Administrative Rules of the State of Montana

BEFORE THE DEPARTMENT OF PUBLIC SERVICE REGULATION

OF THE STATE OF MONTANA

In the matter of the amendment of ARM 38.2.3301 pertaining to discovery procedures

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NOTICE OF PUBLIC HEARING ON PROPOSED AMENDMENT

TO: All Concerned Persons

1. On September 18, 2018, at 1:30 p.m., the Department of Public Service Regulation will hold a public hearing in the Bollinger Room, 1701 Prospect Avenue, Helena, Montana, to consider the proposed amendment of the above-stated rule.

2. The Department of Public Service Regulation will make reasonable accommodations for persons with disabilities who wish to participate in this rulemaking process or need an alternative accessible format of this notice. If you require an accommodation, contact the Department of Public Service Regulation no later than 5:00 p.m. on September 11, 2018, to advise us of the nature of the accommodation that you need. Please contact Rhonda Simmons, Department of Public Service Regulation, 1701 Prospect Avenue, Helena, Montana, 59620-2601; telephone (406) 444-6170; fax (406) 444-7618; TDD/Montana Relay Service (406) 444-4212; or e-mail [email protected].

3. The rule as proposed to be amended provides as follows, new matter underlined, deleted matter interlined:

38.2.3301 DISCOVERY (1) Techniques of prehearing discovery permitted in state civil actions may be employed in commission contested cases, and for this purpose the commission adopts rules 26, 28 through 37 (excepting rule 37(b) (1) and 37(b) (2) (d) of the Montana rules of civil procedure in effect on the date of the adoption of this rule, and any subsequent amendments thereto. In applying the rules of civil procedure to commission proceedings, all references to "court" shall be considered to refer to the commission; references to the subpoena power shall be considered references to ARM 38.2.3302 through 38.2.3305; references to "trial" shall be considered references to hearing; references to "plaintiff" shall be considered references to a party; and references to "clerk of court" shall be considered references to the staff member designated to keep the official record in commission contested cases. The commission will typically issue a procedural order to govern discovery in each docket. Unless otherwise specified, the commission adopts Rule 26(b) of the Montana Rules of Civil Procedure (excepting Rule 26(b)(4)(C)) which establishes the scope and limits of discovery and Rule 37 which governs discovery abuses and compelling discovery responses, except the commission may not award monetary damages as a discovery sanction. All parties, the commission, and individual commissioners may issue discovery in commission proceedings. Parties may issue discovery to the commission or commissioners only upon motion, and subsequent authorization by the commission.

(2) Nothing in (1) of this rule shall be construed to limit the free use of data requests among the parties. The exchange of information among parties pursuant to data requests is the primary method of discovery in proceedings before the commission. Data requests are the primary method of discovery in commission proceedings. Additional discovery methods permitted by Montana Rule of Civil Procedure 26(a) may also be utilized in commission proceedings, but only as requested by a party or the commission, and as approved by the commission. The following format for data requests and responses should be used:

(a) assign a unique, consecutive number to each data request (e.g., MCC-001), regardless of the party to whom the request is directed (e.g., the commission may direct PSC-001 through 008 to NorthWestern, PSC-009 through 016 to the MCC, and PSC-017 through 019 again to NorthWestern);

(b) at the beginning of each data request, consistently describe its subject in five words or less. In addition, a party may direct the request to a particular witness or include citations to exhibits or testimony; and

(3) The following is an example of an acceptable data request or data response:

PSC-006 RE: Purchased Gas Contracts

Witness: Doe, JBD-4:13-15

Request or Response:

a. What risks of bypass would be avoided by the shareholders as a result of the company's proposed treatment?

b. What risks of bypass would be avoided by the ratepayers as a result of the company's proposed treatment?

AUTH: 2-4-612, 69-1-110(3), 69-2-101, 69-2-102, 69-3-103, 69-3-106, 69-3-203(2), 69-3-321, 69-12-201(2), MCA

IMP: 69-1-110(3), 69-2-101, MCA

REASON: Amendment of ARM 38.2.3301 is necessary to clarify and codify long-standing discovery practice before the department. Due to an ambiguity in ARM 38.2.3301, a Montana district court has found that the department lacks the authority to engage in discovery in transportation contested case proceedings. These rulings appear to be based on the language in ARM 38.2.3301 which compares the department and contested case proceedings to courts and trials, where the court's role to investigate issues before it is much more narrowly constrained, and where the court is not allowed to issue discovery. As the department is statutorily required to act in the dual capacity of both investigator and adjudicator in contested case proceedings, it is appropriate to eliminate this ambiguity by removing all references to court and trials.

This rule indicates to parties that specific discovery procedures for each proceeding before the department will typically be contained within the procedural order for that specific docket. This rule retains the incorporation of Mont. R. Civ. Pro. 26(b), as this provides helpful guidelines and case law to determine the scope of discovery before the department. However, the amendment does not incorporate Rule 26(b)(4)(C), as this sub-section has various requirements for expert witness compensation that would not be practical or reasonable given the department's substantial pre-filed expert testimony in various department proceedings.

This rule retains the incorporation of Mont. R. Civ. Pro. 37, as this provides helpful guidelines and case law to govern discovery abuses before the department. However, it does not allow the department to require monetary damages for discovery abuses. This rule codifies department practice indicating that parties are only permitted to issue discovery upon the department, commissioners, and staff when requested by parties and authorized by the department.

This rule codifies department procedural order practice indicating that data requests are the primary method of discovery in commission proceedings. It also retains the incorporation of Mont. R. Civ. Pro. 26(a), as this allows additional discovery methods in addition to discovery requests. However, it conditions these additional mechanisms upon department approval, as these additional mechanisms are rarely utilized before the department, and their usage should be permitted only when necessary or as reasonable.

This rule codifies the typical department format for data requests, as developed over time and as indicated in procedural orders for each contested case proceeding. Finally, this rule notes additional statutory references to reinforce the department's investigatory authority in various proceedings and with various types of regulated entities that practice before the department.

4. Concerned persons may submit their data, views, or arguments either orally or in writing at the hearing. Written data, views, or arguments may also be submitted to: Rhonda Simmons, Department of Public Service Regulation, 1701 Prospect Avenue, Helena, Montana, 59620-2601; telephone (406) 444-6170; fax (406) 444-7618; or e-mail [email protected], and must be received no later than 5:00 p.m., September 21, 2018.

5. The commission, a commissioner, or a duly appointed presiding officer may preside over and conduct the hearing.

6. The Department of Public Service Regulation maintains a list of interested persons who wish to receive notices of rulemaking actions proposed by this agency. Persons who wish to have their name added to the list shall make a written request that includes the name, e-mail, and mailing address of the person to receive notices and specifies for which program the person wishes to receive notices. Notices will be sent by e-mail unless a mailing preference is noted in the request. Such written request may be mailed or delivered to the contact person in paragraph 2 above or may be made by completing a request form at any rules hearing held by the department.

7. The bill sponsor contact requirements of 2-4-302, MCA, do not apply.

8. With regard to the requirements of 2-4-111, MCA, the Department of Public Service Regulation has determined that the amendment of the above-referenced rule will not significantly and directly impact small businesses.

/s/ JUSTIN KRASKE /s/ BRAD JOHNSON

Justin Kraske Brad Johnson

Rule Reviewer Chairman

Department of Public Service Regulation

Certified to the Secretary of State August 14, 2018.