Sunday, April 5, 2015

Earth Island Institute v. Union Electric Company

Opinion issued
February 10, 2015

Link to the Supreme Court of Missouri Opinion

Earth Island Institute[i] appealed the Public Service Commission’s (“Commission”) determination that RSMo 393.1050, a statute exempting electric utilities from solar energy requirements that meet certain renewable energy targets, was not invalidated by the subsequent passage of a ballot initiative, “Proposition C”, that imposed solar energy requirements on all electric utilities.[ii]  Union Electric Company argued, and the Commission agreed, that the two provisions could be harmonized.[iii]  The Court disagreed, finding a direct conflict between section 393.1050 and Proposition C as to solar energy requirements and Proposition C controls over the statute enacted between its approval for circulation and its passage.[iv]  The Court ultimately held the exemption created under section 393.1050 was repealed by the passage of Proposition C.[v]

I. Facts and Holding

On February 4, 2008, the Secretary of State approved a ballot initiative, proposition C, which proposed a statutory renewable energy standard for utility companies operating in Missouri.[vi]  Proposition C included two specific provisions relevant to solar energy codified in Section 393.1030.[vii]   Section 393.1030.1 imposed a “solar carve out” described as a portfolio requirement that all electric utilities generate or purchase electricity generated from renewable energy resources of which at least two percent of each portfolio requirement shall come from solar energy.[viii]  Section 393.1030.3 mandated a solar rebate, whereby each electric utility shall make available a rebate offer for new or expanded solar electric systems on customers’ premises.[ix] 

In May 2008, Proposition C was certified for placement on the 2008 general election ballot, but before it could be voted on the General Assembly passed Senate Bill No. 1181, codified as section 393.1050.[x]  SB 1181 stated that “notwithstanding any other provision of law” an electrical company is exempt from any solar carve out or solar rebate if the company achieves “an amount of eligible renewable energy . . . capacity equal to or greater than fifteen percent of such corporation’s total owned fossil-fired generating capacity.”[xi]

Empire District Electric Company was the sole electric utility that claimed eligibility for the solar carve out or rebate exemption in section 393.1050.[xii]  Renew Missouri thereafter filed a complaint against Empire with the Commission.[xiii]  Renew Missouri argued that Empire could not claim the section 393.1050 exemption because: (1) section 393.1050 is invalid in that the legislature lacked authority to enact legislation amending Proposition C while it was pending but before it had been voted on;[xiv] (2) section 393.1050 conflicts with Proposition C, and as the later enacted law, Proposition C impliedly repealed section 393.1050;[xv] (3) no rational basis existed for exempting Empire, but no other electrical companies, from the solar requirement because section 393.1050 constitutes a special law that violates article III, section 40 of the Missouri Constitution.[xvi]

The Commission determined that: (1) the pendency of Proposition C did not preclude the legislature from passing related legislation;[xvii] (2) The two laws could be harmonized, meaning Proposition C did not impliedly repeal section 393.1050;[xviii] and (3) section 393.1050 is not a special law.[xix]

The Court affirmed the Commission’s determination that the legislature had authority to pass related legislation in section 393.1050, but found that the two laws could not be harmonized.[xx]  The Court found that section 393.1050 was impliedly repealed by the adoption of Proposition C because it conflicted with the latter law.[xxi]  Because the Court resolved the first two issues, the third issue of special laws became moot and was not addressed.[xxii] 

Judge Fischer filed a separate dissenting opinion.[xxiii] He dissented with majority opinion that, in his view, gave special treatment to a statute enacted by initiative petition over a statute enacted by the General Assembly.[xxiv]  Judge Fischer argued that there is no text in the Missouri Constitution or historical support for the idea that initiative legislation should receive preferential treatment above representative legislation.[xxv]  Judge Fischer would affirm the Commission’s order.[xxvi] 

II. Legal Background

A. Conflicts Between Proposition C and Section 393.1050

The main point of contention in Earth Island Institute is whether or not Proposition C and section 393.1050 conflict irreconcilably.  State ex rel. City of Jennings v. Riley[xxvii] helps shed some light on the issue.  The Court in Riley identified conflict between two statutes as “a precondition to the application of the principles of statutory construction.”[xxviii]  South Metro. Fire Prot. Dist. v. City of Lee’s Summit[xxix] expounded on the issue and found that “when two statutory provisions covering the same subject matter are unambiguous standing separately but are in conflict when examined together, a reviewing court must attempt to harmonize them and give them both effect.”[xxx]
B. Legislative Procedure

Since the Court was unable to harmonize the two statutes, they looked to legislative procedure.  The Court previously rejected a similar attempt to negate in advance the effect of a referendum ordered by the people in State ex rel. Drain v. Becker.[xxxi]  In Drain, the Court considered a situation where a proposed referendum was pending, but before it was voted on by the people, the legislature purported to repeal the legislation that was the subject of the referendum and to enact a new statute that retained the essential terms of the former legislation.[xxxii]  The legislature then argued that the new statute could take effect regardless of what the people voted on.[xxxiii] Drain rejected the legislature’s attempt, with the Court holding that once the right of referendum is invoked, the legislature loses all power until the people exercise their vote.[xxxiv]  Drain’s holding shows preemptive legislation cannot negate a constitutional right of the people.  

III. Comment

The Supreme Court of Missouri was incorrect in reversing the Commission’s decision.  The two statutes share a common goal of promoting renewable energy and therefore can be harmonized over that shared objective. 

In addition, the power of the people to legislate by initiative is on equal footing with the General Assembly’s power to legislate.  Therefore, one form of legislation should not be favored over another.  In favoring imitative legislation over representative legislation, the Court creates a special rule, giving initiative legislation precedence over representative legislation.

The Court not only creates a special rule that is unfair to representative legislation, but does so with no authority from the Missouri Constitution.  No such limitation of legislative power appears in the Missouri Constitution either expressly or implied.

In the end, the laws proposed and enacted by the people are subject to the same constitutional limitations as other statutes and may be amended by the General Assembly at will, therefore sections 393.1030 (Proposition C) and 393.1050 should both be given the same legal effect and the Commission’s order should have been affirmed.

-Cole T. Cameron

[i] Earth Island Institute, along with additional parties, are doing business as Renew Missouri. 2015 WL 546067 (Mo. 2015) (en banc).
[ii] Id.
[iii] Id.
[iv] Id.
[v] Id.
[vi] Id. at 2.
[vii] Id.
[viii] Id.
[ix] Id.
[x] Id.
[xi] Id.
[xii] Id.
[xiii] Id.
[xiv] Id. 
[xv] Id.  
[xvi] Id.
[xvii] Id. at 3.
[xviii] Id.
[xix] Id.
[xx] Id.
[xxi] Id.
[xxii] Id.
[xxiii] Earth Island Institute v. Union Electric Company, 2015 WL 546067 (Mo. 2015) (en banc) (Fischer, J., dissenting).
[xxiv] Id. at 8.
[xxv] Id.
[xxvi] Id.
[xxviii] Id.
[xxx] Id.
[xxxii] Id.
[xxxiv] Id.