Submitted on Briefs: March 22, 2017
FROM: District Court of the First Judicial District, In and
For the County of Lewis And Clark, Cause Nos. ADV-2015-315
and CDV 2015-314 Honorable Kathy Seeley, Mike Menahan,
Appellant: Elizabeth A. Brennan, Brennan Law & Mediation,
PLLC, Missoula, Montana
Appellee: Justin W. Kraske, Jeremiah Langston, Special
Assistant Attorneys General, Montana Public Service
Commission, Helena, Montana, Peter Michael Meloy, Meloy Law
Firm, Helena, Montana
Amicus Curiae: Jill Gerdrum, Axilon Law Group, PLLC,
Missoula, Montana (Attorney for Montana Telecommunications
The Montana Public Service Commission requires that certain
regulated telecommunications companies publicly disclose the
compensation of their executive or managerial employees
earning more than $100, 000 per year. Southern Montana
Telephone Company and Lincoln Telephone Company-both
regulated by the Commission-filed motions for protective
orders to keep the salary information confidential. The
Commission denied the motions, relying in part on a new
"rubric" that it developed by which it declared it
would judge such motions. Southern and Lincoln each appealed
to the First Judicial District Court. In two separate
rulings, the District Court affirmed.
Southern and Lincoln appeal, raising several issues. We
reverse on the sole ground that the Commission's
"rubric" constitutes a de facto rule subject to
Montana Administrative Procedure Act (MAPA) rulemaking
AND FACTUAL BACKGROUND
Southern and Lincoln are privately-owned Montana
telecommunications companies. They also qualify as
"public utilities" and are therefore subject to
regulation by the Commission. Sections 69-1-102,
-3-101(1)(f), MCA. The Commission possesses the authority to
regulate privately-owned companies that provide a
"regulated telecommunications service"-like
Southern and Lincoln-but it does not regulate "[r]ural
telephone cooperatives." Sections 69-3-101(1)(f),
The Commission certifies certain telecommunications public
utilities as "eligible telecommunications
carrier[s]" (ETCs) for purposes of the Federal
Telecommunications Act of 1996. See 47 C.F.R. §
54.201(b) (2016); § 69-3-840(2), MCA. That Act's
purpose is, in part, to provide "universal"
telecommunications services to "low-income consumers and
those in rural, insular, and high cost areas." 47 U.S.C.
§ 254(b)(3) (2015). The Act establishes the
"universal service" fund (USF)-a series of federal
subsidies made available to ETCs for the purpose of providing
such services. 47 U.S.C. § 254(e). Federal law provides
the requirements for ETC certification. 47 U.S.C. §
214(e). Only a company that receives certification as an ETC
may be eligible to receive USF subsidies. 47 U.S.C. §
254(e). The Federal Communications Commission delegates to
the Commission the authority to certify annually ETCs in
Montana. 47 C.F.R. § 54.314; § 69-3-840(1), MCA.
The Commission must base its ETC certification on
companies' compliance with federal statute. Section
69-3-840(2), MCA. The Commission has certified Southern and
Lincoln as ETCs, and each receives federal USF subsidies.
Pursuant to federal law, the Commission requires all ETCs to
apply for recertification annually. Section 69-3-203, MCA.
Although all ETCs must submit certain documentation to the
Commission for recertification, most are unregulated
telephone cooperatives and not public utilities. Only ETCs
that are subject to Commission regulation as public
utilities-including Southern and Lincoln-must submit
"annual reports." Mont. Admin. R. 38.5.2602 (2000).
The Commission prescribes the information that ETCs must
include in their annual reports.
Recently the Commission began requiring that privately-owned
ETCs disclose in their annual reports the names and
compensation information for all executives and managers
earning more than $100, 000 per year in total compensation.
The Commission's purpose in imposing this requirement was
to increase transparency by disclosing to the public how ETCs
spend the federal USF subsidies that they receive.
Southern and Lincoln each filed motions for protective orders
with the Commission. The motions requested that the
Commission permit them to not disclose their employees'
compensation information publicly. They agreed to provide the
compensation information to the Commission but argued that
employee salaries constituted trade secret ...