Missouri's Conservation department isn't violating the law or state Constitution in the way it manages watershed mitigation projects, a three-judge appeals court panel ruled Tuesday.
The 12-page decision by the Western District appeals court in Kansas City rejected an appeal by Swallow Tail LLC, a Harrisonville-based "private wetland and stream compensatory mitigation bank provider" that sued the department and the nonprofit Conservation Heritage Foundation in July 2013, accusing them of working together to benefit the foundation and hurt for-profit companies like Swallow Tail.
After a bench trial in December 2015, Cole County Circuit Judge Jon Beetem ruled for the Conservation Commission and department - and against Swallow Tail.
In that 28-page decision, Beetem said the company misinterpreted the law when it argued the department gave an unfair advantage to the foundation in those mitigation projects.
In its original lawsuit, Swallow Tail accused the Conservation department and the separate foundation of having a too-cozy, illegal relationship that resulted in the foundation having an unfair advantage over Swallow Tail and other companies in contracts with the U.S. Army Corps of Engineers.
However, Beetem ruled - and the appeals court agreed - the foundation's only work is to help the department do its work, as mandated by the Missouri Constitution.
Beetem's December 2015 ruling and the appeals court's opinion Tuesday provided some of the technical details of the Corps of Engineers' mitigation credit programs and how the for-profit "mitigation banks" like Swallow Tail operate under different rules from the nonprofit "in lieu fee programs" run by public or government agencies like the Conservation department.
Swallow Tail had argued the department's work with the federation allowed the federation to get, in the appeals court's words, "additional mitigation credits for the SSTF (Stream Stabilization Trust Fund) to the detriment of other competing entities, (resulting) in a multi-million dollar 'windfall' to the Heritage Foundation."
Appeals Court Judge Edward Ardini Jr. wrote for the three-judge panel: "The present case at its core does not involve the transfer of public funds to a private entity. Rather, the Heritage Foundation provides grants to the Conservation department for the completion of projects determined by the Conservation department to be high priority.
"Regardless, even to the extent there is direct use of the Conservation department's own funds, the Conservation department's construction and maintenance of such projects is constitutional, as the projects are primarily for 'the preservation of the state's natural resources,' and 'the quality of our environment and the improvement thereof' is not only a public purpose justifying a grant of public money to a private entity, but is also within the Conservation department's constitutional mission and guidelines."
The appeals court ruling added, "Any public funds are used by the Conservation department for the public purpose of environmental conservation, and any private benefit to the Heritage Foundation is merely incidental to that public purpose."