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Clayton water main break closes part of Hanley Road

A worker from Missouri American Water moves a traffic sign while work continues to close a water main break on South Hanley Road at Carondelet in Clayton on Tuesday, Nov. 11, 2014. Photo by Robert Cohen, rcohen@post-dispatch.com

CLAYTON • Among other attributes, St. Louis County boasts of its standing as the only jurisdiction in Missouri with a population exceeding 1 million people.

But it isn’t entirely accurate.

According to U.S. Census figures, 998,954 men, women and children called St. Louis County home in 2010.

The shortfall of 1,046 residents is at the crux of a recent finding by a three-judge panel on the Western District of the Missouri Court of Appeals in Kansas City.

The court said Missouri-American Water Company cannot collect an infrastructure surcharge from its St. Louis County customers because the statute that allows public utilities to pass along such costs only applies in first-class charter counties with more than 1 million residents.

Numerous Missouri laws have been crafted to pertain only to counties with more than a million residents.

For decades, St. Louis County was the only political subdivision above that threshold. Now that it isn’t, the validity of some statutes is being challenged.

And Missouri-American may be the first to feel the sting.

Population is a measurement also found in legislative formulas that generate tax revenue to fund school districts and other publicly supported institutions.

The use of population to draft legislation describing a class of cities or counties grew out of Missouri court decisions that said statutes applying to a single political subdivision were unconstitutional.

Locally, population enters into equations funding the St. Louis Metropolitan Taxi Commission, the distribution of local hotel and motel sales taxes, and the county’s Tax Increment Financing Commission.

State statutes connected to population also allow public utilities to take steps — within a predetermined range of cost — to install water mains, electrical lines and other service equipment.

The scope of population-specific statutes in Missouri caused Appellate Judge Gary Witt to note in the March 8 decree, “… We accept that this ruling has wide reaching consequences.”

Creating uncertainty

Critics may disagree with the conclusion reached by the appeals court.

But they agree with Witt’s observation on its ramifications.

“We think the decision creates uncertainty for jobs and investment in Missouri,” said Ann Dettmer, a spokeswoman for the Missouri-American Water Company.

St. Louis County Counselor Peter Krane is more circumspect.

“One case, one law” will not “nullify” other statutes that apply solely to St. Louis County by virtue of the number of people residing within its borders, Krane said.

“It won’t change anything we do,” Krane added, noting that the appeals court did not call into question the constitutionality of population-centered statutes.

Dettmer said Missouri-American will nonetheless seek a “rehearing” of the facts in the case. The water company has not ruled out an appeal to the Missouri Supreme Court if the appeals division reaffirms the original decision.

A spokesman for the Public Service Commission said the agency does not comment on pending litigation.

The Missouri Office of Public Counsel challenged a Public Service Commission decision to uphold a Missouri-American Water Company “Infrastructure System Replacement Surcharge,” prompting the appellate court to weigh in on the matter.

At face value

Water main break in Ballwin

Crews from Missouri American Water repair a water main break at the intersection of Manchester Road and Manchester Meadows in Ballwin on Friday, Jan. 25, 2013. Photo by Erik M. Lunsford elunsford@post-dispatch.com

State legislation passed in 2003 and amended several times since allows public utilities, such as Missouri-American Water, to use population as a parameter to “charge additional customer rates to recoup the cost of infrastructure improvements.”

“It allows us to replace aging water mains proactively — in a more cost effective manner than repairing damaging breaks only as they happen,” Dettmer explained.

The company since 2003, she said, has invested $445 million in improvements to water distribution and hydrant upgrades across St. Louis County.

Missouri-American with the blessing of the Public Service Commission was proceeding under the assumption that the surcharge it hoped to assess county residents for 2014-15 infrastructure upgrades was still applicable when the Office of Public Counsel objected.

The public counsel is a consumer protection agency focused on public utility rates.

Acting Director James Owen said the Missouri-American project drew the attention of the agency because the amount the water company hoped to recover from customers — $27.5 million — exceeded the 10 percent “cap” permitted by a statute that applies only to a county with a population in excess of a million residents.

The appellate court last week concurred with the public counsel’s assessment.

“The statute here very clearly only applies to charter counties with over one million people,” Owen said in an email. “That is the amount the Legislature placed in the law.”

The spokesman labeled the ruling “a win” for St. Louis County ratepayers who “will not be forced to pay (Missouri-American) more money than the law requires.”

But Dettmer said that in accepting the census data at face value, the Office of Public Counsel — and by extension the appellate court — willfully ignored overseas military personnel and additional residents who for many reasons missed the 2010 government count.

Dick Burke, the executive director of the Missouri Association of Counties, said the Western District ruling is “on our radar.”

The association, Burke said, is tracking pending state legislation aimed at addressing a key objection raised by Missouri-American Water.

According to Dettmer, jurisdictions and utilities have always operated under the premise of “once-in-always-in.”

In other words, they expect a “consistent application” of the statutes once a population benchmark is established by the Legislature.

A pending bill sponsored by state Sen. Jay Wasson, R-Christian County, would prevent the judicial branch from raising or lowering population criteria.

“A subsequent change in population shall not remove the city, county, or political subdivision from the operation of (a population-based) law,” reads the Wasson proposal.

Burke said Wednesday that the association of counties supports the legislation “for not only St. Louis County but also many other laws that might potentially be impacted by this decision.”

Dettmer says governmental jurisdictions and utilities will be subjected to an undue burden, without passage of the Wasson bill or an appellate court turnabout.

It “forces counties, schools, fire and ambulance districts to revisit the population statutes every ten years,” the Missouri-American spokeswoman said.

Owen begs to differ.

The acting director of the Office of Public Counsel contends the appellate court “made the right decision.”

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