted exercise of discretion. Pondera
argues no prejudice to Kingsbury has ever been shown or
alluded to and that the reviewing court did not have grounds
to reverse.
The orders appealed here are clearly intermediate,
procedural orders of the hearing examiner. There has been no
final decision as yet, nor an exhaustion of administrative
remedies as required by S 2-4-702, MCA. A preliminary,
procedural, or intermediate agency ruling may be reviewed if
review of the final agency action would not provide an
adequate remedy. Section 2-4-701, MCA. There has been no
showing in this case that a review of the final agency action
would provide an inadequate remedy. We therefore hold that
judicial review did not lie from the orders of the hearing
examiner.
Since we have decided that judicial review is not
proper, we decline to address the two remaining issues raised
by appellants, instead w e vacate the decision of the lower
court and remand for further proceedings.
We Concur:
Chief Justice
stices