State ex inf. Danforth ex rel. Farmers' Elec. Co-op., Inc. v. State Environmental Improvement Authority

Decision Date13 January 1975
Docket NumberNo. 58765,58765
Citation518 S.W.2d 68
PartiesSTATE ex inf. John C. DANFORTH, Attorney General, ex rel. FARMERS' ELECTRIC COOPERATIVE, INC., Relator, v. STATE ENVIRONMENTAL IMPROVEMENT AUTHORITY, Respondent.
CourtMissouri Supreme Court

Cleaveland & Macoubrie, Lloyd A. Cleaveland, Chillicothe, for relator; Wood, Dawson, Love & Sabatine, LeRoy Love, Richard F. Raymond, New York City, of counsel.

Stockard, Andereck, Hauck, Pickett & Sharp, Eugene E. Andereck, Jefferson City, for amici curiae, Associated Electric Cooperative, Inc.; Federated Electric Cooperative, Inc.; Great Lakes Carbon Corp.; Missouri Portland Cement Co.; and St. Joe Minerals Corp.

Lathrop, Koontz, Righter, Clagett, Parker & Norquist, W. H. Bates, Carl A. Hummel, C. David Barrier, Kansas City, for amici curiae Armco Steel Corp. and Baychem Corp.

Veryl L. Riddle, Thomas C. Walsh, St. Louis, for Anheuser-Busch, Inc., amicus curiae; Bryan, Cave, McPheeters & McRoberts, St. Louis, of counsel.

Stewart W. Smith, Jr., Carl H. Hendrickson, St. Louis, for Union Elctric Company.

Arthur J. Doyle, Samuel P. Cowley, Kansas City, for Kansas City Power & Light Co.

Charles S. Wilcox, Wilcox & Houts, St. Joseph, for St. Joseph Light & Power Co.

Gene E. Voigts, Shook, Hardy ,& Bacon, Kansas City, for respondent,

MORGAN, Judge.

This is an original proceeding in quo warranto filed by the Attorney General at the relation of Farmers Electric Cooperative, Inc., against the State Environmental Improvement Authority. The information challenges the constitutionality of Chapter 260, §§ 260.005 through 260.090, RSMo, 1973 Supp., V.A.M.S., which was enacted by Laws 1972, H.B. No. 1041, §§ 1 to 19, and made effective January 22, 1973; and, thus seeks to oust respondent (the Authority) from exercising those rights, privileges and franchises granted to it as a body corporate by the statutory provisions noted.

The facts are not in dispute. As submitted, the issues are of law alone and involve the proper construction to be placed on pertinent provisions of the 1945 Constitution of Missouri and their applicability to the Act (Chapter 260).

The chapter is entitled 'Environmental Control' and the designated purpose is set out in § 260.015, to-wit: 'The authority is authorized to provide for the conservation of the air, land and water resources of the state by the prevention or reducing the pollution thereof and proper methods of disposal of solid waste and to further such programs the authority is authorized to acquire and construct projects and to issue bonds and notes as herein provided to pay the costs thereof. Any such projects shall be in furtherance of applicable federal and state standards and regulations.' A comprehensive listing of all of the provisions of the Act, which detail the guildelines to be followed by the Authority in pursuing the declared objective, is not appropriate; but, we do note such of them as necessary to identify the general scheme.

The respondent (Authority) is authorized to lease or sell such pollution control facilities ('projects') to any private person, firm, corporation, public body, political subdivision or municipal corporation (§ 260.035(6)). Any such sale may be on such terms as respondent deems advisable, and respondent also has the right to receive for such sale a note or notes from any entity to whom as sale is made so long as the contract of sale provides for payments adequate to pay the bonds issued by respondent to finance the facility (260.035(14)). The pollution control facilities 'shall be subject to all real and tangible personal property taxes and assessments of the state of Missouri, or any county, municipality, or any governmental subdivision thereof' (§ 260.075). The notes and bonds issued by respondent and the income therefrom are at all times to be exempt from taxation, except for death, gift and transfer taxes (§ 260.075). Furthermore, the notes and bonds are not to constitute an indebtedness of the state and they must contain on their face a statement to that effect (§ 260.065).

The bonds which respondent may issue for the financing of the pollution control facilities are revenue bonds payable out of such revenues of respondent as it may by resolution provide. Respondent is the 'authority' in the following statutory excerpts:

Every issue of its bonds shall be payable out of the revenues of the authority which may be pledged for such payment, without preference or priority of the first bonds issued, subject to any agreements with the holders of any other bonds or pledging any specified revenues (§ 260.040).

'Revenues', all rents, installment payments on notes, revenues, charges and other income received by the authority in connection with any project and any gift, grant, or appropriation received by the authority with respect thereto (§ 260.005(8)).

Any resolution authorizing any notes or bonds may contain such provisions, covenants and agreements . . . as the authority determines necessary. Such provisions, covenants and agreements may include . . . (1) Pledging of all or any part of the revenues . . . to secure the payment of the notes or bonds . . . (2) The use and disposition of the revenues . . . (3) The fixing of rents, fees and other charges and the pledging of the same . . . to pay . . . the principal of and interest on notes, or bonds secured by the pledge of such revenues . . . (§ 260.055).

In addition, § 260.055(4) permits respondent to establish 'reasonable reserves to secure the payment of . . . notes or bonds.' Other relevant statutory or constitutional provisions will be brought out as relevant to an analysis of the case.

Relator raises nine issues of constitutionality, one issue of statutory construction and anticipates one defense (laches), against which it argues.

While resolving the same, we are to be guided by those principles of constitutional construction long established by the law of this state, and we adopt the summarized version thereof with which the parties agree. The state constitution, unlike the federal constitution, is not a grant of power, but as to legislative power, it is only a limitation; and, therefore, except for the restrictions imposed by the state constitution, the power of the state legislature is unlimited and practically absolute. Kansas City v. Fishman, 362 Mo. 352, 241 S.W.2d 377 (1951). An act of the legislature is presumed to be valid and will not be declared unconstitutional unless it clearly and undoubtedly contravenes some constitutional provision. State ex rel. Eagleton v. McQueen, 378 S.W.2d 449 (Mo. banc 1964). Legislative enactments should be recognized and enforced by the courts as embodying the will of the people unless they are plainly and palpably a violation of the fundamental law of the constitution. Borden Company v. Thomason, 353 S.W.2d 735 (Mo. banc 1962).

The burden is upon relator to demonstrate that the legislative enactments, now challenged, run afoul of some constitutional prohibition; and, due to the number of issues presented, each will be identified and considered in the order in which they appear in relator's brief.

Point I

Relator contends the Act is unconstitutional because it permits the granting of public money and the giving and lending of public credit to private entities and permits the lending and pledging of the state's credit for the payment of private liabilities, all in violation, respectively, of §§ 38(a), 39(1) and 39(2) of Art, III of the Missouri Constitution, V.A.M.S.

Such constitutional provisions need not be set out at this point for the simple reason it can not be questioned that they declare the specific proscriptions noted. The crux of the argument is that: 'The . . . enrichment of private industry in the form of the sharply reduced financing costs, because of the Federal (and state) tax-exemption on the bonds, constitutes not only a lending and pledging of the State's credit, but more plainly constitutes a gift of public moneys to private industry . . . (T)he plain design of the framers of the Constitution of Missouri (was) to forbid the subsidization by the State of private industry . . .' To buttress this phase of its argument relator points up that in 1960 Missouri adopted amendments to its constitution which permitted cities, incorporated towns and villages to finance industrial expansion by issuing undustrial development revenue bonds (Art. VI, §§ 23(a) and 27) and concludes thereby that, '. . . it follows that the Constitution of Missouri must be amended to permit the State or a state-constituted instrumentality, such as respondent, to subsidize industry by the issuance of pollution control bonds.' For clarity, we first seek to evaluate the analogy just noted. It is common knowledge that authorization of revenue bonds for development or expansion of industry within the state did result in a direct monetary benefit for the particular industry involved--generally, evidenced by land and plant facilities for use in profit making activities. To the contrary, the environmental improvement scheme contemplated by the challenged statutory provisions does not have such a comparable and direct 'private' benefit. The 'facilities' or 'projects' must be designed to control the emissions from industrial plants to alleviate their detrimental effect upon the air, land and water of the state. There will not be any increase in productive capacity or prolongation of the useful life of any private industrial facility. Furthermore, it is likely that such emission controls will tend to be a burden on the efficiency of production processes. We reject the analogy as unpersuasive, and return to the specific constitutional violations suggested, i.e., that the financing procedure authorized constitutes a lending and pledging of the state's credit or a gift of public money to private interests.

This argument of relator flies in the face of § 260.065, captioned--notes and bonds not an indebtedness of the state,...

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