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HELENA – Feeling hamstrung legally, members of the Montana Power Authority decided unanimously Monday to ask the attorney general to seek a state Supreme Court opinion whether the board can legally recommend issuing bonds for power generation and transmission projects.

Authority members asked the chairman, Lt. Gov. Karl Ohs, if the administration would approach Attorney General Mike McGrath to see if he would ask the Supreme Court to determine whether the authority can constitutionally call for bonding.

At the end of their second meeting, members suggested meeting at the call of the chairman, instead of meeting as tentatively planned on Aug. 13 and Aug. 27, given the questions about its authority. Ohs said his office would continue to send out information on the power situation to members to keep them apprised of the changing electricity market situation.

Members suggested getting a court opinion after hearing a report from the state bond counsel, Mae Nan Ellingson of the Missoula office of Dorsey & Whitney law firm. Ellingson discussed the proposed referendum on House Bill 474, the 2001 state law that among other things created the Montana Power Authority and empowered it to recommend that the Board of Examiners issue up to $500 million in tax-exempt, state revenue bonds on power and transmission projects.

McGrath originally ruled that Reps. Michelle Lee, D-Livingston, and Christopher Harris, D-Bozeman, could not undertake a referendum campaign to put HB474 before voters in November 2002 because it includes an appropriation. However, McGrath was overruled last week by District Judge Jeffrey Sherlock, freeing them up to gather signatures.

However, the two legislators’ lawyer, Jim Goetz of Bozeman, also challenged the constitutionality of HB474 on grounds that it allegedly violates the constitutional requirement that a bill contain a single subject. Sherlock didn’t rule on the constitutional challenge, and Goetz said he is holding that challenge in waiting until he sees the outcome of the referendum effort.

“I think it’s fair to say as long as there is a constitutional challenge to HB474, no one would be able to give an unqualified opinion so as to make the bonds marketable,” Ellingson said.

She suggested that the authority could seek a declaratory judgment on the issue from the court. Or Ellingson said if the attempted referendum failed, the authority could recommend bond issuances to the Board of Examiners.

Another problem with the law, she said, is that it doesn’t give the authority the ability to use bonds to buy power, although it allows the authority to recommend issuing bonds for generation and transmission projects. Having the ability to use bonds to buy power could be a worthwhile asset, she said, and could be clarified at a future legislative session.

Karen Fagg, an authority member and former director of the Department of Natural Resources, wondered if the state could do a joint project with a private entity. Ellingson said it could.

Another authority member, former Supreme Court Chief Justice Jean Turnage, said the court doesn’t issue advisory opinions. It needs a genuine case, possibly through a friendly lawsuit or test case, before it will hear the matter.

Authority member Gary Buchanan suggested the possibility of the governor calling a special legislative session to fix the law but also having the authority try to address energy issues in a more dispassionate, less politically partisan way than they have been dealt with in recent sessions. By reaching out to the public, the authority could try to build consensus and seek acceptable solutions.

“What you see ahead is partisan action by both political parties,” he said.

But Ohs wasn’t keen on the special session idea, saying: “Everybody gets nervous when you start talking special session,”

Former Senate President Gary Aklestad, R-Galata, said the main thing the authority has to offer is through bonding, but now it lacks the power to recommend bonds at present.

“If we haven’t got the authority to bond, we ought to look at our hole card,” he said.

Ellingson said the authority has the authority to bond, but the statute has been alleged to be unconstitutional.

There was some discussion whether the state bonding was even needed, given the declining prices for power in recent weeks.

Two proposed projects already have successfully obtained private financing, Buchanan said. Turnage said the privately financed proposed coal gasification plant at Hardin “will probably get on line a damned sight faster than our power plants would with bonds.”

“Maybe, though, the situation is solving itself,” Buchanan said.

“That’s exactly my point,” Ohs said.

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