State ex rel. Public Water Supply Dist. No. 8 of Jefferson County v. Public Service Commission
| Decision Date | 05 May 1980 |
| Docket Number | No. WD,WD |
| Citation | 600 S.W.2d 147 |
| Parties | STATE of Missouri ex rel. PUBLIC WATER SUPPLY DISTRICT NO. 8 OF JEFFERSON COUNTY, Missouri, Respondent, v. PUBLIC SERVICE COMMISSION of the State of Missouri, Appellant, and Cedar Hill Estates Water Company, Appellant. 30771. |
| Court | Missouri Court of Appeals |
Steve Ellinger, L. Russell Mitten, II, Paul W. Phillips and Rory Ellinger, Jefferson City, for appellant Public Service Commission.
Charles F. Dufour of Yarbrough & Dufour, Clayton, for appellant Cedar Hill Estates Water Co., Inc.
John W. Howald of Thurman, Nixon, Smith, Howald, Weber & Bowles, Hillsboro, for respondent.
Brief amicus curiae filed on behalf of Missouri Rural Water Association by James C. Butcher, Columbia.
Before TURNAGE, P. J., and SHANGLER and MANFORD, JJ.
This is an appeal from a circuit court judgment reversing an order of the Missouri Public Service Commission which had granted a certificate of convenience and necessity to construct and operate a water utility. The judgment of the circuit court is reversed and remanded with instructions.
The proceedings and orders of the Missouri Public Service Commission are administrative by nature. Authority for, and the prescribed standard of, review of such proceedings is found within Mo.Const. Art. V, § 18. Circuit Court review is authorized by § 386.510, RSMo 1978, with appellate review being authorized by § 386.540, RSMo 1978. We review the decision of the P.S.C., not the judgment of the circuit court, see Ingram v. Civil Service Commission, 584 S.W.2d 633 (Mo.App.1979).
Upon inception, this cause involved only appellant, Cedar Hill Estates Water Company, Inc. (hereinafter referred to as Cedar) as applicant for a certificate of convenience and necessity and appellant, Public Service Commission of the State of Missouri (hereinafter referred to as the P.S.C.). Respondent, Public Water Supply District No. 8 of Jefferson County (hereinafter referred to as the District) was permitted to intervene in the hearing upon Cedar's application before the P.S.C.
Upon the original finding by the P.S.C. approving the application of Cedar, the District filed a petition for review, becoming relator in said proceedings. The circuit court reversed the order of the P.S.C. Upon appeal, leave was granted to the Missouri Rural Water Association to file its brief amicus curiae.
The P.S.C. and Cedar are joined as appellants and the following arguments are presented to this court. In summary, these arguments are: (1) there was substantial and competent evidence that the P.S.C. did not violate the spirit of the P.S.C. law and did not promote cut-throat competition because the granting by the P.S.C. of the certificate of convenience and necessity was a legitimate exercise of its discretionary authority to allocate utility service territory; (2) there was substantial and competent evidence that the P.S.C. did not misinterpret the term "public" as that term relates to certificates of convenience and necessity, because the law empowers the P.S.C. to determine what is necessary or convenient for public service; (3) there was substantial and competent evidence that the P.S.C. did not misapply the law to the facts upon failure to consider the impact upon the District and its customers, because the P.S.C.'s order evidenced the consideration of economic impact upon the District and further constituted proper application of the evidence to the law; (4) there was substantial and competent evidence showing that the water service by the District to the mobile home park was inadequate as to quality, quantity or pressure of water furnished and such finding did not overlook the inadequacy of the District's service based upon the District's inability to serve the entire certificated area, the high rates and the unbusinesslike and unreasonable manner in which the District conducted its operations; (5) there was substantial and competent evidence that there was indication that water supply to the certificated area was beyond the capacity of the District, because the evidence revealed a current inability by the District to provide service within the certificated area; (6) there was substantial and competent evidence that the District did not have water mains within the certificated area because the evidence did not support such finding; (7) there was substantial and competent evidence to support the finding that the District did not have the ability to provide water service within the certificated area, because the evidence did support such a finding and (8) there was substantial and competent evidence that the P.S.C.'s order was not contrary to both law and fact as it would not result in duplication of facilities because the evidence did support such a finding and further, the law vests the P.S.C. with exclusive discretion to choose between monopoly and regulated competition.
Respondent District, in its brief and argument, refutes the alleged argument of appellant and premises the support for its position, alleging the record does not support the P.S.C.'s findings and order upon substantial and competent evidence.
The brief amicus curiae presents to this court one point. This point argues that the P.S.C. erred in its finding that service was not already available and being rendered to the proposed certificated area, and that public convenience and necessity did require the issue of a certificate because it would only result in wasteful duplication of facilities and would encourage unnecessary competition. By way of a reply brief, appellants argue that respondent erroneously argues that the P.S.C. acted unreasonably in granting the certificate and by doing so, afforded no territorial protection to the District. Appellants, in their reply brief, also argue that Title 7 U.S.C. § 1926(b) is not applicable to the instant case.
Facts pertinent to the instant case span the greater portion of a decade. The area in question is some 250 acres located in an unincorporated portion of Jefferson County. This tract is bordered on the east by a one-half mile strip of Highway 30. The south and west border is the Big River. The tract composes approximately a one-half to three-quarter square mile area. In addition to this prescribed size and boundary identification, the tract lies in the southwest portion of an eleven square mile area, which comprises the area of District No. 8. This 250 acre tract equals about 5% of the District's total square mile area.
The particular tract is under development by appellant Norman Goad. Mr. Goad and his wife are owners of the Goad Construction Company and are the principal stockholders of Cedar. Development consists to date of a mobile home park (built in 1971), which contains 94 mobile home pads. In addition, there is a 21-lot industrial park, a 47-house subdivision and 16 commercial lots. Three of the commercial lots receive water from the District and are excluded from the area to be certificated. Some 70-80 acres remain undeveloped. The Goads have a residence on the tract, and there is also a lumber company, a florist, a swimming pool supply warehouse, a ready-mix concrete operation and a medical building, which has one dentist as an occupant.
Water to this tract, where supplied at all, is provided by deep wells. The District supplies water on the west side of Highway 30 only to the three business locations excepted in appellant Cedar's application and the medical building. Service to these locations was sought and secured from the District because of the continual dispute between the parties.
Procedurally, the instant case originated with the P.S.C. upon application by Cedar for a certificate of convenience and necessity to become a regulated water public utility to provide water service to the tract in question. The District was permitted to intervene in the hearing upon the application. It should be noted that prior to the hearing on the application, the District had filed a complaint with the P.S.C. alleging Cedar was unlawfully providing service as an unregulated water utility. The P.S.C. dismissed the complaint, concluding at the time that Cedar was supplying water only to its own customers (the mobile home park), and hence was not operating as a water utility company.
The history of this matter is important to the disposition of this appeal and is best provided by the testimony of the witnesses. Cedar was incorporated as a water utility in 1977 by Norman Goad and his wife. The record establishes the Goads could properly finance such a water utility and that Mr. Goad was experienced in the operation of utility services and familiar with the regulatory function of the P.S.C. Cedar provides sewer service to the area. Mr. Goad testified that in 1973, Cedar Hills Water Co. provided water to the tract. The water supply came from a four-inch main along Highway 30. Goad's mobile home park received water through a 11/2 inch meter.
In 1973, pursuant to Chapter 247, RSMo 1969, the District was formed and the District bought Cedar Hills Water Co. 1
Mr. Goad testified that when the District took over the water supply, rates rose and he tried to negotiate a lower bulk rate. He stated the District refused to negotiate. Occurring simultaneously with these events was further construction and development within the tract area. When Mr. Goad's negotiations failed, he proceeded to hook up a 6-inch line to the District's line for service to the mobile home park. This hook-up was unauthorized, and the District sought and obtained a mandatory injunction for severance of this hookup. The District exclaimed that such hook-ups do "irreparable damage" to the remainder of the District's system. A hearing was held in February, 1976, which included discussion of the bulk rate and severance of the line. The day he was served...
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