in the missouri court of appeals appellants joint brief as filed.pdfon august 30, 2016, grain belt...
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1
IN THE MISSOURI COURT OF APPEALS
EASTERN DISTRICT
__________________________________________________________________
ED107886
__________________________________________________________________
MISSOURI LANDOWNERS ALLIANCE, ET AL.,
Appellants,
v.
PUBLIC SERVICE COMMISSION OF THE STATE OF MISSOURI,
Respondent
__________________________________________________________________
Appeal from the Public Service Commission of the State of Missouri
Case No. EA-2016-0358
__________________________________________________________________
INITIAL JOINT BRIEF OF APPELLANTS
EASTERN MISSOURI LANDOWNERS ALLIANCE DBA
SHOW ME CONCERNED LANDOWNERS,
CHRISTINA REICHERT, AND MISSOURI FARM BUREAU
__________________________________________________________________
Paul A. Agathen
Mo. Bar No. 24756
485 Oak Field Ct.
Washington, MO 63090
636-980-6403 [email protected]
Brent E. Haden
Mo. Bar No. 54148
827 E. Broadway, Suite B
Columbia, MO 65201
(573) 442-3535
(888) 632-7775 (fax) [email protected]
Attorneys for Appellants
2
TABLE OF CONTENTS
TABLE OF AUTHORITIES …......................………………………..…….4
JURISDICTIONAL STATEMENT ………………………………………..9
STATEMENT OF FACTS ………………………………………………...10
POINT RELIED ON…………………………………………………...…..18
STANDARD OF REVIEW ……………………………………………….20
ARGUMENT……………………………………………………………. 20
THE PUBLIC SERVICE COMMISSION OF THE STATE OF
MISSOURI (“COMMISSION”) ERRED IN GRANTING A
CERTIFICATE OF CONVENIENCE AND NECESSITY (“CCN”)
TO GRAIN BELT EXPRESS CLEAN LINE LLC (“GRAIN
BELT”) PURSUANT TO SECTION 393.170 BECAUSE THE
COMMISSION LACKED THE STATUTORY AUTHORITY AND
THUS THE SUBJECT MATTER JURISDICTION TO ISSUE THE
CCN, IN THAT GRAIN BELT IS NOT AN “ELECTRICAL
CORPORATION”, AS IS REQUIRED FOR ISSUANCE OF A
CCN UNDER SECTION 393.170.
A. Based on case law, Grain Belt is not an electrical corporation
because it is not subject to all of the statutes which comprise the
Public Service Commission Act………………………………22
B. Based on case law, Grain Belt is not an electrical corporation
because it will not be devoted to the “public use” …………...28
3
i. The Grain Belt/FERC model for establishing rates and
other terms of service………………………………….29
ii. Given how Grain Belt is allowed to set its rates, under
applicable case law it does not serve a public use, and thus
is public utility………………………………………....35
C. Grain Belt is not an electrical corporation because it does
not meet the statutory definition of that term…………..……..51
CONCLUSION ……………………………………………………...….67
CERTIFICATES OF COMPLIANCE AND SERVICE……….……... 70
4
TABLE OF AUTHORITIES
Cases
AMG Franchises, Inc. v. Crack Team USA, 289 S.W.3d 655
(Mo. App. 2009) ……………………………………………….……….66
Bachtel v. Miller County Nursing Home District, 110 S.W.3d 799
(Mo. banc 2003)…………………………………………………………49
Big River Telephone Co. v. Southwestern Bell Telephone
Company, 440 S.W.3d 503 (Mo. App. 2014). …………………………67
City of St. Louis v. Mississippi River Fuel Corp., 97 F.2d 726
(8th Cir. 1938) …………………………………………………..………42
Concerned Citizens and Property Owners v. Illinois Commerce
Commission, 112 N.E.3d 128 (Ill. App. 2018) …………………57, 58, 61
Dow Chemical Co. v. Dir. Of Revenue, 834 S.W.2d 742 (Mo. banc 1992)
………………………………………………………………………...……49
Grain Belt Express Clean Line LLC v. Public Serv. Comm’n,
555 S.W.3d 469 (Mo. banc 2018) …………………………………..15, 20
Grain Belt Express Clean Line LLC v. Public Serv. Comm’n, No.
ED105932 (Mo. App. Feb. 27, 2018)….. …………………………..…..15
Humpreys v. Wooldridge, 408 S.W.3d 261 (Mo. App. 2013) ……..….…..59
5
Hurricane Deck Holding v. Pub. Serv. Comm., 289 S.W.3d 260
(Mo. App. 2009) ……………………………………………………..…28
Illinois Landowners Alliance v. Illinois Commerce Commission,
90 N.E. 3d 448 (IL 2017)…………………………………………....….56
Illinois Landowners Alliance v. Illinois Comm. Comm’n,
60 N.E.3d 150 (Ill. App. 2016)…………………………………………..44
Khulusi v. Southwestern Bell Yellow Pages, Inc., 916 S.W.2d 227
(Mo. App. 1995) ………………………………………………….….41, 42
Kansas City Southern Railway Co. v. Garvey, 592 S.W.2d 703
(Mo. banc 1980) …………………………………………………………53
Lincoln County Stone Co. v. Koenig, 21 S.W.3d 142
(Mo. App. 2000) ………………………………………………….…..…56
May Department Stores Co. v. Union Electric Light & Power,
107 S.W.2d 41 (Mo. 1937) ………………………………………….46, 49
Osage Water Company v. Miller County Water Authority,
950 S.W.2d 569 (Mo. App. 1997) …………………………………...….41
Obetz v. Boatmen’s Nat. Bank, 234 S.W.2d 618 (Mo. 1950) …………..…53
Palmer v. City of Liberal, 64 S.W.2d 265 (Mo. 1933). ……………..…19, 40
Reinhold v. Fee Fee Trunk Sewer, 664 S.W.2d 599 (Mo. App. 1984)….....35
Snyder v. State, 288 S.W.3d 301 (Mo. App. 2009)…………………..……66
6
Sonken-Galamba Corp. v. Missouri Pacific R.R. Co., 40 S.W.2d 524
(Mo. App. 1931) ………………………………………………………..26
Southern Star Central Gas Pipeline v. Murray, 190 S.W.3d 423
(Mo. App. 2006). ……………………………………………………….58
Standard Operations, Inc. v. Montague, 758 S.W.2d 442
(Mo. banc 1988) …………………………………………………….….52
State ex rel. Atmos Energy Corp. v. Pub. Serv. Comm’n.,
103 S.W.3d 753 (Mo. banc 2003)……………………………….….….20
State ex rel. Buchanan County Power Transmission v. Baker,
9 S.W.2d 589 (Mo. banc 1928) …………………………………19, 39, 40
State Ex Rel. City of Grain Valley v. Pub. Serv. Comm.,
778 S.W.2d 287 (Mo. App. 1989) ………………………………….…..35
State ex rel. Crutcher v. Koeln, 61 S.W.2d 750 (Mo. banc 1933)……......52
State ex rel. Howard Electric Cooperative v. Riney, 490 S.W.2d 1
(Mo. 1973) …………………………………………………………….27
State ex rel. Inter-City Beverage Co. v. Missouri Pub. Serv. Comm’n,
972 S.W.2d 397 (Mo. App. 1998) …………………………………….35
State ex rel. Kansas City Power & Light Co. v. McBeth,
322 S.W.3d 525 (Mo. banc 2010) …………………………………….56
State ex rel. Koeln v. Lesser, 141 S.W. 888 (Mo. 1911) ……………….53
7
State ex rel. McKittrick v Missouri Pub. Serv. Comm’n,
175 S.W.2d 857 (Mo. banc 1943) …………………………..…19, 24, 30
State ex rel. M. O. Danciger & Co. v. Pub. Serv. Comm’n of Mo.,
205 S.W. 36 (Mo. 1918) ……………………………………..……passim
State ex rel. Doniphan Telephone Co. v. Pub. Serv. Comm’n,
377 S.W.2d 469 (Mo App. 1964) …………………………………..…..26
State ex rel. Public Counsel v. Public Service Comm., 259 S.W.3d 23
(Mo. App. 2008). ……………………………………………..……..….24
State ex rel. Utility Consumers Council v. Public Serv. Comm’n,
585 S.W.2d 41 (Mo. banc 1979) ………………………....…22, 24, 31, 49
State on inf. Barker v. Kansas City Gas Co., 163 S.W. 854
(Mo. banc 1913) ...………………………………………………..……..26
Tetzner v. State, 446 S.W.3d 689 (Mo. App. 2014) ………………..….…..21
Tsevis v. J & F Industries, 51 S.W.3d 91 (Mo. App. 2001) ……..….…….59
Union Electric Co. v. City of Crestwood, 499 S.W.2d 480
(Mo. 1973) ………………………………………………………..….….10
Statutes
Section 386.510 RSMo………………………………………………….….9
Section 477.050 RSMo…………………………………………………….10
Section 393.170 RSMo………………………………………………passim
8
Section 386.020 RSMo ………… ……………………………….…passim
Section 393.130 RSMo ………………………………………………24, 30
Section 393.140 RSMo………………………………………………..... 55
Section 386.500 RSMo………………………………………………..... 65
Laws of Missouri
Laws of Missouri 1947 V. II p. 338…………………………….………..48
Laws of Missouri 1957 p. 502 …………………………………………..48
Missouri Supreme Court Rules
Rule 84.04 …………………………………………………….……...17, 65
Public Service Commission Rules
Rule 4 CSR 240-10.145 ……………………………………………..….55
Rule 4 CSR 240-3.175(1)…………………………………………….…55
Rule 4 CSR 240-2.160….…………………………………………….…65
Other
Am. Jur. ……….. ………………………………………………...……27
Am. Jur. 2d ……….. …………………………………………………...53
Corpus Juris Secundum ………………………………………….....46, 59
9
JURISDICTIONAL STATEMENT
The Eastern Missouri Landowners Alliance DBA Show Me
Concerned Landowners (“Show Me”), Christina Reichert and Missouri Farm
Bureau appeal the “Report and Order on Remand” issued by the Public
Service Commission (“Commission”) on March 20, 2019, in case number
EA-2016-0358 (hereafter referred to as the “final Report and Order,” at A1
et seq.; Vol. 25, LF 4139 et seq.)1 Appellants contend the Commission
lacked the statutory authority and thus the subject matter jurisdiction to issue
a Certificate of Convenience and Necessity to Grain Belt. This issue does
not fall within the exclusive jurisdiction of the Supreme Court of Missouri
under Article V, Sec. 3 of the Missouri Constitution.
The Eastern District of the Court of Appeals has jurisdiction of this
appeal under § 386.510 (A97) because local public hearings in this case
were held by the Commission in Monroe and Ralls counties – both of which
1 Inadvertently, Volume 25 of the Legal File as originally filed with the
Court by the Commission was actually a duplicate copy of Volume 24. (See
Commission’s Motion to File Corrected Volume 25 of Legal File, filed June
13, 2019). Volume 25 (which includes the Commission Order on appeal)
can be found in the Case.net docket entries under “Other Motion”, following
the list of the “confidential exhibits” in the record on appeal.
10
are within the territorial jurisdiction of this Court under § 477.050 (A100).2
See A6, n.4; LF 4144, n.4.
STATEMENT OF FACTS
Background and Procedural History.
On August 30, 2016, Grain Belt Express Clean Line LLC (“Grain
Belt”) filed an Application with the Commission for a Certificate of
Convenience and Necessity (“CCN”), seeking permission pursuant to §
393.170 to build an electric transmission line across eight counties in
northern Missouri. LF 95, 4143.
Grain Belt is an Indiana limited liability company. The ultimate
parent company of Grain Belt is Clean Line Energy Partners LLC (“Clean
Line”), a Delaware limited liability company. Both are headquartered in
Houston, Texas. LF 99-100.
A similar Application for a CCN was filed by Grain Belt in 2014, but
was rejected by the Commission. See Report and Order at A69 et seq.3
2 All statutory references are to RSMo 2016, as amended, except as otherwise
noted.
3 The courts may take judicial notice of Orders of the Public Service
Commission. See Union Electric Co. v. City of Crestwood, 499 S.W.2d 480,
485 n.3 (Mo. 1973) where the Court took judicial notice of several
Commission Orders.
11
The appellants were among the two dozen or so entities and
individuals allowed by the Commission to intervene in the case below. LF
4144. In the “initial phase” of the case, testimony from supporters and
opponents of the line was submitted by 54 different witnesses. LF 1262-65.
(The term “initial phase” of this case refers here to proceedings at the
Commission prior to the remand from the Missouri Supreme Court, as
discussed hereafter).
As described in Grain Belt’s Application, the Missouri segment of the
proposed project is to be a part of a transmission line which would run
approximately 780 miles from western Kansas to Indiana. Grain Belt’s
objective is to collect and transmit over its line approximately 4,000
megawatts (MW) of renewable wind generation from wind farms in western
Kansas. Approximately 500 MW would be delivered to a converter station
in Ralls County, Missouri. The other 3,500 MW would be delivered to a
converter station near the Illinois-Indiana boarder. From there it would be
distributed to buyers in what is known as the PJM market, including states
along the Eastern Seaboard. LF 96, 101-03, 4147; Tr. Vol. 12, 481:15-18.
Grain Belt is not proposing to buy or sell any electricity. Instead, it
would only sell “capacity” on its proposed transmission line; i.e., the right to
use the line to transmit electrical energy which others would buy and sell.
12
Grain Belt expects to sell capacity on the line to two primary types of
entities. The first would be wind farms in Kansas, which would buy
capacity on the line to transmit their energy to wholesale purchasers located
in Missouri and states further east (e.g., to traditional investor-owned
utilities or municipally-owned utilities). Second, capacity could be bought
by the wholesale purchasers themselves (the traditional utilities or
municipally-owned utilities, e.g.), which would buy energy from the Kansas
wind farms, and use the Grain Belt line to transmit that energy to their own
service areas. See LF 4149, par. 12 & 13; LF 4162, par. 71 & 72; LF 4176;
Exh 100, LF Exh. Vol. 76, 4638, 4659-60, 4666-67; Exh. 111, LF Exh. Vol.
81, 5150-51; Exh. 104, LF Exh. Vol. 42, 2080-81.
In other words, Grain Belt proposes to act as a link, or middleman,
between the Kansas wind generators on the one hand, and wholesale
purchasers in Missouri and states further east on the other. LF 2857; LF
4176; LF 4181.
Grain Belt has sold capacity on its line to two entities. It sold the
rights for 100 MW of capacity on the segment of the line from Kansas to
Missouri to an entity commonly referred to as MJMEUC, with an option for
MJMEUC to purchase an additional 100 MW. MJMEUC is an organization
which purchases power for its members, which consist primarily of
13
municipally owned utilities in Missouri. Exh. 115, LF Exh. Vol. 82, 5243;
Exh. 475, LF Exh. Vol. 59, 3489.
Grain Belt also has a contract with Realgy Energy Services for 25
MW to be delivered in Missouri, and 25 MW in Illinois. Exh. 141, p. 3; LF
Exh. Vol. 71, 4277.
There is also a third option for the sale of the line’s capacity. Under
its amended contract with Grain Belt, MJMEUC also agreed to purchase 25
MW of capacity (with an option for a second 25 MW) which could be used
by municipal utilities to transmit their own power from Missouri to the
converter station in Illinois. LF 152, par. 26; Exh. 104, LF Exh. Vol. 42,
2080; Exh. 115, LF Exh. Vol. 82, 5243-44. However, none of the MJMEUC
member utilities have expressed any interest in using that 25 MW of
capacity. Tr. Vol. 16, 1078:2-5. Nor is there any evidence that any other
utility has purchased any of the available capacity on the segment of the line
from Missouri to Illinois.
Regardless of the type of entity which wishes to buy capacity on the
line, the Federal Energy Regulatory Commission (FERC) has authorized
Grain Belt to establish its rates for the entire 4,000 MW of capacity on its
line through individual negotiations with potential purchasers of that
14
capacity. See FERC Order, LF Exh. Vol. 40, 1939, 1941, 1953; and Exh.
100, LF Exh. Vol. 76, 4660.
On a different subject, as Grain Belt noted in its Application to the
Missouri Commission the fundamental test for granting a CCN under the
applicable statute (§ 393.170) is whether the proposed project is “necessary
or convenient for the public service.” LF 104; and see statute at A101.
In making this determination, the Commission typically analyzes
these five criteria developed in an earlier CCN decision, commonly referred
to as the Tartan case4: (1) there must be a need for the service which the
applicant is proposing to provide; (2) the proposal must be economically
feasible; (3) the applicant must have the financial ability to provide the
proposed service; (4) the applicant must be qualified to provide the service;
and (5) the proposed service must be in the public interest. See LF 104, LF
4178.
The Commission issued a Report and Order in the initial phase of this
case on August 16, 2017, hereafter referred to as the “initial Report and
Order”. LF 2847 et seq. That decision did not reach the merits of whether
the proposed line met the Tartan criteria, and did not decide whether the
4 In re Tartan Energy, Report and Order, 3 Mo.P.S.C. 3d 173, Case No. GA-
94-127, 1994 WL 762882 (September 16, 1994).
15
Grain Belt project would be necessary or convenient for the public service.
Id.
Instead, based on a decision from the Western District of the Court of
Appeals, the Commission found it could not lawfully issue a CCN until
Grain Belt had first gained the consent under § 229.100 to build the line
from the County Commission in each of the eight Missouri counties to be
traversed by the line. Finding that Grain Belt had not obtained all of those
consents, the Commission denied Grain Belt’s application for the CCN. LF
2858-61.
Grain Belt appealed the initial Report and Order to this Court. The
Court held that the Western District’s decision was in error, and that Grain
Belt was not required to obtain the county consents before the Commission
could issue the CCN. Grain Belt Express Clean Line LLC v. Public Serv.
Comm’n, No. ED105932 (Mo. App. Feb. 27, 2018).
On transfer, the state Supreme Court likewise held that the
Commission could issue the CCN before Grain Belt obtained all of the
needed county consents. Grain Belt Express Clean Line LLC v. Public Serv.
Comm’n, 555 S.W.3d 469 (Mo. banc 2018). The Supreme Court therefore
reversed the Commission’s initial Report and Order and remanded the case
16
to the Commission “to determine whether Grain Belt’s proposed utility
project is necessary or convenient for the public service.” Id. at 473.
None of the parties to the appeal of the initial decision raised the issue
of whether the Commission had the statutory authority or the subject matter
jurisdiction under § 393.170 to issue the CCN to Grain Belt. Thus, the issue
was not addressed by either court.
Shortly after the case was remanded by the Supreme Court, the
Commission established a procedural schedule for the receipt of evidence
regarding any significant changes affecting the Grain Belt project in the two-
year period since the filing of the initial testimony in that case. LF 3314 et
seq.
The testimony in the remand phase showed (among other things) that
Grain Belt was proposing to sell itself to a company named Invenergy
Transmission LLC (“Invenergy”) A18-19; LF 4156-57. After two days of
additional hearings on remand (A7; LF 4145), on March 20, 2019, the
Commission issued the final Report and Order which is the subject of this
appeal. A1 et seq.; LF 4139 et seq.
In the final Report and Order the Commission unanimously granted
Grain Belt the CNN for which it had applied on August 30, 2016. A51; LF
4189.
17
In reaching its decision, the Commission found that contrary to the
arguments of those opposing the line, Grain Belt qualified as an “electrical
corporation” under Missouri law. A37-40; LF 4175-78. Accordingly, the
Commission concluded it had the statutory authority to issue the CCN to
Grain Belt pursuant to § 393.170. Id.
The Commission also went into considerable detail as to why the
Grain Belt project met the five traditional Tartan criteria, and was necessary
or convenient for the public service. A40-47; LF 4178-85.
The appellants are not challenging the sufficiency of the evidence to
support the Commission’s final Report and Order. And as Rule 84.04(c)
indicates, the Statement of Facts need only include those facts which are
relevant to the questions presented on appeal. Accordingly, there is no need
here to set forth in any further detail the evidence and findings which
support the final Report and Order.
Facts related to the claim of error.
As discussed in Section C of the Argument below, the Commission
had the statutory authority to issue the CCN to Grain Belt under § 393.170
only if Grain Belt met the definition of an “electrical corporation” in §
386.020(15). A103. This question in turn depends on whether or not Grain
18
Belt owns, operates, controls or manages any item of “electric plant,” as
defined in subsection (14) of that statute. A103.
The Commission found that Grain Belt qualified as an electrical
corporation under subsections (14) and (15) based on two types of electric
plant: (a) the 39 easements which it had secured on the right-of-way of the
proposed line, which the Commission found were “controlled” or
“managed” by Grain Belt; and (b) an unspecified amount of cash owned by
Grain Belt. A37; LF 4175.
Based on these findings, the Commission held that Grain Belt
qualified as an electrical corporation and a public utility, and could therefore
be granted the CCN under § 393.170. A37-38; LF 4175-76.
For purposes of the issues in this case, the terms “public utility” and
“electrical corporation” are essentially interchangeable. See the definition of
“public utility” at § 386.020(43), A104.
POINT RELIED ON
THE PUBLIC SERVICE COMMISSION OF THE STATE OF
MISSOURI (“COMMISSION”) ERRED IN GRANTING A
CERTIFICATE OF CONVENIENCE AND NECESSITY (“CCN”)
TO GRAIN BELT EXPRESS CLEAN LINE LLC (“GRAIN
BELT”) PURSUANT TO SECTION 393.170 BECAUSE THE
19
COMMISSION LACKED THE STATUTORY AUTHORITY AND
THUS THE SUBJECT MATTER JURISDICTION TO ISSUE THE
CCN, IN THAT GRAIN BELT IS NOT AN “ELECTRICAL
CORPORATION”, AS IS REQUIRED FOR ISSUANCE OF A
CCN UNDER SECTION 393.170.
State ex rel. M. O. Danciger & Co. v. Pub. Serv. Comm’n of Mo., 205
S.W. 36 (Mo. 1918).
State ex rel. Buchanan County Power Transmission v. Baker,
9 S.W.2d 589 (Mo. banc 1928).
Palmer v. City of Liberal, 64 S.W.2d 265 (Mo. 1933).
State ex rel. McKittrick v. Missouri Pub. Serv. Comm’n, 175 S.W.2d
857 (Mo. banc 1943).
Sections 386.020(14) and (15) RSMo.
20
STANDARD OF REVIEW
In Grain Belt’s appeal of the Commission’s initial Report and Order,
the Missouri Supreme Court described the standard of review in
Commission cases as follows:
Pursuant to section 386.510, appellate review of an order by the
Commission is two-pronged: first, the reviewing court must
determine whether the [Commission’s] order is lawful; and
second, the court must determine whether the order is
reasonable. The Commission’s order is presumed valid, and the
burden of showing the order is unlawful or unreasonable rests
with the appellant. All questions of law are reviewed de novo.
Grain Belt Express Clean Line, LLC, supra, 555 S.W.3d at 471.
(citations and internal quotation marks omitted).
As to the point regarding de novo review of legal issues, the Supreme
Court has also stated that “[t]here is no presumption in favor of the
Commission’s resolution of legal issues.” State ex rel. Atmos Energy Corp.
v. Pub. Serv. Comm’n., 103 S.W.3d 753, 759 (Mo. banc 2003).
ARGUMENT
THE PUBLIC SERVICE COMMISSION OF THE STATE OF
MISSOURI (“COMMISSION”) ERRED IN GRANTING A
21
CERTIFICATE OF CONVENIENCE AND NECESSITY (“CCN”)
TO GRAIN BELT EXPRESS CLEAN LINE LLC (“GRAIN
BELT”) PURSUANT TO SECTION 393.170 BECAUSE THE
COMMISSION LACKED THE STATUTORY AUTHORITY AND
THUS THE SUBJECT MATTER JURISDICTION TO ISSUE THE
CCN, IN THAT GRAIN BELT IS NOT AN “ELECTRICAL
CORPORATION”, AS IS REQUIRED FOR ISSUANCE OF A
CCN UNDER SECTION 393.170.
Grain Belt has asked the Commission to grant it a CCN to build
an electric transmission line in Missouri, pursuant to § 393.170. LF95.
As it applies to this case, that statute essentially states that no
“electrical corporation” may construct any “electric plant” without first
obtaining a CCN from the Commission. See § 393.170 (1);A101.
Accordingly, if Grain Belt is not an electrical corporation, the
Commission has no authority under that statute (or any other statute cited by
the Commission or by Grain Belt) to approve the construction of the
proposed line.
If the Commission is not authorized by statute to grant the CCN, then
it lacks subject matter jurisdiction to do so. Tetzner v. State, 446 S.W.3d
689, 692 (Mo. App. 2014) (stating that “[a]s a basic tenet of administrative
22
law, an administrative agency has only such jurisdiction as may be granted
by the legislature. If the agency lacks statutory authority to consider a
matter, it is without subject matter jurisdiction”). (citation and internal
quotation marks omitted). See also State ex rel. Utility Consumers Council
of MO v. Pub. Serv. Comm’n, 585 S.W.2d 41, 54 (Mo. banc 1979) (noting
that the PSC’s jurisdiction is set by statutes enacted by the legislature).
As discussed in points A, B and C respectively, appellants have three
lines of argument which independently demonstrate that Grain Belt is not an
“electrical corporation.” The first two are grounded on case law, while the
third is based strictly on the statutory definition of an electrical corporation.
A. Based on case law, Grain Belt is not an electrical corporation
because it is not subject to all of the statutes which comprise the Public
Service Commission Act.
The leading case on this issue was decided just 5 years after passage
of the Public Service Commission Act in 1913: State ex rel. M. O. Danciger
& Co. v. Pub. Serv. Comm’n of Mo., 205 S.W. 36 (Mo. 1918).
The Court held in Danciger that an entity either is a public utility, or it
is not. There is no middle ground. And one defining characteristic of a
public utility is that it must be subject to all of the laws in the Public Service
23
Commission Act. If it is not subject to all of those provisions, then the
entity is not an electrical corporation under Missouri law.
In the words of Danciger: “It is certainly fundamental that the
business done by respondent either constitutes him a ‘public utility’ or it
does not. If he is a public utility, he is such within the whole purview, and
for all inquisitorial and regulatory purposes of the Public Service
Commission Act.” Id. at 40. (emphasis added).
As the Court went on to say, if the respondent in that case was in fact
a public utility, he must be subject to all provisions of that Act, including the
one which allows the Commission to compel him to provide service to all
entities within a defined geographic area. Id. Finding that the Commission
lacked such authority with respect to Danciger, the Court concluded that he
therefore was not a public utility. Id.
Here, it is undisputed that Grain Belt’s rates are to be regulated by the
FERC, and that they will not be regulated by the Missouri Commission.
Exh. 100, LF Exh. Vol. 76, 4660; LF 149, 171. Accordingly, Grain Belt will
not be subject to the laws in Missouri which specify how electric rates are to
be determined.
For instance, Missouri statutes provide for several specific methods by
which rates may be established for electric utilities subject to the jurisdiction
24
of the Commission. State ex rel. Utility Consumers Council v. Public Serv.
Comm’n, supra, 585 S.W.2d 41, 48 (Mo. banc 1979). Because Grain Belt’s
rates will be regulated by the FERC, it will be exempt from the statutory
ratemaking provisions described in State ex rel. Utility Consumers Council,
supra.
Also, Missouri’s anti-discrimination laws, §§ 393.130.2. and
393.130.3 (A109-10), provide among other things that an electric utility may
have two or more rates if the rates are for different types of service, but is
forbidden from having two or more rates for the same service.5 State ex rel.
McKittrick v. Missouri Pub. Serv. Comm’n, 175 S.W.2d 857, 866 (Mo. banc
1943) (discussing § 5645, which is a predecessor of § 393.130. See
legislative notes to § 393.130, at A110). Grain Belt would be exempt from
these requirements as well.
Because Grain Belt will not be subject to the Missouri statutes dealing
with ratemaking, by definition it will not be subject to “the whole purview”
of the Public Service Commission Act. This is a simple, objective test,
5 The comparable laws for telephone service have been referred to as “anti-
discrimination” statutes. State ex rel. Public Counsel v. Public Service
Comm., 259 S.W. 3d 23, 32 (Mo. App. 2008).
25
leaving no room for subjective interpretation. Accordingly, under Danciger,
the Court has no choice but to find that Grain Belt is not a public utility.
The theory behind the Danciger decision makes perfect sense. A
policy would be fundamentally unsound if it recognizes a new class of
“quasi-utilities” which are permitted to enjoy certain benefits of the state’s
regulatory laws, while at the same time avoiding other provisions which
might prove to be inconvenient, if not insurmountable.
Were it not for the ruling in Danciger, for example, Grain Belt could
utilize § 393.179 to obtain a CCN from the Commission (which in turn
would presumably give it the right of eminent domain under § 523.010
(A130)), while at the same time avoiding other Missouri statutes which
would prevent it from setting its own rates through bilateral negotiations
with its customers.
Based on Grain Belt’s latest financial statements from the time of the
hearings in this case, the benefits of such a quasi-utility status are reflected
in Grain Belt’s own projection for its long-term rate of return on this project.
That figure was designated below as confidential by Grain Belt, but is
available at Confidential Tr. Vol. 15, 893:20 – 894:6. See also Id. at 891:13
– 892:2.
26
Danciger inherently assumes that the Public Service Commission Act
is a complete, unified regulatory package. Exemption from one provision
means exemption from all. As such, the Act should not be subject to hit-or-
miss and pick-and-choose enforcement, regardless of the FERC’s
involvement. See Sonken-Galamba Corp. v. Missouri Pacific R.R. Co., 40
S.W. 2d 524, 528 (Mo. App. 1931) (finding that the intent of the Public
Service Commission Act was “to leave to the commission the entire subject
and field of rate regulation, including unjust discrimination and other abuses
….”); State on inf. Barker v. Kansas City Gas Co., 163 S.W. 854, 857-58
(Mo. banc 1913) (referring to the Act as an “elaborate law” which, to be
effective, “must possess the power of intelligent visitation and the plenary
supervision of every business feature to be finally … reflected in rates and
quality of service.”); and State ex rel. Doniphan Telephone Co. v. Pub. Serv.
Comm’n, 377 S.W.2d 469, 474 (Mo App. 1964) (describing the Public
Service Commission Act as “a complete system of law for the regulation of
public utilities by the Commission.”).
On another aspect of this issue, in pleadings at the Commission Grain
Belt subtly questioned the value of the Danciger opinion on the ground that
it was a “century-old case.” LF Vol. 24, 3865. But if anything, that factor
serves to bolster the precedential importance of that decision today.
27
In State ex rel. Howard Electric Cooperative v. Riney, 490 S.W.2d 1,
9 (Mo. 1973) the Supreme Court described the logic behind that proposition.
Based on a passage from Am. Jur. Statutes, the Court described the
applicable law as follows:
The fact that the legislature has not seen fit by
amendment to express disapproval of a contemporaneous or
judicial interpretation of a particular statute, has been referred
to as bolstering such construction of the statute, or as
persuasive evidence of the adoption of the judicial
construction. In this respect, it has been declared that where
a judicial construction has been placed upon the language of
a statute for a long period of time, so that there has been
abundant opportunity for the lawmaking power to give further
expression to its will, the failure to do so amounts to
legislative approval and ratification of the construction placed
upon the statute by the courts, and that such construction
should generally be adhered to, leaving it to the legislature to
amend the law should a change be deemed necessary.
28
Obviously, the General Assembly has chosen not to disturb the
holding in Danciger that an entity is not a public utility unless it is subject to
the entire purview of the Public Service Commission Act.
In fact, a 2009 decision from the Western District stated that “[t]he
statutory provisions on which Danciger relied remain largely unchanged
today, and more recent decisions continue to cite and follow Danciger’s
holding ….” Hurricane Deck Holding v. Pub. Serv. Comm., 289 S.W.3d
260, 264 (Mo. App. 2009).
Clearly, Danciger is still good law today. And so even without
further support or argument, as addressed in Sections B and C below, the
Danciger decision alone leaves the Court with no choice but to find that
Grain Belt is not an electrical corporation or public utility.
B. Based on case law, Grain Belt is not an electrical corporation
because it will not be devoted to the “public use”.
Appellants’ second argument based on case law is that the Grain Belt
project will not be devoted to the “public use”, as that term is defined in
decisions from Missouri and elsewhere. And if an entity is not devoted to
the public use, case law further says that it does not qualify as a public utility
or an electrical corporation.
29
The reason why Grain Belt does not meet the public use requirement
established by case law lies in the manner by which Grain Belt’s rates and
other terms of service will be established under authority of the FERC.
Therefore, appellants will first discuss in more detail how Grain Belt’s rates
are established under applicable FERC regulations. They will then
demonstrate why the FERC/Grain Belt model does not qualify as a “public
use” under applicable case law.
i. The Grain Belt/FERC model for establishing rates and other
terms of service.
Grain Belt will not be selling any transmission service directly to
retail customers in Missouri. LF 123; LF Exh. Vol. 76, 4660. Instead, it
will sell the capacity on its line both to wind generators on the Kansas end of
the line, and to wholesale entities in Missouri and states further east (e.g., to
investor-owned or municipal utilities.) See, e.g., Exh. 100, LF Exh. Vol. 76,
4660.
The rates for this service will be subject to regulation by the FERC,
not the Missouri Commission. And under FERC regulation, Grain Belt has
the authority to establish rates for the entire capacity of the line through
bilateral negotiations with individual customers. Exh. 100, LF Exh. Vol. 76,
4660.
30
In other words, under the FERC’s model for such transmission
projects, Grain Belt would negotiate one-on-one with a potential customer in
an attempt to reach agreement on the key rates, terms and conditions of the
purchase of capacity on the line. Exh. 111 p. 9-10; LF Exh. Vol. 81, 5155-
56.
And as one of Grain Belt’s witnesses observed, the FERC model to
which Grain Belt is subject is “markedly different” from the regulatory
model used for traditional utilities. Id. at p. 5; 5155.
As demonstrated below, establishing rates through bilateral
negotiations with each individual customer will inevitably produce different
rates for similarly situated customers. This practice, under Missouri law,
would be in direct violation of Missouri’s anti-discrimination statute, §
393.130.2, as discussed in State ex rel. McKittrick v Missouri Pub. Serv.
Comm’n, supra.
As one example of how the negotiation process actually works in
practice, as the projected in-service date of its proposed line was delayed,
MJMEUC approached Grain Belt about reducing the rates they had
negotiated earlier. As a result of further negotiations between the two
parties, MJMEUC secured a 30% reduction in its second 100 MW of
capacity. Tr. Vol. 24, 2115:1 – 2116:19. Establishing rates on the basis of a
31
customer’s unique leverage with the supplier is not one of the ratemaking
procedures recognized and discussed in State ex rel. Utility Consumers
Council v. Public Serv. Comm’n, supra, 585 S.W.2d 41, 48 (Mo. banc
1979).
And as would be expected when a utility is allowed to negotiate
different rates with different customers, the rates for those customers are
bound to be different. Mr. Zadlo is a Senior Vice President with Invenergy,
the company poised to purchase the Grain Belt project. Exh. 145, p. 1; LF
Exh. Vol. 72, 4318. As Mr. Zadlo testified, under FERC regulation, two
somewhat similar, nearly identical customers, could end up with two
different rates as a result of the negotiating process. Tr. Vol. 22, 2038:222 –
2019:9.
One reason for the disparities lies in the very process used to select
the customers with whom Grain Belt (or Invenergy) will choose to negotiate.
As Mr. Zadlo explained:
And first you have an open season [an open solicitation of
bids], you see which individuals will -- are willing to pay. And
then you … chose the best – the offers – the best offers that you
receive and try to negotiate a rate with them.
Tr. Vol. 22, 2041:7-11.
32
In other words, Invenergy (or Grain Belt) will begin its negotiations
with the highest bidders and work its way down. So, as Invenergy logically
seeks to maximize its profits, rate disparities in such a process are inevitable.
In addition, in its application to the FERC, Grain Belt stated that the
criteria used in its selection of customers would include a minimum
purchase of 50 MW of capacity, for a minimum term of at least five years.
Exh. 322; LF Exh. Vol. 40, 1947, par. 20.
On their face, these criteria produce inherent advantages to larger
customers over smaller customers. In fact, the latter are excluded from the
process all together. In contrast, of course, utilities subject to regulation by
the Commission are required to serve all customers within their service
territory, regardless of the size of the customer. And as the Court is no
doubt aware, customers are not routinely locked into a fixed-term contract
for their electric service.
As another example of how the FERC method works in practice,
Grain Belt has thus far negotiated contracts for the sale of capacity with only
two entities: MJMEUC, and Realgy Energy Services. Exh. 141, p. 3; LF
Exh. Vol. 71, 4277.
Under the amended contract with MJMEUC, its rate for capacity on
the Grain Belt line is $1,167 per MW per month (or $1.167 per KW per
33
month), escalating at 2% annually. Exh. 480, LF Vol. 74, 4583, 4590. The
rate and escalation factor negotiated with Realgy are considered confidential
by Grain Belt, and therefore cannot be disclosed here. But that data are
available at Exh. 208C, Confidential Exh. Vol. 29, 1420, lines 6-7. Thus the
two rates may be readily compared by the Court if it so desires.
The manner in which Grain Belt applies its negotiated rate making
authority is also illustrated by the process in which it negotiated its initial
contract with MJMEUC.
When the Commission rejected Grain Belt’s Application for a CCN in
the 2014 CCN case, it noted that Grain Belt had not signed a single contract
for the sale of the 500 MW of capacity it proposed to deliver to Missouri.
Report and Order p. 10 par. 22; A79. The Commission also found that a
reasonably prudent Missouri electric utility would not be likely to obtain
wind energy transmission over the Grain Belt line. Id. at p. 23-24; A92-93.
In anticipation of a second application for a CCN in Missouri, Grain
Belt then made a concerted effort to sell capacity to Missouri buyers,
including Ameren, Associated Electric Cooperative, and individual
municipal systems. Tr. Vol. 10, 201:11-17; 200:23-201:6; 200:14-16; Tr.
Vol. 16, 1042:2-5. Those efforts, including Grain Belt’s initial attempts to
34
sell capacity to MJMEUC, were all unsuccessful. Tr. Vol. 16, 990:1-6; 990:
9-12; Tr. Vol. 16, 1041:6-19; 1046:20-1047:5.
Eventually, Grain Belt made an offer which MJMEUC could not
refuse. In a special deal offered only to MJMEUC, the price for the first 100
of the 200 MW offer was initially set at only about 20% of the normal rate
which Grain Belt would charge to other customers for the same transmission
service from Kansas to Missouri. Tr. Vol. 14, 853:18-854:3. (And as
indicated above, Grain Belt later dropped the price for the second 100 MW
to this same low rate. Exh. 480, LF Exh. Vol. 74, 4582-83.)
Stated in other terms, Grain Belt’s price to MJMEUC amounted to
only one third of a cent per kwh for its transmission service. Tr. Vol. 14,
854:9-23. In contrast, Grain Belt estimated that its actual cost of moving the
power from Kansas to Missouri would be about five times that amount. Tr.
Vol. 14, 855:15-856:23. So Grain Belt effectively used its negotiated rate
authority from FERC to sell capacity at a rate drastically below its own cost
of providing that service. It is fair to assume this contract was the
culmination of Grain Belt’s effort to finally sign a contract for use of its line
in Missouri, which would hopefully sway the Commission when Grain Belt
filed its second application for a CCN.
35
And Grain Belt expects to extract a higher price from future buyers.
Tr. Vol. 14, 948:6 – 950:13. In fact, if Grain Belt did not sell to other buyers
at a price above its own cost, it obviously could not survive.
If Grain Belt and Invenergy were subject to Missouri laws, its rates
and terms of service would clearly be in violation of Missouri’s anti-
discrimination statutes, § 393.130.2 and .3. See State Ex Rel. City of Grain
Valley v. Pub. Serv. Comm., 778 S.W.2d 287, 290 (Mo. App. 1989) (holding
that “differences in rates must be based upon a reasonable and fair difference
in conditions which equitably and logically justify a different rate….”, and
that normally these different conditions are based on a difference in the cost
of providing the service.) (internal quotation marks omitted); Reinhold v.
Fee Fee Trunk Sewer, 664 S.W.2d 599, 604 (Mo. App. 1984) (finding that
“[t]he purpose of the Public Service Commission Law … is to secure
equality in service in rates for all who need or desire these services who are
similarly situated.”); and State ex rel. Inter-City Beverage Co. v. Missouri
Pub. Serv. Comm’n, 972 S.W.2d 397, 400 (Mo. App. 1998) (stating that
Section 393.130.2 … “secures equality of services and rates for all who need
or desire the services and who are similarly situated.”)
ii. Given how Grain Belt is allowed to set its rates, under applicable
case law it does not serve a public use, and thus is not a public utility.
36
The initial case in Missouri on the issue of “public use” was also State
ex rel. M. O. Danciger & Co. v. Pub. Serv. Comm’n of Mo., supra, 205 S.W.
36 (Mo. 1918). As to this particular issue, the main point of Danciger is that
in order to qualify as an “electrical corporation,” an entity must not only
meet the statutory definition of that term, but in addition must be devoted to
what the Court termed the “public use.” Id. at 40.
The relator in Danciger was a part owner and close affiliate of a
brewing company in Weston, MO, which had installed electric generation to
light its facilities and to operate a large part of the machinery used in its
brewing process. Danciger at 37.
The brewery found that it had excess capacity from its generating
facilities, and through its affiliate Danciger began selling electricity to
customers within a three block radius of the brewery. Eventually, Danciger
was selling electricity at different rates to the town of Weston; to between 20
and 30 other businesses; and to some 10 individual residences. Id. at 37-38.
Danciger later discontinued service to several of its customers, who
filed a complaint with the Public Service Commission. The Commission
found that Danciger qualified as a regulated public utility and ordered that
the service be restored. Id. at 39-40.
37
On appeal, the state Supreme Court reversed that ruling. The key
issue was whether Danciger was or was not an “electrical corporation”, as
that term is defined in what is now § 386.020(15).6
The Supreme Court first found that although the statutory definition of
an “electrical corporation” includes no specific reference to public use, or to
the necessity that the sale of the electricity be to the public, “it is apparent
that the words ‘for public use’ are to be understood and to be read therein.”
Danciger at 40.
The Court concluded that the nature of the business in question did
not make Danciger a “public utility”. While Danciger did sell electricity to
some members of the public, the Court held there had been “no explicit
professing of public service, or undertaking to furnish lights or power to the
whole public, or even to all persons in that restricted portion thereof who
reside within three blocks of the Company’s plant ….” Id. (emphasis
added).
Similarly, Grain Belt will sell to those customers which are willing to
pay the highest price. That is the very essence of setting rates on the basis of
bilateral negotiations. Accordingly, Grain Belt is not undertaking to furnish
6 The current version of that statute is essentially unchanged from that at
issue in Danciger. See Id. at 39.
38
service to the “whole public,” in the sense described by Danciger. And
given that Grain Belt will not be serving the general public indiscriminately,
under Danciger it does not fall within the jurisdiction of the Commission.
Id. at 41-42.
In fact, the finite capacity of the Grain Belt line means it will be able
to serve only a small portion of the customers which have expressed an
interest in buying capacity on the line. Exh. 111; LF Exh. Vol. 81, 5177,
lines 17-18. And yet Invenergy has no plans to make any substantial
changes to the 4,000 MW project, as it was proposed to the Commission in
this case. Exh. 145, p. 10; LF Exh. Vol. 75, 4327.
The Danciger Court went on to punctuate its ruling on this issue by
adopting this passage from what the Court termed an “excellent work on
Public Service Corporations:”
That the business of supplying gas is public in character is
now universally recognized, provided that the company
supplying is committed to supplying gas to the community in
general. But the case can be imagined of an institution with
a generating plant for its own supply, which might even
supply one neighbor, without being obliged to sell to all
others. In the same way the business of supplying electrical
39
energy has generally been recognized as public in character.
There are, however, several cases where the company
supplying electricity has not professed to sell to the public
indiscriminately at regular rates, but has from the beginning
adopted the policy of entering into special contracts upon its
own terms; such companies are plainly engaged in private
business. (emphasis added)
Danciger at 41.
This last sentence in particular, quoted with approval by the Supreme
Court, precisely describes the proposed operation of the Grain Belt line.
Thus based on Danciger, Grain Belt is not an electrical corporation on two
separate grounds.
Another case based on “public use” is State ex rel. Buchanan County
Power Transmission v. Baker, 9 S.W.2d 589 (Mo. banc 1928). There, the
relator operated a single transmission line between a generation source and
the purchaser of the electricity -- the St. Joseph Railway Light, Heat and
Power Co. The basic issue was which state taxing authority had the right to
tax the transmission line, which in turn depended upon whether or not the
line was a “public utility.” Id. at 591.
40
One of the taxing authorities argued that while the line did not serve
the public individually, “it is certainly an important link in the distribution of
electric energy to the people of St. Joseph, Missouri.” Id. at 592.
But relying upon Danciger, the Supreme Court found instead as
follows: “the mere purchase, transmission and sale of electric energy, a
commercial product, without more, contains no implication of public
service. On the showing made it must be held that relator is not a public
utility.” Id. at 582.
The service being provided there was essentially the same as what
Grain Belt is proposing here: acting as the transmission link between the
source of the generation and the customers which would buy the power.
Based on Buchanan County, the role of a mere transmission link is not
enough for an entity to qualify as a public utility.
Another applicable Missouri Supreme Court case is Palmer v. City of
Liberal, 64 S.W.2d 265 (Mo. 1933). There, a generating facility (the Cardin
Company) supplied electricity to the city of Liberal, and the city in turn sold
the power to its individual citizens. The Court ruled that under these
circumstances the generating facility was not an electrical corporation which
required a CCN from the Commission. As the Court stated: “The Cardin
Company does not propose to deal with the public, but only to furnish the
41
city of Liberal with electric current. It is not dealing with the public and it
would not be necessary for the Public Service Commission to give a
certificate of convenience and necessity before it can start operating in this
State.” Id. at 268.
Here, Grain Belt has sold some of its capacity to MJMEUC, e.g.,
which in turn will sell that capacity to its member utilities, which in turn will
sell to the end-use customers. See Tr. Vol. 16, 984:21-23. However, Grain
Belt itself “is not dealing with the public” any more than was the Cardin
Company in the Palmer decision. Accordingly, just as in that case, Grain
Belt is not authorized by Missouri law to obtain a CCN from the
Commission.
The three Supreme Court cases discussed above have not been
overruled or diluted as to the basic principles relied upon here by the
appellants.
In a more recent case, one issue was whether the Southwestern Bell
Yellow Pages constituted a public utility. Khulusi v. Southwestern Bell
Yellow Pages, Inc., 916 S.W.2d 227 (Mo. App. 1995).
Relying in part on Danciger, the Court determined that that it did not.
Id. at 232. As summarized in Osage Water Company v. Miller County
Water Authority, 950 S.W.2d 569, 574 (Mo. App. 1997), “[t]he crucial
42
factor in Khulusi that the court examined to determine that Southwestern
Bell Yellow Pages was not a public utility was that it used ‘private contracts’
to publish advertising, thereby removing it from the realm of public utility
status.”
Similarly, Grain Belt’s operations will be founded on “private
contracts,” negotiated individually with its customers. So on that basis,
Khulusi would say that Grain Belt is likewise not a public utility.
The 8th Circuit of the U.S. Court of Appeals has also weighed in
decisively on the appellants’ side of this issue. In City of St. Louis v.
Mississippi River Fuel Corp., 97 F.2d 726 (8th Cir. 1938), the utility
(Mississippi River) sold natural gas in St. Louis to one wholesale customer
(Laclede Gas), and to 14 industrial customers at retail. Id. at 728. The retail
sales were all “by special contracts, entered into after negotiations with the
customer.” Id. The question on appeal was whether the utility’s operations
were “for public use”, within the meaning of the Danciger decision.
Quoting extensively from Danciger, the 8th Circuit held that the
utility’s operations in St. Louis were not for public use. Among the findings
and conclusions made by the 8th Circuit in reaching that decision were the
following:
43
● We conclude that under Missouri law the term “for public
use” as used in the ordinance under consideration, means the
sale of gas to the public generally and indiscriminately, and not
to particular persons upon special contract. This construction
of the phrase is the one generally understood and applied.
Id. at 730.
● To constitute a public use all persons must have an equal
right to the use, and it must be in common, upon the same
terms, however few the number who avail themselves of it.
(internal quotations marks omitted.)
Id.
● The sale to the Laclede Company [at wholesale] alone is not
sufficient to transform what is otherwise a private business into
a public business any more than would the sale of a locomotive
to a railroad company make the seller a common carrier.
Id.
Based upon this language from the 8th Circuit, Grain Belt is definitely
not a public utility. In particular, its wholesale contracts with MJMEUC and
Realgy do not transform its business into one “of public use.”
44
The issue of “public use” was addressed at some length in a recent
decision from an Illinois appellate court, Illinois Landowners Alliance v.
Illinois Comm. Comm’n, 60 N.E.3d 150, 158-160 (Ill. App. 2016).7 That
case involved the question of whether the Rock Island Clean Line (a sister
line of Grain Belt, also owned by Clean Line8) was or was not a “public
utility” under Illinois law. The rates for capacity on the Rock Island line
were also to be established through bilateral negotiations, under authority of
the FERC. Id. at 155.
As in the Danciger case, the Illinois court held that in order to qualify
as a “public utility” the entity in question must not only meet the statutory
definition of a public utility, but must also meet what was essentially the
second test established in Danciger: “a public utility also must provide its
product or service ‘for public use,’ carrying with it the duty of the producer
or manufacturer to serve the public and treat all persons alike, without
discrimination.” Id. at 158.
7 As discussed shortly, this case was transferred to the Illinois Supreme
Court. That Court also found that the Rock Island line was not a public
utility, based on a second line of reasoning from the appellate court.
8 Ex. 100, LF Exh. Vol. 76, 4657.
45
The Court found that the proposed line did not meet this test, stating
that “[a] private company that provides public utility services according to
its own terms and conditions does not meet the statutory definition of a
public utility.” Id. at 159.
Furthermore, the court found that in order to qualify as a public utility,
the entity must offer its assets for public use without discrimination. But as
the court concluded, the Rock Island line “is not for public use without
discrimination.” Id.
Finally, the Illinois appellate court relied on an earlier Illinois
Supreme Court decision which found that the Mississippi River Fuel
company did not qualify as a public utility in Illinois.
As described in the appellate court decision, that company sold
natural gas through individual contracts with 23 private industrial retail
customers, as well as to 2 public utilities which in turn resold the gas to their
retail customers. In relying on the Illinois Supreme Court’s decision, the
appellate Court found that the company’s contracts were not based on fixed
rates, and instead varied as to terms and conditions; and that the company’s
act of selling gas to a limited group of customers could not be characterized
as “public use.” Id.
46
Notably, this decision did not turn on any statutory language in
Illinois which differed from that in Missouri.
Appellants’ point here is further reinforced by Corpus Juris
Secundum, which begins the topic of Public Utilities § 7 with the following
statement of the law: “It is a fundamental principle that a public utility may
not discriminate in the distribution of services or the establishment of rates.”
As it goes on to say, “[a] utility must act toward all members of the public
impartially, and treat all alike.” Id.
One other case is instructive as to appellants’ second point based on
case law: May Department Stores Co. v. Union Electric Light & Power, 107
S.W.2d 41 (Mo. 1937). Although the case does not deal directly with the
issue of “public use”, it certainly supports appellants’ position on that
question.
In the May case, an electric generator signed several contracts in 1912
to supply power at specified rates to May and to other nearby customers. Id.
at 45-47. One year later the Public Service Commission Act was passed,
and the threshold question before the Court was whether the passage of that
Act in effect nullified the private contracts for the sale of electricity. Id. at
48.
47
The Court held that the power of the Commission overrides all such
contracts, Id., and that the provisions of the contracts regarding rates and
service could not stand if they were inconsistent with those adopted by the
Commission. Id. at 49.
Particularly significant here are the following observations and
findings by the Supreme Court in that case:
● Prior to enactment of the Public Service Commission Act in 1913,
customers were left to make the best deal they could negotiate with
competing suppliers. The Act was passed as a result of the growing feeling
that this practice was inadequate to protect the public, and thus was replaced
by “impartial treatment of everyone under regulations approved and
enforced by the State.” Id. at 48.
● Regulation of rates could not be successful without regulating all
rates. Id.
● “The purpose of providing public utility regulation was to secure
equality in service and in rates for all who needed or desired these services
and who were similarly situated.” Id. at 49.
● And finally, in an observation which has proven prophetic in this
case, the Court stated that if rates and other terms of service established by
the Commission could be superseded by private contracts, “the certain result
48
would be inequality between consumers. If all consumers similarly situated
are to be treated alike, a contract dealing with one on a different basis from
others cannot be recognized.” Id.
While not expressly stating so, the gist of this case is that a system of
privately negotiated contracts does not serve a public use.
Based upon the above decisions, particularly those from our own
Supreme Court, Grain Belt does not qualify as an electrical corporation
under two separate criteria established by case law.
In further support of this position, appellants respectfully refer the
Court to several well established rules of statutory construction (in this case,
construction of the statute defining an electrical corporation).
First, subsequent to the Supreme Court’s decision in Danciger, the
General Assembly on several occasions reenacted §§ 386.020(14) and (15),
which together define the term “electrical corporation”. See summary of
legislative history of § 386.020 at A105, and the 1947 and 1957
reenactments of that section at A120 et seq. and A125 et seq., respectively.
And case law holds that in reenacting those provisions, one must
presume the legislature concurred in Danciger’s conclusions regarding what
does and does not qualify as an electrical corporation under the reenacted
49
statutes. See State ex rel. Utility Consumers Council, supra, 585 S.W2d at
55.
Similarly, the Supreme Court has held that “[t]he construction of a
statute by a court of last resort becomes a part of the statute as if it had been
so amended by the legislature.” Dow Chemical Co. v. Dir. Of Revenue, 834
S.W.2d 742, 745 (Mo. banc 1992) (internal quotation marks omitted). That
being the case, the statutes defining an electrical corporation have been
imprinted over the years with the decisions cited here by appellants.
Finally, “[i]nsight into the legislature’s object can be gained by
identifying the problems sought to be remedied and the circumstances and
conditions existing at the time of the enactment.” Bachtel v. Miller County
Nursing Home District, 110 S.W.3d 799, 801 (Mo. banc 2003). As
discussed in May Department Stores Co., supra, 107 S.W.2d 41 at 48, a
primary reason for passage of the Public Service Commission Act was to
eliminate the inequalities inherent in individually negotiated contracts for
electric service. Accordingly, the statutes in question should not be
interpreted in a manner which would encourage a return to the very practice
which the General Assembly sought to eliminate.
50
Grain Belt will no doubt point out, as it did in the Commission
proceedings, that under FERC regulations Grain Belt’s rates must be “just
and reasonable”, and not “unduly discriminatory”. See LF Vol. 24, 3865-66.
But assuming the actual results of Grain Belt’s bilateral negotiations
do meet these FERC ratemaking standards, it is apparent that those quoted
terms have a different meaning to the FERC than they do under Missouri
law. As is clear from the case law cited above, and despite the FERC’s
views on the subject, the ratemaking process employed by Grain Belt would
be inconsistent with Missouri’s own statutory procedures for setting rates.
Appellants are not questioning the wisdom or legality of FERC’s
policy of allowing Grain Belt to establish its rates and other terms of service
through bilateral negotiations with its customers. Nor do appellants contend
on this appeal that any of Grain Belt’s practices fail to comply with
applicable FERC regulations – including the below-cost rate to MJMEUC.
See FERC Order at Exh. 322, LF Exh. Vol. 40, 1939 et seq.
What appellants are saying is that by choosing to build a transmission
line which brings it within FERC’s ratemaking authority, however
meritorious the FERC model may be, Grain Belt cannot at the same time
serve a “public use” as defined by the laws of this state.
51
C. Grain Belt is not an electrical corporation because it does not meet
the statutory definition of that term.
In addition to its failure to meet the judicially-imposed requirements
discussed above, Grain Belt does not even meet the statutory definition of an
electrical corporation. To qualify as an electrical corporation, an entity must
own, operate, control or manage, in the present tense, some item of “electric
plant”. Section 386.020(15); A103.
Subsection (14) of that statute states that electric plant consists of the
following items: real estate, fixtures, personal property, conduits, ducts or
other devices, materials, and apparatus or property for containing, holding or
carrying conductors used for transmission of electricity. A103. So, if Grain
Belt does not presently own, operate, control or manage any such item of
electric plant, then under § 386.020(15), it does not qualify as an electrical
corporation.
In its final Report and Order, the Commission found that Grain Belt
qualifies as an electrical corporation because it held two types of assets
which the Commission viewed as “electric plant”. One was cash, which the
Commission considered to fall within the term “personal property” under the
definition of electric plant. The second was the 39 easements which Grain
Belt has secured on the proposed right-of-way in Missouri. LF 4175. (To
52
put this number in perspective, the line will cross the property of
approximately 750 landowners in Missouri. LF 4149).
Starting with the first of these items, appellants contend that cash is
not the type of asset which the General Assembly intended to include within
the definition of “electric plant.”
Instead, appellants contend that the list of items constituting electric
plant is intended to include only assets which will become part of the facility
itself. In other words, “electric plant” means what one would commonly
think of as “electric plant.” And cash does not fit within the type of assets
which are specifically enumerated by the General Assembly in defining the
term “electric plant”, as listed above.
In analyzing this issue, the maximum “noscitur a sociis” is directly on
point. That term is of course an aid in statutory construction, meaning that
words coupled together “are to be understood in the same general sense and
are to be regarded as of the same nature.” State ex rel. Crutcher v. Koeln, 61
S.W.2d 750, 754 (Mo banc 1933). See also Standard Operations, Inc. v.
Montague, 758 S.W.2d 442, 444 (Mo. banc 1988).
Here, cash is clearly not of the “same nature” as real estate, fixtures,
conduits, ducts or other devices, materials, and apparatus or property for
53
containing, holding or carrying conductors used for transmission of
electricity.
Although the term “personal property” is also included in the
definition of electric plant, the meaning of that term depends upon the
context in which it is used. See Kansas City Southern Railway Co. v.
Garvey, 592 S.W.2d 703, 705-06 (Mo banc 1980) (deciding whether or not
the term personal property means tangible personal property subject to ad
valorem taxation); Obetz v. Boatmen’s Nat. Bank, 234 S.W.2d 618, 623
(Mo. 1950) (debating whether the term personal property was used in a will
in its “limited and restricted sense”, or in the broad and general sense,
meaning everything except real estate); and State ex rel. Koeln v. Lesser, 141
S.W. 888 (Mo. 1911) (discussing whether for tax purposes the term
“personal property” did or did not include stock in companies not located in
Missouri).
The term personal property obviously does include cash in some
contexts, but that need not always be the case. The statute defining electric
plant is a perfect example of why the following warning was included in
Am. Jur. 2d Property, § 5:
54
Δ Caution. Where the term property is used in a context
indicating that only physical property is intended, the meaning
of the term is accordingly so limited.
The only sensible conclusion here is that “personal property”, as an
item of electric plant, was intended to encompass property such as
transmission cables and components of the steel support towers – items of
the same general nature as those expressly included in the statutory list of
items which constitute electric plant.
Furthermore, the inclusion of cash within the definition of electric
plant would lead to some rather strange results, no doubt beyond what the
General Assembly had in mind when deciding what qualifies as an electrical
corporation.
For instance, under the Commission’s definition of electric plant, a
$10 bill, being “personal property,” and which an individual intended to use
as a down-payment on a small back-up generator for that person’s home,
would in and of itself constitute “electric plant”. Yet that $10 bill certainly
does not square with the common understanding of that term.
And based upon the Commission’s theory, if the person owning that
$10 bill for the back-up generator agreed to sell emergency power to his or
her neighbor for say a share of the fuel cost, that individual would
55
automatically become an “electrical corporation” under the terms of §
386.020(15) -- even if the purchase of the generator was still in the planning
stage.
This in turn would make that unsuspecting individual subject
immediately to all of the Commission reporting requirements applicable to
electrical corporations. As just two of many examples, § 393.140(6) would
require that the individual file a detailed annual report of his or her utility
operations with the Commission. A113-14. See also Commission Rule 4
CSR 240-10.145, A118. And Commission Rule 4 CSR 240-3.175(1) would
further require that a detailed depreciation study be filed annually by that
individual with the Commission Staff and the Office of Public Counsel.
A119.
In both instances, there is no exemption from the filing requirement
for electrical corporations which are not even operational, or which plan at
some point to own only a single back-up electric generator to be shared with
a neighbor.
In addition, the new one-person electrical corporation would
presumably be subject to all other statutes not even in the Public Service
Commission Act which affect electric utilities – such as those dealing with
56
tax assessments. See, e.g., State ex rel. Kansas City Power & Light Co. v.
McBeth, 322 S.W.3d 525, 534 n.1 (Mo. banc 2010).
This logical extension of the Commission ruling on this issue is surely
not what the General Assembly had in mind when defining the term electric
plant. Consequently, the Commission’s decision also runs afoul of the
general rule that “statutes should be construed in such a way as to avoid
unreasonable, oppressive or absurd results.” Lincoln County Stone Co. v.
Koenig, 21 S.W.3d 142, 146 (Mo. App. 2000).
In Illinois, in order to qualify as a public utility the entity must own,
control, operate or manage “any plant, equipment or property” used or to be
used in connection with the provision of utility services. Illinois
Landowners Alliance v. Illinois Commerce Commission, 90 N.E. 3d 448,
459, par. 37 (IL 2017).
This list of assets is quite similar in nature to those which constitute
“electric plant” in Missouri. And significantly, the Illinois Supreme Court
referred to these categories of assets as “utility-related property or
equipment” – even though that term is not part of the definition itself. Id. at
42, par. 48. Cash certainly does not fit the description of “utility-related
property or equipment.”
57
In any event, in a unanimous decision the Illinois Supreme Court
found that the applicant owned none of the required assets, and thus did not
qualify as a public utility. Id. at 460, par. 40.9 Appellants submit that based
on comparable language in Missouri, in the normal sense of the word cash is
not “utility-related property or equipment”.
Based on that Illinois Supreme Court decision, an Illinois appellate
court then found that the Grain Belt line likewise did not qualify as a public
utility. Concerned Citizens and Property Owners v. Illinois Commerce
Commission, 112 N.E.3d 128 (Ill. App. 2018). As the Court noted, Grain
Belt did not own any “utility infrastructure assets”, as was required by the
Illinois Supreme Court decision regarding the Rock Island line. Id. at 134,
par. 16.
As is apparent, the Illinois courts assumed that the statutory definition
of “any plant, equipment or property” implicitly included only “utility
infrastructure assets” and “utility-related property and equipment.” And in
the ordinary sense of the word, “cash” does not fall within the meaning of
those terms.
9 Based on this conclusion, the Supreme Court found it was not necessary to
address the second basis for the decision by the appellate court. Illinois
Landowners Alliance v. Illinois Commerce Commission, supra, 90 N.E.3d at
463, par. 51.
58
Notably, the Grain Belt decision in Illinois makes no mention of any
contention by Grain Belt that money or cash qualified as “property” used in
providing utility service. Concerned Citizens, 112 N.E.3d 128, supra.
Obviously, Grain Belt decided against even making that argument in Illinois.
As to the 39 easements, they do not constitute electric plant in
Missouri for two reasons. First, Grain Belt clearly does not “own” the real
estate over which it holds these easements. Southern Star Central Gas
Pipeline v. Murray, 190 S.W.3d 423, 430 (Mo. App. 2006).
Therefore, the only issue is whether the Commission was correct in
finding that Grain Belt currently “controls” or “manages” the real estate on
which it holds those easements. A37; LF 4175.
The standard form easement agreement used by Grain Belt generally
gives it the right to build and repair the proposed transmission line, including
support structures, on the real estate for which it has the easement.
Specifically, “The Easement will be used for the transmission of electric
energy, whether existing now or in the future, in order to deliver electrical
energy and for all communication purposes related to delivering electrical
energy.” Exh. 113 Sch. DKL-4 par. 2b, LF Exh. Vol. 82, 5233. And see Id.
at LF Exh. Vol. 81, 5219.
59
Paragraph 4 of the easement only prohibits activities and the addition
of structures which would “interfere with Grain Belt’s use of the
easement….” Exh. 113 Sch. DKL-4, LF Exh. Vol. 82, 5234-35.
This provision reflects the general rule that landowners may erect
structures upon and use their real estate so long as they do not interfere with
the enjoyment of the easement by the easement holder. Tsevis v. J & F
Industries, 51 S.W.3d 91, 93 (Mo. App. 2001). See also Humpreys v.
Wooldridge, 408 S.W.3d 261, 267 (Mo. App. 2013) (holding that the
landowner “’retains the right of full dominion and use of the land affected by
the easement; he may control and use his property in any way that does not
substantially interfere with the reasonable use of the easement by the
easement holder.’”); and Corpus Juris Secundum, Easements, § 222 (stating
that “the servient estate’s owner retains the rights of full dominion and use
of the land except so far as a limitation thereof is essential to the reasonable
enjoyment of the dominant estate.”)
So theoretically, a landowner could build a new home today in the
middle of the right-of-way, and would not interfere with Grain Belt’s use of
the easement until Grain Belt actually begins construction of the line. There
is certainly no evidence in this case that the new home or any other activity
60
on the part of the landowner would interfere with Grain Belt’s use of its
easement prior to the start of construction.
Accordingly, at the present time Grain Belt has no right to control or
manage the real estate on which it has an easement, and will not be
authorized to control or manage that real estate until it actually begins to
construct the proposed transmission line. That being the case, at this point
Grain Belt does not “control” or “manage” any real estate which would
qualify as electric plant.
Mr. Zadlo seemed to suggest that construction of the line might begin
in another year or so. Tr. Vol. 22, 2046:3-8. But even that projection is
overly optimistic. Before it may begin construction, Grain Belt/Invenergy
must first secure all eight of the County Consents under § 229.100, which it
has not yet accomplished. LF 2861; 2811-15. And it must also secure major
permits and consents from additional state and federal agencies, such as the
Missouri Dept. of Transportation, the U.S. Fish and Wildlife Service, and
the Corps of Engineers. Tr. Vol. 22 1978-79; Exh. 115, LF Exh. Vol. 82,
5248-49.
Another impediment to the start of construction is that Grain
Belt/Invenergy must first secure the debt financing to build the project. Exh.
147 p. 3, LF Exh. Vol. 72, 4437. Before it can even secure such financing,
61
Invenergy will need to secure contracts with buyers of additional capacity on
its line, and will not begin construction until six to nine months after the
construction loan is secured. Exh. 146, LF Exh. Vol. 72, 442930 (as
corrected at Tr. Vol. 22, 2003:8-11.
Perhaps most significantly, before Grain Belt may build the project it
will need a certificate from the Illinois Commerce Commission. Tr. Vol. 22,
1930:21-24. Its first attempt to gain such approval took almost three years,
from the time it applied with the Commission until the matter was resolved
in court against Grain Belt. Concerned Citizens, supra, 112 N.E. 3d at 130.
There is no reason to believe Grain Belt or Invenergy will receive final
permission to build the line in any significantly shorter period of time after
they eventually file a new application in Illinois.
For the above reasons, any use of the real estate by the landowners
will not interfere with Grain Belt’s easement rights for at least another year –
and probably longer. Therefore, Grain Belt does not presently control or
manage the real estate, as would be required in order for the easements to
qualify as electric plant.
An additional problem regarding the easements is that according to
the terms of the Commission’s final Report and Order, Grain Belt’s
easements must incorporate a document referred to as the Missouri
62
Landowner Protocol. A35, par. 121; LF 4173. However, the 39 easements
relied upon by the Commission were secured before that final Report and
Order was issued, as evidenced by reference to those easements in that very
Report and Order. Thus those 39 easements did not incorporate the
Landowner Protocol, as required by the Commission in its final Report and
Order. (See Grain Belt’s standard form easement at the time, at Exh. 113
Sch. DKL-4, LF Exh. Vol. 82, 5233. That easement makes no mention of
the Landowner Protocol). Accordingly, Grain Belt’s 39 easements fail to
satisfy the mandates of the very Order granting the CCN to Grain Belt.
As described by the Commission, this Protocol “is a comprehensive
policy of how Grain Belt Express interacts, communicates, and negotiates
with affected landowners….” It includes a variety of provisions intended to
protect the landowners. A32-33; LF 4170-71. And according to the
Commission, the Protocol is one of the factors intended to mitigate any
negative impacts of the Grain Belt project on the land and landowners. A46;
LF 4184.
Moreover, Grain Belt’s CEO testified they would hire an appraisal
firm to perform “refreshed” county-wide market data studies to determine
the average per acre value in each county. These updated appraisals were to
63
become a part of the Protocol, which was to be incorporated into the
easement agreements with landowners. Exh. 100, LF Exh. Vol. 76, 4654.
The landowners who signed easements before this new appraisal was
performed obviously did not have the advantage of the new appraisals
promised by Grain Belt. Nor do their easements incorporate the terms of the
Landowner Protocol, which the Commission intended as an added protection
for the landowners. LF 4184.
Because the existing 39 easements are not in compliance with the
Commission’s final Report and Order, they should be deemed unenforceable
at this point by Grain Belt against the landowners granting those easements.
Accordingly, those landowners should be perfectly within their rights in
simply ignoring any request by Grain Belt based on any of the 39 easements
which fail to conform to the Commission’s Order.
Section 393.170.3 authorizes the Commission to impose such
conditions “as it may deem reasonable and necessary” when issuing a CCN.
A101. It makes little sense to say that having exercised that statutory
authority, an easement which fails to comply with a Commission-imposed
condition is just as effective as one which does comply. This is particularly
true in light of the purpose which that condition was intended to serve.
64
Moreover, Grain Belt voluntarily agreed to the condition that the
Landowner Protocol be incorporated “into the easement agreements with
landowners.” A35, par. 121; LF 4173. Grain Belt did not agree to
incorporate the Protocol into some but not all of the easement agreements.
Having agreed to that condition, Grain Belt should not now be allowed to
argue that its agreement means something other than what it says.
After the final Report and Order was issued, Grain Belt could
conceivably attempt to incorporate the Landowner Protocol into the 39
easements relied upon by the Commission. Even if they did so, however, at
the moment the Commission issued its final Order those easements failed to
satisfy a key condition imposed by the Commission. Accordingly, at that
point (which is the only point that matters) the 39 easements did not qualify
as electric plant.
Appellants have found no case law dealing with the legal
repercussions of a Commission condition imposed in a CCN Order. But
given that the 39 easements do not conform to Grain Belt’s own agreement,
or to the lawful conditions of the Commission’s final Order, they should not
be allowed to validate the very Order which they violate.
Grain Belt may certainly purchase whatever real estate or easements it
desires, and may lawfully build its proposed line in Missouri just as other
65
construction projects are typically built in this state. Grain Belt has cited no
law which would preclude it from doing so. Appellants’ point is that the
Commission has no statutory authority to assist Grain Belt in this process by
granting it the CCN.
For the foregoing reasons, when the Commission issued its final
Report and Order on March 20, 2019, Grain Belt did not own, operate,
control or manage any property falling within the definition of “electric
plant”. Therefore, Grain Belt does not qualify as an electrical corporation,
and cannot be issued a CCN pursuant to § 393.170.
This issue was preserved for appellate review.10 Show Me has argued
from the outset that Grain Belt is not an electrical corporation, and therefore
does not qualify for a CCN. See Statement of Position, filed with the
Commission just prior to the evidentiary hearings, LF 1344; and Initial
Brief to the Commission, LF 1959, 1962-67. Pursuant to Section 386.500
RSMo and 4 CSR 240-2.160, Appellants Show Me and Christina Reichert
also preserved this argument in their Joint Application for Rehearing with
the Commission. See A133-135; A136-137; LF 4246 et seq. Similarly,
pursuant to Section 386.500 RSMo and 4 CSR 240-2.160, Appellant
10 This subject is addressed here in conformance with Rule 84.04(e).
66
Missouri Farm Bureau preserved this argument in its Application for
Rehearing to the Commission. See A133-135; A136-137; LF 4254, et seq.
As a final note on this matter, in the initial Report and Order in this
case the Commission rejected Grain Belt’s application for the CCN. See
A6; LF 4144. Thus, at that point, the appellants had prevailed completely
in the Commission case. Accordingly, there was no logical reason for
appellants to appeal that decision on the ground it is raising here or on any
other ground.
In fact, according to the Commission, a party may not lawfully file an
appeal from a Commission case in which it prevailed. (See Motion to
Dismiss Notice of Appeal, October 20, 2017, filed in case ED106023,
which was later consolidated with ED105932.)11
But even if appellants could have raised the jurisdictional issue in the
initial appeal, but did not do so, that fact would be of no consequence in this
current appeal. The issue of subject matter jurisdiction may be raised for
the first time on appeal. AMG Franchises, Inc. v. Crack Team USA, 289
S.W.3d 655, 659 (Mo. App. 2009). In fact, a party is allowed on appeal to
challenge the subject matter jurisdiction of the Commission even if that
11 As this Court has stated, “we take judicial notice of our own records.”
Snyder v. State, 288 S.W.3d 301, 304 n.1 (Mo. App. 2009).
67
issue was not raised in its Application for Rehearing at the Commission.
Big River Telephone Co. v. Southwestern Bell Telephone Company, 440
S.W.3d 503, 509-10 (Mo. App. 2014). Accordingly, the jurisdictional issue
would be subject to review on this appeal even if it had not been made an
issue in the Commission proceedings below.
CONCLUSION
The Commission is firmly convinced that we are in the midst of a
worldwide, long-term movement to renewable energy. LF 4185. But
regardless of how accurate or laudable that view might be, in reaching its
decision on the Grain Belt line the Commission was nevertheless bound by
this fundamental rule of law: “Neither convenience, expediency or necessity
are proper matters for consideration in the determination of whether or not
an act of the commission is authorized by statute.” State ex rel. Mo. Cable
Telecomms. Ass’n v. Mo. Pub. Serv. Comm’n, 929 S.W.2d 768, 772 (Mo.
App. 1996) (internal quotation marks omitted).
Thus, however well-intentioned and expedient the issuance of the
CCN may have been, and however valuable the Commission thought the
Grain Belt project would be, its decision must be reversed by the Court if it
was not authorized by statute.
68
And authorized, it was not. To begin with, Grain Belt is not subject to
the entire purview of state statutes governing the regulation of electric
utilities. In addition, its rates will be established by special contracts with
individual customers, set ultimately on terms negotiated by Grain Belt.
Accordingly, respondents respectfully submit that under state Supreme
Court precedent, this Court has no choice but to find that Grain Belt does not
fall within the definition of an “electrical corporation.”
In addition, Grain Belt does not presently own, operate, control or
manage any item of “electric plant”. Therefore, it does not qualify as an
electrical corporation under §§ 386.020(14) and (15).
Because Grain Belt is not an electrical corporation, the Commission
did not have the jurisdiction or statutory authority under § 393.170 to issue
the CCN to Grain Belt for construction of the proposed line.
Accordingly, the appellants respectfully ask the Court to reverse the
Commission’s Final Report and Order on Remand, issued March 20, 2019,
and to remand the case to the Commission for further action in accordance
with the Court’s decision.
Respectfully submitted,
/s/ Paul A. Agathen
Paul A. Agathen
69
MO Bar No. 24756
485 Oak Field Ct.
Washington, MO 63090
636-980-6404 [email protected]
Attorney for
Show Me and Christina Reichert
AND
/s/ Brent E. Haden
Brent E. Haden, Mo. Bar No. 54148
827 E. Broadway, Suite B
P.O. Box 7166
Columbia, MO 65201
(573) 442-3535
(888) 632-7775 (fax) [email protected] HADEN & HADEN
Attorney for
Missouri Farm Bureau
70
CERTIFICATE OF COMPLIANCE WITH RULE 84.06(c)
I certify pursuant to Rule 84.06(c) that this brief includes the information
required by Rule 55.03 (except that counsel for Show Me and Christina
Reichert does not have a facsimile number), and complies with the
limitations contained in Rule 84.06(b). I further certify that this brief
contains 12,171 words in total, as determined by the word count feature of
Microsoft Word.
/s/ Paul A. Agathen
Paul A. Agathen
/s/ Brent E. Haden
Brent E. Haden
CERTIFICATE OF SERVICE
I hereby certify that on this 12th day of August, 2019, the foregoing Brief
and accompanying Appendix were filed electronically with the Clerk of the
Eastern District of the Missouri Court of Appeals, to be served by operation
of the Court’s electronic filing system pursuant to Missouri Supreme Court
Rule 103.8.
/s/ Paul A. Agathen
Paul A. Agathen
/s/ Brent E. Haden
Brent E. Haden