Johnson v. Piedmont Municipal Power Agency, 21640
| Decision Date | 10 February 1982 |
| Docket Number | No. 21640,21640 |
| Court | South Carolina Supreme Court |
| Parties | P. Duncan JOHNSON, and Roger Lloyd Jones, Individually and on behalf of all other persons similarly situated; and Town of Bamberg, South Carolina, Appellants, v. PIEDMONT MUNICIPAL POWER AGENCY; Clarence A. Shealy, Jr., John C. Eargle, Calvin T. Millstead, L. D. Gardner, Jr., Winifred Culclasure, Robert P. Coats, and Donald E. Morris, as mayor and members of the City Council of the City of Newberry, South Carolina, and representing the governing bodies of the member municipalities of the Piedmont Municipal Power Agency; Jack Millwood, Joe Dean Knuckles, Ronnie Brown, Dewitt McCraw, and Basil H. Clary, as the Commissioners of Public Works of the City of Gaffney, South Carolina, and representing the commissioners of public works of the member municipalities of the Piedmont Municipal Power Agency; Vernon L. Sanders, Frank Guyton, Fred Kirby, Kenneth W. Gaulman, Ray Clary, John Q. Little, and J. Chad Sarratt, as mayor and members of the City Council of Gaffney, South Carolina, and representing the governing bodies of the member municipalities of Piedmont Municipal Power Agency, Respondents. |
Pope & Hudgens, Newberry, and B. Monroe Hiers, Bamberg, for appellants.
McNair, Glenn, Konduros, Corley, Singletary, Porter & Dibble, Columbia, Eugene C. Griffith, Newberry, and C. E. Saint-Amand, Michael R. Daniel and A. Ray Godshall, Gaffney, for respondents.
This appeal tests the constitutionality of the Joint Municipal Electric Power and Energy Act of 1978 (the "Act") 1 and challenges the validity of contracts executed under authority of the Act. We hold it constitutional.
In 1975, Duke Power Company (Duke) offered to sell its power generating Catawba Nuclear Station, under construction near Lake Wylie in York County, South Carolina, to its wholesale municipal customers in North and South Carolina.
In March, 1978, Duke sold a part interest in the Catawba project to a joint agency composed of municipalities in North Carolina. 2 South Carolina, unlike North Carolina By August, 1980, PMPA and Duke negotiated a sale. The contracts generally provide (1) that PMPA would purchase from Duke a 25 per cent undivided ownership interest in one of the two Catawba nuclear generators under construction, 4 (2) that PMPA would employ Duke to complete construction of the generator and to maintain and operate it thereafter, (3) that Duke would furnish support facilities services (e.g. laboratories, roads, parking, railroads) and transmission services, and (4) that Duke would repurchase from PMPA any excess power generated over the first fifteen years of commercial operation.
had no legislation allowing municipalities to form a joint agency that could issue revenue bonds for financing a project such as Catawba. On April 17, 1978, legislation (the Act) was signed into law. Thereafter, twelve South Carolina municipalities formed a joint agency, the Piedmont Municipal Power Agency (PMPA), and pursued the feasibility of accepting Duke's offer to sell an interest in the Catawba project. 3
PMPA then offered to sell its newly contracted-for bulk power to each of its member municipalities. Ten municipalities accepted the offer. This new arrangement substituted PMPA for Duke as supplier of the municipalities' power.
To finance acquisition and completion of the construction of the generator, PMPA must issue revenue bonds totalling $675-767 million. PMPA's revenues would consist primarily of its sales to the participating municipalities at a rate set by PMPA sufficient to pay all of its project-related costs. The municipalities would be required to establish their own customer rates at levels sufficient to operate their power distribution systems and to satisfy the rate payments to PMPA. The payments would include amounts sufficient to service the bond issues.
Plaintiffs P. Duncan Johnson and Roger Lloyd Jones, taxpayers from two of the member municipalities representing themselves and all persons similarly situated, and plaintiff Town of Bamberg, a municipality not qualifying under the Act, brought this declaratory judgment action seeking declaratory and injunctive relief to prevent both the issuance of bonds by PMPA and the performance of the Project Agreements (between Duke and PMPA) and Power Sales Agreements (between PMPA and the municipalities).
The trial judge upheld the Act and the agreements. We affirm. This appeal followed.
The purpose of the Act, as stated in the legislative finding, is to provide an economical and efficient method of producing energy not attainable by one municipality acting alone.
Subject to certain qualifications, a municipality may join hands as tenant-in-common with one or more municipalities in this State or another state, or any political subdivision or agency of any other state, in order to jointly provide electricity for its inhabitants. § 6-23-30. To participate, a municipality must acquire approval of an appropriate resolution or ordinance by a majority of the members of its governing body. Upon approval, notice of the resolution is publicized in a newspaper, and any affected party may challenge the action by a de novo proceeding in the circuit court. § 6-23-40.
An application containing pertinent information about the joint agency is then filed with the Secretary of State, who may thereafter issue a corporate certificate recognizing the joint agency as a public body corporate and politic under State law. § 6-23-50.
The management and control of a joint agency is vested in a board of directors composed of one representative from each of the participating municipalities. § 6-23-70. The joint agency has the power, inter alia, to construct an energy plant, or to purchase an existing one, and to issue tax-exempt bonds of the joint agency to fund the project. § 6-23-90, § 6-23-230.
The bonds of PMPA are payable solely from the revenues collected by the municipalities from their customers; neither the full faith and credit nor the taxing power of the State or any municipality is, or may be, pledged for payment of the bond. § 6-23-210.
A municipality may be obligated to make payments to the joint agency even if the project never produces any energy. § 6-23-110. The payments shall be made from revenues derived from the operation of its electric system, and shall not invoke the municipalities' taxing power. § 6-23-110.
Bonds may not be issued to finance facilities owned wholly or in part by any private corporation. § 6-23-320.
In passing upon the constitutionality of legislative enactment, we are mindful of the proper framework for review.
The legislative power of the general assembly is not dependent upon specific constitutional authorization. The State Constitution only limits the legislature's plenary powers. Thus, the general assembly may enact any law not prohibited, expressly or by clear implication, by the State or Federal Constitutions. See West's South Carolina Digest, Constitutional Law, Key 26.
Where the constitution allegedly limits or prohibits a legislative act, every reasonable presumption must be made in favor of the constitutionality of the act. Only where an enactment offends specific constitutional provisions beyond a reasonable doubt will we declare it unconstitutional. State ex rel. McLeod v. Riley, S.C., 278 S.E.2d 612 (1981).
Several constitutional challenges to the Act are before us. The effect of a particular constitutional provision should be determined in light of its relationship to the entire Constitution and not as a single isolated provision. Knight v. Salisbury, 262 S.C. 565, 206 S.E.2d 875 (1974).
Guided by the principles above, we proceed with our analysis of the Act in light of the questions presented.
Bonded indebtedness may be incurred only for a public purpose. Incidental benefits to private interest from the promotion of projects funded with bond money is not inconsistent with the overall public purpose. Article X, Constitution of South Carolina; Hunt v. McNair, 255 S.C. 71, 177 S.E.2d 362 (1970); Elliott v. McNair, 250 S.C. 75, 156 S.E.2d 421 (1967). We find no constitutional provision which prohibits municipalities from combining their resources to purchase and operate electric utilities.
Any municipality in South Carolina may join with other municipalities to perform its public functions. Article VIII, § 13 of the S.C. Constitution. Also any municipality, singly or together with other municipalities, may join with a political subdivision outside the State to perform public functions. Article VIII, § 13, Id.
Article VIII, § 16 authorizes a municipality, upon a majority vote of its electors to acquire and operate an electric system. It is conceded the ten municipalities who are members of PMPA presently own and operate electric systems and are providing electricity to their respective consumers. The electors of these ten municipalities have PMPA, not the municipalities, will own the project with the North Carolina joint agency. The municipalities will purchase their electricity from PMPA under a contractual arrangement, in the same manner as they presently purchase their power from their suppliers. The project will not be part of the electric systems of the municipalities but will be solely owned and financed by PMPA through the issuance of revenue bonds.
already made the basic decision to enter into the providing of electric services. The PMPA municipalities would therefore have the constitutional authority to join together directly with each other and with the [277 S.C. 352] North Carolina joint agency in a project to provide electricity to their consumers. Act No. 473 of 1978 simply provides an alternative method to accomplish the same purpose through the formation of a joint agency. Section 6-23-110, Code of Laws, 1976, as amended
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