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WD Court of Appeals ruling spells trouble for local statutes

Missouri has a constitutional prohibition against “special legislation” – legislation that applies to only one person or entity. But Missouri legislators still enact legislation that pertains to a particular city or county. How do they do it?

Historically, legislation drafters have used the population of a particular city or county as a way to target legislation to one particular city or county.  This is done profusely in tax statutes. The theory is the legislation is not really “special legislation” if another city or county can “grow into” the description. However, as the Western District Court of Appeals noted in Missouri American Water v Office of Public Counsel, this legislative description must also exclude cities or counties that no longer fit the description.

In this case, St. Louis County is described in Section 393.1003.1, RSMo, a statute allowing Missouri American Water Company to have an Infrastructure System Replacement Surcharge, or ISRS, as a “county …with more than one million inhabitants.” While St. Louis County met that threshold in 2003 according to the 2000 census, the 2010 census updated St. Louis County population to 998,954. The ISRS allows a utility company to be reimbursed through rates for improvements made to the system’s infrastructure without a full rate case.

In this case, Missouri American Water Company argued because the statute was passed in 2003 and contained language that preceded the population description that read, “as of August 28, 2003,” the description of St. Louis County should remain intact.

Conversely, the Office of Public Counsel argued the water company had no authority to file an ISRS petition because they were no longer subject to the section that authorizes the ISRS.

The Western District Court of Appeals held that a legislative description must allow entities to qualify, and conversely no longer qualify, as a member of a class.  In other words, while additional counties could “grow into” the description, counties may also no longer qualify if their population is reduced. To hold otherwise, the Court said, would be to declare the statute unconstitutional as “special legislation.” The Court found the PSC had no authority to grant the water company the ISRS.

This case may be appealed, but if left standing will draw into question any other statutes that have narrowly described a particular city or county by population. This would include many tax and regulatory statutes. If the particular city no longer qualifies under the statute, they may no longer receive the benefit of the statute.

We will continue to monitor this situation and report back to you on progress.

You may read the case here.

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