State ex rel. Mogas Pipeline LLC v. Mo. Pub. Serv. Comm'n

• Citation: 366 S.W.3d 493
• Decision Date: 17 April 2012
• Docket Number: No. SC 91968.,SC 91968.
• Parties: STATE of Missouri ex rel. MOGAS PIPELINE LLC, Respondent, v. MISSOURI PUBLIC SERVICE COMMISSION, Appellant.
• Court: United States State Supreme Court of Missouri

366 S.W.3d 493

STATE of Missouri ex rel. MOGAS PIPELINE LLC, Respondent,

v.MISSOURI PUBLIC SERVICE COMMISSION, Appellant.

No. SC 91968.

Supreme Court of Missouri,

En Banc.

April 17, 2012.

Jennifer Leigh Heintz, Jefferson City, for The Commission.

Gerard T. Carmody, David H. Luce, and Teresa Dale Pupillo, Carmody MacDonald PC, St. Louis, Leland B. Curtis and Carl Lumley, Curtis, Heinz, Garrett & O'Keefe PC, St. Louis, for MoGas.

LAURA DENVIR STITH, Judge.

MoGas Pipeline, LLC, seeks review of the Missouri Public Service Commission's (PSC) order denying MoGas' request that the PSC terminate its intervention in matters pending before the Federal Energy Regulatory Commission (FERC). Becausethis Court finds that the PSC has no authority to intervene as a party in proceedings before the FERC, this Court affirms, as modified, the circuit court's judgment that the PSC's order was unlawful.

I. FACTUAL AND PROCEDURAL BACKGROUND

MoGas operates an interstate natural gas pipeline delivering natural gas to customers in Missouri. The company was organized formally in 2008 after the FERC approved the merger of three affiliated gas pipeline systems. Prior to the merger, two of MoGas' predecessors, Missouri Gas Company, LLC, and Missouri Pipeline Company, LLC, operated pipelines only in Missouri; therefore, they were subject to the jurisdiction of the PSC. MoGas' third predecessor company, Missouri Interstate Gas, LLC, operated an interstate natural gas pipeline and, pursuant to the federally enacted Natural Gas Act, was subject to the jurisdiction of the FERC.¹See Schneidewind v. ANR Pipeline Co., 485 U.S. 293, 300–01, 108 S.Ct. 1145, 99 L.Ed.2d 316 (1988) (“The [Natural Gas Act] confers upon FERC exclusive jurisdiction over the transportation and sale of natural gas in interstate commerce for resale.”). Because the merger created a single natural gas pipeline system with interstate operations, MoGas' entire system became subject to FERC's jurisdiction in 2008.

Throughout 2007 and 2008,² MoGas submitted various petitions to the FERC for approval including, as relevant here, proposals to construct and operate new compression facilities on its systems and to modify its gas tariffs. In both instances, the PSC intervened as a party in the related FERC proceedings to protest MoGas' proposals. In September 2008,³ MoGas filed a petition with the PSC alleging that the PSC did not have authority to intervene in matters before the FERC. As such, the petition requested that the PSC terminate its intervention in FERC cases concerning MoGas' operations. The PSC denied MoGas' petition by an order issued in July 2009.

After the PSC denied MoGas' subsequent application for a rehearing, MoGas filed a petition for writ of review in the circuit court of Cole County. In March 2010, the circuit court entered judgment holding the PSC's July 2009 order unlawful. The court reversed the order and remanded the cause to the PSC for further action. The PSC appeals the circuit court's judgment.

II. STANDARD OF REVIEW

“This Court reviews the decision of the PSC rather than that of the circuit court.” State ex rel. Praxair, Inc. v. Missouri Pub. Serv. Comm'n, 344 S.W.3d 178, 184 (Mo. banc 2011). “[T]he appellate standard of review of a PSC order is two-pronged: ‘first, the reviewing court must determine whether the PSC's order is lawful; and second, the court must determine whether the order is reasonable.’ ” State ex rel. AG Processing, Inc. v. Pub. Serv. Comm'n, 120 S.W.3d 732, 734 (Mo. banc 2003), quoting State ex rel. Atmos Energy Corp. v. Pub. Serv. Comm'n, 103 S.W.3d 753, 759 (Mo. banc 2003).

“The lawfulness of a PSC order is determined by whether statutory authority for its issuance exists, and all legal issues are reviewed de novo.' ” AG Processing, Inc., 120 S.W.3d at 734. A PSC order is reasonable “ ‘where the order is supported by substantial, competent evidence on the whole record; the decision is not arbitrary or capricious[;] or where the [PSC] has not abused its discretion.’ ” Praxair, Inc., 344 S.W.3d at 184,quoting Envtl. Utils., LLC v. Pub. Serv. Comm'n, 219 S.W.3d 256, 265 (Mo.App.2007). This Court need not reach the issue of an order's reasonableness if it finds the order unlawful. See State ex rel. Util. Consumers' Council of Missouri, Inc. v. Pub. Serv. Comm'n, 585 S.W.2d 41, 47 (Mo. banc 1979).

III. THE PSC'S ORDER WAS UNLAWFULA. The PSC's Authority is Limited to that Granted It by the Legislature and Not Preempted by Congress

The PSC “is a creature of statute and can function only in accordance with” its enabling statutes. State ex rel. Monsanto Co. v. Pub. Serv. Comm'n, 716 S.W.2d 791, 796 (Mo. banc 1986). Its “powers are limited to those conferred by ... statutes, either expressly, or by clear implication as necessary to carry out the powers specifically granted.” Util. Consumers' Council of Missouri, Inc., 585 S.W.2d at 49;see also § 386.040 ⁴ (creating the PSC and vesting it with “the powers and duties ... specified, and also all powers necessary or proper to enable it to carry out fully and effectually all the purposes” of its governing statutes). If a power is not granted to the PSC by Missouri statute, then the PSC does not have that power.

Though section 386.610 provides that statutes pertaining to the PSC “shall be liberally construed with a view to the public welfare,” this provision does not authorize the Court to vest the PSC with authority that the legislature has not granted it either expressly or by clear implication. Cf. Reichert v. Bd. of Educ. of City of St. Louis, 217 S.W.3d 301, 305 (Mo. banc 2007) (“[T]he Court has no authority to read into a statute legislative intent contrary to the intent made evident by the plain language.”).

The powers and duties of the PSC are set forth principally in chapter 386. As pertains to natural gas, section 386.250 extends the PSC's jurisdiction “[t]o the manufacture, sale or distribution of gas, natural and artificial ... within the state, and to persons or corporations owning leasing, operating or controlling the same; and to gas and electric plants, and to persons or corporations owning, leasing, operating or controlling the same.” § 386.250(1) (emphasis added).

As the Missouri legislature has recognized in section 386.030, those powers granted to the PSC by Missouri statute are limited by the doctrine of preemption as to matters affecting interstate commerce.⁵ Congress has preempted regulationof interstate gas pipelines by providing authority for such regulation to the FERC pursuant to the Natural Gas Act. See15 U.S.C. § 717; Schneidewind, 485 U.S. at 300–01, 108 S.Ct. 1145. As noted earlier, all parties agree that MoGas is an interstate gas pipeline subject to regulation by the FERC. Therefore, the PSC has authority to act as to MoGas only (1) as it specifically is granted such authority by Missouri statute and (2) as permitted by FERC regulations and other federal law.

B. The Missouri Legislature Has Neither Expressly Nor by Clear Implication Authorized the PSC to Intervene in FERC Proceedings

Though the PSC alleges that several provisions within both state and federal law can be interpreted to vest the PSC with authority to intervene in FERC proceedings, for the reasons detailed below, the PCS's arguments are unavailing.

1. Section 386.210.1

First, the PSC cites section 386.210.1,⁶ which states:

The [PSC] may confer in person, or by correspondence, by attending conventions, or in any other way, with the members of the public, any public utility or similar commission of this and other states and the United States of America, or any official, agency or instrumentality thereof, on any matter relating to the performance of its duties.

(emphases added). The PSC asserts that because section 386.210.1 authorizes the PSC to confer with other similar commissions, this means that it can intervene in matters before the FERC because: (1) the FERC is a commission of the United States that is similar to the PSC and (2) intervention in FERC proceedings is “[an]other way” by which the PSC may “confer” with the FERC.

The PSC's argument depends entirely on interpreting the word “confer” to include intervention by the PSC as a party in a regulatory proceeding of another state or the federal government. The PSC cites no published case or other direct authority of any kind in support of this interpretation of the word “confer.” Indeed, it concedes that this is a matter of first impression and that were this Court to interpret the PSC's authority to confer with other commissions to include the power to intervene, it would be the first court to do so.

The PSC nonetheless says that this Court should find intervention as a party in a federal regulatory proceeding is a form of “conferring” with that federal regulatory body because some other state public utility commissions also intervene with no more authority than this and, so, the PSC also should be permitted to do so.

But the PSC admits that the authority of these other commissions to intervene has not been challenged, just as the authority of Missouri's PSC to do so was not challenged until the instant case, nor has the PSC cited any governing authority from other state commissions specifically interpreting the word “confer” to encompass intervention as a party in FERC proceedings. The PSC's power and authority proceeds from Missouri statutes. While a review of the reasoning of other states in permitting such intervention would have been informative had there been any such cases, there are none, and the unchallenged conduct of other state regulatory agencies provides no authorityfor the PSC to act beyond its statutory powers. This Court, therefore, turns to the words of the PSC's governing statutes, for it is this Court's duty to ascertain the intent of the Missouri legislature from the language it used in drafting section 386.210.1. See State ex rel. Nixon v. Karpierz, 105 S.W.3d 487, 489–90 (Mo. banc 2003).

In considering...