Williamson v. Montana Public Service Commission & Northwestern Energy

February 14 2012

DA 11-0382

IN THE SUPREME COURT OF THE STATE OF MONTANA

2012 MT 32

DR. PAUL WILLIAMSON, REV. DR. VERN KLINGMAN,
PATRICIA KLINGMAN, RUSSELL L. DOTY, JAMES
T. and ELIZABETH GRUBA, LEO G. and JEANNE
R. BARSANTI,

Petitioners and Appellants,

v.

MONTANA PUBLIC SERVICE COMMISSION
and NORTHWESTERN ENERGY,

Respondents and Appellees.

APPEAL FROM: District Court of the Thirteenth Judicial District,
In and For the County of Yellowstone, Cause No. DV 10-1450
Honorable Susan P. Watters, Presiding Judge

COUNSEL OF RECORD:

For Appellants:

Russell L. Doty, Attorney at Law, Billings, Montana

For Appellee Montana Service Commission:

James C. Paine, Special Assistant Attorney General, Montana Service
Commission, Helena, Montana

For Appellee Northwestern Energy:

Monica J. Tranel, Tranel, McCarter & Morris, PLLC, Helena, Montana

Submitted on Briefs: November 23, 2011

Decided: February 14, 2012
Filed:

__________________________________________
Clerk

2
Justice James C. Nelson delivered the Opinion of the Court.

¶1 Appellants are a group of individuals who filed a complaint with the Montana

Public Service Commission (Commission or PSC) against NorthWestern Energy

(NorthWestern or NWE) concerning NorthWestern’s provision of street lighting services.

The PSC dismissed the complaint on the ground that the four named complainants lacked

standing under § 69-3-321, MCA. Appellants then filed an amended complaint in which

they named four additional complainants. The PSC decided that Appellants were

procedurally barred from amending their complaint. Moreover, the PSC stated that it was

not persuaded to reconsider its earlier ruling on standing in any event. Appellants sought

review in the Thirteenth Judicial District Court, Yellowstone County. The District Court

affirmed, and Appellants have now brought the case to this Court.

¶2 There are two issues on appeal: (1) whether the four original complainants have

standing to pursue their complaint in the PSC under § 69-3-321, MCA, and (2) whether

the PSC properly rejected the amended complaint. As to the first issue, we affirm the

PSC’s and the District Court’s conclusions that the original complainants lack standing.

As to the second issue, we conclude that the PSC’s and the District Court’s rationales for

rejecting the amended complaint were incorrect, and we accordingly reverse and remand

for further proceedings as detailed below.

BACKGROUND

Street Lighting Service

¶3 Title 7, chapter 12, part 43 of the Montana Code Annotated contains provisions

relating to the creation of special improvement districts for lighting streets and highways.

3
Section 7-12-4301(1), MCA, authorizes the council of any city or town to create such

districts. Once a street lighting district is created, the city or town council may arrange to

have the posts, wires, pipes, conduits, lamps, or other suitable and necessary appliances

procured and erected by contract, by the street commissioner, or by any other official of

the city or town. Section 7-12-4308(1)(a), MCA. The costs of installing, maintaining,

and supplying electrical current for the street lighting system are to be borne, in whole or

in part, by the owners of property within the lighting district. Sections 7-12-4301(1)(b),

-4321, MCA. The city or town council is authorized to assess and collect these costs by

special assessment against said property. Section 7-12-4301(1)(c), MCA.

¶4 Under § 69-3-306(1), MCA, the PSC has authority to prescribe “classifications of

the service of all public utilities.” Such classifications may take into account the quantity

used, the time when used, and any other reasonable consideration; and each public utility

is required to conform its schedule of rates, tolls, and charges to such classifications.

Section 69-3-306(1), MCA. Pursuant to this statute, the PSC has approved a number of

customer classes for NorthWestern. The electric rates assessed each customer class vary

based on cost-of-service studies and are designed to generate sufficient monies to meet

the class revenue requirement. Examples of NorthWestern’s customer classes include

residential (governed by Tariff Schedule REDS-1), small commercial (Tariff Schedule

GSEDS-1), large commercial (Tariff Schedule GSEDS-2), irrigation (Tariff Schedule

ISEDS-1), and street and area lighting (Tariff Schedule ELDS-1).

¶5 NorthWestern directly bills the members of the street and area lighting class for

the provision of street lighting service. Included within this class are municipalities, such

4
as the City of Billings and the City of Missoula, which pay the street lighting bills to

NorthWestern. Property owners in the street lighting districts do not pay NorthWestern

directly for the provision of street lighting service. But, as discussed below, Appellants

contend that the property owners ultimately pay for the service because the city assesses

the property owners within each district for the costs of the street lighting, as reflected by

separate lines on their property tax bills. In addition, Appellants allege that persons

residing outside the street lighting districts help defray, in general property taxes, the

costs of street lighting.

Appellants’ Claims

¶6 Appellants brought this action seeking various types of relief. Primarily, they

would like the PSC to require NorthWestern to replace existing high pressure sodium

(HPS) street lights with light emitting diode (LED) street lights. Appellants contend that

“[a]doption of new energy saving infrastructure technologies, such as LEDs, can play an

important role in helping the United States and the State of Montana to achieve their

goals to become more energy independent and to generate less CO2 [carbon dioxide].”

Appellants further contend that the costs of LED street lights “have now dropped to a

level where we will waste more money and energy in the long run by waiting for future

improvements and price cuts in LED luminaires than to move forward with LED street

lighting projects.”

¶7 Prior to the commencement of the instant action, the PSC initiated a proceeding to

“investigate the technical and economic feasibility and possible adoption of rules related

to the installation by regulated electric utilities of [LED] street and area lighting.” The

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PSC held an informal roundtable in April 2009. Various parties participated or provided

comments, including NorthWestern, Montana-Dakota Utilities Co., and two of the

complainants in the present case. NorthWestern and Montana-Dakota advised the PSC

that, according to their analyses, “the costs of converting their existing street and area

lighting to LED luminaires exceed the benefits at this time” and “payback periods could

often exceed the life of the luminaire.” The utilities also cited “legal and administrative

problems” with adopting a street lighting rule. Ultimately, the PSC concluded that “LED

technology is a promising technology, but is currently at a developmental stage that does

not warrant a mandatory street and outdoor lighting conversion program.” Thus, the PSC

elected “not [to] pursue an LED street and outdoor lighting rulemaking at this time.” The

PSC noted, however, that NorthWestern and Montana-Dakota are both “obligated to

acquire cost-effective energy efficiency and conservation in their resource planning

processes.” Accordingly, the PSC stated that it expected the utilities to “continue to

monitor the technical and economic aspects of LED technology” and to “include

consideration of LED lighting technology along with other energy efficiency alternatives

when the utilities develop and submit their resource planning filings.”

¶8 Appellants commenced the instant action in February 2010. While acknowledging

the 2009 proceedings, Appellants distinguish the present proceeding on several grounds.

Primarily, they contend that the cost-benefit analysis which NorthWestern presented to

the PSC in 2009 failed to include consideration of so-called “ownership overcharges.” In

this regard, Appellants allege that many of the poles, mast arms, luminaires, and wiring

of NorthWestern-owned street lights (which Appellants refer to collectively as “the street

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lighting infrastructure”) have been fully paid for—i.e., that NorthWestern has already

recouped the full cost of these assets—and that NorthWestern customers should not have

to continue paying “ownership charges” for them. (Appellants note that “ownership

charges” do not include charges for the energy used, for transmission and distribution of

that energy, and for billing, maintenance, and other such expenses.) Appellants further

allege that in Billings alone, NorthWestern has collected millions of dollars in ownership

charges beyond the cost of the street lighting infrastructure. Appellants opine that the

same thing has occurred in other Montana cities and counties served by NorthWestern.

They argue that NorthWestern should be required to disgorge these “ownership

overcharges,” which could then be used to defray the installation costs of switching to

more energy efficient LED lighting.

¶9 Thus, while the utility companies asserted in the 2009 proceedings that “the costs

of converting their existing street and area lighting to LED luminaires exceed the benefits

at this time,” Appellants argue here that the costs of conversion are substantially reduced

or eliminated when the alleged ownership overcharges are factored into the equation.

Appellants observe that their complaint “narrowly addresses the cases where a mandatory

conversion [to LED technology] is warranted.” For instance, based on their analysis of

various street lighting districts in Billings, Appellants allege that the City of Billings is

paying $60,742 per month in ownership overcharges and that these funds could instead

be used to “pay for new energy efficient LED lighting without an increased cost to

NorthWestern’s customers” (emphasis in original). Appellants conclude that Billings

taxpayers would pay roughly 80 percent less for street lighting if the wrongful ownership

7
charges were eliminated and the already-collected overcharges were used to pay for new

LED lights. Again, they opine that this situation “undoubtedly” exists in other Montana

cities and counties as well.1

Original Complainants

¶10 Appellants frame this case as a class action. The four original complainants are

Dr. Paul Williamson, Rev. Dr. Vern Klingman, Patricia Klingman, and Russell L. Doty

(collectively, Complainants). At the time the complaint and the amended complaint were

filed, Williamson was a resident of Missoula. He alleges that he is “directly affected by

local government taxes levied on street lighting districts in the city and county where he

lives, pays rent, and works.” He purports to represent “renters who pay rent that reflects

the fee on the property tax for rental units that reflects the street lighting overcharge.”

Appellants note that Williamson has since moved out of state, but they assert that he will

be replaced by another renter at some future time in the proceedings.

¶11 The Klingmans resided in Billings at the time the complaint and the amended

complaint were filed. They were not residents of a street lighting district, but instead

1
Besides the “ownership overcharge” issue, there are other distinctions between
the instant action and the 2009 proceeding. First, the 2009 proceeding was a rulemaking
proceeding initiated by the PSC, whereas the present action involves a formal complaint
filed by Appellants against a public utility under § 69-3-321(1), MCA, regarding its rates,
charges, practices, and service. Furthermore, in rejecting NorthWestern’s “res judicata”
and “collateral estoppel” arguments, the PSC observed that the 2009 proceeding was not
conducted as a contested case and that the participants did not have an opportunity for
meaningful discovery, were not allowed an opportunity for cross-examination of those
submitting comments, and had no opportunity to brief the issues. In short, Appellants did
not have “a full opportunity . . . to litigate their views” in the 2009 proceeding. The PSC
also noted that Appellants’ current complaint is “far broader” than the issues considered
in 2009. Lastly, Appellants contend that LED technology and efficiency have improved
in the intervening months since the 2009 proceeding.

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claimed to be “directly affected by local government taxes they pay levied on street

lighting districts where Yellowstone County and the City of Billings defray some of the

costs of lighting districts where the street lights are owned by [NorthWestern].” The

Klingmans purport to represent persons who reside outside of street lighting districts but

who “help defray in general property taxes, the city’s and county’s pro-rata share of street

lighting fees” in districts where those governments own property and NorthWestern owns

and maintains the street lights. The Klingmans also have since moved out of state, but

they paid property taxes through 2011 prior to leaving Montana. In addition, Appellants

state that the Klingmans will be replaced, at some future time in the proceedings, by other

Billings residents who do not live in a street lighting district.

¶12 Lastly, Doty also is not a resident of a street lighting district. Rather, he brings

this action “as a private attorney general, taxpayer of the City of Billings who is directly

affected by local government taxes he pays levied on street lighting districts where

Yellowstone County and the City of Billings defray some of the costs of lighting districts

where the street lights are owned by [NorthWestern].” Doty purports to represent

“persons directly affected by NWE’s inferior service from lights illuminating roadways

they drive on and others directly affected by climate change exacerbated by the

unnecessary CO2 emissions caused by the waste of energy perpetuated by

NorthWestern’s outdated street lights.”

Motion to Dismiss

¶13 NorthWestern filed a motion to dismiss on the ground that Complainants lack

standing. NorthWestern cited § 69-3-321(1), MCA, which states that the PSC

9
 shall proceed, with or without notice, to make such investigation as it may
deem necessary upon a complaint made against any public utility by any
mercantile, agricultural, or manufacturing society or club; by any body
politic or municipal organization or association, the same being interested;
or by any person, firm, or corporation, provided such person, firm, or
corporation is directly affected thereby, that: (a) any of the rates, tolls,
charges, or schedules or any joint rate or rates are in any way unreasonable
or unjustly discriminatory; (b) any regulations, measurements, practices, or
acts whatsoever affecting or relating to the production, transmission,
delivery, or furnishing of heat, light, water, power, or regulated
telecommunications service, or any service in connection therewith is in
any respect unreasonable, insufficient, or unjustly discriminatory; or (c) any
service is inadequate. [Emphasis added, paragraph breaks omitted.]

NorthWestern argued that Doty lacks standing because he is not “directly affected” by

the complained-of rates. NorthWestern argued that Williamson and the Klingmans lack

standing because they are not “directly affected in a way that is unique to them and

distinct from the consuming public generally.”

¶14 In response, Complainants clarified that they are not challenging the right of their

respective cities and counties to spend taxes on street lighting. Rather, they challenge

NorthWestern’s allegedly “unreasonable and unjustly discriminatory rates, tolls, charges

or schedules and practices relating to the furnishing of light” which have resulted in an

“overcharge and profligate waste of energy.” Complainants argued that they are “directly

affected” primarily for “economic” and “climatic” reasons. First, they alleged that their

property tax bills “are higher than they would otherwise be if the local governments

where they live were not being overcharged; higher than they would be if 50% of the

energy needed to light Billings streets at night were eliminated.” Second, they alleged

that they are directly affected “by the contribution to global warming and CO2 emissions

that NWE’s failure to take reasonable measures to curb greenhouse gases causes.”

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¶15 Besides the “directly affected” requirement of § 69-3-321(1), MCA, NorthWestern

also relied on the rules of justiciability which limit courts to deciding only “cases” and

“controversies.” See Plan Helena, Inc. v. Helena Regl. Airport Auth. Bd., 2010 MT 26,

¶¶ 6-8, 355 Mont. 142, 226 P.3d 567. NorthWestern argued that Complainants had not

established standing because they had failed to allege a past, present, or threatened injury

to a property or civil right that is distinguishable from the injury to the public generally.

See Fleenor v. Darby Sch. Dist., 2006 MT 31, ¶ 9, 331 Mont. 124, 128 P.3d 1048.

Complainants argued, however, that “the rules on standing, announced by the Montana

Supreme Court, while applicable to lawsuits filed in court, do not apply to this

administrative proceeding.” As support, they quoted from the April 2, 2009 decision of

William L. Corbett, a University of Montana administrative law professor, who served as

hearing examiner in a case before the Commissioner of Political Practices (Fox v.

Molnar) involving several complaints filed by Mary Jo Fox against PSC Commissioner

Brad Molnar. In addressing Molnar’s motion to dismiss Fox’s complaints for lack of

standing, Professor Corbett concluded that the constitutional requirements for standing

“are applicable only to judicial proceedings, not administrative proceedings.”

¶16 Addressing this issue in the present case, the PSC found that Professor Corbett’s

analysis raised “legitimate issues as to whether the same standards to prove standing in

causes of action initiated in federal or state courts are applicable to show standing in a

case initiated before a state regulatory agency.” In this regard, the PSC noted that the

case-or-controversy requirement is imposed on federal and state courts by Article III of

the United States Constitution and Article VII of the Montana Constitution, respectively.

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See Plan Helena, ¶ 6. The PSC reasoned that actions initiated in a court, whose power is

limited to deciding “cases” and “controversies,” must be distinguished from actions

initiated before an administrative agency, which is not subject to the same limitation.

Agreeing with Professor Corbett, the PSC concluded that standing principles derived

from the case-or-controversy requirement do not govern PSC proceedings. “The focus

must be on the specific statute or statutes under which Complainants have made their

filing and whether Complainants fall within the scope of the statute or statutes.” Hence,

the PSC likewise was not persuaded by Complainants’ reliance on Rule 38.2.2101 of the

Administrative Rules of Montana.2 The PSC noted that a statute controls over an

administrative rule, at least to the extent of any inconsistency or conflict. See Haney v.

Mahoney, 2001 MT 201, ¶ 6, 306 Mont. 288, 32 P.3d 1254; § 2-4-305(6)(a), MCA.

¶17 Turning, then, to an analysis under § 69-3-321(1), MCA, the PSC first noted that

NorthWestern directly bills the members of the street and area lighting class, and that

these entities in turn pay the street lighting bills to NorthWestern. “Clearly,” the PSC

observed, “customers within [this] class, including the cities of Billings and Missoula and

the counties of Yellowstone and Missoula, which are billed by NWE for street lighting

service, would have standing” under the statute. Complainants, in contrast, are not

members of the street and area lighting class and are not “directly paying” NorthWestern

2
“Complaints may be made by the [PSC] on its own motion or by any person,
having a legal interest in the subject matter, or any public utility concerned. Any public
utility or other person likewise may complain of anything done or omitted to be done by
the commission or any person over whom the commission has jurisdiction in violation of
any law, rule, regulation or order administered or promulgated by the commission,
pertaining to matters over which the commission has jurisdiction.” Admin. R. M.
38.2.2101(1).

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for the provision of street lighting service. Therefore, the PSC reasoned, they are only

“indirectly” affected by NorthWestern’s ELDS-1 rates.

¶18 As noted, Complainants alleged that a portion of their property taxes is being used

to pay for street lighting. The PSC found, however, that Complainants had not

sufficiently explained

how the cities generate monies to pay street lighting bills; whether
Complainants themselves pay lighting district fees in a district with NWE-
owned street lights; how the cities or counties calculate lighting district fees
to districts where NWE owns the street lights as distinguished from districts
in which the city or county owns the street lights; whether lighting district
fees are the only source of revenues for the cities or counties to pay their
street lighting bills; how the city or county calculates lighting fees in areas
where there are no street lighting districts, but where there are street lights;
[and] why Complainant-Williamson would have standing as a renter, not a
property owner or property tax paying or lighting district paying resident of
Missoula.

¶19 Complainants had also argued that they are “third-party beneficiaries” under street

lighting contracts between NorthWestern and the cities. The PSC reasoned, however,

that the contracts between public utilities and municipalities addressing the provision of

street lighting service do not establish the rates and charges for that service and, thus, that

Complainants’ supposed status as third-party beneficiaries of these contracts does not

give them standing to contest NorthWestern’s street lighting rates and charges.

¶20 Lastly, Complainants had argued that they have standing based on their right to a

clean and healthful environment under Article II, Section 3 of the Montana Constitution.

In this regard, they alleged various effects from the burning of fossil fuels, such as rising

sea levels, more summer heat waves, declining crop yields, elimination of late summer

water flows, increased wildfires, an enlarged range of disease-bearing insects, increased

13
stress on insurance and financial systems due to “freak storms,” and destruction of the

earth’s biodiversity. The PSC observed, however, that Complainants had failed to allege

that NorthWestern’s street lighting service is powered exclusively or partially through the

burning of fossil fuels. Furthermore, the PSC found that Complainants had failed to

show that their requested relief would result in a cleaner and more healthful environment.

The PSC noted that “[t]his Commission is interested in reducing the burning of fossil

fuels.” However, while “LED’s are competitive in many situations, . . . they are not

necessarily the best choice everywhere at their current stage of development.” For all of

these reasons, the PSC concluded that Complainants had failed to demonstrate standing

under § 69-3-321(1), MCA.

Amended Complaint

¶21 Complainants filed a request for reconsideration, in conjunction with an amended

complaint in which they named four additional complainants: James T. and Elizabeth A.

Gruba, and Leo G. and Jeanne R. Barsanti. The Grubas and the Barsantis are residents of

Billings. They allege that they live in street lighting districts and that they have been

assessed and paid property taxes for street lighting services in these districts.

¶22 The PSC rejected the amended complaint and refused to reconsider its ruling on

standing. The PSC “readily acknowledge[d]” that its procedural rules allow amendments

to any pleading. See Admin. R. M. 38.2.1207; see also Admin. R. M. 38.2.2105

(allowing amendments to complaints). Nevertheless, the PSC deemed it “an issue of first

impression” whether a party may amend its complaint after the PSC has issued an order

dismissing the complaint. The PSC opined that dismissal “is akin to a judgment against

14
complainants” and that “the better rule” is not to allow an amendment to the complaint

but, rather, to limit the complainants to seeking modification of the dismissal order.

¶23 The PSC then noted that even if it allowed the amended complaint here, the only

significant modifications to the original complaint consist of revised dollar amounts and

the addition of four new complainants. The PSC observed that “[t]he added complainants

may very well pay street lighting district fees assessed by local city or county

governments,” but the PSC decided that “such circumstances do not present a persuasive,

compelling reason to reconsider the Commission’s findings that Complainants do not

possess standing to contest NWE’s street lighting rates as they are not ‘directly’ affected

by [those] rates.” The PSC rebuffed Complainants’ argument that its interpretation of the

word “directly” had been too narrow. The PSC adopted the view that although the

residents of a city or county are primarily and legally responsible to the city or county for

taxes levied or street lighting district fees assessed, it is the members of the street lighting

customer class (i.e., the city or county) who are primarily and legally responsible for

billings from NorthWestern for the provision of street lighting services, and thus only the

members of this class are directly affected by NorthWestern’s rates.

District Court Review

¶24 The District Court affirmed. First, the court concluded that the PSC’s rejection of

the amended complaint was proper because “the amended complaint was not merely filed

after notice of the hearing, but filed after the hearing was held . . . .” See Admin. R. M.

38.2.1207. The PSC concedes on appeal that this statement is incorrect, as there was no

hearing at the administrative agency level. But the PSC asks us to affirm nonetheless

15
based on the PSC’s “better rule” approach discussed above. Second, as to the standing

question, the District Court concluded that Complainants are not directly affected by

NorthWestern’s street lighting rates because NorthWestern bills the municipalities, not

the individual taxpayers, for the street lighting service. “Since the municipalities

comprised the customer class for NWE’s street and area lighting services, it follows that

they were the only potential parties who could have challenged NWE’s Tariff Schedule

ELDS-1 Rates. [Complainants] were not members of the ELDS-1 class of customers and

therefore lacked standing to mount such a challenge.”

STANDARDS OF REVIEW

¶25 As a general rule, judicial review of a final agency decision must be conducted by

the court without a jury and must be confined to the record. Section 2-4-704(1), MCA.

The court may reverse or modify the decision if substantial rights of the appellant have

been prejudiced either because findings of fact upon issues essential to the decision were

not made although requested, or because the administrative findings, inferences,

conclusions, or decisions are (i) in violation of constitutional or statutory provisions;

(ii) in excess of the statutory authority of the agency; (iii) made upon unlawful procedure;

(iv) affected by other error of law; (v) clearly erroneous in view of the reliable, probative,

and substantial evidence on the whole record; or (vi) arbitrary or capricious or

characterized by abuse of discretion or clearly unwarranted exercise of discretion.

Section 2-4-704(2), MCA. A finding of fact is clearly erroneous if it is not supported by

substantial evidence in the record, if the fact-finder misapprehended the effect of the

evidence, or if a review of the record leaves the court with a definite and firm conviction

16
that a mistake has been made. Denke v. Shoemaker, 2008 MT 418, ¶ 39, 347 Mont. 322,

198 P.3d 284. In reviewing conclusions of law, the court must determine whether the

agency’s interpretation and application of law are correct. Knowles v. State ex rel.

Lindeen, 2009 MT 415, ¶ 22, 353 Mont. 507, 222 P.3d 595. These standards apply to

both the District Court and this Court. Knowles, ¶ 23.

DISCUSSION

¶26 Issue 1. Do the original complainants have standing under § 69-3-321, MCA?

Governing Law

¶27 As an initial matter, it is necessary to identify the law which governs the standing

question presented in this case. Like it did in the PSC proceedings, NorthWestern again

injects case-or-controversy principles into the analysis of Appellants’ standing before the

PSC. NorthWestern observes that the power to adjudicate a case is limited to justiciable

controversies, and that the central concept of justiciability incorporates the more specific

doctrine of standing which is governed by its own set of substantive rules. See Greater

Missoula Area Fedn. of Early Childhood Educators v. Child Start, Inc., 2009 MT 362,

¶¶ 22-23, 353 Mont. 201, 219 P.3d 881. NorthWestern argues that Appellants have not

satisfied these rules.

¶28 The question of standing is whether the litigant is entitled to have the merits of the

dispute decided—more specifically, whether the litigant has alleged “ ‘such a personal

stake in the outcome of the controversy as to assure that concrete adverseness which

sharpens the presentation of issues.’ ” Olson v. Dept. of Revenue, 223 Mont. 464, 469,

726 P.2d 1162, 1166 (1986) (quoting Baker v. Carr, 369 U.S. 186, 204, 82 S. Ct. 691,

17
703 (1962)); Heffernan v. Missoula City Council, 2011 MT 91, ¶¶ 29-30, 360 Mont. 207,

255 P.3d 80. In relation to the courts, the requirement of standing arises from two

sources: the Constitution, which limits the judicial power to deciding only cases and

controversies, and the courts themselves, which have adopted discretionary limitations on

the exercise of judicial power for prudential reasons. See Heffernan, ¶¶ 31-33; Greater

Missoula, ¶ 22. To meet the case-or-controversy requirement, the plaintiff must clearly

allege a past, present, or threatened injury to a property or civil right, and the injury must

be one that would be alleviated by successfully maintaining the action. Heffernan, ¶ 33.

Beyond this irreducible constitutional minimum of standing, this Court has adopted

prudential rules under which a litigant may assert only her own constitutional rights or

immunities, and the alleged injury must be distinguishable from the injury to the public

generally, though not necessarily exclusive to the plaintiff. Heffernan, ¶ 33. Having

been adopted essentially as matters of judicial self-governance, these prudential rules are

subject to exceptions. See Heffernan, ¶¶ 32-33. For example, a physician may have

standing to litigate the constitutional rights of her patient despite the prudential rule that a

litigant may assert only her own constitutional rights or immunities. Armstrong v. State,

1999 MT 261, ¶¶ 8-13, 296 Mont. 361, 989 P.2d 364. Likewise, the rule that “the alleged

injury must be distinguishable from the injury to the public generally” serves to prevent

litigants from using the courts as a forum in which to air generalized grievances, but it

does not preclude standing by a litigant who alleges an actual injury which happens to be

shared by a large segment of the populace. Helena Parents Commn. v. Lewis and Clark

County Commrs., 277 Mont. 367, 372-74, 922 P.2d 1140, 1143-44 (1996).

18
¶29 While acknowledging that these standing requirements arose as limitations on the

judicial power of Montana’s courts, NorthWestern seeks to import them into PSC

proceedings. This is incorrect. “The judicial power of the state is vested in one supreme

court, district courts, justice courts, and such other courts as may be provided by law.”

Mont. Const. art. VII, § 1. The PSC is not a “court.” It is an Executive Branch agency.

See §§ 2-15-101, -2602, MCA. To be sure, there are various Executive Branch boards

and commissions that exercise a quasi-judicial function as part of their mandate.3 A

“quasi-judicial function” is “an adjudicatory function exercised by an agency, involving

the exercise of judgment and discretion in making determinations in controversies.”

Section 2-15-102(10), MCA. This may include holding hearings; evaluating and passing

on facts; interpreting, applying, and enforcing existing rules and laws; granting or

denying privileges, rights, or benefits; awarding compensation; and ordering action or

abatement of action. Section 2-15-102(10), MCA. Having a quasi-judicial function,

however, does not necessarily make these bodies Article VII courts.

3
See e.g. §§ 2-15-1704(5) (Board of Labor Appeals), -1706(3) (Human Rights
Commission), -1819(5)(a) (Board of Research and Commercialization Technology),
-2029(1)(a) (Public Safety Officer Standards and Training Council), -2502(8)
(Transportation Commission), -3105(4) (Board of Milk Control), -3303(4) (Board of Oil
and Gas Conservation), -3402(5) (Fish, Wildlife, and Parks Commission), MCA.

19
¶30 In the federal system,4 administrative adjudications are not considered Article III

proceedings to which case-or-controversy or prudential standing requirements apply.

Gardner v. F.C.C., 530 F.2d 1086, 1090 (D.C. Cir. 1976); Ritchie v. Simpson, 170 F.3d

1092, 1094-95 (Fed. Cir. 1999). “Agencies are not Article III creatures, and Congress

may allow anyone it wishes, including members of the public at large, to become parties

in agency proceedings.” City of St. Louis v. Dept. of Transp., 936 F.2d 1528, 1532 (8th

Cir. 1991). An agency’s responsibility for implementation of statutory purposes justifies

a wider discretion, in determining what actions to entertain, than is allowed to the courts

by the Constitution or prudential standing rules. Ecee, Inc. v. Fed. Energy Reg. Commn.,

645 F.2d 339, 349-50 (5th Cir. 1981); see also Envirocare of Utah, Inc. v. Nuclear Reg.

Commn., 194 F.3d 72, 74 (D.C. Cir. 1999) (the criteria for establishing “administrative

standing” may permissibly be less demanding than the criteria for “judicial standing”).

Hence, “within their legislative mandates, agencies are free to hear actions brought by

parties who might be without standing if the same issues happened to be before a federal

court.” Ecee, 645 F.2d at 349; accord Wilcox Elec., Inc. v. F.A.A., 119 F.3d 724, 727

(8th Cir. 1997). Conversely, even if a party meets the criteria for judicial standing, the

party might nevertheless lack administrative standing if the governing statutes do not

4
We may consider federal justiciability principles to the extent they are relevant
and persuasive. See e.g. Chovanak v. Matthews, 120 Mont. 520, 525-26, 188 P.2d 582,
584-85 (1948); Helena Parents, 277 Mont. at 371-74, 922 P.2d at 1142-44; Armstrong,
¶¶ 7-13; Columbia Falls Elem. Sch. Dist. No. 6 v. State, 2005 MT 69, ¶¶ 14-19, 326
Mont. 304, 109 P.3d 257; Havre Daily News, LLC v. City of Havre, 2006 MT 215, ¶¶ 20,
33-36, 333 Mont. 331, 142 P.3d 864; Plan Helena, Inc. v. Helena Regl. Airport Auth. Bd.,
2010 MT 26, ¶¶ 6-9, 355 Mont. 142, 226 P.3d 567; Griffith v. Butte Sch. Dist. No. 1,
2010 MT 246, ¶ 24, 358 Mont. 193, 244 P.3d 321; Heffernan, ¶¶ 42-46.

20
contemplate participation by that party. See e.g. Envirocare, 194 F.3d at 74-79. In short,

standing under the Constitution is not required for administrative proceedings, nor is it

sufficient to guarantee access to them. A litigant’s standing before an administrative

agency depends on the language of the statute and regulations which confer standing

before that agency. Ritchie, 170 F.3d at 1095; Ecee, 645 F.2d at 350.

¶31 It is not necessary in the present case to identify precisely all of the factors that

distinguish a “court” from an “administrative agency.” Necessarily, this determination

depends on the powers, duties, and functions of the particular body. Here, the PSC is

vested with the duty to supervise, regulate, and control the operations of public utilities,

common carriers, railroads, and other regulated industries. Sections 69-1-102, 69-3-102,

MCA. The PSC is specifically not vested with judicial powers. Section 69-3-103(1),

MCA (“[N]othing in this chapter shall be construed as vesting judicial powers on said

commission or as denying to any person, firm, association, corporation, municipality,

county, town, or village the right to test in a court of competent jurisdiction the legality or

reasonableness of any fixed order made by the commission in the exercise of its duties or

powers.”). “The proceedings before the commission are investigative on the part of the

commission, although they may be conducted in the form of adversary proceedings.”

Admin. R. M. 38.2.302(1); see also e.g. § 69-3-103(2)(a), MCA (authorizing the PSC to

adopt rules relative to its “inspections, tests, audits, and investigations”). Certain PSC

matters are to be conducted specifically in accordance with the Montana Administrative

Procedure Act (Title 2, chapter 4, MCA). See e.g. §§ 69-3-108(6), 69-3-303(2),

69-3-1305(3), 69-3-1309(1), (2), MCA. And review of PSC decisions is under the same

21
standards that apply to review of agency decisions generally. Compare §§ 69-3-402 and

-404, MCA, with §§ 2-4-702 and -704, MCA.

¶32 For these reasons, we conclude that the PSC is an administrative agency. As such,

satisfaction of the case-or-controversy and prudential standing requirements that are

applicable to the courts is not required in order to litigate a complaint before the PSC.

We agree with the PSC that Appellants’ standing is governed by § 69-3-321(1), MCA.

Again, this statute directs the PSC

to make such investigation as it may deem necessary upon a complaint
made against any public utility . . . by any person, firm, or corporation,
provided such person, firm, or corporation is directly affected thereby, that:
(a) any of the rates, tolls, charges, or schedules or any joint rate or rates are
in any way unreasonable or unjustly discriminatory; (b) any regulations,
measurements, practices, or acts whatsoever affecting or relating to the
production, transmission, delivery, or furnishing of heat, light, water,
power, or regulated telecommunications service, or any service in
connection therewith is in any respect unreasonable, insufficient, or
unjustly discriminatory; or (c) any service is inadequate.

Section 69-3-321(1), MCA (emphasis added, paragraph breaks omitted). The dispositive

question is whether Appellants are “directly affected” by NorthWestern’s rates, tolls,

charges, schedules, practices, or service in the provision of street lighting. The focus

here, under Issue 1, is on the four original complainants: Williamson, the Klingmans,

and Doty. (The Grubas and the Barsantis are discussed under Issue 2.)

¶33 Because this issue arises within the context of a motion to dismiss, the following

rules guide the analysis. 5 The only relevant document when considering a motion to

5
The rules discussed here are based on the Montana Rules of Civil Procedure.
Although the Montana Rules of Civil Procedure do not govern PSC proceedings, “they
may still serve as guidance for the agency and the parties.” Citizens Awareness Network

22
dismiss is the complaint and any documents it incorporates by reference. Cowan v.

Cowan, 2004 MT 97, ¶ 11, 321 Mont. 13, 89 P.3d 6. A motion to dismiss has the effect

of admitting all well-pleaded allegations in the complaint. Cowan, ¶ 10. In considering

the motion, the complaint is construed in the light most favorable to the plaintiff (or, as

here, the complainant), and all allegations of fact contained therein are taken as true.

Cowan, ¶ 10. It is not necessary, however, to take as true legal conclusions or allegations

that have no factual basis or are contrary to what has already been adjudicated.

Cowan, ¶ 14.

Complainants’ Theories of Standing

¶34 Williamson, the Klingmans, and Doty are not property owners in a street lighting

district and are not directly assessed for the costs of street lighting. They premise their

standing instead on climatic, “general property taxes,” safety, contractual, constitutional,

and “special expertise” theories. We consider each of these in turn, starting with their

claim that they are directly affected “by climate change exacerbated by the unnecessary

CO2 emissions caused by the waste of energy perpetuated by NorthWestern’s outdated

street lights.” Complainants assert that continued use of inefficient lights contributes to

the unnecessary burning of fossil fuels, which in turn brings about effects such as a

“3-foot sea level rise within this century which . . . will displace more than 100 million

v. Mont. Bd. of Envtl. Review, 2010 MT 10, ¶ 20, 355 Mont. 60, 227 P.3d 583. In fact,
NorthWestern cited M. R. Civ. P. 12(b)(6), and this Court’s cases applying that rule, as
the “legal standard” for deciding its motion to dismiss. The PSC has the power to “adopt
and publish reasonable and proper rules to govern its proceedings.” Section
69-3-103(2)(b), MCA; see also e.g. Admin. R. M. 38.2.2107(2) (recognizing motions to
dismiss). In the absence of rules published by the PSC addressing the standards for
evaluating motions to dismiss, the following rules serve as guidance.

23
people,” “more summer heat waves that kill people because nighttime temperatures do

not cool enough,” a “decline in wheat, corn, and rice yields,” “complete elimination of

late summer water flows in many rivers and streams,” “increased prairie and forest fires

brought on by parched vegetation,” an “enlarged range of disease-bearing insects that

will cause an additional 80 million cases of malaria a year,” and “overwhelming upward

stress on home insurance rates as climate ‘weirding’ produces freak storms.”

¶35 While expressing no views on the merits of Complainants’ concerns,6 we conclude

that these sorts of effects are too attenuated to satisfy § 69-3-321(1), MCA. Indeed, such

a broad interpretation of “directly affected” would nullify the statute’s distinctive

standard. NorthWestern’s continued use of HPS street lights, instead of LED lights, may

“affect” Complainants through the chain of events they have alleged—i.e., by creating

needless carbon dioxide emissions which contribute to climate changes which cause the

consequences listed above. But it is not plausible to say that Complainants are, in this

way, “directly affected” by the continued use of HPS lights.

¶36 When interpreting a statute, we seek to implement the intention of the Legislature.

Section 1-2-102, MCA. To determine legislative intent we look first to the plain meaning

of the words of the statute. In re K.M.G., 2010 MT 81, ¶ 26, 356 Mont. 91, 229 P.3d

1227. Words used by the Legislature must be given their usual and ordinary meaning.

Rocky Mt. Bank v. Stuart, 280 Mont. 74, 80, 928 P.2d 243, 246-47 (1996). Where the

6
See Arreola v. Godinez, 546 F.3d 788, 794-95 (7th Cir. 2008) (“Although the
two concepts unfortunately are blurred at times, standing and entitlement to relief are not
the same thing. Standing is a prerequisite to filing suit, while the underlying merits of a
claim (and the laws governing its resolution) determine whether the plaintiff is entitled to
relief.” (emphases in original)).

24
language is clear and unambiguous, the statute speaks for itself and we will not resort to

other means of interpretation. Rocky Mt. Bank, 280 Mont. at 80, 928 P.2d at 246.

¶37 Under § 69-3-321(1), MCA, a person making a complaint must be not merely

affected, but directly affected by the public utility’s rates, tolls, charges, schedules,

regulations, measurements, practices, acts, or service. “Directly” means “in a direct

manner.” Merriam-Webster’s Collegiate Dictionary 328 (10th ed., Merriam-Webster

1997). “Direct” in this context means “stemming immediately from a source,” “marked

by absence of an intervening agency, instrumentality, or influence,” or “characterized by

close logical, causal, or consequential relationship.” Merriam-Webster’s Collegiate

Dictionary 328; see also Black’s Law Dictionary 525 (Bryan A. Garner ed., 9th ed.,

Thomson Reuters 2009) (“Free from extraneous influence; immediate .”).

The climate-related consequences alleged by Complainants do not stem immediately—

without intervening agency, instrumentality, or influence—from the continued use of

HPS lights. They do not even bear a close logical, causal, or consequential relationship

to the use of HPS lights rather than LED lights—particularly given the PSC’s unrefuted

determination that LEDs “are competitive in many situations, but they are not necessarily

the best choice everywhere at their current stage of development.”

¶38 Complainants’ other theories of standing fail for similar reasons. First, they claim

to be directly affected by the rates charged for street lighting because they pay general

property taxes to the cities and counties within which they reside7 and these taxes are

7
Williamson alleges that he “defrayed in rent he paid, part of the fee on the
property tax statements for the dwelling wherein he resided.”

25
then used by the cities and counties to defray a portion of the street lighting costs billed

by NorthWestern. Complainants’ allegations in this regard are speculative, however. As

the PSC noted, Complainants fail to allege how the cities and counties generate monies to

pay street lighting bills; how the cities and counties calculate lighting district fees for

districts where NorthWestern owns the street lights, versus districts where the city or

county owns the street lights; whether lighting district fees are the only source of revenue

for the cities and counties to pay their street lighting bills; and how the cities and counties

calculate lighting fees in areas where there are street lights but no street lighting districts.

In any event, even if some of the general property taxes paid by Complainants are used

by the cities and counties to help defray the costs of street lighting, paying general

property taxes does not, in itself, establish a sufficiently close logical, causal, or

consequential relationship to NorthWestern’s street lighting rates to make Complainants

“directly affected” thereby. The same is true of Williamson’s rent payments.

¶39 Second, Complainants point out that they are challenging not only NorthWestern’s

rates, but also its “service.” See § 69-3-321(1)(c), MCA. They contend that they are

directly affected “by NWE’s inferior service from lights illuminating roadways they drive

on.” They allege that converting to LED lights will create “improved road safety because

drivers will be able to see better under the superior, more uniform, scotopic light emitted

by LEDs.” Yet, even if this is true, mere dissatisfaction with the quality of luminaires—

without any allegation that the person resides in the street lighting district and is assessed

the costs of the street lighting—is insufficient to make the person “directly affected” by

NorthWestern’s service. Otherwise, anyone who passes through a Montana city and

26
finds the quality of NorthWestern’s street lights “inferior” could file a complaint with the

PSC. We interpret a statute to give effect to its purpose. In re Marriage of McMichael,

2006 MT 237, ¶ 14, 333 Mont. 517, 143 P.3d 439. The Legislature did not contemplate

the sort of boundless standing proposed by Complainants under this theory.

¶40 Third, Complainants claim standing as third-party beneficiaries of various street

lighting contracts which their local governments entered into with NorthWestern. There

are several problems with this theory. For one thing, Complainants point to no language

in § 69-3-321, MCA, authorizing them to bring an action for breach of contract in the

PSC. Furthermore, Complainants fail to identify specifically what provision of these

contracts they seek to enforce through this action. And lastly, not everyone who may

benefit from performance, or suffer from nonperformance, of a contract between two

other parties is permitted to enforce the contract. Diaz v. Blue Cross and Blue Shield of

Mont., 2011 MT 322, ¶ 18, 363 Mont. 151, ___ P.3d ___. A stranger to a contract lacks

standing to bring an action for breach of that contract unless he is an intended third-party

beneficiary of the contract. Dick Anderson Constr., Inc. v. Monroe Constr. Co., 2009 MT

416, ¶ 46, 353 Mont. 534, 221 P.3d 675. A plaintiff cannot assume that he is an intended

third-party beneficiary; rather, he must show from the face of the contract that it was

intended to benefit him. Diaz, ¶¶ 19, 21; see also Dick Anderson Constr., ¶ 47 (defining

an intended third-party beneficiary). Complainants fail to do so here.

¶41 Fourth, Complainants claim standing based on the Montana Constitution. They

contend that they have the right to obtain a speedy remedy for their injuries. See Mont

Const. art. II, § 16 (“Courts of justice shall be open to every person, and speedy remedy

27
afforded for every injury of person, property, or character. . . .”). Denying Complainants

standing in the PSC, however, does not deny them access to the courts, nor does it deny

them the right to seek full legal redress in a court of justice for any injuries they have

suffered. Complainants also contend that they have the right to a clean and healthful

environment. See Mont Const. art. II, § 3 (“All persons are born free and have certain

inalienable rights” including “the right to a clean and healthful environment . . . .”). Yet,

Complainants do not explain why the failure to convert to LED street lights at this

juncture amounts to a violation of Article II, Section 3. The PSC found that LEDs “are

competitive in many situations, but they are not necessarily the best choice everywhere at

their current stage of development.” The PSC determined that Complainants’ allegations

did not show a reduction in electricity generation if HPS lights were replaced with LED

lights. The PSC concluded, therefore, that Complainants had not established that their

requested relief would result in a cleaner and more healthful environment. Complainants

fail to refute these determinations.

¶42 Finally, citing Singleton v. Wulff, 428 U.S. 106, 96 S. Ct. 2868 (1976), Williamson

and Doty assert that they have “standing to protect the rights of others in the general rate

paying public who do not have the scientific or ratemaking expertise to bring action on

their own behalf.” Singleton involved a challenge by physicians to a Missouri abortion

statute. The Supreme Court first held that the physicians had standing in their own right

because they had established a concrete injury to themselves from the statute’s operation.

Singleton, 428 U.S. at 112-13, 96 S. Ct. at 2873. A plurality of four Justices then

concluded, “as a prudential matter,” that the physicians could “assert the rights of women

28
patients as against governmental interference with the abortion decision.” Singleton, 428

U.S. at 112, 118, 96 S. Ct. at 2873, 2876. This rule was premised on the closeness of the

physician-patient relationship and recognition of several obstacles to a woman’s ability to

assert her own rights. Singleton, 428 U.S. at 117-18, 96 S. Ct. at 2875-76; see also

Armstrong v. State, 1999 MT 261, ¶¶ 9-13, 296 Mont. 361, 989 P.2d 364 (applying

Singleton). Here, Williamson and Doty state that they have “special expertise” to address

“dangers and wrongs in the complicated areas of climate change and utility ratemaking

and service that have eluded the average citizen and even regulators tasked with

addressing those issues.” Yet, the issue here is not whether we should adopt an exception

to the prudential rule that a litigant may assert only his own rights (see ¶ 28, supra) and

allow litigants with “special expertise” to assert the rights of third parties. Rather, the

issue is whether Complainants have met the statutory standard. The fact that Williamson

and Doty may have special expertise in this field does not establish that they are directly

affected by NorthWestern’s rates, tolls, charges, schedules, practices, or service.

¶43 In sum, Complainants’ allegations fail to establish that they are “directly affected”

under § 69-3-321(1), MCA. Accordingly, the PSC and the District Court did not err in

concluding that Williamson, the Klingmans, and Doty lack standing.

¶44 Issue 2. Did the PSC properly reject the amended complaint?

¶45 Following the PSC’s ruling on their lack of standing, Complainants filed an

amended complaint in which they named four additional complainants: the Grubas and

the Barsantis. In summary, the Grubas allege as follows: they are residents of Billings;

they live within two street lighting districts; they have been assessed and paid taxes for

29
street lighting services in these districts, as shown by separate lines on their property tax

bills; NorthWestern owns the street lights in these districts; the street lighting

infrastructure in these districts was fully paid for by January 1, 2007, but the ownership

charge that NorthWestern was imposing to recoup the cost of the street lighting

infrastructure did not cease; as a result, the Grubas and other similarly situated property

owners have been paying too much for street lighting service over the last several years;

this overcharge could be applied to purchasing more energy efficient lighting without any

increased assessment to property tax payers; and if LED street lights were installed and

the ownership charge were eliminated, the Grubas’ bill would drop by 86 percent within

3.7 years. Therefore, the Grubas contend, they are directly affected by NorthWestern’s

allegedly improper rates and ownership overcharges which have resulted in their paying

property tax bills that were several hundred dollars too high.

¶46 The Barsantis are also residents of Billings who live in a street lighting district.

Their allegations are substantially the same. In short, the Barsantis have been paying for

street lighting as part of their property taxes, but they allegedly have been overcharged

because NorthWestern has continued to bill the City of Billings an ownership charge for

the street lighting infrastructure in that district, even though the full cost of the street

lighting infrastructure was fully recouped as of August 12, 1998. The Barsantis assert

that the overcharge could be applied to purchasing more energy efficient lighting, which

ultimately will reduce their property tax bills by 88 percent within 3.1 years. They claim

that they have been directly affected by NorthWestern’s allegedly improper rates and

30
ownership overcharges because their cumulative property tax bill over the last decade

was approximately $621 too high.

¶47 In rejecting the amended complaint, the PSC cited two grounds: (1) the amended

complaint is procedurally barred and (2) the Grubas and the Barsantis do not have

standing under § 69-3-321(1), MCA, in any event. The District Court, in its review of the

PSC’s decision, affirmed the PSC as to both grounds. Appellants contend and we agree,

however, that the PSC and the District Court erred in these two determinations.

¶48 First, as to the Grubas’ and the Barsantis’ standing, the PSC and the District Court

interpreted “directly affected” to mean that only the customers in the street and area

lighting class—i.e., the cities and counties—have standing to challenge NorthWestern’s

rates and charges for street lighting service. In other words, only the parties that write the

check directly to NorthWestern for the street lighting bill are directly affected by the

rates, charges, and service. We cannot agree that this restrictive construction is consistent

with the intent of § 69-3-321(1), MCA. The statute grants standing to “persons,” not just

“customers,” and the critical language is “directly affected,” not “directly pays.” Under

the PSC’s approach, large categories of persons could be precluded from pursuing

legitimate complaints in the PSC through the mere expedient of structuring customer

classes, rate classifications, and billing practices such that consumers pay energy fees to

an intermediary which in turn pays NorthWestern directly. The PSC’s construction also

is contrary to the intent of §§ 7-12-4301(1) and -4321, MCA. These statutes contemplate

a sort of “pass-through” system under which the costs of installing, maintaining, and

supplying electrical current for street lighting are to be borne by the owners of property

31
within the street lighting district, and the governing body is thus authorized to assess and

collect these costs by special assessment against said property. Where that occurs—i.e.,

where the costs of street lighting are assessed and collected by the city or county from the

property owners in the street lighting district—we conclude that there is a sufficiently

close logical, causal, or consequential relationship between (a) NorthWestern’s rates and

charges and (b) the taxes paid by the property owners specifically for street lighting in the

street lighting district, to satisfy § 69-3-321(1), MCA. See ¶ 37, supra.

¶49 Taking the Grubas’ and the Barsantis’ well-pleaded allegations as true, they allege

that they live in street lighting districts and that they have been assessed and paid taxes

for street lighting services in these districts as shown by separate lines on their property

tax bills (which they have attached to their pleadings). These allegations are sufficient to

establish that the Grubas and the Barsantis are “directly affected” by NorthWestern’s

rates and charges under § 69-3-321(1), MCA. The PSC’s and the District Court’s

contrary conclusions are reversed.

¶50 Second, as to the procedural bar, the PSC’s rules allow pleadings and complaints

to be amended. See Admin. R. M. 38.2.1207, 38.2.2105. Nevertheless, the PSC posited

that an order dismissing the complaint “is akin to a judgment against complainants” and

that “the better rule” is not to allow an amendment to the complaint but, rather, to limit

the complainants to seeking modification of the dismissal order. In essence, the PSC

created a categorical rule that amendments to a complaint are impermissible following a

dismissal order. In this respect, the PSC was mistaken.

32
¶51 The policy of the law8 “is to permit amendments to the pleadings in order that

litigants may have their causes submitted upon every meritorious consideration that may

be open to them; therefore, it is the rule to allow amendments and the exception to deny

them.” Union Interchange, Inc. v. Parker, 138 Mont. 348, 353-54, 357 P.2d 339, 342

(1960). This does not mean, of course, that a motion to amend must be automatically

granted. Allison v. Town of Clyde Park, 2000 MT 267, ¶ 20, 302 Mont. 55, 11 P.3d 544.

The decision to grant or deny a motion to amend lies within the court’s—or, as here, the

PSC’s—discretion. Farmers Coop. Assn. v. Amsden, LLC, 2007 MT 286, ¶ 12, 339

Mont. 445, 171 P.3d 690; Admin. R. M. 38.2.1207, 38.2.2105.9

¶52 We have recognized that a complaint may be amended to cure deficiencies related

to a party’s standing. See e.g. Weaver v. Adv. Refrigeration, 2011 MT 174, ¶¶ 15-17, 361

Mont. 233, 257 P.3d 378 (Weaver did not have standing to bring the action, but he could

have amended his complaint to substitute the real party in interest); Boehm v. Cokedale,

LLC, 2011 MT 224, ¶¶ 13-21, 362 Mont. 65, 261 P.3d 994 (Boehm could have

substituted the real party in interest to pursue the claims at issue). In creating its new

8
Again, the principles discussed here serve as guidance in the absence of rules
published by the PSC detailing the circumstances in which amendments to pleadings and
complaints are permissible or impermissible. See ¶ 33 n. 5, supra.
9
Admin. R. M. 38.2.1207(1) (“Any pleading or document may be amended prior
to notice of the hearing. After notice of a hearing is issued, motion for leave to amend
any pleading or document may be filed with the commission and may be authorized in
the discretion of the commission or the hearing examiner. . . . Post-notice amendments to
any pleading or document shall not unduly broaden the scope of the issues originally filed
with the commission, unless the commission shall in its discretion allow such
amendments. . . .”); Admin. R. M. 38.2.2105(1) (“Amendments to complaints shall
comply with all requirements of a complaint as heretofore enumerated. The amendment
may, in the discretion of the commission, be allowed.”).

33
categorical rule, however, the PSC assumed that a complaint may not be amended

following an order of dismissal for lack of standing. Yet, the PSC cited no authority in its

own procedural rules for this assumption, and extant caselaw contradicts the PSC’s

assumption. “Dismissal without leave to amend is improper unless it is clear . . . that the

complaint could not be saved by any amendment.” Maya v. Centex Corp., 658 F.3d

1060, 1072 (9th Cir. 2011) (internal quotation marks omitted). In Maya, the district court

determined that the plaintiffs had failed to establish one of the elements of standing

(causation) in their pleadings. The plaintiffs sought to amend in order to introduce expert

testimony that could cure this deficiency, but the district court denied the request. On

appeal, the Ninth Circuit agreed that the plaintiffs had failed to establish causation, but

the court reversed the denial of their motion to amend. “[W]e cannot say that it is clear

that the complaint could not be saved by any amendment”; accordingly, “plaintiffs should

be permitted to amend their complaint and attach expert testimony on causation.” Maya,

658 F.3d at 1073.

¶53 Contrary to the PSC’s assumption, therefore, there is not a categorical bar to a

party’s amending her complaint, after an order of dismissal, in order to cure a deficiency

in her pleadings on the issue of standing. The PSC has discretion under its rules to allow

amendments to pleadings and complaints. Admin. R. M. 38.2.1207, 38.2.2105. The PSC

failed to exercise that discretion in this case based on the mistaken view that a complaint

cannot be amended after a dismissal order. “[A]n agency, vested with discretion, abuses

that discretion when it behaves as if it has no other choice than the one it has taken . . . .”

Clark Fork Coalition v. Mont. Dept. of Envtl. Quality, 2008 MT 407, ¶ 43, 347 Mont.

34
197, 197 P.3d 482 (internal quotation marks omitted); see also e.g. Whitehall Wind, LLC

v. Mont. Pub. Serv. Commn., 2010 MT 2, ¶ 24, 355 Mont. 15, 223 P.3d 907 (“The PSC’s

argument ignores the rules it has implemented and is empowered to enforce. An

administrative agency must comply with its own administrative rules.”). Accordingly, it

is necessary to reverse and remand this case to the PSC so that it may exercise its

discretion, in the first instance, as to whether the amended complaint should be allowed.

¶54 In sum, the Grubas’ and the Barsantis’ allegations are sufficient to meet the

statutory “directly affected” standard. There is not a categorical procedural bar to the

filing of an amended complaint following an order of dismissal for lack of standing. The

PSC has discretion to allow the amended complaint in this case, to require that the

Grubas’ and the Barsantis’ allegations be re-filed as a new complaint, or to take some

other course of action within the PSC’s discretion.

CONCLUSION

¶55 Williamson, the Klingmans, and Doty lack standing under § 69-3-321(1), MCA,

and this action was properly dismissed as to these four complainants. The Grubas’ and

the Barsantis’ allegations satisfy the “directly affected” standard of § 69-3-321(1), MCA.

This action is remanded to the District Court with instructions to remand to the PSC so

that the PSC may exercise its discretion, in the first instance, as to whether to allow the

amended complaint.

¶56 Affirmed in part, reversed in part, and remanded for further proceedings consistent

with this Opinion.

/S/ JAMES C. NELSON

35
We Concur:

/S/ MIKE McGRATH
/S/ BETH BAKER
/S/ MICHAEL E WHEAT
/S/ JIM RICE

36