Title: State ex rel. Praxair, Inc. v. Mo. Pub. Serv. Comm'n
Citation: N/A
Docket Number: SC91322
State: Missouri
Issuer: Missouri Supreme Court
Date: July 19, 2011

SUPREME COURT OF MISSOURI 
en banc 
 
STATE ex rel. PRAXAIR, INC., AG  
) 
PROCESSING, INC., A COOPERATIVE, 
) 
and SEDALIA INDUSTRIAL ENERGY 
) 
USERS’ ASSOCIATION, 
 
 
 
) 
 
 
 
 
 
 
 
) 
 
 
Appellants,  
 
 
) 
 
 
 
 
 
 
 
) 
OFFICE OF THE PUBLIC COUNSEL, 
) 
No. SC91322 
 
 
 
 
 
 
 
) 
 
 
Appellant, 
 
 
 
) 
 
 
 
 
 
 
 
) 
v. 
 
 
 
 
 
 
) 
 
 
 
 
 
 
 
) 
MISSOURI PUBLIC SERVICE 
 
 
)  
COMMISSION, GREAT PLAINS  
 
) 
ENERGY, KCP&L, KCP&L GREATER 
) 
MISSOURI OPERATIONS CO., 
 
) 
 
 
 
 
 
 
 
) 
 
 
Respondents. 
 
 
) 
 
Appeal from Circuit Court of Cole County 
Honorable Jon E. Beetem, Judge 
 
 
Opinion issued July 19, 2011 
 
 
 
 
 
 
 
 
 
 
 
 
 
Praxair, Inc., AG Processing, Inc., a cooperative, and Sedalia Industrial Energy 
Users’ Association (for convenience, collectively “Praxair”) appeal the Public Service 
Commission’s (PSC’s) approval of Great Plains Energy, Inc.’s acquisition of Aquila, 
Inc., a Missouri utility company.  Praxair argues that the PSC improperly failed to 
consider Great Plains’ allegedly inadequate gift policy, a policy that, Praxair asserts, 
should have caused the merger to be rejected. Further, Praxair argues that the regulatory 
law judge erred in precluding Praxair from making an offer of proof as to Great Plains’ 
gift policy, as it prevents this Court from considering whether the gift policy was relevant 
and material to the merger decision. 
While the Court agrees that section 536.070(7)1 gives the regulatory law judge the 
discretion to preclude a testimonial offer of proof when, as here, he finds the offered 
evidence to be “wholly irrelevant,” he erred in failing to allow a written offer of proof to 
be made as to Great Plains’ gift policy. Were such an offer of proof not permitted, the 
decision to exclude evidence as “wholly irrelevant” itself would be wholly unreviewable 
by the courts, and, therefore, would violate article V, section 18 of the Missouri 
Constitution and section 386.510, both of which provide for judicial review of PSC 
decisions.  Here, however, this Court directed the parties to file a written offer of proof 
and any response thereto directly in this Court.  The Court finds that while the evidence 
as to Great Plains’ gift policy should have been admitted, its exclusion was not 
prejudicial as the gift policy could not have substantially impacted the weight of the 
evidence evaluated to approve the merger.    
The Office of Public Counsel separately appeals the denial of its motion to dismiss 
the application for approval of the merger.  Public Counsel argues that the PSC decision 
cannot stand because certain of the PSC commissioners who heard the merger application 
had been subject to inappropriate ex parte contact with executives from Great Plains at 
various meetings held approximately three months prior to the filing of the application 
for approval of this merger.  He argues that this created an appearance of impropriety and 
that an appearance of impropriety creates a basis for recusal under the Code of Judicial 
Conduct.  Public Counsel argues that the Code of Judicial Conduct applies to PSC 
commissioners just as much as it applies to judges and that this Court should hold that it 
was improper for the commissioners to decide the merger question.  
This Court agrees that a failure to recuse after ex parte meetings concerning 
specific cases that are to be filed before the PSC creates an appearance of impropriety 
and that the appearance of impropriety is a basis for recusal under the Code of Judicial 
Conduct.  But, although the PSC commissioners act in a quasi-judicial capacity, they are 
not judges, but members of the executive branch of government.  The Code of Judicial 
Conduct does not govern their actions.  Due process considerations nonetheless require 
an impartial arbiter. Public Counsel does not suggest that the ex parte meetings resulted 
in actual bias, however, and presented no evidence that could support a finding of actual 
bias.  Moreover, the record is clear that those involved believed that the contacts were not 
inappropriate and did not require recusal where no case had yet been filed.  Public 
Counsel has not overcome the presumption that the PSC acted impartially. 
The judgment is affirmed. 
I. 
FACTUAL AND PROCEDURAL BACKGROUND 
In late January 2007, a series of four or five meetings were held between members 
of the PSC and executives of Great Plains and the Kansas City Power and Light 
Company (KCPL), a subsidiary of Great Plains.  Each meeting was held with just one or 
two commissioners attending, although ultimately, all five of the then-serving 
                                                                                                                                                 
 
1 All statutory references are to RSMo 2000 unless otherwise indicated. 
 
3
commissioners were present for at least one meeting.  Two of the three commissioners 
who ultimately decided this case participated in these meetings.  No notice was given to 
the public or to Public Counsel about these meetings, which were intended to allow the 
utility executives to notify the commissioners of the contemplated transaction and 
preview issues that would be raised by the impending joint application.  Those involved 
believed that such meetings were not improper because until a proceeding was filed with 
the PSC, there was no ongoing case and, therefore, no prohibition against ex parte 
discussions. 
On February 7, 2007, Great Plains and Aquila announced the planned merger.  On 
April 4, 2007, Great Plains, KCPL and Aquila filed a joint application with the PSC 
requesting authority for a series of transactions by which Great Plains would acquire the 
stock of Aquila and operate Aquila as a separate, wholly-owned subsidiary.  If approval 
were granted, Aquila and KCPL both would operate as subsidiaries of Great Plains. 
Praxair intervened.  Evidentiary hearings at the PSC began on December 3, 2007, 
but were halted at the request of Great Plains, KCPL and Aquila.  Thereafter, one 
commissioner who had been present for at least one of the pre-filing meetings recused 
himself.  On December 13, 2007, Public Counsel filed a motion to dismiss on the grounds 
that three of the remaining four commissioners then hearing the case had been present at 
one or more pre-filing meetings and should have recused themselves because of the 
alleged impropriety of those meetings.  The PSC denied the motion on January 2, 2008. 
The evidentiary hearings resumed on April 21, 2008 and, in non-consecutive 
sessions, concluded on June 11, 2008.  Also in April 2008, Great Plains, KCPL and 
 
4
Aquila filed a motion to limit the scope of the proceedings.  Among other things, they 
sought to preclude any evidence as to their gift and gratuity policies. 
On April 24, 2008, the regulatory law judge who acted as presiding officer at the 
hearing ruled that evidence as to the gift and gratuity policies would be excluded.2  He 
further found that the evidence was “wholly irrelevant” to the merger because the PSC 
does not dictate gift policies of utilities it regulates and, on that basis, precluded the 
parties from making an offer of proof as to the excluded gift and gratuities policy 
evidence.   
On July 1, 2008, the PSC, with only three commissioners participating, issued its 
285-page report and order approving the merger by a 2-1 vote.  Two commissioners, only 
one of whom was present at a pre-filing meeting, voted to approve the merger.  One 
commissioner, who also had been present at a pre-filing meeting, voted against approval.  
Praxair and Public Counsel timely filed applications for rehearing.  On July 14, 2008, the 
July 1, 2008, report and order became effective.3  On August 5, 2008 the PSC denied all 
pending applications for rehearing.   
Petitions for writs of review were filed in Cole County circuit court by Praxair and 
Public Counsel.  After briefing and argument, the circuit court issued its judgment 
affirming the order.  Praxair and the Public Counsel appealed.  After opinion by the court 
of appeals, this Court granted transfer.  Mo. Const. art. V, § 10.  
                                             
 
2 Section 386.240 permits the PSC to delegate rulings on the admissibility of evidence to 
a presiding officer who acts as a regulatory law judge. 
3 Because of the approval of the acquisition of Aquila, Great Plains now holds both 
KCPL and Aquila, which it has renamed “KCPL Greater Missouri Operations.” 
 
5
II. 
STANDARD OF REVIEW  
 
This Court reviews the decision of the PSC rather than that of the circuit court.  
Environmental Utilities, LLC v. Public Serv. Comm’n, 219 S.W.3d 256, 263 (Mo. App. 
2007).  Under section 386.510, “the appellate standard of review of a PSC order is two-
pronged: ‘first, the reviewing court must determine whether the PSC’s order is lawful; 
and second, the court must determine whether the order is reasonable.’”  State ex rel. AG 
processing, Inc. v. Public Serv. Comm’n, 120 S.W.3d 732, 734 (Mo. banc 2003), quoting, 
State ex rel. Atmos Energy Corp. v. Public Serv. Comm’n, 103 S.W.3d 753, 759 (Mo. 
banc 2003).   “The burden of proof is upon the appellant to show that the order or 
decision of the PSC is unlawful or unreasonable.”  AG Processing, 120 S.W.3d at 734.  
The lawfulness of an order is determined “by whether statutory authority for its issuance 
exists, and all legal issues are reviewed de novo.”  Id.  “The decision of the [PSC] is 
reasonable where the order is supported by substantial, competent evidence on the whole 
record; the decision is not arbitrary or capricious or where the [PSC] has not abused its 
discretion.”  Environmental Utilities, 219 S.W.3d at 265. 
III. 
PARTIES ARE ENTITLED TO MAKE A WRITTEN OFFER OF 
PROOF EVEN AS TO EVIDENCE EXCLUDED AS “WHOLLY 
IRRELEVANT”  
  
Great Plains and Aquila are regulated utilities that, under section 393.190.1, must 
obtain approval from the PSC for their proposed merger.  As noted, there are two 
components to this review, lawfulness and reasonableness.  Praxair contends on appeal 
that the PSC’s order was unreasonable. “Reasonableness turns on the standard used to 
evaluate a merger subject to approval by the PSC, which is whether or not the merger 
 
6
would be ‘detrimental to the public.’” State ex rel. AG Processing, 120 S.W.3d at 735.  In 
the merger context, a PSC decision will be held unreasonable if the PSC erroneously 
ignores evidence that “may have substantially impacted the weight of the evidence 
evaluated to approve the merger.”  Id. at 736. 
Here, Praxair contends that the PSC order was unreasonable because the PSC 
failed to consider evidence of Aquila’s allegedly unreasonable gift and gratuity policy, 
evidence that Praxair says was improperly excluded from the appellate record because the 
regulatory law judge who acted as presiding officer at the PSC hearing refused to permit 
it to make an offer of proof, finding the proffered evidence was wholly irrelevant.   
The PSC’s authority and the procedures it follows are set out principally in chapter 
386.  Section 386.410.1 states, “All hearings before the commission or a commissioner 
shall be governed by rules to be adopted and prescribed by the commission.” The PSC 
accordingly has adopted and prescribed numerous rules governing its operations, 
including 4 C.S.R. 240-2.130(1), which states that “[i]n any hearing, these [PSC] rules 
supplement section 536.070, RSMo,” governing offers of proof.  Section 536.070 is a 
portion of the Missouri Administrative Procedure Act, or MAPA.  To the extent that there 
are matters not addressed by the PSC statutes and the administrative rules adopted by the  
PSC pursuant to section 386.410, MAPA “operates to fill gaps not addressed within the 
PSC statutes.”  State ex rel. A&G Commercial Trucking v. Public Serv. Comm’n, 168 
S.W.3d 680, 682-83 (Mo. App. 2005).   
In regard to offers of proof, however, both 4 C.S.R. 240-2.130(3), adopted by the 
PSC, and section 536.070.7 of MAPA are substantively identical.  Section 536.070.7 
 
7
states in relevant part: 
In any contested case: 
.... 
(7) Evidence to which an objection is sustained shall, at the request of the 
party seeking to introduce the same, or at the instance of the agency, 
nevertheless be heard and preserved in the record, together with any cross-
examination with respect thereto and any rebuttal thereof, unless it is 
wholly irrelevant, repetitious, privileged, or unduly long.4  
 
The PSC construes the quoted language to mean that if the presiding officer finds 
that evidence as to which an objection is sustained “is wholly irrelevant, repetitious, 
privileged or unduly long,” then the PSC is authorized to refuse to permit any sort of 
offer of proof from being made.  By its terms, however, the provision is far more limited.  
It simply says that unless the evidence is found to be wholly irrelevant, repetitious, 
privileged or unduly long, it must “be heard and preserved in the record, together with 
any cross-examination with respect thereto and any rebuttal thereof.”  It does not address 
whether some more limited form of offer of proof must be permitted even when the 
presiding officer believes the offered evidence to be repetitious, too long or wholly 
irrelevant.  That is not surprising in light of the dual purpose of offers of proof.  One 
purpose of an offer of proof is to show the trial judge or officer what the rejected 
                                             
 
4 Similarly, 4 C.S.R. 240-130(3) states: 
The presiding officer shall rule on the admissibility of all evidence. 
Evidence to which an objection is sustained, at the request of the party 
seeking to introduce the same or at the instance of the commission, 
nevertheless may be heard and preserved in the record, together with any 
cross-examination with respect to the evidence and any rebuttal of the 
evidence, unless it is wholly irrelevant, repetitious, privileged or unduly 
long. When objections are made to the admission or exclusion of evidence, 
the grounds relied upon shall be stated briefly. Formal exceptions to rulings 
shall be unnecessary and need not be taken. 
 
8
evidence would show, with the hope of convincing him or her to reconsider.  State v. 
Ross, 292 S.W.3d 521, 526 (Mo. App. 2009) (“The immediate goal of the offer of proof is 
to educate the trial judge as to the admissibility of the proffered testimony”).  In the 
circumstances set out in the statute, the presiding officer’s belief that the evidence is 
wholly repetitious, unduly long, privileged or irrelevant would make the hope of 
changing the presiding officer's mind so minimal that it is outweighed by the need to 
move ahead with the case.  
There is a second purpose to an offer of proof, however – to preserve for the 
appellate courts’ review a record of what evidence was offered but rejected.  Evans v. 
Wal-Mart Stores, Inc., 976 S.W.2d 582, 584 (Mo. App. 1998) (an offer of proof 
“preserve[s] the record for appeal so the appellate court understands the scope and effect 
of the questions and proposed answers in considering whether the trial judge’s ruling was 
proper”). 
Both purposes of an offer of proof can be served by a written offer of proof, the 
propriety of which is not addressed by section 536.070.7.  Written offers of proof suffer 
none of the concerns about oral offers addressed by the statute – even if a matter 
ultimately is deemed wholly irrelevant, or even if it is presented in a format that the 
presiding officer considers unduly long or repetitious of other testimony, or if it is 
deemed privileged, it can be placed in the written record without delaying or disrupting 
the trial proceeding, so that on review the appellate court can determine for itself whether 
it agrees with the presiding officer’s assessment.  
Indeed, were the statute and comparable PSC regulation interpreted to wholly 
 
9
preclude even written offers of proof of excluded evidence, they would conflict with the 
Missouri Constitution’s separation of powers provisions, which place the power of 
judicial review in the courts and preclude the other branches from exercising such 
powers.5  In keeping with this separation of powers, Mo. Const. art. V, § 18 guarantees to 
Missouri’s citizens the right to judicial review of “all final decisions” of an administrative 
agency. 
The PSC “is a state agency established by the Missouri General Assembly to 
regulate public utilities operating within the state.”  State ex rel. Atmos Energy Corp., 103 
S.W.3d at 756.  Section 393.190.1 requires regulated public utilities to obtain approval 
from the PSC for merger transactions.6  In evaluating whether to approve such 
transactions, interested parties are allowed to participate in a contested proceeding before 
the PSC with many of the trappings customarily associated with adjudications conducted 
by the courts.  In this way, the PSC performs a function that is quasi-judicial in nature.   
                                             
 
5 Mo. Const. art. II, § 1 (“The powers of government shall be divided into three distinct 
departments – the legislative, executive and judicial – each of which shall be confided to 
a separate magistracy, and no person, or collection of persons, charged with the exercise 
of powers properly belonging to one of those departments, shall exercise any power 
properly belonging to either of the others, except in the instances in this constitution 
expressly directed or permitted”); Mo Const. art. V, § 1 (“The judicial power of the state 
shall be vested in a supreme court, a court of appeals consisting of the districts as 
prescribed by law, and circuit courts”). 
6 Section 393.190.1 provides, in relevant part: 
No gas corporation, electrical corporation, water corporation or sewer 
corporation shall hereafter sell, assign, lease, transfer, mortgage or 
otherwise dispose of or encumber the whole or any part of its franchise, 
works or system, necessary or useful in the performance of its duties to the 
public, nor by any means, direct or indirect, merge or consolidate such 
works or system, or franchises, or any part thereof, with any other 
 
10
For the quasi-judicial work of the PSC to comport with basic notions of separation 
of powers, its decisions must be capable of being tested by (and receiving the imprimatur 
of) the judicial branch of this state.  This can be accomplished only by way of meaningful 
and unobstructed judicial review as provided in the Missouri Constitution.  As this Court 
has noted: 
The quintessential power of the judiciary is the power to make final 
determinations of questions of law.  Marbury v. Madison, 1 Cranch (5 U.S.) 
137, 2 L.Ed. 60 (1803); Howlett v. Social Security Comm’n, 149 S.W.2d 
806, 810 (Mo. banc 1941); Lederer v. State Dept. of Social Servs., 825 
S.W.2d 858, 863 (Mo. App. 1992).  This power is a non-delegable power 
resting exclusively with the judiciary.  The legislature “has no authority to 
create any other tribunal and invest it with judiciary power.”  State ex rel. 
Haughey v. Ryan, 182 Mo. 349, 81 S.W. 435, 436 (1904).  Thus, while the 
legislature may allow for judicial or quasi-judicial decision-making by 
legislative or executive (administrative) agencies, it may not preclude 
judicial review of those decisions.  Nor may the legislature alter the 
principal power of the judiciary to make the final review.  Short of these 
two considerations, however, there will not customarily be found a 
violation of the separation of powers clause. 
        
Asbury v. Lombardi, 846 S.W.2d 196, 200 (Mo. banc 1993).  In keeping with these 
principles, the legislature has made the right to judicial review concrete by establishing 
the procedure by which a party may petition for review of PSC decisions in the circuit 
courts.  § 386.510.  From there, a party may seek review by the court of appeals much as 
it could any other final judgment.  § 512.020.  
The PSC’s expansive reading of the statute would mean that any matter could be 
kept from the record, and so kept from review, if labeled as privileged, repetitive, unduly 
long, or “wholly irrelevant.”  While it is not in question here that the presiding officer 
                                                                                                                                                 
 
corporation, person or public utility, without having first secured from the 
 
11
excluded the evidence because he believed it to be wholly irrelevant, such a rule could be 
used to exclude evidence that conflicts with or would call into question the PSC’s 
decision, effectively precluding judicial review.  Or, as is claimed to have occurred here, 
the presiding officer simply could be incorrect in his or her view that a particular piece of 
evidence was wholly irrelevant, privileged or repetitious.  Yet, without an offer of proof 
in the record, that decision effectively would be unreviewable, and relevant and material 
evidence might be excluded from consideration by the trial or appellate courts in 
determining whether an appellant has met its “burden of proof … to show that the order 
or decision of the PSC is unlawful or unreasonable.”  AG Processing, 120 S.W.3d at 734.  
This would interfere with the courts’ duty under section 386.510 to “inquire[] into or 
determine[]” the PSC decision’s “reasonableness or lawfulness” and with its 
constitutional duty to review final agency action under Mo. Const. art. V, § 18.    
This Court, therefore, interprets section 536.070(7) as it is written – it simply 
provides an exception to the duty the presiding officer otherwise has to allow evidence as 
to which objection is sustained to be placed in the record and subject to cross-
examination and rebuttal.  The Court will not read into the statute additional meaning that 
would call into question its constitutional validity.7  The presiding officer is not entitled 
                                                                                                                                                 
 
commission an order authorizing it so to do. 
7 Because the legislature is presumed to enact laws that comport with constitutional 
standards, this Court is reluctant to interpret statutes in a manner that would render them 
unconstitutional or raise serious constitutional difficulties.  Cascio v. Beam, 594 S.W.2d 
942, 946 (Mo. banc 1980) (“[A] court should avoid a construction which would bring a 
statute into conflict with constitutional limitations”); Pub. Citizen v. U.S. Dept. of Justice, 
491 U.S. 440, 466 (1989) (“It has long been an axiom of statutory interpretation that 
where an otherwise acceptable construction of a statute would raise serious constitutional 
 
12
under this statute or the comparable PSC regulation to prohibit a written offer of proof 
from being placed in the record.  
Here, the PSC refused any offer of proof – written or otherwise – as to Great 
Plains’ and KCPL’s gift and gratuities policies.  This exceeded the PSC’s authority under 
section 536.070.7 and 4 C.S.R. 240-2.130(3). In the absence of an offer of proof, this 
Court could not determine whether the PSC’s refusal to admit evidence of the gift and 
gratuities policies “substantially impacted the weight of the evidence evaluated to 
approve the merger.”  State ex rel. AG Processing, 120 S.W.3d at 736.  This would render 
the decision unreasonable and subject to reversal to permit the taking of the excluded 
evidence.  Rather than require this procedural delay, this Court directed appellants to file 
the written offer of proof it would have made and directed respondents to file any 
response they would have made. See Rule 81.12(f) (permitting court to direct 
supplementation of record with original documents and exhibits).   
In the offer, Praxair attaches excerpts from a number of depositions of Great 
Plains and KCPL employees.  One excerpt quotes Great Plains’ and KCPL’s gift and 
gratuities policy as providing that:  
The occasional giving and receiving of modest gifts, meals, services or 
entertainment is an accepted practice for promoting good will and building 
and maintaining business relationships.  However, they should be 
infrequent, reasonable, customary, legal and or modest value.  It is 
inappropriate to accept meals, refreshments or entertainment on a regular 
basis or without returning the hospitality at business-related functions.  
Invitations to functions that involve travel or overnight stays and are in the 
                                                                                                                                                 
 
problems, the Court will construe the statute to avoid such problems unless such 
construction is plainly contrary to the intent of [the legislature]”) (quotation and internal 
citation omitted). 
 
13
best interest of the company will either be paid for by the company or be 
approved in advance by the president of the applicable company.  
 
Praxair offered testimony from certain Great Plains and KCPL employees stating 
that they interpreted this policy to permit them to accept gifts such as tickets to sporting 
events or meals from time to time from entities with which Great Plains and KCPL did 
business, such as law firms or insurance companies, so long as over time they then would 
reciprocate by, for example, providing a meal to individuals from these law firms or 
insurance companies.  There is no evidence that Great Plains’ employees sought these 
gifts or that they sought or obtained large or unreciprocated gifts. 
Praxair also attached deposition excerpts from Aquila personnel suggesting that 
Aquila’s gift and gratuities policy was more restrictive and prohibited employees from 
accepting more than nominal gifts such as coffee mugs and pens.  Praxair argues that 
Great Plains’ gift policy is subject to abuse and could impose undue costs on taxpayers as 
its employees felt obligated to reciprocate with gifts of their own, for which they received 
reimbursement, and that the PSC should reject the merger rather than risk such a gift and 
gratuity policy being adopted by Aquila. 
In response, Great Plains counters that the gift and gratuities practices could not 
have entered into the “detrimental to the public” analysis because the PSC’s “‘authority 
to regulate does not include the right to dictate the manner in which the company shall 
conduct its business.’”  State ex rel. Kansas City Transit, Inc. v. Public Serv. Comm’n, 
406 S.W.2d 5, 11 (Mo. banc 1966), quoting, State ex rel. City of St. Joseph v. Public Serv. 
Comm’n, 30 S.W.2d 8, 14 (Mo. banc 1930).   
 
14
While the PSC may not have the authority to regulate gift policies, it does have the 
authority to regulate mergers and to disapprove them if they are detrimental to the public.  
This Court agrees with Praxair that the presiding officer erred in holding that this 
evidence was wholly irrelevant to the issue of public detriment.  While the material in 
Praxair’s offer does may not move the dial very much, it presents a relevant 
consideration.  State v. Anderson, 76 S.W.3d 275, 277 (Mo. banc 2002) (“logical 
relevance has a very low threshold”).  It is entirely possible that a particular set of gift 
and gratuity practices could be relevant to the “detrimental to the public” standard were it 
to permit unethical conduct.  Reckless gift giving also conceivably could increase a 
public utility’s costs, resulting in a higher rate being passed through to the ratepayers.  
Taking such practices into consideration while evaluating a merger does not rise to the 
level of dictating the way in which a company should conduct its business. 
That said, Praxair falls far short of showing that disregarding the evidence of the 
gift and gratuities policy was unethical or could have substantially impacted the PSC’s 
weighing of the evidence regarding the Aquila merger.  The PSC reached its decision 
approving the merger after receiving volumes of competent evidence on a variety of 
subjects including Great Plains’ and KCPL’s creditworthiness, the ability of Great Plains 
and KCPL to complete certain power plant construction projects and the merger at the 
same time, and the ability of Great Plains, KCPL and Aquila to achieve merger synergies.  
The gift and gratuities policy evidence, in contrast, shows merely that Great Plains 
and KCPL approved the giving and receipt of modest gifts and entertainment to promote 
goodwill so long as the gifts were infrequent, customary and of modest value.  Whether 
 
15
this was a good policy or whether it could be improved, and whether it was applied as 
intended, might well be subject to serious debate, but there is no evidence that the policy 
was used to conceal bribes or corruption, that it influenced decisions or that it produced 
costs sufficient to affect the setting of rates. The excluded evidence does not constitute 
substantial evidence, considered alone or in combination with the other evidence adduced 
below, that the merger would be detrimental to the public. As such, its exclusion did not 
substantially impact the weight of the evidence evaluated to approve the merger.  State ex 
rel. AG Processing, 120 S.W.3d at 73.  
IV. 
 THERE IS NO SHOWING THAT THE PSC WAS BIASED DUE TO THE 
PRE-FILING MEETINGS  
 
Public Counsel separately appealed the PSC’s order.  He alleges that the PSC 
erred in overruling his motion to dismiss the application for merger on the basis that two 
of the three commissioners who decided the merger were involved in pre-filing meetings 
held between some of the sitting commissioners and Great Plains executives.  Public 
Counsel raised this issue on a motion to dismiss.  The motion does not argue that the 
meetings resulted in actual bias on the part of these commissioners but rather that they 
created such a strong appearance of impropriety that the commissioners involved in those 
meetings were required to recuse themselves, with the result that the PSC could not hear 
the merger issue. 
The PSC defends this practice, suggesting that it is commonplace for its 
commissioners to meet with executives of the utilities it regulates and to discuss 
upcoming cases in general terms, although it makes clear that in none of these cases are 
 
16
improper promises sought or made.  Therefore, it suggests, its commissioners’ conduct is 
proper under section 386.210, which provides in relevant part:  
1. The commission may confer in person, or by correspondence, by 
attending conventions, or in any other way, with the members of the public, 
any public utility or similar commission of this and other states and the 
United States of America, or any official, agency or instrumentality thereof, 
on any matter relating to the performance of its duties. 
 
2. Such communications may address any issue that at the time of such 
communication is not the subject of a case that has been filed with the 
commission. 
…. 
4. Nothing in this section or any other provision of law shall be construed 
as imposing any limitation on the free exchange of ideas, views, and 
information between any person and the commission or any commissioner, 
provided that such communications relate to matters of general regulatory 
policy and do not address the merits of the specific facts, evidence, claims, 
or positions presented or taken in a pending case unless such 
communications comply with the provisions of subsection 3 of this section. 
The Court notes that, first, subsections 1 and 2 of section 386.210 do not authorize 
the commission to meet with public utilities; they authorize it to meet with public utility 
and other similar commissions.  Such contact is permitted “on any matter relating to the 
performance of its duties” and “may address any issue that at the time of such 
communication is not the subject of a case that has been filed with the commission.”  Id. 
Here, however, the commission members meetings were with executives of 
utilities, not a utility commission.  The cited section did not authorize such contacts.  
Further, subsection 4 of section 386.210 simply says it does not prohibit meetings where 
there is no pending case.  Neither does it authorize such contacts.8 
                                             
 
8 Subsequent to the proceedings in this case, the applicable regulation relating to ex parte 
communications was changed significantly to more strictly regulate communications with 
commissioners.  4 C.S.R. 240-4.020(3)(B) (as amended in 2009, effective July 30, 2010).  
 
17
Public Counsel argues that, whatever the PSC rules may say or not say about such 
contacts, the commissioners’ failure to recuse themselves violates the standards of 
judicial conduct adopted in Missouri’s Code of Judicial Conduct, which is set out in 
canons 1 through 4 of Rule 2.  The title of Canon 2 of the code states, “A judge shall 
avoid impropriety and the appearance of impropriety in all of the judge’s activities,” and 
the body of the rule and commentary state that the appearance of impropriety should lead 
to recusal.  Public Counsel asserts that the PSC should be governed by these judicial 
standards when they are acting in a quasi-judicial capacity, such as when adjudicating 
applications for merger and other cases filed before them.   
There is some surface appeal to Public Counsel’s argument in that the PSC does 
perform a quasi-judicial function when it acts in an adjudicative capacity.  But PSC 
commissioners are members of the executive branch, not the judicial branch.  While they 
act in a quasi-judicial capacity at times – and at other times act in a regulatory capacity – 
they are not judges.  They are members of an executive branch administrative 
commission.  As such, the judicial canons do not apply to them, for, as expressly stated in 
the preamble to the code, “The text of the Canons is intended to govern conduct of judges 
and to be binding upon them.” Rule 2.01 Preamble to Missouri Code of Judicial Conduct  
(emphasis added).  The reason that judges must follow a special and unusually strict code 
                                                                                                                                                 
 
The new rule provides that a “commissioner, technical advisory staff, or the presiding 
officer assigned to a proceeding shall not initiate, participate in, or undertake, directly or 
indirectly, an ex parte communication regarding an anticipated contested case.” Id.  An 
“anticipated case” is “[a]ny case that a person anticipates, knows, or should know will be 
filed before the commission within sixty (60) days and that such person anticipates or 
should anticipate will be or become a contested case.” Id. 240-4.020(1)(A).   
 
18
of conduct is discussed in the preamble to the code also: 
Our legal system is based on the principle that an independent, fair 
and competent judiciary will interpret and apply the laws that govern us. 
The role of the judiciary is central to American concepts of justice and the 
rule of law. Intrinsic to all sections of this Rule 2 are the precepts that 
judges, individually and collectively, must respect and honor the judicial 
office as a public trust and strive to enhance and maintain confidence in our 
legal system. The judge is an arbiter of facts and law for the resolution of 
disputes and a highly visible symbol of government under the rule of law. 
 
Rule 2.01 Preamble to Missouri Code of Judicial Conduct.  Rule 2.03, Canon 1.A. 
governing ethical conduct by judges, similarly makes clear that it is intended to define the 
duties of and guide the conduct of members of the “judiciary” and courts, not 
administrative commissioners.  It states: 
Canon 1. A Judge Shall Uphold the Integrity and Independence of 
the Judiciary 
A. An independent and honorable judiciary is indispensable to justice in 
our society. A judge should participate in establishing, maintaining and 
enforcing high standards of conduct and shall personally observe those 
standards of conduct so that the integrity and independence of the 
judiciary will be preserved. The provisions of this Rule 2 are to be 
construed and applied to further that objective. 
COMMENTARY 
 
Deference to the judgments and rulings of courts depends upon public 
confidence in the integrity and independence of judges. The integrity and 
independence of judges depends in turn upon their acting promptly, 
courteously and without fear or favor. Although judges should be 
independent, they must comply with the law, including the provisions of 
this Rule 2. Public confidence in the impartiality of the judiciary is 
maintained by the adherence of each judge to this responsibility. 
Conversely, violation of this Rule 2 diminishes public confidence in the 
judiciary and thereby does injury to the system of government under law. 
 
(emphasis added); see also Rule 2.03, commentary to Canon 2.B. (“Maintaining the 
prestige of judicial office is essential to a system of government in which the judiciary 
 
19
functions independently of the executive and legislative branches”) (emphasis added); 
Rule 2.01, Preamble (“Intrinsic to all sections of this Rule 2 are the precepts that judges, 
individually and collectively, must respect and honor the judicial office …”).  
The PSC commissioners are not governed by the canons of judicial conduct and, 
thus, are not bound by the proscription of Canon 2 that a judge must avoid not just bias 
but also the appearance of impropriety.  
Public Counsel does not cite any authority other than the judicial canons and cases 
applying them to members of the judicial branch for its argument that the appearance of 
impropriety is itself a sufficient basis on which to base disqualification of an 
administrative officer acting in a quasi-judicial capacity.   
Cases cited involving persons other than judges in which it is alleged that the 
tribunal or adjudicator is biased are decided on the basis of due process principles, which 
require that a tribunal be free of actual bias or the probability of actual bias.  “The 
procedural due process requirement of fair trials by fair tribunals applies to an 
administrative agency acting in an adjudicative capacity.”  State ex rel. AG Processing, 
Inc. v. Thompson, 100 S.W.3d 915, 919 (Mo. App. 2003).  “A presumption exists that 
administrative decision-makers act honestly and impartially, and a party challenging the 
partiality of the decision-maker has the burden to overcome that presumption.”  Id. at 
920. 
[V]arious situations have been identified in which experience teaches that 
the probability of actual bias on the part of the judge or decisionmaker is too 
high to be constitutionally tolerable. Among these cases are those in which 
the adjudicator has a pecuniary interest in the outcome and in which he has 
been the target of personal abuse or criticism from the party before him. 
 
20
  
 Withrow v. Larkin, 421 U.S. 35, 47 (1975).  But the mere combination of investigative 
and adjudicative functions in an agency generally does not create an unconstitutional risk 
of bias in administrative adjudication.  Id. at 52 (“our cases … offer no support for the 
bald proposition applied in this case … that agency members who participate in an 
investigation are disqualified from adjudicating”).  Similarly, “[m]ere familiarity with the 
facts of a case gained by an agency in the performance of its statutory role does not … 
disqualify a decisionmaker.”  Hortonville Joint Sch. Dist. No. 1 v. Hortonville Educ. 
Ass'n, 426 U.S. 482, 493 (1976).   
Prior Missouri cases have applied these principles to allegations of bias against 
PSC members, stating: 
The PSC is an administrative body created by statute and has only such 
powers as are expressly conferred by statute and reasonably incidental 
thereto. Union Elec. Co. v. Pub. Serv. Comm’n, 591 S.W.2d 134, 137 
(Mo.App. W.D.1979). The procedural due process requirement of fair trials 
by fair tribunals applies to an administrative agency acting in an 
adjudicative capacity. Fitzgerald v. City of Maryland Heights, 796 S.W.2d 
52, 59 (Mo.App. E.D.1990) (citing Withrow v. Larkin, 421 U.S. 35, 46, 95 
S.Ct. 1456, 1464, 43 L.Ed.2d 712, 723 (1975)). Thus, administrative 
decision-makers must be impartial. Id. Officials occupying quasi-judicial 
positions are held to the same high standard as apply to judicial officers in 
that they must be free of any interest in the matter to be considered by 
them. Union Elec., 591 S.W.2d at 137. A presumption exists that 
administrative decision-makers act honestly and impartially, and a party 
challenging the partiality of the decision-maker has the burden to overcome 
that presumption. Burgdorf v. Bd. of Police Comm’rs, 936 S.W.2d 227, 234 
(Mo.App. E.D. 1996). A judge or administrative decision-maker is without 
jurisdiction, and a writ of prohibition would lie, if the judge or decision-
maker failed to disqualify himself on proper application. State ex rel. 
Ladlee v. Aiken, 46 S.W.3d 676, 678 (Mo.App. S.D.2001); State ex rel. 
White v. Shinn, 903 S.W.2d 194, 196 (Mo.App. W.D.1995). 
 
 
21
Thompson, 100 S.W.3d at 919-20. 9   
 
Similarly, Union Electric Co. v. Public Serv. Comm’n, 591 S.W.2d 134, 136, 139 
(Mo. App. 1979), relied on by Public Counsel, held that under due process principles and 
the “common law rule that no man may be the judge of his own cause,” a sitting 
commissioner was disqualified from participating in an adjudication because the 
commissioner had incorporated, served on the board of directors and been president of a 
company involved in the case.  Union Electric is an obvious example of bias arising from 
an administrative decisionmaker having an interest in the outcome of the case. 
Here, Public Counsel offered no evidence to show any form of actual bias or 
personal stake in the merger on the part of any commissioner.  He made no showing of 
commitment made by the commissioners based on the pre-filing meetings, or that the 
commissioners were inappropriately exposed to facts that were not later made of record, 
or that the information they obtained was more than general background information 
                                             
 
9 Although Thompson uses the term “jurisdiction” the more appropriate term would be 
authority.  See J.C.W. ex rel. Webb v. Wyciskalla, 275 S.W.3d 249, 254 (Mo. banc 2009).  
It is interesting that here, the PSC argues that Public Counsel had to raise the bias issue 
as a writ because it does not involve the questions whether the PSC’s decision is either 
lawful or reasonable. In Thompson, 100 S.W.3d at 919, the PSC took the contrary 
position, arguing that an appeal would lie if a commissioner were biased and no writ 
therefore was appropriate. 
As Public Counsel notes, however, the overruling of a motion to dismiss based on 
bias of a commissioner can be reviewed as part of the appeal of the ultimate decision in 
the case, for such a decision necessarily is without lawful authority and the lawfulness of 
an order is determined “by whether statutory authority for its issuance exists, and all legal 
issues are reviewed de novo.”  State ex rel. AG Processing, 120 S.W.3d at 734.  “The 
decision of the Commission is reasonable where the order is supported by substantial, 
competent evidence on the whole record; the decision is not arbitrary or capricious or 
where the Commission has not abused its discretion.”  Environmental Utilities, 219 
S.W.3d at 265. 
 
22
 
23
about adjudicative facts associated with the Aquila merger of the kind that Withrow and 
Hortonville Joint Sch. Dist. No. 1 indicate are not sufficient to form the basis for a 
violation of due process.  In these circumstances, no showing of actual bias has been 
made.  While the Court agrees that the meetings create an appearance of impropriety, on 
these facts they are not adequate to overcome the presumption that the PSC acted 
impartially. 
V.  
CONCLUSION 
For the foregoing reasons, the judgment affirming the PSC decision is affirmed. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
_________________________________  
 
 
 
 
 
 
 
     LAURA DENVIR STITH, JUDGE 
 
All concur.