                                NO. 85-554
                IN THE SUPREME COURT OF THE STATE OF MONTANA
                                    1986




KINGSBURY DITCH CO.,
                 Petitioner and Respondent,


DEPARTMENT OF NATURAL RESOURCES
AND CONSERVATION, et al.,
                 Respondents and Appellants.




F..PPEALFROM:    District Court of the First Judicial District,
                 In and for the County of Lewis & Clark,
                 The Honorable W. W. Lessley, Judge presiding.


COUNSEL OF RECORD:

         For A.ppellant:
                 Jardine, Stephenson, Blewett & Weaver; K. Dale
                 Schwanke argued for Pondera Canal, Great Falls,
                 Montana
                 Candace West, Dept. of Natural Resources, Helena,
                 Montana; Donald D. MacIntyre argued for Dept. of
                 Natural Resources, Helena, Montana

         For Respondent:
                 Loble & Pauly; Lester Loble argued for Kingsbury
                 Ditch Co., Helena, Montana




                                    Submitted:   September 11, 1986
                                      Decided:   October 9, 1986

             -
         OCT 9 ~ 8 6
Filed:




                                    Clerk
Mr. Justice William E. Hunt, Sr., delivered the Opinion of
the Court.




       Kingsbury Ditch Company filed an application with the
Department of Natural Resources and Conservation (DNRC) to
change the point of use of a water right as required by the
Water Use Act of 1973, 5      85-2-402, MCA   (1983).     Pondera
County Canal and Reservoir Company and many others filed
objections to the proposed change, and a hearing date was
set.    During the course of the proceedings, the DNRC hearing
examiner made several procedural rulings.      Kingsbury asked
the Water Court to review two of those rulings.         The Water
Court reversed both rulings.    The DNRC and Pondera appeal.
We vacate and remand.
       Pondera raises this issue on appeal.       Did    judicial
review properly lie from the interlocutory rulings of the
hearing examiner?    Both appellants raise the following two
issues:   (1) Whether the District Court erred in ordering
that the burden of proof must be placed on the objector in a
contested case hearing for a change of use application before
the DNRC?    (2) Whether the District Court erred in ordering
the hearing examiner to impose discovery sanctions prior to
hearing to assure compliance with petitioner's request for
discovery?
       Kingsbury Ditch Company has a pre-1973 water right.
Subsequent to the passage of the Water Use Act of 1973, they
applied for DNRC approval to change the point of use of that
water right as required by 5 85-2-402, MCA (1983).         Public
notice of the proposed change was given and a prehearing
conference was scheduled.    The hearing examiner detailed the
issues for the prehearing conference in her order of October
18, 1983.    The order read:
     The issues i n the Hearing will be whether the
                  .
     Applicant has shown existence of the statutory
     criteria for change in place and method of use
     pursuant to MCA 5 85-2-402. The Objectors --
                                               have the
     burden of proof - - - that their rights - -be
                      to show                   will
     adverseq affected by the change proposed by the
     Applicant. (Emphasis added.)
     This order was clarified by another order issued by the
hearing examiner on October 19, 1984.       It read:
     [A! s  in all administrative proceedings, -    the
     Applicant bears the burden - pursuasion (sic) on
                                 of
     all ultimate issues, i.e.:      the scope of the
     existing right subject to the change request, and
     lack of adverse affect to other appropriators. The
     Objectors herein bear the burden of production on
     the scope [and] existence of their riqhts, and the
     kind and character of adverse affect alleged.
     (Emphasis added.)
     After    the   prehea.ring conference      was   sched.uled, the
hearing   examiner    ordered   all   parties    to   participate    in
discovery.     Kingsbury   served a discovery request on all
parties on December 21, 1983.          On December 23, 1983 the
hearing examiner, in response to Kingsbury's motion, issued
an order for discovery, requiring all parties to respond
within 30 days to Kingsbury's discovery request.          On January
27, 1984, Kingsbury moved the hearing examiner to dismiss the
objections of the objectors who         failed to respond to the
discovery request.
    The hearing examiner stated that she has discretion as a
hearing examiner to order discovery and impose sanctions for
failure of a party to comply with her order.          She noted that
numerous objectors were unrepresented by counsel, and their
ability to respond. to discovery requests was limited.              One
such objector who attended the prehearing status conference
indicated a willingness to respond to the discovery request
but an understandable inability to comprehend exactly what a
response should entail.              The hearing examiner ruled that
dismissal      is   a    harsh      sanction,     especially        against      one
unrepresented       by   counsel     in an       administrative proceeding
where water users typically appear pro                  E.        Further, there
had    been   no    allegations       of   bad     faith     on    the    part   of
non-responsive parties.             She held there was a less drastic
means to protect Kingsbury's fundamental right to fairness
and procedural due process.            She denied the motion to dismiss
the    objections without           prejudice     and   ruled      that    if the
objectors appeared at the hearing with substantive testimony
of which Kingsbury was unaware, a continuance sufficient for
Kingsbury to meet the evidence would be granted.
       Kingsbury sought judicial review of these two orders in
the District Court.           Judge Loble deemed himself disqualified
and Judge Lessley assumed jurisdiction.                 The facts on appeal
were    stipulated       to   and   following briefing            Judge Lessley
reversed both orders.
       He ruled:
       [Tlhe Hearing Examiner below will return to her
       original Order         ...
                           namely "The objectors have the
       burden of proof to show that their rights will be
       adversely affected by the change proposed by the
       Applicant."
       and
        [Blefore the time set for the next hearing in this
       Cause, the Examiner shall prepare such Orders as
       are    necessary   to    assure   compliance   with
       Petitioner's request for Discovery; that such Order
       will. carry the condition of Sanctions for failure
       to comply.
       On    appeal,     Pondera     argues      judicial    review       was    not
appropriate.        Pondera contends that pursuant to MAPA, the
only types of administrative orders that are subject to
judicial review are final decisions in which the aggrieved
party has exhausted his administrative remedies.                           Section
2-4-702, MCA.        The exception to that rule is                   $   2-4-701, MCA,
which   allows       review    of       a    "preliminary, procedural,             or
intermediate agency action or ruling                    ...     if review of the
final agency decision would not provide an adequate remedy."
Pondera contends adequate relief is available by way of a
review of the final agency decision.
      Pondera also argues that pursuant to                       $       2-4-704, MCA,
when judicial review is undertaken, the reviewing court may
reverse or modify "if substantial rights of the appellant
have been prejudiced" by administrative findings which are:
violative     of     constitutional          or     statutory        provisions;    in
excess of the statutory authority of the agency; made upon
unlawful    procedures;        affected           by    other    error       of   law;
arbitrary or capricious; characterized by abuse of discretion
or   clearly    unwarranted      exercise of discretion.                       Pondera
argues no prejudice to Kingsbury has ever been                               shown or
alluded to and that the reviewing court did not have grounds
to reverse.
      The   orders     appealed         here      are    clearly         intermediate,
procedural orders of the hearing examiner.                      There has been no
final decision as yet, nor an exhaustion of administrative
remedies as required by             S       2-4-702, MCA.            A preliminary,
procedural, or intermediate agency ruling may be reviewed if
review of      the    final agency action would                  not provide an
adequate remedy.        Section 2-4-701, MCA.                There has been no
showing in this case that a review of the final agency action
would provide an inadequate remedy.                     We therefore hold that
judicial review did not lie from the orders of the hearing
examiner.
      Since we       have     decided        that      judicial review is not
proper, we decline to address the two remaining issues raised
by appellants, instead w e vacate the decision of the lower
court and remand for further proceedings.




We Concur:



      Chief Justice




             stices
