                                           No. 01-560

               IN THE SUPREME COURT OF THE STATE OF MONTANA

                                          2002 MT 121N


MONTGOMERY CONSTRUCTION,

              Petitioner and Appellant,

         v.

MONTANA DEPARTMENT OF TRANSPORTATION,

              Respondent and Respondent.



APPEAL FROM:         District Court of the First Judicial District,
                     In and for the County of Lewis and Clark,
                     The Honorable Jeffrey M. Sherlock, Judge presiding.


COUNSEL OF RECORD:

              For Appellant:

                     Jon A. Oldenburg, Attorney at Law, Lewistown, Montana

              For Respondent:

                     Nick A. Rotering, Timothy W. Reardon; Montana Department of
                     Transportation, Helena, Montana


                                                        Submitted on Briefs: April 25, 2002

                                                                   Decided:    June 11, 2002

Filed:


                     __________________________________________
                                       Clerk
Chief Justice Karla M. Gray delivered the Opinion of the Court.



¶1      Pursuant to Section I, Paragraph 3(c), Montana Supreme Court

1996 Internal Operating Rules, the following decision shall not be

cited as precedent.           It shall be filed as a public document with

the Clerk of the Supreme Court and shall be reported by case title,

Supreme     Court    cause     number     and     result    to   the   State     Reporter

Publishing Company and to West Group in the quarterly table of

noncitable cases issued by this Court.
¶2     The First Judicial District Court, Lewis and Clark County,

denied the petition of Montgomery Construction (Montgomery) for

judicial review and upheld a decision of the State Tax Appeal Board

(STAB) regarding Montgomery's state tax liability as a special fuel

user    for    the    time    between      July    of   1993     and    June    of   1996.

Montgomery appeals.           We affirm.

¶3     The issue is whether the District Court erred in denying

Montgomery's petition for judicial review.

                                       BACKGROUND

¶4     Montgomery is a Montana construction business and a licensed

"special fuel user"--that is, an operator of diesel fuel-consuming

motor vehicles on the highways of Montana.                   See § 15-70-302(16) and

(18), MCA.      Pursuant to § 15-70-321, MCA, a tax of 27¾ cents per gallon is

imposed on each gallon of special fuel used to operate a motor vehicle upon, or in connection

with a construction contract on, public roads in Montana. The tax is enforced by the

Montana Department of Transportation (DOT).

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¶5     DOT conducted a fuel audit of Montgomery's records for the

period from July of 1993 to June of 1996 which culminated in an

assessment of $30,717.51, plus interest, for special fuel user tax

due.   Montgomery requested--and was granted--an informal telephone

hearing on the assessment, for purposes of which it submitted a

written compilation listing contracts it had worked, the number of

days worked on--and value of--each contract, and whether it felt

special fuel used for each job was taxable or not.       The parties'

disagreement centered on whether specific gravel crushing jobs

performed by Montgomery were subject to the special fuel users tax.

 Montgomery contended fuel used for jobs in which it merely crushed

and stockpiled gravel is not subject to the fuel users tax because

it did not operate its vehicles on the highways of Montana to

complete those jobs.    DOT determined, however, that based on the

records provided by Montgomery, the special fuel used for the

disputed jobs was taxable.    Montgomery appealed to STAB.
¶6     After a hearing, STAB issued findings, conclusions and an

order determining that the disputed taxes are due and owing.        STAB

noted that § 15-70-323, MCA, requires special fuel users to keep

records as required by DOT.    STAB also noted that Rule 18.10.324,

ARM, sets forth guidelines for record-keeping requirements relating

to special fuel taxes and that, according to DOT, Montgomery had

provided   incomplete   records.   STAB   determined   Montgomery   was

obligated under Rule 18.10.202, ARM, to demonstrate off-road usage

through adequate records, and DOT had established Montgomery did




                                   3
not maintain records adequate to document the claim that the fuel

in question is not taxable.

¶7     Montgomery petitioned the District Court for judicial review,

asserting STAB's decision was clearly erroneous in view of the

reliable,     probative,   and   substantial   evidence      of   record   and

arbitrary or capricious and characterized by an abuse of discretion

or an unwarranted exercise of discretion.          Noting Montgomery had

failed to provide a transcript of the STAB hearing or otherwise

cite to the record at STAB, the District Court pointed out that it

could not determine whether STAB's findings were supported by

substantial evidence and not otherwise clearly erroneous.            On that

basis, the court rejected Montgomery's argument and concluded

STAB's finding that Montgomery had failed to produce sufficient

records in connection with special fuels was not clearly erroneous.


                                 DISCUSSION

¶8     Did the District Court err in denying Montgomery's petition

for judicial review?

¶9     The standards for judicial review of an agency decision are

set forth in statute.      The court may not substitute its judgment

for that of the agency on factual questions, but may reverse or

modify the agency's decision if substantial rights of the appellant

have   been   prejudiced   because,   inter    alia,   the   administrative

findings are clearly erroneous in light of the reliable, probative

and substantial evidence of record, the agency's interpretation of

the law is incorrect or the agency's decision is "arbitrary or


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capricious or characterized by abuse of discretion or clearly

unwarranted exercise of discretion[.]"           Section 2-4-704(2), MCA.

¶10   Montgomery argues that one of its employees testified he kept

records concerning which jobs were subject to the special fuel

users tax, using a method taught to him by State of Montana

Department of Revenue auditors.         Montgomery also contends that STAB

made clearly erroneous findings of fact and interpreted the law

incorrectly because the records sought by DOT cannot be produced by

Montgomery or any other special fuel user who is not in charge of

the eventual use of stored gravel, when it is used, where it is

used, or how it is used.         According to Montgomery, the gravel may

sit for years before it is used, other gravel may be stacked upon

it, and "it would be impossible to ever document the use of the

[gravel]."
¶11   In a judicial review of a contested case, "[t]he review shall

be conducted by the court without a jury and shall be confined to

the record."      Section 2-4-704(1), MCA.       The party asserting error

is    obligated    to   insure    the   record   contains   all   documents,

discovery, and evidence which relate to the errors claimed.                 A

party may not predicate error on an incomplete record.            Miller v.

Frasure (1994), 264 Mont. 354, 362, 871 P.2d 1302, 1307.           Without a

transcript of the testimony given at the STAB hearing or references

to a record produced by Montgomery, the District Court was unable

to review the basis for STAB's findings and conclusions.

¶12   This Court is in the same position as the District Court.           To

the considerable extent that Montgomery's arguments depend on the


                                        5
transcript of the STAB hearing, a record not before us, Montgomery

has not established--and cannot establish--error by STAB in clearly

erroneous    findings   of   fact,   erroneous   conclusions   of   law   or

determinations which are arbitrary and capricious or characterized

by an abuse of discretion or unwarranted exercise of discretion.

¶13   Affirmed.

                                          /S/ KARLA M. GRAY


We concur:

/S/   JIM REGNIER
/S/   JAMES C. NELSON
/S/   PATRICIA COTTER
/S/   JIM RICE




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