Petition to Transfer Territory

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No. 98-236 and 99-045
IN THE SUPREME COURT OF THE STATE OF MONTANA

2000 MT 342

IN THE PETITION TO TRANSFER TERRITORY FROM HIGH SCHOOL

DISTRICT NO. 6, LAME DEER, ROSEBUD COUNTY, MONTANA,

TO HIGH SCHOOL DISTRICT NO. 1, HARDIN, BIG HORN COUNTY, MONTANA.

___________________________________________

MARILYN S. HAYES, ARTHUR F. HAYES, Jr.,et al., consisting of the signators

of the Petitions for Transfer of Territory from Lame Deer High School District to Colstrip

High School District,

Petitioners/ Respondents,

v.

LAME DEER HIGH SCHOOL DISTRICT and NANCY KEENAN, in her

capacity as MONTANA SUPERINTENDENT OF PUBLIC INSTRUCTION,

Respondents/ Appellants.

APPEAL FROM: District Court of the Thirteenth Judicial District,

In and for the County of Big Horn,

The Honorable Diane G. Barz, Judge presiding. (98-236)

District Court of the Sixteenth Judicial District,

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In and for the Count of Rosebud,

The Honorable Joe L. Hegel, Judge presiding. (99-045)

COUNSEL OF RECORD:

For Appellants:

Richard J. Dolan, Goetz, Gallik, Baldwin & Dolan, Bozeman, Montana

For Respondents:

Laurence R. Martin, Felt, Martin, Grazier, Jacobs & Rapkoch, Billings, Montana (98-236);
George W. Huss, Brown & Huss, Miles City, Montana (99-045)

Heard: January 25, 2000

Submitted: February 15, 2000

Decided: December 19, 2000

Filed:

__________________________________________

Clerk

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

¶1 Lame Deer High School District appeals the decisions of the Thirteenth Judicial
District Court, Big Horn County, and the Sixteenth Judicial District Court, Rosebud
County, which reversed the decisions of the State Superintendent and affirmed the County
Superintendents' decisions to grant a transfer of territory from Lame Deer High School
District. We reverse the decisions of the District Courts.

¶2 The appellants raise several issues, but we find the dispositive issue on appeal to be
whether the school territory transfer statute, § 20-6-320, MCA, is an unconstitutional
delegation of legislative power.

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FACTUAL BACKGROUND

¶3 Lame Deer High School District (LDHSD) was created in 1993 after extensive
hearings and testimony. In February of 1991, after petitions were filed to create the new
district, the County Superintendents of Schools of both Big Horn and Rosebud Counties
held hearings. After both County Superintendents denied the petitions to create LDHSD,
the State Superintendent of Public Instruction issued a notice of hearing, consolidated the
appeals, and an independent hearing examiner conducted further hearings on the matter.
The hearing examiner issued an order; the parties were allowed to file exceptions and
present oral arguments. On November 9, 1993, after consideration of this record, the State
Superintendent issued her order creating LDHSD.

¶4 The non-voted mill levy assessed in LDHSD is currently about 34 mills, which is close
to the statewide average, and which is less than predicted by the State Superintendent
when she created the new district. The assessed taxable valuation of the territory
belonging in LDHSD is approximately $2,111,689. The transfer sought to be made here
will remove approximately $1.6 million through the Rosebud County territory transfer and
approximately $325,000 will be removed by the Big Horn County territory transfer.

¶5 LDHSD includes land from the Colstrip and Hardin High School Districts in both
Rosebud and Big Horn Counties, including lands within and outside of the borders of the
Northern Cheyenne Reservation. The territories proposed for transfer in this consolidated
case border the Northern Cheyenne Indian Reservation on three sides. Transferring both
the Rosebud and Big Horn territories from LDHSD would leave the district with only
$161,000 in taxable valuation, all within the Northern Cheyenne Indian Reservation.

¶6 In 1994, individuals residing in both Rosebud and Big Horn Counties, but outside of
the Northern Cheyenne Indian Reservation (collectively "Respondents"), petitioned their
respective County Superintendents of Schools requesting a territory transfer from LDHSD
back to the Colstrip and Hardin High School Districts. Both County Superintendents of
Schools held hearings, and both granted the Respondents' requests to transfer territory
from LDHSD pursuant to § 20-6-320, MCA (1993).

¶7 LDHSD appealed these decisions to the State Superintendent of Public Instruction, who
reversed the County Superintendents' decisions. From that determination, Respondents
appealed to their respective District Courts. Both District Courts reversed the State

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Superintendent's decisions. LDHSD now appeals from the District Courts' decisions. In
February of 1999, we consolidated the cases.

DISCUSSION

¶8 The dispositive issue on appeal is whether § 20-6-320, MCA, which gives authority to
county superintendents of schools to grant or deny petitions to transfer territory among
school districts, is an unconstitutional delegation of legislative power.

¶9 Our review of issues involving constitutional law is plenary. State v. Bedwell, 1999
MT 206, ¶ 4, 295 Mont. 476, ¶ 4, 985 P.2d 150, ¶ 4. A statute, however, is presumed to be
constitutionally valid. Ingraham v. Champion Intern. (1990), 243 Mont. 42, 46-47, 793
P.2d 769, 772. The party challenging the constitutionality of a statute has the burden of
overcoming this presumption. McClanathan v. Smith (1980), 186 Mont. 56, 65, 606 P.2d
507, 512.

¶10 Respondents argue that this issue is not properly before this Court because it was not
raised in the District Courts. LDHSD counters that while this issue is being raised for the
first time on appeal both the law and the procedural posture of the case support their
position that this Court should review the issue. LDHSD argues that broad public concerns
are involved which effect the substantial rights of the litigants and that the only time this
issue could have been raised in this case was on appeal.

¶11 In general, this Court does not consider issues raised for the first time on appeal. Reno
v. Erickstein (1984), 209 Mont. 36, 41, 679 P.2d 1204, 1207; Day v. Payne (1996), 280
Mont. 273, 276, 929 P.2d 864, 866. It appears, however, that substantial rights of the
litigants are at stake here. Their school district boundaries and tax burden have been
affected by a potentially unconstitutional delegation of power to the County
Superintendents. Further, the procedural posture of this case is unique. This matter began
as an administrative case before the County Superintendent who did not consider any
constitutional issues. On appeal, the State Superintendent refused to consider
constitutional issues. Even if LDHSD had raised this issue in the District Courts, it still
would have been raised for the first time on appeal.

¶12 LDHSD argues that the County Superintendent's change of the boundaries of LDHSD
was an exercise of legislative power. We have previously held that the authority to alter
school district boundaries is legislative in nature. The authority to make school district

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boundaries is entirely within the power of the legislature. Read v. Stephens (1948), 121
Mont. 508, 512, 193 P.2d 626, 628. Montana law on this issue is consistent with those of
sister states. See, e.g., School District No. 46 v. City of Bellevue (Neb. 1987), 400 N.W.2d
229, 235; State ex rel. Dix v. Board of Education (Kan. 1974), 527 P.2d 952, 955; Dunker
v. Brown County Board of Education (S.D. 1963), 121 N.W.2d 10, 13; Hazlet v. Gaunt
(Colo. 1952), 250 P.2d 188, 194; State v. Hines (Kan. 1947), 182 P.2d 865, 868.

¶13 Section 20-6-320, MCA, grants local county superintendents the power to transfer
territory from one school district to another. Section 20-6-320, MCA, gives the county
superintendents the authority to alter the boundaries of school districts, constituting a
delegation of legislative power. The legislature may constitutionally delegate its
legislative functions to an administrative agency, but it must provide, with reasonable
clarity, limitations upon the agency's discretion and provide the agency with policy
guidance. City of Missoula v. Missoula County (1961), 139 Mont. 256, 259, 362 p.2d 539,
541.

¶14 Article III, Section 1, of the 1972 Montana Constitution (formerly Article IV, Section
1, 1889 Montana Constitution) provides:

Separation of powers. The power of the government of this state is divided into
three distinct branches-legislative, executive, and judicial. No person or persons
charged with the exercise of power properly belonging to one branch shall exercise
any power properly belonging to either of the others, except as in this constitution
expressly directed or permitted.

¶15 In Bacus v. Lake County (1960), 138 Mont. 69, 354 P.2d 1056, we set the standard for
a delegation of legislative power. We stated the rule as follows:

The law-making power may not be granted to an administrative body to be
exercised under the guise of administrative discretion. Accordingly, in delegating
powers to an administrative body with respect to the administration of statutes, the
legislature must ordinarily prescribe a policy, standard, or rule for their guidance
and must not vest them with an arbitrary and uncontrolled discretion with regard
thereto, and a statute or ordinance which is deficient in this respect is invalid.

Bacus, 138 Mont. at 78, 354 P.2d at 1061. A statute granting legislative power to an
administrative agency will be held to be invalid if the legislature has failed to prescribe a

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policy, standard, or rule to guide the exercise of the delegated authority. If the legislature
fails to prescribe with reasonable clarity the limits of power delegated to an
administrative agency, or if those limits are too broad, the statute is invalid. See Matter of
Auth. to Conduct Sav. & Loan Act., Etc. (1979), 182 Mont. 361, 369-70, 597 P.2d 84, 89;
Douglas v. Judge (1977), 174 Mont. 32, 38, 568 P.2d 530, 534; Plath v. Hi-Ball
Contractors, Inc. (1961), 139 Mont. 263, 272, 362 P.2d 1021, 1025; City of Missoula, 139
Mont. at 259, 362 P.2d at 540-41.

¶16 LDHSD argues that the statute's delegation of power is unconstitutional because it
gives the county superintendents unfettered discretion in determining whether to transfer
territory. Further, the statute's only directive is that the decision must be based on the
effects of a transfer on both those living in the territory proposed for transfer and those
living in the remaining territory. LDHSD argues that the legislature must give more
guidance than this broad discretionary language. Respondents counter that the detailed
procedure involved in petitioning for a territory transfer expressly constrains the county
superintendents' ability to act.

¶17 The legislature has established a number of conditions which must be satisfied before
a petition may be considered by a county superintendent of schools. Satisfaction of these
conditions, however, does not require granting of a petition. Section 20-6-320, MCA
(1993), is as follows:

(1) A majority of registered electors of a high school district who reside in territory
that is a part of a high school district may petition the county superintendent to
transfer the territory in which they reside to another high school district if:

(a) the territory to be transferred is contiguous to the high school district to which it
is to be attached;

(b) the territory to be transferred is not located within 3 miles, over the shortest
practical route, of an operating school of the high school district from which it is to
be detached;

(c) the transfer of the territory will not reduce the taxable value of the district to less
than $300,000 unless the remaining territory of the high school district contains not
less than 50,000 acres of nontaxable Indian land;

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(d) the board of trustees of the school district that would receive the territory has
approved the proposed transfer in writing; and

(e) the territory proposed to be transferred to another high school district has not
been included in a petition filed under this section in the previous 3 years. . . .

(6) Within 30 days after the hearing, the county superintendent shall, after
considering the testimony and exhibits presented at the hearing, issue findings of
fact, conclusions of law, and an order. The county superintendent shall grant or deny
the requested transfer of territory. The decision must be based on the effects that the
transfer would have on those residing in the territory proposed for transfer as well as
those residing in the remaining territory of the high school district. . . .

This statute's only directive on whether to grant or deny a petition is that "the
decision must be based on the effects that the transfer would have on those residing
in the territory proposed for transfer as well as those residing in the remaining
territory of the high school district." Section 20-6-320(6), MCA (1993) (statute was
amended in 1997, causing the difference in subsection numbers, but the language at
issue remains the same). The territory transfer statute does not constrain a county
superintendent's discretion in whether to grant or deny a transfer. The decision is left
up to the county superintendent's unguided judgment.

¶18 While this statute sets forth some criteria, the satisfaction of these conditions does not
limit a county superintendent's discretion in granting or denying a petition once the
procedural requirements have been met. This statute fails to provide any checks on the
discretion of the county superintendent of schools in deciding whether to grant a territory
transfer. The statute's only directive is that the county superintendent should make the
decision based on the effects felt by those transferred and those remaining. Section 20-6-
320(6), MCA (1993). The legislature has provided no criteria for balancing the effects felt
by the parties involved in a school district territory transfer. Instead, the decision is left
solely to the whim of the local county superintendents.

¶19 It is this broad grant of discretion to a county superintendent of schools, unchecked by
any standard, policy or rule of decision, that renders the territory transfer statute
unconstitutional. In Bacus we stated that "the standard must not be so broad that the
officer or board will have unascertainable limits within which to act." Bacus, 138 Mont. at
81, 354 P.2d at 1062. If the legislature had limited a county superintendent to the role of

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fact finder or if the legislature had set forth the specific criteria to be weighed when
deciding to grant or deny a petition, the statute would have conformed to constitutional
requirements.

¶20 We hold that § 20-6-320, MCA, is an unconstitutional delegation of legislative power.
The decisions of the District Courts are reversed.

/S/ WILLIAM E. HUNT, SR.

We Concur:

/S/ J. A. TURNAGE

/S/ JIM REGNIER

/S/ TERRY N. TRIEWEILER

/S/ W. WILLIAM LEAPHART

Justice James C. Nelson specially concurs.

¶21 I specially concur in our opinion. I write separately, first, because I believe that the
dissent's criticism of the procedural component of our opinion is unfounded and, second,
(1)
because I have my own rationale for concluding that § 20-6-320(6), MCA is
unconstitutional beyond a reasonable doubt. In sum, I believe that we are correct in
addressing this issue; I believe that we are correct in holding the statute unconstitutional;
and, finally, I believe that the Legislature can amend the statute to cure its constitutional
infirmities by articulating reasonably clear and definite standards, objective criteria and
ascertainable limits to guide the county superintendent's exercise of discretion in territory
transfer cases.

I.

¶22 First, there is the contention that the constitutional issue is being raised for the first
time on appeal contrary to our general rule that dictates we not address issues and theories
unless first raised in the trial court. There are at least two sound legal reasons which
militate against following the usual rule in this case.

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¶23 As noted by the Court, there is a "substantial rights" exception to the general rule. In
Matter of N.B. (1980), 190 Mont. 319, 323, 620 P.2d 1228, 1231, we stated:

This Court reserves to itself the power to examine constitutional issues that involve
broad public concerns to avoid future litigation on a point of law. We reject the
State's argument that this appeal should be dismissed for failure to raise these issues
for the first time on appeal if the alleged District Court error affects the substantial
rights of a litigant. [Citation omitted.]

This exception to the no-review rule is discretionary, and we interpret "substantial rights"
narrowly. Reno v. Erickstein (1984), 209 Mont. 36, 42, 679 P.2d 1204, 1207.
Notwithstanding, I believe that this case fits within the exception.

¶24 Public education and how school districts are drawn, administered, and financed
implicate broad public concerns--concerns that are the subject of continuing, intense,
popular, and legislative scrutiny statewide. Moreover, as part II of this separate opinion
demonstrates, these same matters significantly impact the rights of educational
opportunity guaranteed under Article X, Section 1 of the Montana Constitution and, thus,
(2)
the substantial rights of the litigants here.

¶25 Additionally, this case is one of three school district territory transfer cases presently
before this Court. See In re the Petition to Transfer Territory from Belgrade Elementary
and High School District No. 44 to Monforton Elementary District No. 27 and Bozeman
High School District No. 7, No. 99-687; Belgrade Elementary and High School District
No. 44 v. Alan and Cindy Morris, Bozeman Elementary and High School District No. 7
and Gallatin County Superintendent of Schools Jill Richards, No. 99-395. In these latter
two cases, the unconstitutional delegation issue was raised and briefed below. And, while
it might be argued that, to avoid the criticism of the dissent, we should address this issue
in one of those two cases, the fact remains that if the statute is unconstitutional for one
case, it is unconstitutional for all cases. In practical terms, it simply does not matter which
case serves as the vehicle to articulate the dispositive rule of law which governs all three.
Moreover, since the instant case was the first of the three to advance through the opinion
writing stage, (and the only one orally argued), it makes good sense to give the Legislature
as much lead time as possible in which to consider and adopt amendments to the statute, if
that body chooses to do so.

II.

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¶26 That said, I turn next to the substance of the statute at issue.

¶27 Section 20-6-320, MCA (1993), allows territory comprising a high school district to
be transferred from one contiguous district to another. Subsection (1) of the statute
provides certain specific criteria as to the territory to be transferred, as to the territory
remaining and as to the receiving district. Subsection (2) provides certain information that
must be included in the transfer petition and for a $50 (now $100) filing fee. Like those in
subsection (1), these requirements are black and white and require no exercise of
discretion. Under subsection (3), a petition that meets the statutory criteria specified in
subsection (1) and contains the information required by subsection (2) is valid; one that
does not meet these criteria or contain this information is invalid.

¶28 Subsections (3), (4) and (5) set out how the county superintendent is to proceed
procedurally after a valid petition is filed. Subsections (7) and (8) also contain other
procedural requirements. None of these procedural requirements are at issue here.

¶29 As noted by the majority, subsection (6) of the statute presents the constitutional
infirmity. This subsection provides:

Within 30 days after the hearing, the county superintendent shall, after considering
the testimony and exhibits presented at the hearing, issue findings of fact,
conclusions of law, and an order. The county superintendent shall grant or deny the
requested transfer of territory. The decision must be based on the effects that the
transfer would have on those residing in the territory proposed for transfer as well
as those residing in the remaining territory of the high school district.

Section 20-6-320(6), MCA (1993) (emphasis added).

¶30 Subsection (6) completely fails to provide any objective legislative standard, policy,
instruction, criteria, or requirements as to what sort of "effects" are to guide the county
superintendent in exercising his or her power to grant the petition to transfer or to deny the
petition. There is no legislative direction as to what "effects" the county superintendent, at
a minimum, is to consider. For example, is he or she to consider the effect of the transfer
on educational opportunity and quality; on property taxes; on taxable valuation; on fiscal
stability and bonding capacity; on student transportation; on plant capacity; on class size;
on student, teacher and staff morale; on sports and extracurricular activities; on local
control; on racial, cultural, social, economic and demographic diversity or homogeneity;
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on district geography and on the communities and infrastructure of the transferring and
receiving districts? Is he or she to consider all of the above, some of the above, none of the
above? Is he or she to consider other "effects" instead of or in addition to the above?

¶31 Moreover, the statute fails to provide any legislative direction as to how,
substantively, the county superintendent is to evaluate the types of "effects" that transfer
might implicate. Which "effects" are important; which are less important; under what
criteria are competing "effects" to be balanced; and are there certain "effects" that must
exist--or may not exist--before a transfer petition can be granted or denied? Is some sort of
cost-benefit-burden analysis appropriate or necessary? Is the county superintendent
required to determine whether the relief sought by the petitioners could be accomplished
by some mechanism short of disturbing existing school district boundaries so as to avoid
the consequent "effects" of transfer on the tax base and operations of both districts?

¶32 The statute does not set out who--the petitioners or the opponents of transfer--bears
the burden of proof of the "effects." The statute simply provides that a majority of the
resident electors in territory that is part of a district may petition to transfer the territory in
which they reside to another district. Aside from there being no definition as to what
constitutes "territory"--i.e., is it some percent of the total territory in the district or can it be
one family's lot or farm?--the statute fails to specify whether this "majority" has any
obligation to actually offer evidence or prove any "effects." The statute does not articulate
a standard of proof. Are the "effects"--assuming some obligation of proof--to be
demonstrated by a preponderance of the evidence; by clear and convincing evidence; or by
some other standard?

¶33 In short, one cannot read subsection (6) without being reminded of the old fast-food
commercial:

Customer: "What's in the chicken sandwich?"

Counter person: "Parts."

Customer: "What kind of parts?"

Counter person: "Parts is parts."

In context, the same question can be asked: What's in this statute? Unfortunately, the

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answer is the same: "Effects is effects."

¶34 Under this statute, the Legislature has effectively given the county superintendent
carte blanche to make virtually any decision he or she wishes. In default of specifying
legislative standards, one locally-elected official has been statutorily granted free reign to
transfer "territory"--whatever that is--from one school district to another (or to deny a
transfer) so long as the decision is based on the "effects" of the transfer. There is no
apparent legislative concern as to the significance, relevance or legitimacy of those
"effects"--only that there be some. The statute delegates completely unfettered discretion
to the administrative official whether to transfer or to not transfer territory. The statute
completely fails to set out any reasonably clear and ascertainable limits, objective criteria
or clear and definite legislative standards to control the county superintendent's exercise of
discretion and decision-making authority.

¶35 As a result, this scheme allows, if not encourages, arbitrary and capricious decisions
based on political expediency instead of on considerations emphasizing thoughtful and
fiscally responsible school district administration and, most importantly, insuring the best
educational opportunity for the students affected. By virtue of the non-existence of
legislative criteria as to the nature and significance of the "effects" the county
superintendent is to consider, these statutes promote litigation between school districts
with the attendant non-educationally related cost and expense that no school district in this
State can realistically afford.

¶36 There being no formal "parties" to school district territory transfer disputes, the
"forum" for these sorts of proceedings constitutes little more than a public hearing before
the county superintendent. Such a format is better suited to exchanges of opinions and
rhetoric by any resident, taxpayer or district representative that wants a say, than to the
receipt from knowledgeable witnesses of relevant, probative testimony and hard evidence
on the "effects" of the transfer on each district.

¶37 Moreover, this scheme defies any meaningful review of the county superintendent's
determination because there are no legislative standards against which to judge his or her
decision. So long as the county superintendent's decision is based on the "effects" of the
transfer, who is to say that the county superintendent is right or wrong? One "effect" is as
good or as bad as another "effect." One district's beneficial "effect" is the other district's
detrimental "effect." "Effects" may be important or they may be trivial. The "effects" may
impact many district residents or they may be personal only to the petitioners. But, so

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what? "Effects is effects."

¶38 If logic and common sense do not condemn such a perverse statutory scheme, the law
does. Thus, it is to this law that I now turn.

III.

¶39 In Read v. Stephens (1948), 121 Mont. 508, 512, 193 P.2d 626, 628, we held that "[t]
he power exercised by the administrative boards or officials in changing the boundaries of
school districts is usually termed legislative power . . . ." We also concluded that the
statutory language permitting the county superintendent to grant a transfer petition "if he
deem it advisable and for the best interest of the territory proposed to be transferred or
included" delegated to the country superintendent of schools and to the board of county
commissioners "a full measure of discretionary power in creating and changing the
boundaries of school districts." Read, 121 Mont. at 513, 193 P.2d at 629. Unfortunately,
however, we did not directly address the issue framed in the case at bar--i.e., whether the
statutory language accorded with the constitutional requirement that delegation of
authority to an administrative officer by the Legislature must be accompanied with
(3)
objective, clear and ascertainable standards on how that authority should be exercised.

¶40 As the Court's opinion notes, however, this issue was addressed in Bacus v. Lake
County (1960), 138 Mont. 69, 79-80, 354 P.2d 1056, 1061-62, wherein we declared
unconstitutional a statute that delegated to county and district boards of health the power
to enact rules and regulations "pertaining to the prevention of disease and the promotion of
public health."

¶41 Citing the "Separation of Powers" provision, Article IV, Section 1 of the 1889
Montana Constitution (virtually identical to Article III, Section 1 of the 1972 Montana
Constitution), we stated:

When the legislature confers authority upon an administrative agency it must lay
down the policy or reasons behind the statute and also prescribe standards and
guides for the grant of power which has been made to the administrative agency.
The rule has been stated as follows:

"The law-making power may not be granted to an administrative body to be
exercised under the guise of administrative discretion. Accordingly, in delegating

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powers to an administrative body with respect to the administration of statutes, the
legislature must ordinarily prescribe a policy, standard, or rule for their guidance
and must not vest them with an arbitrary and uncontrolled discretion with regard
thereto, and a statute or ordinance which is deficient in this respect is invalid. In
other words, in order to avoid the pure delegation of legislative power by the
creation of an administrative agency, the legislature must set limits on such agency's
power and enjoin on it a certain course of procedure and rules of decision in the
performance of its function; and, if the legislature fails to prescribe with reasonable
clarity the limits of power delegated to an administrative agency, or if those limits
are too broad, its attempt to delegate is a nullity.

"* * * On the other hand, a statute is complete and validly delegates administrative
authority when nothing with respect to a determination of what is the law is left to
the administrative agency, and its provisions are sufficiently clear, definite, and
certain to enable the agency to know its rights and obligations."

Bacus, 138 Mont. at 78-79, 354 P.2d at 1061 (emphasis in original) (quoting 73 C.J.S.
Public Administrative Bodies and Procedure § 29 at 324-25).

¶42 We observed that the statutory language at issue in Bacus was not sufficiently definite
to lay down proper standards for the guidance of the administrative agency and that the
Legislature's intention could not be discerned from the language which it used in
delegating rule-making authority to the boards. We also pointed out that "the validity of a
statute is determined by what may be done under it not what has been done under it."
Bacus, 138 Mont. at 79, 354 P.2d at 1061 (citation omitted).

¶43 Finally, citing State v. Stark (1935), 100 Mont. 365, 371, 52 P.2d 890, 892, we stated:

"Delegation of power to determine who are within the operation of the law is not a
delegation of legislative power. * * * But it is essential that the Legislature shall fix
some standard by which the officer or board to whom the power is delegated may be
governed, and not left to be controlled by caprice."

We agree with this statement of the law and go further by saying that the standard
must not be so broad that the officer or board will have unascertainable limits within
which to act. The statute in the case at bar is too broad to prescribe with reasonable
clarity the limits within which the officer or board may act.

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Bacus, 138 Mont. at 81, 354 P.2d at 1062.

¶44 We have continued to follow the Bacus Court's reasoning in other cases where the
Legislature has too broadly delegated its authority to administrative agencies. See Plath v.
Hi-Ball Contractors, Inc. (1961), 139 Mont. 263, 362 P.2d 1021 (declaring
unconstitutional a statute which delegated to city-county planning boards complete
discretion in the development of master plans for the contiguous unincorporated area
within a 12-mile radius of the city); Douglas v. Judge (1977), 174 Mont. 32, 568 P.2d 530
(holding unconstitutional a statute authorizing the Department of Natural Resources to
make loans to farmers and ranchers who proposed "worthwhile" renewable resource
development programs); In the Matter of Savings & Loan Activities (1979), 182 Mont.
361, 597 P.2d 84 (declaring unconstitutional a statute granting the Department of Business
Regulation the power to approve or disapprove applications for the merger of savings and
loan associations); Shannon v. City of Forsyth (1983), 205 Mont. 111, 666 P.2d 750
(holding that a zoning ordinance requiring the approval of 80% of landowners residing
within 300 feet of a particular property before a variance may be granted, was an
unconstitutional delegation of legislative authority); White v. State (1988), 233 Mont. 81,
759 P.2d 971 (declaring that the Legislature unconstitutionally delegated authority to the
Science and Technology Development Board).

¶45 White even more dramatically points up the constitutional infirmities in the school
district territory transfer statute at bar. In White, the legislation at issue actually set out a
whole list of criteria to be used by the Science and Technology Development Board in
making technology investments. These considerations included:

(1) Technology investments may be made from money in the technology
development account only upon a favorable determination by the board of:

(a) the relevance of the proposed technology development project to the purposes of
this part;

(b) the prospects for collaboration on the project between public and private sectors
of the state's economy in mineral technology, agricultural technology, forestry
technology, biotechnology, microelectronics and computer sciences, energy
technology, information sciences, and materials science;

(c) the prospects for achieving commercial success in general and for creating

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significant numbers of new jobs in the state in particular;

(d) the quality of the specific product and business development methodology
proposed;

(e) the suitability of any proposed milestone for evaluating progress of technology
development project results; and

(f) the availability of matching funds required under 90-3-301(2).

(2) In this evaluation process, the board shall consider the investment's:

(a) job creation potential;

(b) potential benefit for existing industry;

(c) potential for creating new industry; and

(d) involvement of existing institutional research strength or whether it involves a
newly targeted technology area with development potential.

White, 233 Mont. at 89-90, 759 P.2d at 976.

¶46 Notwithstanding, even with this detail we held that these considerations did not rise to
the level of objective criteria, but were more akin to general policy considerations
underlying the entire technology investment program. The legislation was constitutionally
(4)
deficient because "[n]o legislatively defined 'policy, standard or rule' [was] effectively
given" and because the bill failed to"'prescribe with reasonable clarity the limits of power
delegated.'" White 233 Mont. at 90, 759 P.2d at 976 (citation omitted).

¶47 If the detailed list of considerations set out in the legislation at issue in White was not
sufficiently definite and clear enough to pass constitutional muster for legislative
delegation of authority purposes, how much further then from the permissible standard is
the school district territory transfer statute at issue in the case sub judice? The answer is
self-evident. This statute permits the administrative official to grant or deny a petition
merely "based on the effects that the transfer would have on those residing in the territory
proposed for transfer as well as those residing in the remaining territory of the high school

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district." Section 20-6-320(6), MCA. In fact, it is difficult to imagine broader discretionary
language. Purely and simply, in enacting subsection (6), the Legislature failed to prescribe
any objective policy, standard, or rule of decision to limit the county superintendent's
exercise of discretion. See White, 233 Mont. at 90, 759 P.2d at 976. Moreover, subsection
(6) of § 20-6-320, MCA, is so broad that the county superintendent has no reasonably
clear and ascertainable limits within which to act. See Bacus, 138 Mont. at 81, 354 P.2d at
1062.

¶48 Under this statute, the county superintendent can make his or her decision for a good
reason, for a bad reason, or for no reason at all. Provided his or her decision is based on
the "effects" of the transfer on the residents of the territories involved and assuming he or
she says his or her decision is based on the "effects," legally it matters not what or how he
or she decides. This is so, because there is no objective, clear and certain legislative
direction as to what "effects" he or she is to consider and as to how he or she is to judge
the significance, relevance and legitimacy of those "effects" as to the losing and gaining
districts.

¶49 Moreover, any judicial review of his or her decision--our appellate review included--is
necessarily little more than an exercise in the judiciary substituting its judgment for that of
the county superintendent's. Since the statute fails to include any objective, legislative
policy, standard, or rule of decision as to what "effects" are to be considered, reviewing
courts have no basis for determining whether the county superintendent met or missed the
mark. There is no yardstick by which to determine whether his or her decision was
arbitrary or capricious; wrong or right.

¶50 In short, the county superintendent's decision may have no real meat in it at all. It
might well be made up of little more than beaks and claws and gizzards and eyeballs. But,
under this statute, that's all right because "Parts is parts," and "Effects is effects."

¶51 The language of the territory transfer statute at issue cannot pass the test of
constitutionality under either Article III, Section 1, or Article V, Section 1 of the Montana
Constitution. For that reason, I agree that § 20-6-320(6), MCA, is unconstitutional beyond
a reasonable doubt.

¶52 I concur.

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/S/ JAMES C. NELSON

Justice W. William Leaphart joins in the forgoing special concurrence.

/S/ W. WILLIAM LEAPHART

Justice Karla M. Gray, dissenting.

¶53 I respectfully dissent from the opinions of both the Court and Justice Nelson on the
threshold question of whether the constitutional issue on which the Court resolves the
present case is properly before us. As a result, I would not reach in this case the
substantive issue of whether § 20-6-320(6), MCA (1993), is an unconstitutional delegation
of legislative power. I would affirm the District Courts on the issues properly before us.

¶54 With regard to whether the constitutional issue raised by LDHSD is properly before
us, our general rule requires us to decline to consider issues raised for the first time on
appeal. See Day, 280 Mont. 273, 929 P.2d 864. The LDHSD having conceded that it is
raising this constitutional issue for the first time on appeal to this Court, I would decline to
address it.

¶55 With regard to the Court's notion that the procedural posture of this case is "unique," I
disagree. It goes without saying that this Court receives many appeals from judicial review
by district courts of final agency decisions.

¶56 Nor do I agree with the Court that the earliest the LDHSD could have raised the
constitutional issue was in the District Courts and, consequently, the issue would have
been raised "for the first time on appeal" there, thus rendering it somehow permissible for
this Court to resolve the issue here and now. Under §§ 20-6-320 and 20-3-107, MCA
(1993), a county superintendent's decision is "appealable" to the state superintendent of
public instruction. The state superintendent's decision is the final administrative order. See
§ 20-3-107(2), MCA (1993). In its appeals to the state superintendent, LDHSD raised at
least one constitutional issue and the state superintendent properly left that issue for
resolution by the courts. The District Courts, noting that the constitutional issue had been
raised, addressed it and, as a result, that issue was properly preserved for consideration by
this Court. LDHSD could have done the same with its "unconstitutional delegation" issue;
it did not do so.

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¶57 Moreover, the remedy for one purportedly aggrieved by a final agency decision is
"judicial review," pursuant to the Montana Administrative Procedure Act (Act), not
"appeal," as stated by the Court. See § 2-4-702(1)(a), MCA (1993). In that regard, § 2-4-
702(1)(b), MCA (1993), of the Act expressly provides that a party proceeding before an
agency under the terms of a particular statute may not be precluded from questioning the
validity of that statute on judicial review. Thus, the Act specifically allows a challenge to a
statute on "judicial review," even if not raised prior to that stage. LDHSD clearly was
entitled, by law, to raise the "unconstitutional delegation" argument on judicial review in
the District Courts and such an action would not constitute raising an issue for the first
time on "appeal." LDHSD had a second opportunity to raise this issue and failed to do so.
I would not give it a third bite of the apple in this Court at this time in derogation of our
general rule that we will not address an issue raised for the first time here.

¶58 Finally, the Court's broad language suggesting that the general no-review rule contains
an exception when "substantial rights of the litigants are at stake" is set forth without any
legal basis. Fortunately, Justice Nelson's special concurrence fills this hole in the Court's
opinion by providing decisional authority. It also, however, clarifies that the "substantial
rights" exception to the no-review rule is interpreted narrowly and is discretionary with
this Court. I would focus on the rationale behind the exception, which relates to avoiding
future litigation on a point of law, rather than merely the "affects substantial rights"
language. See N.B., 190 Mont. at 323, 620 P.2d at 1231. As Justice Nelson points out,
other cases pending before us properly preserved the issue regarding the constitutionality
of § 20-6-320(6), MCA (1993). We could, and should, address the issue in one of those
cases. Under the circumstances of these cases, the underlying rationale for the exception to
the no-review rule-avoiding future litigation-simply does not support discretionary
application of the exception here, particularly given another important principle applied by
this Court, that we avoid constitutional issues whenever possible. See, e.g., State v. Still
(1995), 273 Mont. 261, 902 P.2d 546.

¶59 Furthermore, the no-review exception raises serious concerns of its own. Presumably,
"substantial rights" always can be argued in the context of a constitutional issue, given
lawyers' creativity in crafting arguments. Consequently, the exception's application may
well overwhelm and engulf the no-review rule, which is premised on the unfairness to
district courts which results when this Court considers an issue not previously raised, and
reverses-as the Court does here-a district court on an issue never presented to that court for
resolution.

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¶60 The dispositive questions properly before us, at the bottom line, are (1) whether the
county superintendents' decisions to grant a transfer of territory were arbitrary or
capricious; (2) whether the state superintendent applied the proper standard on appeal of
those decisions; and (3) whether the District Courts erred in concluding that the territory
transfers did not constitute racial discrimination in violation of the equal protection clause
of the Fourteenth Amendment to the U.S. Constitution. I would resolve all three questions
in the negative and affirm the District Courts. I dissent from the Court's failure to do so.

/S/ KARLA M. GRAY

1. All references to this statute in this separate opinion are to the 1993 version of the
Montana Code. I note, however, that the language at issue is included in the 1995, 1997
and 1999 versions of § 20-6-320, MCA, as well, not to mention in the statute pertaining to
transferring territory from one elementary school district to another. See § 20-6-213,
MCA.

2. While we have not had the opportunity to characterize the educational rights that are
protected under Montana's Constitution, two members of this Court--the writer of this
separate opinion and Justice Leaphart--have stated that they believe the educational rights
protected by Article X, Section 1 of the Montana Constitution, are fundamental
constitutional rights. See Kaptein v. Conrad School Dist.(1997), 281 Mont. 152, 163, 931
P.2d 1311, 1318 (Nelson, J., specially concurring).

3. Similarly, we did not address this constitutional issue in Gunderson v. Board of County
Commissioners (1979), 183 Mont. 317, 599 P.2d 359 (upholding a decision made under
the elementary school district transfer statute).

4. In this case we held that the improper delegation of legislative authority violated Article
V, Section 1 of the 1972 Montana Constitution (legislative power is vested in the
Legislature). White, 233 Mont. at 92, 759 P.2d at 977.

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