In the 

Missouri Court of Appeals 

Western District

STAFF OF THE MISSOURI PUBLIC 

SERVICE COMMISSION,

Respondent,

v.

CONSOLIDATED PUBLIC WATER 

SUPPLY DISTRICT C-1 OF 

JEFFERSON COUNTY, MISSOURI,

Appellant.

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WD78507

OPINION FILED:

November 17, 2015

Appeal from the Public Service Commission

Before Division One: Anthony Rex Gabbert, Presiding Judge, Victor C. Howard, Judge 

and Cynthia L. Martin, Judge

Consolidated Public Water Supply District C-1 of Jefferson County, Missouri 

("CPWSD") appeals from the Public Service Commission's ("Commission") report and 

order ("Report and Order") which concluded that CPWSD and the City of Pevely

("Pevely") violated section 247.1721by failing to submit to the Commission for approval

a written contract addressing the provision of water services, and which ordered CPWSD 

 

1All statutory references are to RSMo 2000 as supplemented unless otherwise indicated. Section 247.172 

was last amended in 2007. 
2

and Pevely to submit a territorial agreement to the Commission for approval. CPWSD 

argues that section 247.172 did not apply to its agreement with Pevely, and that in any 

event, the Commission lacked jurisdiction and statutory authority to determine whether 

the agreement violated section 247.172 and to order CPWSD and Pevely to submit a

territorial agreement for Commission approval. 

Because the Commission has no statutory authority to determine whether an 

agreement between a public water supply district and a municipally owned utility is 

unlawful and has no authority to order a public water supply district and a municipally 

owned utility to submit an agreement regarding the provision of water services to the

Commission for approval, the Report and Order was entered in excess of the 

Commission's authority and is vacated. 

Factual and Procedural Background 

CPWSD is a public water supply district formed pursuant to Chapter 247 for the 

purpose of supplying potable water to residents within its boundaries.2 CPWSD's 

boundaries are located within Jefferson County. 

Pevely is a city of the fourth class located in Jefferson County. Pevely provides its 

residents potable water as a municipal service. Pevely's municipal boundaries are located 

entirely within Jefferson County. 

 

2

Section 247.010 provides, in part, that the provisions of Chapter 247 "are intended to make possible, 

through public corporations, conveniences in the use of water, ample in quantity for all needful purposes and pure 

and wholesome in quality, furnished from common sources of supply to many inhabitants of our state now denied 

such privileges." 
3

Pevely annexed unincorporated land into its municipal boundaries in or around 

2006. As a result of this, and of earlier annexations, portions of Pevely's municipal 

boundaries overlap with portions of CPWSD's water service boundaries. 

In 2006, CPWSD filed suit in Jefferson County, seeking to enjoin Pevely from 

providing water services to those areas where the two entities' boundaries overlap. On 

November 12, 2007, CPWSD and Pevely entered into a contract titled "Territorial 

Agreement Between the Consolidated Public Water Supply District No. C-1 of Jefferson 

County, Missouri, and the City of Pevely, Missouri" ("Territorial Agreement"). The 

stated purpose of the Territorial Agreement was to resolve CPWSD's lawsuit by serving 

as "a permanent determination as to which party shall provide water service to the areas 

specifically described in [the Territorial] Agreement." The Territorial Agreement stated 

the parties' intent "not [to] be in competition with each other for the purposes of 

providing water service." 

The Territorial Agreement authorized Pevely to continue providing water service 

to "Hunters Glen subdivision, Tiara at the Abbey subdivision, and Vinyards at Bushberg 

subdivision." For all other areas where Pevely's boundaries overlapped with CPWSD's 

boundaries, Pevely "agree[d] to cease all plans to extend water service within the current 

geographic boundaries of [CPWSD]." According to the Territorial Agreement, "[a]ny 

future development which is within corporate boundaries of both [Pevely] and [CPWSD], 

including the development presently known as Valle Creek Condominiums, shall be 

served by [CPWSD] unless the rights to serve such development are assigned in writing 
4

to [Pevely] by [CPWSD]." (Emphasis added.) CPWSD and Pevely agreed that "all other 

territory within [CPWSD's] boundaries shall remain the exclusive territory of [CPWSD]." 

Although the Territorial Agreement identified Valle Creek Condominiums as an

area where CPWSD would provide water service, the property was not yet connected to 

CPWSD's water mains.

3

 The property was connected to Pevely's water mains. On June 

30, 2008, CPWSD entered into an agreement ("Main Extension Agreement") with H and 

H Development Company, the developer of Valle Creek Condominiums ("Developer"). 

The Main Extension Agreement provided that the Developer would pay to connect Valle 

Creek Condominiums to CPWSD's water main. The Main Extension Agreement 

contemplated that in the interim, Valle Creek Condominiums would receive water service 

from Pevely, though that service would be metered by CPWSD. Though Pevely was not 

a party to the Main Extension Agreement, Pevely verbally agreed to continue to provide

water service to Valle Creek Condominiums to permit the Developer time to connect to 

CPWSD's water main. Pursuant to the Main Extension Agreement and the verbal 

agreement, the Developer received monthly bills for water service from CPWSD, and 

CPWSD reimbursed Pevely semiannually for the water provided by Pevely. 

The Main Extension Agreement required the Developer to connect to CPWSD's 

water main by February 1, 2009, or failing that, to reach an acceptable agreement with

CPWSD by March 1, 2009, to complete the project in some other manner. In the absence 

of timely connection or an alternative agreement, the Main Extension Agreement 

 

3According to the record, undeveloped land was annexed into Pevely in or around 2006 at the owner's 

urging prior to development of the Valle Creek Condominiums on that land. Thus, the undeveloped property 

appears not to have required water service from CPWSD prior to its annexation into Pevely. 
5

provided that "the water service line from Pevely's water main [would] be terminated on 

that date[, CPWSD's] water meters will be removed, and the Developer will make other 

provisions to legally serve Valle Creek Condominiums customers at that time." 

The Developer did not connect to CPWSD's water main by February 1, 2009, and 

no alternative agreement was reached with CPWSD by March 1, 2009. CPWSD did not, 

however, remove its water meters, and Pevely did not take any immediate action to 

discontinue performance of the verbal agreement reached with CPWSD. 

That changed on August 28, 2012, when Pevely accused CPWSD of being in

violation of the Territorial Agreement because CPWSD had failed either to extend its 

service to Valle Creek Condominiums or to notify Pevely of its inability to do so. Pevely 

advised that it would be removing CPWSD's meters from the Valle Creek Condominiums 

and installing its own meters to enable direct billing of the Developer for the provision of 

water services. In October 2012, Pevely removed CPWSD's meters from the Valle Creek 

Condominiums. 

On November 1, 2012, CPWSD filed suit against Pevely in Jefferson County, 

alleging breach of the verbal agreement to provide temporary service to Valle Creek 

Condominiums metered by CPWSD.

4

 In April 2013, CPWSD removed Pevely's meters

and reinstalled its own meters. Thereafter, CPWSD once again billed Valle Creek 

Condominiums directly for water service, even though the water continued to be 

provided through Pevely's water main. CPWSD also sent a letter to John Holborow 

 

4This lawsuit was later dismissed without prejudice. 
6

("Holborow"), the court-appointed receiver for the Developer,5demanding that the work 

contemplated by the Main Extension Agreement be complete within 180 days or water 

service would be terminated. 

Holborow contacted the Commission. In a letter to the Commission, Holborow 

expressed his concerns: 

Does [CPWSD] have the right to cut service as long as all the bills are 

being paid[?] Is ther [sic] precedent or a law in place to block this? 

As the receiver I am charged with protecting, preserving and managing the 

asset. What do I need to do to prevent [CPWSD] from disconnecting the 

water service? Is there a dispute or claim we can file to prevent this form 

[sic] occurring? 

Obviously, there is no developer and no promise of a future developer at 

this point, and there is no money to install the pipe as [CPWSD] want[s] us 

to do.

In investigating Holborow's letter, the Staff of the Missouri Public Service Commission 

("PSC Staff") learned about the Territorial Agreement which had never been submitted to 

the Commission for approval. 

The PSC Staff filed a complaint with the Commission against CPWSD and Pevely 

on July 19, 2013. The complaint alleged that the Territorial Agreement was subject to 

the requirements of section 247.172, and that CPWSD and Pevely violated the statute by 

failing to submit the Territorial Agreement to the Commission for approval. The 

complaint sought declarations to that effect and the imposition of penalties. CPWSD and 

Pevely filed a joint motion to dismiss the complaint for lack of jurisdiction, which the 

Commission denied. Following an evidentiary hearing and briefing from the parties, the 

 

5The Developer defaulted on loans secured by the Valle Creek Condominiums and was placed into courtsupervised receivership in August 2012. 
7

Commission issued its Report and Order. The Report and Order declared CPWSD and 

Pevely to have violated section 247.172; ordered CPWSD and Pevely to "submit a 

territorial agreement for Commission approval no later than February 27, 2015;" and 

directed PSC Staff to notify the Commission "so that the Commission may consider 

further action" should CPWSD and Pevely fail to do so. Pevely filed a notice of its 

intention to comply with the Report and Order, but CPWSD filed an application for 

rehearing. The Commission denied CPWSD's request for rehearing. 

CPWSD appeals.

Standard of Review

When considering a challenge to an order by the Commission, we presume the 

Commission's order was valid so that the appellant has the burden of proving the order's 

invalidity. Big River Tel. Co. v. Sw. Bell Tel. Co., 440 S.W.3d 503, 508 (Mo. App. W.D. 

2014). Appellate review of an order by the Commission requires consideration of a twoprong test: (1) whether the Commission's order was lawful; and (2) whether the 

Commission's order was reasonable. In re Verified Application & Petition of Liberty 

Energy Corp., 464 S.W.3d 520, 524 (Mo. banc 2015). We do not reach the issue of 

reasonableness of the Commission's order unless we conclude that the order was lawful. 

Id. "The lawfulness of the [Commission's] order is determined by whether statutory 

authority for its issuance exists, and all legal issues are reviewed de novo." Id. The 

Commission's order is deemed reasonable if it "(1) is supported by competent and 

substantial evidence upon the whole record; (2) is not arbitrary or capricious; and (3) 
8

does not constitute an abuse of the PSC's discretion." Big River Tel. Co., 440 S.W.3d at 

508-09. 

Analysis

CPWSD asserts four points on appeal. Points one and two argue that section 

247.172 does not apply to the Territorial Agreement because the statute only applies to an 

agreement to displace competition involving the provision of water services outside a 

water service provider's geographic boundaries, and even then, only when a water 

corporation subject to regulation by the Commission is a party to the agreement. Points

three and four argue that even assuming the Territorial Agreement was within the 

intended scope of section 247.172, the Commission was nonetheless without jurisdiction 

or statutory authority to entertain the PSC Staff's complaint under either section 247.172

or section 386.390.

Because discussion of the Commission's statutory authority is dispositive of this 

appeal, we first address points three and four. In addressing the merits of these points,

we assume arguendo, without deciding, that the Territorial Agreement is a territorial 

agreement subject to the provisions of section 247.172. 

The Commission's Limited Authority To Approve Territorial Agreements Does Not 

Extend to Declaring or Remediating Violations of Section 247.172.4

In its third point relied on, CPWSD asserts that neither section 247.172 nor section 

386.190 grants the Commission statutory authority to determine whether the Territorial 

Agreement was unlawful because it had not been approved by the Commission, or to 

order CPWSD and Pevely to submit "a territorial agreement" for Commission approval. 
9

According to CPWSD, section 247.172 extends no authority to the Commission to hear 

complaints about territorial agreements that were not first approved by the Commission, 

and neither CPWSD nor Pevely is a "corporation" as that term is used in section 

386.390.1, a statute which addresses the Commission's authority to hear complaints. In 

its fourth point relied on, CPWSD argues that if the Territorial Agreement was within the 

scope of section 247.172 (the subject of points one and two on appeal), the failure to 

secure Commission approval of the Territorial Agreement as a condition of its 

effectiveness rendered the agreement void ab initio, leaving the Commission with no 

authority to entertain a complaint about the Territorial Agreement, or to order CPWSD 

and Pevely to submit some other territorial agreement for approval. Both points require 

us to address the extent of the Commission's statutory authority over the regulation of 

municipally owned utilities and public water supply districts. 

As a creature of statute, the Commission "only has the power granted to it by the 

Legislature and may only act in a manner directed by the Legislature or otherwise 

authorized by necessary or reasonable implication." Evans v. Empire Dist. Elec. Co., 346 

S.W.3d 313, 318 (Mo. App. W.D. 2011). "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." City of O'Fallon v. Union Elec. Co., 462 S.W.3d 

438, 442 (Mo. App. W.D. 2015). "If a power is not granted to the Commission by 

Missouri statute, then the Commission does not have that power." Id.

The Commission's statutory authority is primarily expressed in Chapters 386 and

393. Though provisions within Chapters 386 and 393 have purported to grant the 
10

Commission the authority to regulate and control municipalities in their manufacture, 

distribution, supply, and transmission of utilities, and in fixing the rates to be charged 

therefor, the Supreme Court long ago declared that the Commission does not have this 

power. See Forest City v. City of Oregon, 569 S.W.2d 330, 332-33 (Mo. App. 1978)

(citing City of Columbia v. State Pub. Serv. Comm'n, 43 S.W.2d 813 (Mo. 1913); State ex 

rel. Union Elec. Light & Power Co. v. Pub. Serv. Comm'n, 62 S.W.2d 742 (Mo. 1933); 

State ex rel. City of Sikeston v. Pub. Serv. Comm'n, 82 S.W.2d 105 (Mo. 1935)). The 

Supreme Court's rationale extends by logical implication to public water supply districts, 

which are "municipal corporations" in the broad sense of the word. See State ex rel. 

Halferty v. Kansas City Power & Light Co., 145 S.W.2d 116, 122 (Mo. 1940) (holding 

that a public water supply district is a "'municipal corporation' in the broad sense 

sometimes attributed to that term"). Thus, although section 386.250(3) provides that the 

Commission's "jurisdiction, supervision, powers and duties" extends "[t]o all water 

corporations," "water corporations" do not include municipally owned utilities or public 

water supply districts either expressly or by reasonable implication. See Forest City, 569 

S.W.2d at 332-33. 

Although the Commission's statutory authority is primarily addressed in Chapters 

386 and 393, there are other statutes which provide the Commission with additional 

limited authority. One such statute is section 247.172. 

Section 247.172 appears in Chapter 247, a chapter addressing public water supply 

districts. Section 247.172.1 provides:
11

Competition to sell and distribute water, as between and among public 

water supply districts, water corporations subject to public service 

commission jurisdiction, and municipally owned utilities6 may be displaced 

by written territorial agreements, but only to the extent hereinafter provided 

for in this section.

Section 247.172.2 requires territorial agreements to:

[S]pecifically designate the boundaries of the water service area of each 

water supplier subject to the agreement, any and all powers granted to a 

public water supply district by a municipality, pursuant to the agreement, to 

operate within the corporate boundaries of that municipality, 

notwithstanding the provisions of sections 247.010 to 247.670 to the 

contrary, and any and all powers granted to a municipally owned utility, 

pursuant to the agreement, to operate in areas beyond the corporate 

municipal boundaries of its municipality.

Section 247.172 thus generally recognizes that under certain circumstances, water service 

providers can enter into territorial agreements to "displace competition"7 with respect to 

the provision of water service to particular geographic areas. 

Though water service providers are not required to enter into section 247.172 

territorial agreements, should they mutually consent to do so, the Commission is granted 

limited authority over the agreements in three circumstances:

Section 247.172.3 provides that "[w]here the parties cannot agree upon the 

boundaries of the water service areas that are to be set forth in the 

 

6CPWSD's second point relied on argues that the Commission has no authority over territorial agreements 

unless a water corporation subject to the Commission's jurisdiction is a party to the agreement. In other words, 

CPWSD argues that an agreement between only a public water supply district and a municipally owned utility can 

never fall within the scope of section 247.172.1. This argument is problematic, however, given section 247.172.6, 

which provides that a Commission-approved territorial agreement will not "affect or diminish the rights and duties 

of any water supplier not a party to the agreement," including "any water corporation which is . . . subject to the 

jurisdiction, control and regulation of the [C]ommission." Section 247.172.6 appears to contemplate territorial 

agreements without a regulated water corporation as a party. Because we resolve this case on the basis of the 

Commission's lack of statutory authority, we need not further address CPWSD's argument that section 247.172 

applies only to territorial agreements where a regulated water corporation is a party to the agreement. 

7CPWSD's first point relied on argues that displacement of competition as referred to in section 247.172 

occurs only where a water service provider wants to provide service outside its legal boundaries. Because we 

resolve this case on the basis of the Commission's lack of statutory authority, we need not further address CPWSD's 

argument. 
12

[territorial] agreement, they may, by mutual consent of all parties 

involved, petition the public service commission to designate the 

boundaries of the water service areas to be served by each party." 

(Emphasis added.) In such a case, the Commission will consider the 

petition using procedures applicable to the issuance of a certificate of 

convenience and necessity, and must determine whether its designated 

water service areas are "in the public interest."

Section 247.172.4 provides that "[b]efore becoming effective, all territorial 

agreements entered into under the provisions of this section, including 

any subsequent amendments to such agreements, . . . shall receive the 

approval of the public service commission by report and order." 

(Emphasis added.) In such a case the Commission will consider an 

application for approval using procedures applicable to the issuance of a 

certificate of convenience and necessity. And the Commission may 

approve an application submitted pursuant to section 247.172.4 if the 

mutually agreed water service areas are "not detrimental to the public 

interest." Section 247.172.5.

Section 247.172.7 provides that "[t]he commission shall have jurisdiction to 

entertain and hear complaints involving any commission-approved 

territorial agreement. . . . If the commission determines that a territorial 

agreement that is the subject of a complaint is no longer in the public 

interest, it shall have the authority to suspend or revoke the territorial 

agreement. If the commission determines that the territorial agreement is 

still in the public interest, such territorial agreement shall remain in force 

and effect. Except as provided in this section, nothing in this section shall 

be construed as otherwise conferring upon the commission jurisdiction over 

the service, rates, financing, accounting, or management of any public 

water supply district or municipally owned utility, or to amend, modify, or 

otherwise limit the rights of public water supply districts to provide service 

as otherwise provided by law." (Emphasis added.) 

In summary, these provisions extend authority to the Commission in three discrete 

scenarios: (1) where competing water service providers want to enter into a territorial 

agreement to displace competition but cannot agree on water service areas, they can

mutually consent to permitting the Commission to determine their water service areas;

(section 247.172.3); (2) where competing water service providers mutually agreed upon 
13

a territorial agreement, they must submit the agreement to the Commission for approval

as a condition of the agreement's effectiveness (section 247.172.4); and (3) to entertain 

complaints to determine whether a commission-approved territorial agreement (i.e., a 

territorial agreement generated pursuant to section 247.172.3 or approved pursuant to 

sections 247.172.4 and .5) remains in the public interest (section 247.172.7). 

These discrete scenarios are not implicated by the present case.

8

 First, Pevely and 

CPWSD have not mutually consented to submit determination of their water service areas 

to the Commission pursuant to section 247.172.3. Second, the Territorial Agreement was

never submitted to the Commission for its approval, a condition of its effectiveness

pursuant to section 247.172.4. And third, as a result, there is no "commission-approved 

territorial agreement" over which the Commission has jurisdiction to hear a complaint to 

determine whether the agreement remains in the public interest. Section 247.172.7. 

Instead, in its Report and Order, the Commission declared that CPWSD and 

Pevely violated section 247.172.4 by failing to submit the Territorial Agreement to the 

Commission for approval. This holding necessarily required the Commission to 

determine that the Territorial Agreement fell within the scope of section 247.172. In 

addition, the Commission ordered CPWSD and Pevely to submit "a territorial agreement" 

for approval, or to face other consequences, presumably an order that was intended to 

address Holborow's concerns about CPWSD's threatened termination of water service to 

the Valle Creek Condominiums. As we explain, infra, the Commission did not have the 

 

8Again, in addressing the Commission's statutory authority to entertain the PSC Staff's complaint, we are 

assuming without deciding that the Territorial Agreement is the type of agreement contemplated by section 274.172, 

the subject of CPWSD's first and second points on appeal.
14

statutory authority, expressly or by reasonable implication, to entertain the PSC Staff's 

complaint or to enter this Report and Order. Evans, 346 S.W.3d at 318. (holding that the 

Commission "only has the power granted to it by the Legislature and may only act in a 

manner directed by the Legislature or otherwise authorized by necessary or reasonable 

implication"); City of O'Fallon, 462 S.W.3d at 442 ("If a power is not granted to the 

Commission by Missouri statute, then the Commission does not have that power.”). 

(i) The Commission Did Not Have the Statutory Authority Pursuant to 

Section 247.172, Expressly or by Reasonable Implication, To Entertain the 

PSC Staff's Complaint Requesting a Declaration that CPWSD and Pevely 

Violated Section 247.172.4

The PSC Staff's complaint giving rise to the Report and Order sought a declaration 

from the Commission that the Territorial Agreement violated section 247.172.4. As 

noted, section 247.172.7 addresses the Commission's jurisdiction to hear complaints, and 

is expressly limited to "complaints involving any commission-approved territorial 

agreement," and even then, to determining whether "commission-approved territorial 

agreements" remain in the public interest. (Emphasis added.) By its plain terms, section 

247.172.7 does not extend authority to the Commission to entertain complaints regarding 

territorial agreements that were never approved by the Commission. And section 

247.172.7 does not extend authority to the Commission to declare that an agreement 

between water service providers is an unlawful territorial agreement because it required 

Commission approval pursuant to section 247.172.4.

Nor can it be said that the Commission is afforded these powers by "reasonable 

implication." Evans, 346 S.W.3d at 318. Section 247.172.7 expressly provides that 
15

"[e]xcept as provided in this section, nothing in this section shall be construed as 

otherwise conferring upon the commission jurisdiction over the service, rates, 

financing, accounting, or management of any public water supply district or municipally 

owned utility, or to amend, modify, or otherwise limit the rights of public water supply 

districts to provide service as otherwise required by law." (Emphasis added.) 

Perhaps mindful of the restraint on its authority plainly expressed in section 

247.172.7, the Commission does not rely on that provision to claim authority to entertain 

the PSC Staff's complaint. Instead, the Commission's Report and Order concluded that 

section 247.172.9 granted it the authority to entertain the PSC Staff's complaint. We 

disagree. 

Section 247.172.9 provides: "Notwithstanding any other provisions of this section, 

the commission may hold a hearing regarding any application, complaint or petition filed 

under this section upon its own motion." The Commission contends that this section 

authorizes it to file applications, complaints or petitions under section 247.172 on its own 

motion. The Commission is mistaken. Section 247.172.9 does not authorize the 

Commission to file applications, complaints, or petitions on its own motion. Rather,

section 247.172.9 authorizes the Commission to "hold a hearing" on its own motion 

regarding applications, petitions, or complaints that are properly filed pursuant to section 

247.172. That authority is expressed "notwithstanding any other provisions of" section 

247.172 in recognition of the fact that sections 247.172.5 and .7 authorize the parties to 

an application, complaint, or petition to waive a hearing before the Commission by 

agreement. Section 247.172.9 simply empowers the Commission to require a hearing, on 
16

its own motion, even if the parties to an application, complaint, or petition filed pursuant 

to section 247.172 have waived a hearing.

Even if we interpreted section 247.172.9 as urged by the Commission, which we 

do not, the Commission would remain limited in its authority to entertaining applications, 

complaints, or petitions addressing the matters expressed in section 247.172: (i) 

determining water service areas for water service providers who wish to cede the 

authority for this decision to the Commission by mutual consent; (ii) determining whether 

to approve a mutually agreed upon territorial agreement is in the public interest; and (iii) 

determining whether a Commission-approved territorial agreement remains in the public 

interest. The PSC Staff's complaint9did not ask the Commission to act consistent with 

this authority. Rather, the PSC Staff's complaint asked the Commission to declare that

the Territorial Agreement was a section 247.172 "territorial agreement," and if so, to 

declare the agreement unlawful because it was not first submitted to the Commission for 

approval and to impose penalties accordingly. Section 247.172.9 does not extend this 

authority to the Commission no matter how it is construed.

 

9Assuming arguendo that section 247.172.9 affords the Commission the authority to file section 247.172 

applications, complaints, or petitions "upon its own motion," (a construction of the statute that we reject), the 

Commission has delegated its authority to file matters on its behalf to the PSC Staff by regulation. See 4 CSR 240-

2.070(1).
17

(ii) The Commission Did Not Have the Statutory Authority Pursuant to 

Section 386.390.1, Expressly or by Reasonable Implication, To Entertain the 

PSC Staff's Complaint Requesting a Declaration that CPWSD and Pevely 

Violated Section 247.172.4

The Commission's Report and Order alternatively concludes that section 

386.390.1 provided the Commission with the authority to entertain the PSC Staff's 

complaint. We disagree. 

Section 386.390.1 allows the Commission to hear complaints filed against "any 

corporation, person or public utility . . . in violation, or claimed to be in violation, of any 

provision of law." The Commission notes that section 386.020(11) defines "corporation" 

as "a corporation, company, association and joint stock association or company." The 

Commission argues that Pevely and CPWSD are "corporations" because section 79.010 

designates a city of the fourth class like Pevely as a "body corporate" and because section 

247.020 classifies public water supply districts such as CPWSD as a "political

corporation." The Commission thus argues that section 386.390.1 afforded it authority 

because the PSC Staff's complaint alleged that "corporations" violated a law--section 

247.172.

We have already explained, however, that the provisions of Chapters 386 and 393 

cannot be read or construed to grant the Commission the authority to regulate the 

provision of water services by municipally owned utilities or public water supply 

districts. See Forest City, 569 S.W.2d at 332-33 (citing City of Columbia, 43 S.W.2d 

813; State ex rel. Union Electric Light & Power Co., 62 S.W.2d 742; State ex rel. City of 

Sikeston, 82 S.W.2d 105); see also Love 1979 Partners v. Pub. Serv. Comn'n, 715 
18

S.W.2d 482, 489 (Mo. banc 1986) ("The legislature, in it [sic] wisdom, has given the 

Commission jurisdiction only over investor-owned utilities, and has specifically 

exempted public agencies . . . ."). The Commission's urged construction of the term 

"corporation" as used in section 386.190.1 would operate in direct contravention of 

settled Missouri Supreme Court precedent. 

It is thus immaterial that the statutory definition of "corporation" is so broad as to

technically include within its scope a "body corporate" or a "political corporation." 

Municipal utilities are simply not within the regulation of Chapters 386 and 393 

regardless the breadth of the statutory definition of "corporation." City of Columbia, 43 

S.W.2d at 817 (holding that municipal corporations are not included within the scope of 

legislature's definition of "corporation"). 

Lending emphasis to our conclusion is section 247.172 itself. Section 274.172 

was first enacted in 1991. As noted, section 247.172.1 applies to territorial agreements as 

between and among competing "public water supply districts, water corporations subject 

to public service commission jurisdiction, and municipally owned utilities." (Emphasis 

added.) It would have been unnecessary for the legislature to differentiate between water 

service providers in this fashion if public water supply districts and municipally owned 

utilities were "corporations," and thus "water corporations," subject to the Commission's 

jurisdiction.10 To construe "corporation" in the manner urged by the Commission would 

 

10Section 386.020(43) defines "public utility" to include, in pertinent part, "every . . . water corporation . . . 

and each thereof is hereby declared to be a public utility and to be subject to the jurisdiction, control and regulation 

of the commission and to the provisions of this chapter." Section 386.020(59) defines "water corporation" in 

pertinent part as "every corporation . . . owning, operating, controlling or managing any plant or property, dam or 

water supply, canal, or power station, distributing or selling for distribution, or selling or supplying for gain any 
19

render the referenced language in section 247.172.1 meaningless and superfluous, a 

construction we will not entertain. Am. Nat'l Prop. & Cas. Co. v. Ensz & Jester, P.C., 

358 S.W.3d 75, 85 (Mo. App. W.D. 2011) (holding that if possible, we avoid construing 

a statute in a manner that will render a portion of its language meaningless (citing In re 

Estate of Hough, 457 S.W.2d 687, 692 (Mo. 1970))). 

In addition, section 386.390.1 also differentiates between "corporations" and 

municipal entities. Section 386.390.1 describes who can file a complaint with the 

Commission, listing the Commission of its own motion, or "public counsel or any 

corporation or . . . any body politic or municipal corporation." Section 386.390.1 goes 

on to describe against whom complaints can be filed, listing "any corporation, person or 

public utility, in violation, or claimed to be in violation of, any provision of law . . . ." 

(Emphasis added.) By differentiating between "corporations" and "body politics and 

municipal corporations" in describing who can initiate complaints, while naming only 

"corporations" in describing against whom complaints can be filed, the legislature 

evidenced its understanding that municipal corporations are not included within the 

statutory definition of "corporation."

Undeterred, the Commission argues that in State ex rel. Ozark Border Electric Coop v. Public Service Commission, 924 S.W.2d 597 (Mo. App. W.D. 1996), this court 

"found no problem in the Commission hearing a complaint against a municipal 

corporation . . . under the term "any corporation" in section 386.390." [Respondent's 

 

water." As noted, "corporation" is defined by section 386.020(11) as "a corporation, company, association and joint 

stock association or company." 
20

Brief, p. 34] The Commission's reading of Ozark Border is in error. That case involved 

a territorial agreement displacing competition for the provision of electric service 

pursuant to section 394.312, a statute nearly identical to section 247.172, though 

addressing electric service and not water service. Unlike the instant case, the mutually 

agreed upon territorial agreement in Ozark Border had been submitted to the Commission 

for approval by the parties; one of the parties to the agreement was a regulated electric 

corporation; and the territorial agreement had been determined by the Commission to be 

in the public interest. 924 S.W.2d at 599. One year later, an electric cooperative who

was not a party to the Commission-approved territorial agreement filed a complaint with 

the Commission claiming the agreement was no longer in the public interest. Id. The 

Commission dismissed the complaint deeming it to be in excess of the Commission's 

jurisdiction because: (i) there was no violation of a law alleged as required by section 

386.390.1; and (ii) the complaint raised issues that did not go to whether the 

Commission-approved territorial agreement remained in the public interest. Id. On 

appeal, this court affirmed. Id. at 599-601. Ozark Border did not hold that a municipal 

corporation is subject to the Commission's jurisdiction pursuant to section 386.390.1 any 

time the municipal corporation is alleged to have violated a law. In fact, Ozark Border

was not required to address over whom the Commission can exercise authority pursuant 

to section 386.390.1 because the essential predicate for the exercise of authority under 

that statute--a complaint alleging violation of a law--was not established. Id. If anything, 

Ozark Border underscores the limited nature of the Commission's statutory authority 

under section 274.172. Ozark Border agreed that the Commission can only hear 
21

complaints pursuant to section 394.312.6 about Commission-approved territorial 

agreements, and even then, only if the complaint alleges a change in circumstances that 

calls into question whether the approved agreement remains in the public interest. Id.

In short, we conclude that section 386.390.1 afforded the Commission no authority 

to entertain the PSC Staff's complaint or to enter the Report and Order.

(iii) CPWSD's Purported Violation of Section 247.172.4 Must Be Determined 

and Remediated by a Court

Our conclusion does not leave a purported violation of section 274.172.4 without 

recourse. Rather, that recourse must be sought in a court of competent jurisdiction. 

Section 247.172 is but one in a series of provisions in Chapter 247 addressing 

permissive means for lawfully divesting a public water supply district of its obligation to 

provide water service to territory within its legal boundaries. See, e.g., section 247.031 

(permitting the owners or residents of territory in a public water supply district that is not 

being served by the district to petition to detach the territory from the district); section 

247.160.1 (providing that if territory in a public water supply district is "included by 

annexation within the corporate limits of a municipality," the district can enter into a 

contract with the municipality to "operat[e] the waterworks system within such annexed 

area," or to sell its water works infrastructure within the annexed area to the municipality 

and thus detach and exclude the annexed territory from the boundary of the district); 

sections 247.165.1 and .2 (providing that if territory in a public water supply district is 

"included by annexation within the corporate limits of a municipality," and the annexed 

territory "is not receiving water service from such district or such municipality at the time 
22

of such annexation," the district and the municipality can enter into an agreement 

regarding the provision of water service to the annexed territory, and/or the detachment 

of the annexed area from the district); section 247.170.1 (providing that if a "city owning 

a waterworks or water supply system" annexes land within a public water supply district, 

and the city and the district cannot reach an agreement or are otherwise "unable to 

proceed under section 247.160," the city can seek to have the annexed land "detached and 

excluded" from the district by putting the matter to a public vote). Each of these 

permissive means for addressing overlapping geographic territory requires approval in 

one form or another. See section 247.031.1 (requiring circuit court approval); section 

247.160.2 (requiring circuit court approval); sections 247.165.1 and .2 (requiring circuit 

court approval); section 247.170.1 (requiring a public vote).

Section 247.172 territorial agreements represent another permissive means by 

which the provision of water services can be addressed by mutual agreement between 

water service providers, albeit an agreement that does not go so far as to permanently 

detach territory from the boundaries of a water service provider or so far as to sell a 

portion of a water service provider's waterworks system to another water service 

provider.

11

 And just as is the case with the permissive procedures specified in the statutes 

referenced above, a section 247.172 territorial agreement must be approved as a condition 

of its effectiveness, albeit by the Commission, (sections 247.172.3, .4, and .5), a 

 

11Once again, we understand that CPWSD's first and second points on appeal challenge whether section 

274.172 applies to agreements entered into solely between a public water supply district and a municipally owned 

utility. Because we otherwise hold that even assuming the Territorial Agreement was a section 247.172 territorial 

agreement, the Commission had no authority to entertain the PSC Staff's complaint or to issue its Report and Order, 

we need not resolve these questions. 
23

legislative nod, no doubt, to the Commission's demonstrated experience in determining 

whether a utility service area is in the public interest through its certificate of 

convenience and necessity procedures.

In short, pursuant to Chapter 247, a public water supply district and a municipally 

owned utility have no power to privately contract to alter the public water supply 

district's statutory obligation to provide water service to all of the territory within its 

geographic boundaries unless the contract comports with one of the statutory procedures 

described in Chapter 247.12 In fact, it is settled law that unless a statutory means for 

relieving a public water supply district of its right to provide water service within its 

territory is successfully pursued, a municipality has no authority to provide water within 

the geographic boundaries of the district, and the public water supply district remains 

obligated and entitled to provide water service throughout its territory. See Pub. Water 

Supply Dist. No. 1 of Butler Cnty. v. City of Poplar Bluff, 12 S.W.3d 741, 745-46 (Mo. 

App. S.D. 1999) (holding that in order to provide water service in annexed areas within a 

public water supply district, a municipality must first comply with either section 247.160 

or section 247.170 (citing Pub. Water Supply Dist. No. 16 v. City of Buckner, 951 S.W.2d 

743, 744-45 (Mo. App. W.D. 1997); Pub. Water Supply Dist. No. 10 of Cass County v. 

City of Peculiar, 971 S.W.2d 849, 854-55 (Mo. App. W.D. 1998))); Mathison v. Public 

Water Supply Dist. No. 2 of Jackson Cnty., 401 S.W.2d 424, 431 (Mo. 1966) (holding 

 

12Compare City of Harrisonville v. Public Water Supply Dist. No. 9 of Cass County, 49 S.W.3d 225 (Mo. 

App. W.D. 2001), which interpreted a contract between a public water district and a city that had annexed land in 

the district without discussing whether the contact comported with one of the provisions of Chapter 247. Notably, 

the contract at issue in that case was entered into in 1974. Sections 247.160 and .170 were first enacted in 1949. 

Section 247.031 was first enacted in 1988. Section 247.172 was first enacted in 1991. Section 247.165 was first 

enacted in 2000. 
24

that section 247.010's statement of Chapter 247's purpose reflects that "the legislature did 

not intend that both [a] city and [a public water supply] district distribute water in the 

same area at the same time"). Thus, when a public water supply district is first formed, it 

can include within its legal territory "cities that do not have a waterworks system." 

Section 247.030.1. However, after a public water supply district is formed, 

municipalities with or without a waterworks systems that annex land within the district's 

boundaries cannot displace the district's authority to provide water to the annexed land

absent compliance with one of the provisions for doing so set forth in Chapter 247. 

Here, a court must determine whether the Territorial Agreement lawfully relieved 

CWPSD of its obligation to provide water service throughout its territory by ceding some 

of that authority to Pevely. That inquiry will not only require a court to determine 

whether the Territorial Agreement is a section 247.172 "territorial agreement" but will as 

well require a court to determine whether the agreement otherwise qualifies (or attempts 

to qualify) as a lawful transaction pursuant to other provisions of Chapter 247.13 In fact, 

in this case, CPWSD argued that the Territorial Agreement was a section 247.165 

agreement and not a section 247.172 territorial agreement. The Commission considered 

and rejected this contention though it plainly had no statutory authority to do so. That the

Commission was required to consider CPWSD's contention underscores the fact that the 

Commission lacks the statutory authority, either expressly or by reasonable implication, 

 

13The record is silent with respect to whether the Territorial Agreement, which was entered into to settle a 

lawsuit filed by CPWSD against Pevely in 2006, was approved by the court in substantial compliance with section 

247.160 or section 247.165. 
25

to determine whether a public water supply district and a municipality have unlawfully 

contracted to address the provision of water services. 

Further underscoring this point is the fact that only a court can remediate the legal 

ramifications of an unlawful contract between a public water supply district and a 

municipally owned utility addressing the provision of water services. The Commission 

"cannot 'enforce, construe nor annul' contracts, nor can it enter a money judgment." 

Wilshire Constr. Co. v. Union Elec. Co., 463 S.W.2d 903, 905 (Mo. 1971) (quoting May 

Dep't Stores Co. v. Union Elec. Light & Power Co., 107 S.W.2d 41, 49 (Mo. 1937)). 

"Likewise, the Commission does not have the authority to do equity or grant equitable 

relief." State ex rel. GS Techs. Operating Co. v. Pub. Serv. Comm'n, 116 S.W.3d 680, 

696 (Mo. App. W.D. 2003) (citing Am. Petroleum Exch. v. Pub. Serv. Comm'n, 172 

S.W.2d 952, 955 (Mo. 1943)). Moreover, if a contract is determined to be a section 

247.172 territorial agreement which required, but did not receive, the Commission's 

approval as a condition of its effectiveness, then the agreement is void ab initio and not 

merely voidable. See, e.g., Thies v. St. Louis Cnty., 402 S.W.2d 376, 380 (Mo. 1966) 

(holding that contract involving public entity that does not comply with statutory 

requirements for its formation is void ab initio and cannot be later rendered valid despite 

performance); Kindred v. City of Smithville, 292 S.W.3d 420, 424 (Mo. App. W.D. 2009) 

(holding that contract with municipality that does not comply, or substantially comply,

with statutory requirements that are conditions to its effectiveness is void ab initio and 

not merely voidable). In such a circumstance, neither a court nor the Commission would 
26

have the authority to retroactively approve the void territorial agreement or to 

retroactively legitimize its unlawful performance. Thies, 402 S.W.2d at 380. 

In this case, a court must determine whether the Territorial Agreement, the Main 

Extension Agreement, and the corresponding verbal agreement between CPWSD and 

Pevely unlawfully delegated some of CPWSD's statutory water service obligations to 

Pevely. And a court must redress Holborow's complaint that CPWSD is improvidently 

relying on one or more of the aforesaid agreements to threaten termination of water 

service to Valle Creek Condominiums despite the property's timely payment of its water 

bills.14 

In summary, and for the reasons herein explained, the Commission had no 

statutory authority to entertain the PSC Staff's complaint, or to issue its Report and Order 

finding, as alleged by the complaint, that CPWSD and Pevely violated section 247.172 by 

failing to submit the Territorial Agreement to the Commission for approval as a condition 

of its effectiveness. 

(iv) The Commission Did Not Have the Statutory Authority, Expressly or by 

Reasonable Implication, To Order CPWSD and Pevely To Submit a 

Territorial Agreement for Commission Approval

The Commission's Report and Order also ordered CPWSD and Pevely to submit 

"a territorial agreement" to the Commission for its approval or to face other recourse by 

the Commission. On appeal, the Commission makes no attempt to defend this order, 

which plainly exceeded the Commission's statutory authority. We have already 

 

14We express no opinion about the applicability of section 247.031 to this scenario, a statute which permits, 

in certain circumstances, the detachment of property from the geographic boundaries of a public water supply 

district if the property is not being provided water service by the district. 
27

explained that section 247.172 does not require competing water service providers to 

enter into a territorial agreement. It certainly does not grant the Commission the 

authority to order them to do so.15 The Commission's order directing CPWSD and 

Pevely to submit "a territorial agreement" for the Commission's approval or to face other 

recourse by the Commission is unlawful as it exceeds the Commission's statutory 

authority. 

CPWSD's third and fourth points on appeal are granted. Our disposition of points 

three and four renders any further discussion of CPWSD's first and second points on 

appeal unnecessary. 

Conclusion

The Commission's Report and Order is vacated as it was entered in excess of the 

Commission's statutory authority. 

__________________________________

Cynthia L. Martin, Judge

All concur

 

15The Commission points out in its Brief that the Report and Order did not order CPWSD and Pevely to 

perform the 2007 Territorial Agreement or to submit same to the Commission for retroactive approval. For the 

reasons herein explained, the Commission would not have had the authority to do so.