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HELENA — The state Public Service Commission voted Tuesday to intervene in Touch America's bankruptcy proceedings to assure that the Butte company's customers in Montana will be adequately served after its assets are sold.

The vote was 4-1, with Commissioner Jay Stovall, R-Billings, dissenting. Stovall said he's not against it but wanted to vote no at this time.

Under the motion, the commission will petition the U.S. Bankruptcy Court by the July 31 deadline to intervene.

"This preserves our ability to do it," said Commissioner Tom Schneider, D-Helena. "Then we have to have a hard-nosed discussion whether it's worth it."

Protecting customers Possible goals of a PSC intervention could be to negotiate or obtain adequate assurances from the buyer that Touch America's buyer will adequately serve the company's Montana customers, PSC attorney Monica Tranel said.

Assistant Attorney General Jim Screnar, who heads the bankruptcy unit in the state attorney general's office, said the PSC's request to intervene would be based on its authority to set rates and approve sales of utility property.

"Certainly the Public Service Commission of the state of Montana would be party of interest in this bankruptcy," Screnar said.

Screnar said both the Department of Fish, Wildlife and Parks and the University of Montana are considering intervention requests to make sure whichever company buys Touch America will be able to service existing contracts.

After a financial free fall the past 18 months, Touch America filed for bankruptcy June 19 and announced that it intended to sell its private data line and Internet business to a Canadian company, 360networks Inc. At a hearing July 14, a bankruptcy judge said the auction of Touch America's assets can proceed in early August, despite objections from the government trustee urging the judge to reject the sale because it was biased against other competitors.

Authority in jeopardy? Some commissioners wondered if an adverse bankruptcy court decision against the PSC could jeopardize the regulatory agency's future authority if NorthWestern Corp. files for bankruptcy.

"Is it precedent-setting if our motion to intervene is denied?" asked Commissioner Matt Brainard, R-Florence.

"It's certainly precedent-setting in Delaware," Screnar said, although he said such decision could be appealed in federal court.

Screnar said any business wanting to buy Touch America's assets would want to buy them "free and clear of regulatory power."

"Anyone who wants to perfect a sell is probably going to have to sit down and talk to you," he said. "Bottom line, I'm not sure the commission can do anything about selling it."

The PSC could intervene using its own attorneys or do so using state's bankruptcy division, Rowe said. Screnar said he would be working with a Delaware lawyer who would handle the appearance at the hearing.

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