Love 1979 Partners v. Public Service Com'n of Missouri, 67404

• Decision Date: 15 July 1986
• Docket Number: No. 67404,67404
• Citation: 715 S.W.2d 482
• Parties: LOVE 1979 PARTNERS, First Plaza Redevelopment Corporation, et al., Respondents, v. PUBLIC SERVICE COMMISSION OF MISSOURI, Appellant, and STATE ex rel. Gerald A. RIMMEL, etc., Relator-Respondent, v. PUBLIC SERVICE COMMISSION OF MISSOURI, Defendant-Respondent, and Union Electric Co., et al., Intervenors-Respondents Appellants.
• Court: Missouri Supreme Court

Page 482

715 S.W.2d 482

LOVE 1979 PARTNERS, First Plaza Redevelopment Corporation, et al., Respondents, v. PUBLIC SERVICE COMMISSION OF MISSOURI, Appellant, and STATE ex rel. Gerald A. RIMMEL, etc., Relator-Respondent, v. PUBLIC SERVICE COMMISSION OF MISSOURI, Defendant-Respondent, and Union Electric Co., et al., Intervenors-Respondents Appellants.

No. 67404.

Supreme Court of Missouri,

En Banc.

July 15, 1986.

Rehearing Denied Sept. 16, 1986.

Claiborne P. Handleman, St. Louis, W.R. England, III, Paul A. Boudreau, Jefferson City, Thomas M. Byrne, Jefferson City, for appellant.

Robert G. Brady, Joseph Colagiovanni, Joanne Clark Kuhns, Thomas A. Schweich, St. Louis, Richard S. Brownlee, III, Jefferson City, for respondents.

BLACKMAR, Judge.

This case involves an ambitious program for using refuse from the City of St. Louis in the generation of commercial steam. Because the program calls for the sale of some of the facilities of Union Electric Company (UE), a regulated electric company and heating company, the jurisdiction of the Missouri Public Service Commission was invoked. ¹ The Commission, after an evidentiary hearing, granted the required approval. Certain steam users presently served by UE successfully challenged the Commission's order in the Circuit Court of Cole County, which set aside the order and remanded the case to the Commission for further proceedings. UE and the Commission appealed directly to this Court. We now reverse the decree of the circuit court and sustain the order of the Public Service Commission.

UE for many years had produced steam from oil-fired boilers at its Ashley plant, which it sold to customers in downtown St. Louis. Its rates were regulated by the Commission. The steam is distributed through a network of underground pipes known as the "steam loop." The steam operation has not produced an attractive return in recent years. There had been no rate increase since 1981. Some customers have switched to alternate heating methods, and UE has been interested in disposing of the operation.

Bi-State Development Agency (Bi-State) is a public agency established by interstate compact approved by the legislatures of Missouri and Illinois ² and by the Congress of the United States ³ as required by Art. I, Sec. 10, of the Constitution. It is governed by a Board of Commissioners appointed in equal numbers by the governors of each state and renders a variety of services in the Greater St. Louis metropolitan area. It has no taxing power but does have the authority to issue revenue bonds to finance its various projects and to accept contributions from agencies of government. ⁴

For many years the City of St. Louis has had a problem in the disposal of refuse. It is under order from the Environmental Protection Agency to bring its present incineration operations to an end. Bi-State undertook an inquiry as to the feasibility of using the city's refuse in the production of steam to be distributed to the customers now served by UE's Ashley plant and steam loop. It made inquiries about available contractors and decided to negotiate with Thermal Resources of Ohio, Inc. which formed a wholly-owned subsidiary, Thermal Resources of St. Louis, Inc., (Thermal) for its prospective Missouri operations.

The program, set out in three interdependent contracts, called for (1) the sale of the steam loop by UE to Bi-State; (2) the sale of the Ashley Plant by UE to Thermal and its conversion of some oil-fired boilers to coal-firing; (3) the discontinuance of UE's steam distribution operation and its replacement by Bi-State as a supplier of steam to UE's customers; (4) the operation of the steam production and distribution facilities by Thermal in accordance with its contract with Bi-State (described as "Phase One"); (5) the temporary supply of electric power from the Ashley plant to UE until it could construct alternate facilities; and (6) the design and construction by Thermal of a refuse-to-steam plant (described as "Phase Two"). It is contemplated that the new plant will provide the normal quantities of steam required by the customers, but the Ashley plant will be retained for "peaking" supply and will be available during temporary shutdowns, as for repairs.

UE applied to the Public Service Commission for approval of the contracts for sale of the Ashley plant and the steam loop, and for authority to discontinue its operations as a regulated heating company. The Commission directed UE to notify its steam customers, some 18 of which sought and were granted leave to intervene. A group of these intervenors, representing only a small minority of the steam users, actively opposed the application before the Commission.

The objecting users assert legal arguments against the proposal essentially as follows: ⁵

1. Section 70.373(2), RSMo Cum.Supp. 1984, which purports to confer upon Bi-State the power to acquire and operate facilities for the conversion of waste and refuse into energy, was "invalid" at the time the Commission acted because it had not at that time been consented to by Congress;

2. Section 70.373(2) does not authorize Bi-State to acquire and operate oil-fired or coal-fired facilities for the production of steam;

3. The Commission was in error in yielding up its jurisdiction over Thermal as a "heating company."

The users also argue that the proposals should not be approved because there is no assurance that a refuse-to-steam facility would ever be built, and that the entire program is not in the public interest because it is not feasible and economic. They subsume these arguments in a claim that the decision is not supported by substantial evidence.

The Commission, without dissent, rejected the users' arguments and granted the permission sought. It found that the proposed contracts were a part of an integrated plan and that the initial acquisitions were a first step in the plan. It concluded that the overall plan was not detrimental to the public interest and that the contracting parties were capable of carrying it out. It rejected the users' argument that the plan would produce an unreasonable increase in rates for steam, and held that the fact of an initial rate increase was not ground for disapproving the plan. It concluded that Thermal was exempt from it jurisdiction because it served only Bi-State, which was specifically excluded by statute from Commission jurisdiction by § 386.020(10), RSMo Cum.Supp. 1984. It also found that the transaction was authorized by the governing statute.

Following denial of their application for rehearing, the users sought review in accordance with § 386.510, RSMo 1978, in the Circuit Court of Cole County, which set aside the decision of the Commission. The court found that the users had properly presented and preserved all the legal issues ruled on, and that these issues had merit. It made no ruling on the other issues assigned by the users, presumably because the legal findings were adequate to support its conclusions.

UE, the Commission, Bi-State and Thermal have appealed. ⁶ We have initial appellate jurisdiction because the users have drawn the validity of § 70.373(2) into question by pointing to the absence of congressional approval at the time the Commission acted. ⁷ Mo. Const. Art. V, Sec. 3. It is helpful, at the outset, to comment on the scope of our review. There is no presumption in favor of the Commission's resolution of legal issues. Nor is there any presumption in favor of the circuit court's determination of these issues, over and above an appellant's normal burden of demonstrating error. So we decide the legal points anew. The decision of the Commission on factual issues, however, is presumed to be correct until the contrary is shown and we are obliged to sustain the Commission's order if it is supported by substantial evidence on the record as a whole. ⁸ The circuit court did not reach the factual issues, and so had no occasion to consider the users' challenge to the Commission's factual findings, but the users are entitled to maintain their factual challenges as additional reasons for sustaining the judgment of the circuit court.

1. Legal issues.

a. The basic authority of Bi-State.

Art. I, Sec. 10, of the Constitution of the United States provides in pertinent part as follows:

No state shall, without the consent of Congress, ... enter into any agreement or compact with another state....

Section 70.373(2), was amended in 1980 to include language granting Bi-State the authority to operate refuse-to-energy facilities. An identical provision was adopted by the legislature of Illinois. ⁹ At the time the essential contracts were entered into, and at the time the Commission issued its order, Congress had not approved or consented to these amendments. That approval did not come until the adoption of SJR 127 on September 23, 1985. The users argue that the Commission's order is unauthorized by law because, at the time it was entered, § 70.373(2) was invalid for want of congressional consent.

We do not agree. We need not speculate as to what the situation would have been if congressional consent had not been forthcoming, or if one of the parties relying on the statutory section had changed its mind prior to the approval by Congress. We do not even need to consider the appellant's arguments: (1) that the contracts in issue affect only the state of Missouri and so do not depend on congressional approval, citing Virginia v. Tennessee, 148 U.S. 503, 13 S.Ct. 728, 37 L.Ed. 537 (1893) and United States Steel Corp. v. Multistate Tax Commission, 434 U.S. 452, 98 S.Ct. 799, 54 L.Ed.2d 682 (1978), and, (2) that Congress had given advance consent to interstate compacts relating to the conversion of refuse into energy, citing Cuyler v. Adams, 449 U.S. 433, 101 S.Ct. 703, 66 L.Ed.2d 641 (1981). We hold that the subsequent congressional approval was effective to remove any existing infirmities and that § 70.373(2), in its present form, governs the...