The Montana Supreme Court has partially sided with Parker Noland, an entrepreneur who challenged regulations imposed by the Montana Public Service Commission (PSC) on motor carrier services, specifically for construction debris removal. In a split decision, the high court affirmed the lower court’s finding that Noland lacked standing for his *as-applied* challenge but reversed the dismissal of his *facial* constitutional challenge, sending that part of the case back to the District Court for further review.
The core of the dispute centers on Montana’s “public convenience and necessity” (PCN) provisions within the Motor Carrier law. These rules require anyone wishing to operate as a Class D motor carrier—which includes debris removal—to prove a need for their services, a process that allows existing certificate holders, like Evergreen Disposal, Inc., to protest new applications and demand sensitive financial information.
Noland’s Failed Attempt at an “As-Applied” Challenge
Parker Noland, operating as PBN LLC, initially attempted to comply with the regulations after being ordered to stop hauling construction debris without a Class D certificate. However, Noland withdrew his application, citing the administrative proceedings and competitor scrutiny as “cost prohibitive.”
In his subsequent lawsuit, Noland sought a declaratory judgment that the PCN provisions were unconstitutional both as applied to him and facially.
The Supreme Court, led by Chief Justice Cory J. Swanson, agreed with the District Court that Noland failed to establish standing for his *as-applied* challenge. An *as-applied* challenge requires demonstrating how a law specifically violates a person’s rights under the concrete facts of their situation.
The Court found Noland’s situation problematic for two main reasons. First, the primary injury stemming from the discovery requests and competitor protests was inflicted upon PBN LLC, the entity that filed the application, not Noland personally. Citing the precedent set in *Sagorin v. Sunrise Heating and Cooling, LLC*, the Court noted that an individual cannot assert the claims of an LLC in which they hold an interest without proper assignment or personal injury.
Second, Noland’s challenge was deemed a “pre-enforcement challenge in a vacuum.” Because Noland voluntarily withdrew his application and is not currently operating under the licensing scheme, he is asking the court for an advisory opinion on how the rules *might* be applied to him in the future. The Court emphasized that Noland failed to exhaust his administrative remedies, which would have provided the necessary factual record to analyze an *as-applied* violation.
Justice Laurie McKinnon, in a special concurrence, agreed Noland lacked standing for the *as-applied* claim but disagreed with the majority’s reasoning, arguing the majority conflated standing with the merits of the case.
Victory on the Facial Challenge Standing
The Supreme Court reached a different conclusion regarding Noland’s *facial* challenge. A facial challenge argues that a statute is unconstitutional in all possible applications.
The District Court had initially allowed Noland standing for this facial challenge because it is generally not dependent on specific case facts. However, the District Court then dismissed the facial claim, reasoning that since some applicants had successfully obtained certificates despite protests, the statute could be constitutionally applied in some circumstances.
The Supreme Court reversed this dismissal. The majority held that the District Court misunderstood the nature of Noland’s facial argument. Noland wasn’t just arguing against the *denial* of a certificate; he was arguing that the *process itself*—the requirement to prove “need” and endure protests—imposes an unconstitutional barrier to exercising his right to earn a living (the “right of pursuing life’s basic necessities” under the Montana Constitution) and violates due process and equal protection.
“Where the application process itself is the mechanism of injury, regardless of ultimate outcome, the court must apply the relevant constitutional standards of review to the procedure as well as the results,” the opinion stated.
The Court reasoned that the existence of the PCN procedures creates an obstacle for *every* applicant, which is the injury Noland claims is unconstitutional on its face. The fact that some applicants managed to navigate the process successfully does not negate the alleged constitutional burden imposed by the procedure itself.
Justice McKinnon concurred on this point, emphasizing that Noland’s facial challenge targets the notice, protest, and hearing procedures that apply to every single application, making his challenge distinct from the ultimate outcome of any single case.
Remand for Merits Review
While Noland successfully cleared the standing hurdle for his facial challenge, the Supreme Court cautioned that this is not a ruling on the merits of his constitutional claims. The Court declined to rule on whether the PCN provisions actually violate the Montana or U.S. Constitutions.
The case is remanded back to the Eleventh Judicial District Court in Flathead County. The District Court must now analyze the merits of Noland’s facial claims under the appropriate constitutional scrutiny standards.
In summary, Parker Noland cannot challenge the licensing rules based on his past aborted application, but he has successfully secured the right to argue that the rules themselves are fundamentally flawed under the Montana Constitution.