Missouri Hosp. Ass'n v. Air Conservation Com'n, WD

• Decision Date: 08 February 1994
• Docket Number: No. WD,WD
• Parties: MISSOURI HOSPITAL ASSOCIATION, and Associated Industries of Missouri, Respondents, v. AIR CONSERVATION COMMISSION, et al., Appellants. 47706.
• Court: Missouri Court of Appeals

Page 380

874 S.W.2d 380

MISSOURI HOSPITAL ASSOCIATION, and Associated Industries of

Missouri, Respondents, v. AIR CONSERVATION COMMISSION, et al., Appellants.

No. WD 47706.

Missouri Court of Appeals,

Western District.

Feb. 8, 1994.

Motion for Rehearing and/or Transfer to

Supreme Court Denied March 29, 1994.

Application to Transfer Denied May 26, 1994.

Jeremiah W. (Jay) Nixon, Atty. Gen., Timothy P. Duggan, Asst. Atty. Gen., Jefferson City, for appellants.

Lori Levine, Jefferson City, for Missouri Hosp. Ass'n.

Julie A. Emmerich, St. Louis, for Associated Industries of Missouri.

Before TURNAGE, C.J., and ULRICH and ELLIS, JJ.

ELLIS, Judge.

The Air Conservation Commission of Missouri (Commission) and the Missouri Department of Natural Resources (Department), hereinafter collectively referred to as the "State," appeal an order of the Circuit Court of Cole County granting summary judgment for declaratory and permanent injunctive relief to the Missouri Hospital Association (MHA) and Associated Industries of Missouri (AIM), referred to jointly as the "Associations" hereinafter, in their challenge to the validity of two rules governing waste incinerators. We affirm.

On September 6, 1991, the Associations filed suit to challenge two rules promulgated by the Commission: 10 CSR 10-6.160 and 10 CSR 10-6.190. (For ease of analysis, throughout this opinion 10 CSR 10-6.160 will be referred to as Rule 160 and 10 CSR 10-6.190 will be referred to as Rule 190.) An amended petition reflecting the 1992 amendments to §§ 643.050 and 643.055 ¹ was filed on January 19, 1993. The State filed an answer to the amended petition on January 26, 1993, and on February 8, 1993, the parties submitted a lengthy and detailed Stipulation of Facts. Both parties subsequently filed Motions for Summary Judgment, and on March 11, 1993, the trial court entered an order granting the Associations' Motion for Summary Judgment. In its order, the trial court made a specific finding that Rules 160 and 190 were void and of no force or effect. The order also permanently enjoined the State from enforcing those two rules.

When summary judgment is granted, we must read the record on appeal in the light most favorable to the party against whom judgment was entered, and accord that party the benefit of every doubt. Germania Bank v. Thomas, 810 S.W.2d 102, 105 (Mo.App.1991). Likewise, we must sustain the summary judgment upon any reasonable legal basis, even if the trial court reached the correct result for incorrect reasons. Ernst v. Ford Motor Co., 813 S.W.2d 910, 915 (Mo.App.1991).

The parties do not dispute the facts. Chapter 643, RSMo, establishes the Commission and charges it with protecting the quality of Missouri's ambient, or outside, air. Pursuant to the authority given to its director in § 643.060, the Department, through the Air Pollution Control Program within its Division of Environmental Quality, provides technical support for the Commission. The Commission is granted authority to promulgate and adopt rules and regulations. Relying on its rulemaking authority, the Commission promulgated the two rules in question: Rule 160, regulating medical waste and solid waste incinerators; and Rule 190, which regulates sewage sludge and industrial waste incinerators.

Both rules contain provisions relating to incinerator design and operation controls, emissions limitations for specified air pollutants, operator training, performance testing methods, exemptions and compliance schedules. Under both rules, new waste incinerators coming on line after their effective dates are required to be in compliance upon start-up, but operators of incinerators in existence before the rules became effective are allowed additional time to bring them into compliance. For existing medical and solid waste incinerators, compliance with most provisions of Rule 160 was required by June 10, 1993 except for certain emissions limitations which must be met by June 10, 1996. All existing medical and solid waste incinerators must comply with the requirements for new incinerators by January 1, 2000. In addition, existing industrial waste and sewage sludge incinerators were to be in compliance with Rule 190 by December 1, 1993. ²

The court below found both rules to be void and of no force or effect. It did so upon two separate grounds. First, it found that because the State failed to comply with the provisions of § 536.200 and § 536.205, RSMo 1986, in promulgating and adopting the rules, they were void as expressly provided by both statutes. The court also determined that § 643.055, RSMo 1986, places a limitation on the Commission's rulemaking power, and it did not have authority to adopt Rules 160 and 190. As a result, the trial court concluded the rules were void because they were adopted without proper legislative authorization. On appeal, the State argues that the court erred in making those twin determinations.

I.

In 1978, the General Assembly added an important element to the rulemaking process called the "fiscal note." There are two types of fiscal notes: one for rules requiring public funds to be spent or redirected, governed by § 536.200; and one for rules requiring an expenditure of funds by private persons or entities, governed by § 536.205.

If a state agency proposes to adopt, amend or rescind a rule which will "require or result in an expenditure of public funds by or a reduction of public revenues for that agency" or any other state agency or political subdivision, a fiscal note is required if the change is estimated to cost "any category" of such public entities more than $500 in the aggregate. ³ § 536.200.1. The statute mandates that the fiscal note be filed with the Secretary of State at the time the notice of proposed rulemaking is filed. Id. The fiscal note, which must estimate in detail "the cost to each affected agency or to each class of the various political subdivisions to be affected," also has to be supported with an affidavit by the director of the department to which the proposing agency belongs declaring that in his opinion the estimate is reasonably accurate. Id. Finally, § 536.200.3 requires that the "estimated cost in the aggregate" of compliance with the new, modified, or repealed rule be published in the Missouri Register contemporary with and next to the notice of proposed rulemaking. ⁴ An agency's "failure to do so shall render any rule promulgated thereunder void and of no force or effect." Id.

Although its provisions are somewhat different, § 536.205 reflects a similar concern about the economic impact of rules on the private sector. It requires state agencies to file a fiscal note with the Secretary of State along with the notice of proposed rulemaking if the rule change "would require an expenditure of money by or a reduction of income for any person, firm, corporation, association, partnership, proprietorship or business entity of any kind or character" of more than $500 in the aggregate. ⁵ § 536.205.1. The note must contain an estimate, by class, of the number of persons, firms, etc. which would likely be affected; a classification by type of business entity so as to give reasonable notice of the number and kind of businesses which would likely be affected; and an estimate of the aggregate cost of compliance for the likely affected entities. §§ 536.205.1(1)-(3). If a fiscal note is required due to the proposed rule's aggregate effect on private finances, § 536.205.2 mandates that the fiscal note itself be published contemporary with and next to the notice of proposed rulemaking in the Missouri Register. If the state agency fails to publish the fiscal note, "any rule promulgated thereunder [is] void and of no force and effect." Id.

Rule 160

The Commission initially proposed Rule 160 on April 18, 1990, and it first appeared in the Missouri Register on May 1, 1990. However, this version of Rule 160 was withdrawn in August, 1990. A revised Rule 160, which was proposed on October 16, 1990, appeared in the Missouri Register on November 1, 1990. The final rule was published in the Code of State Regulations on May 31, 1991, and became effective on June 10, 1991.

An affidavit signed by the director of the Department and a fiscal note pertaining to public entities were filed along with the initial version of Rule 160 on April 18, 1990. The note declared the "affected agencies" to be the Missouri Department of Natural Resources, St. Louis City, St. Louis County, the Springfield and Kansas City Air Pollution Control Agencies, the Missouri Department of Health, and "various other city and local agencies." It gave this estimate of the public cost of compliance with Rule 160: $0 for the remainder of the fiscal year in which the proposed rule was filed (fiscal year 1990, ending June 30, 1990); and $102,800 for fiscal year 1991 (July 1, 1990 through June 30, 1991), the first full fiscal year the rule was to be in effect. The revised Rule 160 (which was proposed on October 16, 1990, became effective on June 10, 1991, and is the subject of this appeal) was not accompanied by a new fiscal note.

The fiscal note filed with the original version of Rule 160 on April 18, 1990, contained no estimate of the costs of compliance to private entities. However, at the end of the proposed rule, just before the section giving notice that a public hearing on Rule 160 would be held, the following statement appears: "Private Entity Cost: This proposed rule will not cost private entities more than $500 for the remainder of FY 1990 and $1,950,000 for the FY 1991." The revised version of Rule 160, proposed on October 16, 1990, stated in the same location: "Private Entity Cost: This proposed rule will cost private entities $1,950,000 for the FY 1991."

Because Rule 160 compliance costs were estimated to exceed $500 in the aggregate to both public and private entities, the Commission was obligated to file two fiscal notes with the Secretary of State: one under § 536.200...