Solid Waste Cont. v. Dep. of Pub. Ser. Reg.

• Decision Date: 26 June 2007
• Docket Number: No. DA 06-0175.,DA 06-0175.
• Citation: 2007 MT 154,338 Mont. 1,161 P.3d 837
• Parties: MONTANA SOLID WASTE CONTRACTORS, INC. and Allied Waste Services of North America, LLC (formerly BFI Waste Systems of North America, Inc.), Petitioners and Appellants, v. MONTANA DEPARTMENT OF PUBLIC SERVICE REGULATION; The Montana Public Service Commission; and Mackenzie Disposal, Inc., Respondents and Respondents.
• Court: Montana Supreme Court

161 P.3d 837

2007 MT 154

338 Mont. 1

MONTANA SOLID WASTE CONTRACTORS, INC. and Allied Waste Services of North America, LLC (formerly BFI Waste Systems of North America, Inc.), Petitioners and Appellants, v. MONTANA DEPARTMENT OF PUBLIC SERVICE REGULATION; The Montana Public Service Commission; and Mackenzie Disposal, Inc., Respondents and Respondents.

No. DA 06-0175.

Supreme Court of Montana.

Submitted on Briefs December 20, 2006.

Decided June 26, 2007.

For Appellant Montana Solid Waste Contractors: G. Steven Brown, Helena, Montana.

For Appellant Allied Waste Services of North America, LLC: Frank C. Crowley, Doney Crowley Bloomquist Payne Uda, PC, Helena, Montana.

For Respondent Montana Public Service Commission: Al Brogan, Staff Attorney, Montana Public Service Commission, Helena, Montana.

For Respondent MacKenzie Disposal, Inc.: Tom Singer, Axilon Law Group, PLLC, Billings, Montana, Jerome Anderson, Attorney at Law, Helena, Montana.

Justice PATRICIA O. COTTER delivered the Opinion of the Court.

¶ 1 The genesis of this dispute is a solid waste transportation certificate issued by the Montana Public Service Commission (PSC, the Commission or Agency) in 1977 to Suhr Transportation.¹ Suhr sold the certificate to Jim's Excavating in 1992 and Jim's transferred it to WWSS Inc. in 1993. MacKenzie Disposal bought it from WWSS in 1999. The PSC approved each transfer. Montana Solid Waste Contractors (MSWC) and Allied Waste Services² (Allied), alleged that Suhr, Jim's and WWSS failed to comply with the applicable rules and the PSC failed to enforce those rules. While they argued that all three previous owners violated the rules, they emphasized the alleged failings of WWSS. As a result of these violations MSWC and Allied posited that MacKenzie's certificate was invalid at the time it was transferred to MacKenzie and should be revoked.

¶ 2 After a contested hearing proceeding before the PSC, the PSC determined, among other things, that MacKenzie's certificate is valid, that MacKenzie was, and had been, operating within the scope of authority granted by Certificate 9265, and that it could not revoke the certificate based on any alleged or actual violations by previous holders of the certificate. MSWC and Allied appealed the PSC's Final Order to the First Judicial District Court, Lewis and Clark County. The District Court affirmed the PSC's Order. MSWC and Allied appeal the District Court's Order on Petition for Judicial Review. We affirm.

ISSUE

¶ 3 MSWC and Allied present several issues on appeal. We conclude, however, that the dispositive issue is whether the PSC has the authority to revoke MacKenzie's certificate under the circumstances presented in this case.

FACTUAL AND PROCEDURAL BACKGROUND

¶ 4 Montana motor carriers are divided into four classes—A, B, C and D. Class D motor carriers operate motor vehicles transporting garbage, or solid waste. Under § 69-12-314, MCA, Class D carriers must conduct their commercial operations pursuant to a "certificate of public convenience and necessity" issued by the PSC. Certificate 9265 is such a certificate.

¶ 5 Montana Solid Waste Contractors is a Montana non-profit corporation and trade association established in 1972 and located in Helena, Montana. Its members are private solid waste transportation businesses who operate throughout Montana under Class D certificates issued by the Montana Public Service Commission. Allied Waste Services, a Delaware corporation authorized to do business in Montana, owns and operates solid waste transportation businesses in Montana, including Billings. It conducts its business under Class D certificates issued by the PSC. The PSC is the head of the Montana Department of Public Service Regulation (Department). Section 2-15-2601, MCA. The Department administers the laws, rules and orders regulating motor carriers, including Class D motor carriers which transport solid waste. The PSC supervises, monitors, and regulates Class D motor carriers. It has original jurisdiction over complaints lodged by members of the regulated community. MacKenzie Disposal, Inc. is a Montana corporation presently transporting solid waste in and around Billings, Montana, under Class D Certificate 9265.

¶ 6 Certificate 9265 was originally issued to Suhr Transportation in 1977. In 1992 the PSC authorized transfer of the certificate to Jim's Excavating. Jim's Excavating, in turn and with PSC approval, sold the certificate to WWSS in 1993. In August 1999 WWSS and MacKenzie applied for PSC approval allowing WWSS to sell the certificate to MacKenzie. Allied filed a protest to the proposed transfer. MacKenzie moved to dismiss the protest and in November 1999 the PSC approved the transfer over Allied's protest.

¶ 7 On January 14, 2000, MSWC and Allied jointly filed an initial complaint with the PSC which was subsequently amended on January 31, 2000. MSWC/Allied sought an order from the PSC revoking MacKenzie's Class D permit arguing, among other things, that the original permit was issued to WWSS in violation of law and the permit should have been voided for dormancy prior to being transferred to MacKenzie. The PSC did not serve MacKenzie with the joint complaint. In March 2001 the PSC sua sponte dismissed MSWC's and Allied's complaint. It ruled in part that the Class D permit was properly issued to WWSS and was not invalidated by WWSS inactivity. It also ruled that successor MacKenzie was operating in full compliance with the certificate.

¶ 8 In April 2001 MSWC/Allied filed their initial petition for judicial review in the District Court asserting, among other things, that the PSC (1) denied them their constitutional and statutory right to a contested case hearing, (2) refused to enforce applicable statutes and rules by failing to serve their joint complaint on MacKenzie, (3) wrongfully dismissed their complaint sua sponte, and (4) denied MSWC/Allied their right to due process.

¶ 9 In February 2002 the parties stipulated to remand the matter to the PSC for a contested case hearing. The District Court issued an order remanding the case. The order specified that the following issues, among others, would be addressed in the contested case hearing: (1) whether Certificate 9265 should be deemed lapsed for non-use because WWSS and possibly other predecessor owners allegedly failed to comply with applicable hauling laws and regulations, (2) whether predecessor owners and the PSC complied with applicable statutory and regulatory provisions governing temporary suspensions of Class D hauling certificates and filing of annual reports, as such requirements impact a determination of whether a certificate is used on a "regular" basis, and (3) what MacKenzie, the previous owners and the PSC believed as of October 1999 was the territorial scope of service authorized by Certificate 9265 as it pertained to a determination of compliance with the "regular use" requirements.

¶ 10 Upon remand, MSWC/Allied filed their second amended complaint before the PSC. This complaint was served on MacKenzie and MacKenzie filed an answer. In its answer it asserted numerous affirmative defenses, one of which was the applicability of a two-year statute of limitations. MSWC and Allied filed a consolidated brief arguing that MacKenzie was bound by the issues defined in the Stipulation Order and could not circumvent the Stipulation Order by invoking a statute of limitations defense.

¶ 11 A contested case hearing was held in January 2003 and continued in September and October 2003. During the hearing, the hearing officer received evidence of events that occurred outside of the argued statute of limitations with the caveat that the statute of limitations issue was still under advisement and could be used to subsequently eliminate consideration of earlier events.

¶ 12 In October 2004 the PSC again dismissed MSWC/Allied's complaint. In its order, the Commission concluded that a three-year statute of limitations applied to the proceeding and therefore excluded actions by the parties that occurred before January 14, 1997. It specifically held that WWSS did not violate any applicable statutes or Commission rules and orders between January 1997 and 1999 when it sold the certificate to MacKenzie. It also held that it did not have the authority to revoke MacKenzie's permit based on the conduct or activities of a prior certificate holder when no complaint or revocation proceeding was pending against the prior owner at the time of the transfer. Lastly, the PSC determined that MacKenzie's certificate was valid because MacKenzie was operating within the scope of authority granted under the certificate.

¶ 13 In November 2004 MSWC/Allied filed another petition for judicial review with the First Judicial District Court. They argued numerous errors by the PSC including, but not limited to, the Commission's (1) refusal to revoke the certificate based on WWSS's inactivity at the time WWSS held the certificate, (2) reliance on unwritten policies to justify declining to revoke the certificate, (3) failure to monitor and enforce applicable statutes and regulations pertaining to Class D certificate holder compliance, (4) application of a three-year statute of limitations to the scope of the contested case hearing, and (5) failure to make requested findings of fact.

¶ 14 The District Court concluded that the PSC (1) appropriately applied a three-year statute of limitations, (2) did not abuse its discretion in concluding that WWSS did not violate any applicable statute, rule or commission order, (3) did not err in deciding that WWSS's use of the certificate was not "incidental," and (4) did not err in determining that Certificate 9265 could be used to transport Class D material from outside of Billings through the city and to the Billings landfill. The District Court also held that MSWC and Allied were not denied their right to due process. Having expressly found that WWSS did not violate any applicable law or orders,...