In re Application of Hawai'i Electric Light Company, Inc. , 445 P.3d 673 ( 2019 )

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Electronically Filed
Supreme Court
SCOT-XX-XXXXXXX
10-MAY-2019
08:02 AM
IN THE SUPREME COURT OF THE STATE OF HAWAII
---o0o---
In the Matter of the Application of
HAWAII ELECTRIC LIGHT COMPANY, INC.
For Approval of a Power Purchase Agreement for Renewable
Dispatchable Firm Energy and Capacity.
SCOT-XX-XXXXXXX
APPEAL FROM THE PUBLIC UTILITIES COMMISSION
(Docket No. 2017-0122)
MAY 10, 2019
RECKTENWALD, C.J., NAKAYAMA, McKENNA, POLLACK, AND WILSON, JJ.
OPINION OF THE COURT BY RECKTENWALD, C.J.
This case arises from the Public Utilities Commission’s
approval of an amended power purchase agreement (Amended PPA)
between Hawaii Electric Light Company, Inc. (HELCO) and Hu Honua
Bioenergy, LLC. Pursuant to the Amended PPA, Hu Honua would
construct and operate a biomass-fueled energy production
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facility, and HELCO would purchase energy from the facility.
Life of the Land (LOL), an environmental nonprofit
organization, sought to intervene as a party in the PUC’s
proceeding in order to address the environmental impacts of the
proposed biomass facility. The PUC denied LOL full party status,
but granted LOL limited participation in the proceeding. The PUC
ultimately approved the Amended PPA without holding a hearing.
LOL directly appealed the PUC’s order granting it
limited participation in the proceeding, as well as the Decision
and Order approving the Amended PPA (2017 D&O), to this court.
LOL argues that the PUC: (1) failed to explicitly consider
greenhouse gas (GHG) emissions in determining whether to approve
the Amended PPA, as required by state law; (2) denied LOL due
process to protect its interest in a clean and healthful
environment by restricting its participation in the proceeding;
and (3) abused its discretion and violated due process by denying
LOL full party status in the proceeding. In addition to
disputing these allegations, the PUC, HELCO, and Hu Honua contest
this court’s jurisdiction over the matter.
As a threshold matter, we hold that this court has
jurisdiction to consider LOL’s appeal. We further hold that the
PUC erred by failing to explicitly consider the reduction of GHG
emissions in approving the Amended PPA, as required by statute,
and that the PUC denied LOL due process with respect to the
opportunity to be heard regarding the impacts that the Amended
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PPA would have on LOL’s right to a clean and healthful
environment. Finally, we need not resolve whether the PUC abused
its discretion or deprived LOL of due process by denying it full
party status in the proceeding.
Accordingly, we vacate the 2017 D&O and remand this
matter to the PUC for further proceedings.
I. BACKGROUND
A. PUC Proceedings
1. 2012 Docket
In 2012, HELCO submitted an application to the PUC
seeking approval of a power purchase agreement (Original PPA)
with Hu Honua. Pursuant to the Original PPA, Hu Honua agreed to
refurbish an existing biomass power plant located on the Hāmākua
Coast in Pepeekeo, Hawaii, to allow it to utilize harvested
timber and other “woody biomass” as a fuel source. HELCO agreed
to purchase energy from the facility over the Original PPA’s 20-
year term.
LOL filed a Motion to Intervene as a party-intervenor
in the PUC proceeding (2012 Docket), pursuant to Hawaii
Administrative Rules (HAR) § 6-61-55 (effective 1992-2018).1 In
1
We note that HAR title 6, chapter 61 - Rules of Practice and
Procedure Before the Public Utilities Commission (effective 1992-2018) - was
repealed on January 1, 2019. It was replaced by HAR title 16, chapter 601
(effective Jan. 1, 2019). All of the repealed administrative rules referenced
in this opinion have been replaced by identical rules that remain in effect.
HAR § 6-61-55 (effective 1992-2018) has been replaced by HAR § 16-601-55
(effective Jan. 1, 2019). See infra note 22.
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its motion, LOL explained that it is a Hawaii-based nonprofit
organization comprised of members who live, work, and recreate in
Hawaii. LOL highlighted its environmental interests and
explained that the externalities associated with the use of
biofuels for energy production “[can] be very harmful to [its]
interests.” LOL also stated it “has developed great expertise in
biofuels” and has demonstrated its expertise in several
regulatory proceedings regarding biofuels.
More specifically, with regard to the proposed Hu Honua
facility, LOL stated it had “several concerns, including the fuel
source, the comparative cost, . . . [and whether] this proposed
facility will cut into the utilities[’] purchase of energy from
existing and/or planned wind and solar farms.” Finally, LOL
stated it had “unique environmental interests different from the
general public,” and assured the PUC that its intent was “not to
disrupt the process[,] but . . . to insure that [LOL’s] members
and our local environmental communities have a voice in this
process.”
The PUC found that the “concerns raised in [LOL’s]
Motion to Intervene provide[d] insufficient basis to justify full
intervention[.]” However, it also found that “LOL’s concerns
regarding the proposed project’s impact on existing renewable
projects on the Big Island, and the supply and pricing analysis
between the biomass resources delineated in the [Original] PPA
[were] sufficient to justify LOL having limited participant
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status in [the 2012 Docket], pursuant to HAR § 6-61-56.”
Accordingly, the PUC denied LOL’s motion, but granted it “limited
participant status” sua sponte, allowing it to participate with
respect to: (1) whether the energy price components properly
reflect the cost of biomass fuel supply; and (2) whether HELCO’s
purchase power arrangements under the Original PPA are prudent
and in the public interest.
The PUC ultimately approved the Original PPA, but HELCO
subsequently terminated the agreement. HELCO and Hu Honua agreed
to amend the Original PPA, giving rise to the Amended PPA at
issue in the instant case.
2. 2017 Docket
In 2017, HELCO filed an application with the PUC,
seeking approval of the Amended PPA. The PUC entered Order No.
34554, opening Docket No. 2017-0122 (2017 Docket) to address
HELCO’s request. The order also granted LOL “conditional
participant status” in the proceeding and stated it would
reevaluate LOL’s status and establish the scope of LOL’s
participation following its final determination of the issues
governing the 2017 Docket.
LOL filed exhibits in response to Order No. 34554,
which included an overview of the “agricultural expertise” of
Henry Curtis, LOL’s Vice President of Consumer Issues. Curtis
explained that he had “stayed with friends living in Hamakua,
stayed at vacation sites in Hamakua, explored Hamakua, and made
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several trips to the Hu Honua site, driving around three sides of
the site.”2 In support of his agricultural expertise, Curtis
also cited to a chapter that he authored in “The Value of
Hawaii: Knowing the Past, Shaping the Future,” which cites
runoff into the ocean as one of the primary adverse environmental
impacts associated with the use of biofuels for energy
production.
The PUC entered Order No. 34597, establishing a
procedural schedule, statement of the issues, and scope of
participation for participants. The PUC permitted LOL to
participate in the proceeding, but limited the scope of its
participation to the same two issues that it participated on in
the 2012 Docket:
2.a.i. Whether the energy price components in the
Amended and Restated PPA properly reflect the cost of
biomass fuel supply.
2.b. Whether HELCO’s purchase power arrangements under
the Amended and Restated PPA are prudent and in the
public interest.
Specifically, the PUC found that:
Because the question of whether HELCO’s purchase power
arrangements under the Amended and Restated PPA are
prudent and in the public interest continues to be an
issue in this proceeding, as it was in Docket No.
2012-0212, the commission finds it appropriate to
maintain LOL, Tawhiri, and HEP’s participant status on
2
It appears Curtis was referring to the Big Island’s Hāmākua Coast,
of which Pepeekeo is a part.
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this issue (Issue 2.b., above).3 Further, while not
explicitly stated, the question of whether the energy
price components properly reflect the cost of biomass
fuel supply is a consideration when determining
whether the purchased power costs to be paid by HELCO
pursuant to the Amended and Restated PPA are
reasonable (Issue 2.a., above). Accordingly, the
commission finds it appropriate to maintain LOL's
participant status on the specific sub-issue of
whether the energy price components properly reflect
the cost of biomass fuel supply (Issue 2.a.i., above).
(Emphasis added).
a. Motion to Upgrade Status
LOL filed a Motion to Upgrade Status, requesting that
the PUC allow it to intervene in the 2017 Docket as a party.4 In
support of its Motion to Upgrade Status, LOL stressed the fact
that the PUC had already “grant[ed] LOL participant status based
on [its] interests in the pending matter.” LOL also cited
previous PUC proceedings in which it was admitted as a party, and
stated that: (1) its Board of Directors “approved continuing to
intervene in energy dockets as a means of promoting sustainable
policies”; (2) LOL’s members “are very deeply concerned about
climate change, biodiversity, and the spread of invasive
species”; (3) the only way to protect LOL’s interest is by
3
Tawhiri Power, LLC (Tawhiri) and Hamakua Energy Partners (HEP)
were granted participant status in the 2017 Docket only with regard to Issue
2.b. LOL, Tawhiri, and HEP all filed motions to intervene in the 2012 Docket,
which were denied. They were instead granted limited participant status.
4
Although LOL did not cite HAR § 6-61-55 as the relevant authority
for its Motion to Upgrade Status, the motion nevertheless touches upon each of
the nine requirements for motions for intervention under HAR § 6-61-55(b)
(effective 1992 to 2018). HAR § 16-601-55(b) (effective Jan. 1, 2019)
contains the same nine requirements. See infra, note 22.
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accessing “classified documents dealing with externalities”; (4)
there are no other means available to protect LOL’s interests;
(5) the Consumer Advocate does not represent LOL’s interests
because it lacks the expertise to understand externalities;5 (6)
the agricultural expertise of LOL’s vice president will assist in
developing an evidentiary record; and (7) while the Consumer
Advocate represents the interests of the general public, “LOL is
concerned with a wider lens that encompasses externalities
including social justice, environmental justice, climate justice,
and [GHG] impacts.” In addition, LOL specifically expressed
5
Pursuant to Hawaii Revised Statutes (HRS) § 269–51 (Supp. 2018)
and HAR § 16–601–62 (effective Jan. 1, 2019), the Consumer Advocate represents
the consumer and may participate as an ex officio party in Commission
proceedings.
HRS § 269–51 provides:
The executive director of the division of consumer
advocacy shall be the consumer advocate in hearings
before the public utilities commission. The consumer
advocate shall represent, protect, and advance the
interests of all consumers, including small
businesses, of utility services.
The responsibility of the consumer advocate for
advocating the interests of the consumer of utility
services shall be separate and distinct from the
responsibilities of the public utilities commission
and those assistants employed by the commission. The
consumer advocate shall have full rights to
participate as a party in interest in all proceedings
before the public utilities commission.
HAR § 16–601–62 provides, in pertinent part:
(a) The consumer advocate is, ex officio, a party to
any proceeding before the commission. . . .
(b) The consumer advocate shall further apprise the
commission and the parties of record of any
facts which relate to the protection or
advancement of the consumer interest.
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concern regarding the externalities associated with “acquiring
bioenergy crops” from a specific area of the Big Island that
already serves as a source for another biofuel facility.
The PUC issued Order No. 34651, denying LOL’s motion.
The PUC cited HAR § 6-61-55, specifically noting subsection (d),6
and stated that “intervention is not a guaranteed right of a
movant, but is a matter resting within the sound discretion of
the commission, so long as that discretion is not exercised
arbitrarily or capriciously.” It also cited HAR § 6-61-56
(effective 1992-2018),7 which sets forth the requirements for
6
HAR § 6-61-55(d) (effective 1992-2018) provided that “Intervention
shall not be granted except on allegations which are reasonably pertinent to
and do not unreasonably broaden the issues already presented.” HAR § 16-601-
55(d) (effective Jan. 1, 2019) contains identical language. See infra note
22.
7
HAR § 6-61-56 provided:
(a) The commission may permit participation without
intervention. A person or entity in whose
behalf an appearance is entered in this manner
is not a party to the proceeding and may
participate in the proceeding only to the degree
ordered by the commission. The extent to which
a participant may be involved in the proceeding
shall be determined in the order granting
participation or in the prehearing order.
(b) A person who has a limited interest in a
proceeding may make an application to
participate without intervention by filing a
timely written motion in accordance with
sections 6-61-15 to 6-61-24, section 6-61-41,
and section 6-61-57.
(c) The motion shall provide:
(1) A clear and concise statement of the
direct and substantial interest of the
applicant;
(continued...)
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participation without intervention. It stated:
As was the case in [the 2012 Docket], upon review of
the record, the commission continues to find that the
concerns raised in LOL’s Motion, which are identical
to or mirror the concerns raised by LOL in its Motion
to Intervene in [the 2012 Docket], provide
insufficient basis to justify full intervention in
this proceeding. The commission finds that LOL has
failed to demonstrate any additional interest or
expertise sufficient to justify a change in its
limited participant status granted on a conditional
basis in Order No. 34554, and permanently established
pursuant to Order No. 34597.
b. Information Requests
LOL filed several Information Requests (IRs), seeking
information from HELCO, Hu Honua, and the Consumer Advocate
regarding GHG emissions and other potential adverse environmental
impacts of the Hu Honua facility. In its response to LOL’s IRs,
HELCO acknowledged that GHGs would be emitted by equipment used
7
(...continued)
(2) The applicant's position regarding the
matter in controversy;
(3) The extent to which the participation will
not broaden the issues or delay the
proceeding;
(4) The extent to which the applicant's
interest will not be represented by
existing parties;
(5) A statement of the expertise, knowledge or
experience the applicant possesses with
regard to the matter in controversy;
(6) Whether the applicant can aid the
commission by submitting an affirmative
case; and
(7) A statement of the relief desired.
(Emphasis added). Other than the HAR section numbers it references, HAR 16-
601-56 (effective Jan. 1, 2019) is identical to HAR 6-61-56 (effective 1992-
2018).
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to raze and transport trees, but stated that it had not
quantified the amount of emissions. HELCO asserted that although
carbon would be released into the atmosphere upon the combustion
of trees in the facility, it would be recaptured upon the
regrowth of the trees. In response to at least one of the IRs
that LOL submitted to HELCO, HELCO objected and refused to
respond, arguing that the information sought was “not relevant to
and [was] outside the scope of LOL’s authorized scope of limited
participation[.]”
One of the IRs that LOL submitted to Hu Honua posed
several questions regarding the quantity of wastewater that would
be produced by the facility, the means by which it would be
produced and managed, and the steps that would be taken to
monitor and prevent ocean contamination. Hu Honua objected to
this IR, as well as those focused on GHG emissions and climate
change, stating that they were “not relevant or material to Issue
Nos. 2.a.i or 2.b, which [were] the only issues for which the
Commission authorized LOL’s participation.”
The Consumer Advocate responded to LOL that it had not
completed an analysis of the impact the project would have on GHG
emissions, and that any analysis should be comprehensive,
including GHGs resulting from harvesting and transporting the
feedstock. The Consumer Advocate further stated that it had not
evaluated the need for a consultant to review GHGs and climate
change in the instant proceeding.
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c. Statements of Position
In its Statement of Position, LOL argued that Hu
Honua’s proposed facility was not in the public interest. LOL
further argued that Hu Honua’s proposal failed to fully address
climate change and the environmental impacts of the proposed
operations. LOL stated:
Hu Honua plans to chop down existing trees for seven
years, and then to rely on a rotational system of
growing new trees and then chopping them down.
Omitting any discussion of the fossil fuels used in
the mechanization of growing, chopping, chipping, and
transport, Hu Honua alleges that this operation is
carbon neutral.
LOL also argued that the pricing of Hu Honua’s proposal
was not in the public interest when compared to lower-priced
solar-based electricity proposals previously approved by the PUC.
In its Reply Statement of Position, Hu Honua argued
that its facility “will make a significant contribution to the
State’s [Renewable Portfolio Standards (RPS),]” noting that
“HELCO estimates that Hu Honua will increase RPS levels by 11%
over the life of the PPA, and avoid the emission of hundreds of
thousands of tons of CO2.” Hu Honua asserted that “the estimated
emissions due to transportation of fuel to the plant pale in
comparison to the emissions reductions that will result from the
displacement of fossil fuel[.]” Hu Honua further stated that
“biomass plants, like wind and solar plants, are renewable and
carbon neutral to a reasonable approximation, and are therefore
deemed fully renewable by applicable state law.”
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d. 2017 Decision and Order
Without holding a hearing, the PUC entered the 2017 D&O
approving the Amended PPA. The PUC noted that comments in
support of the Project focused on issues including the
fulfillment of the RPS targets and energy resource self-reliance,
while comments in opposition focused on issues including
potential adverse environmental impacts, an expected rise in GHG
emissions, and general objections to biomass as a fuel resource.
The PUC then summarized each party’s position, citing
HELCO’s claims that approval of the Amended PPA would be
reasonable due to, inter alia, the project’s contribution to the
State’s RPS goals, the fact that the contract price for the
Amended PPA is de-linked from fossil fuel pricing, and the
assertion that “renewable energy provided by the Project could
potentially save approximately 15,700 barrels of fuel per year,
which over the term of the [Amended] PPA amounts to approximately
329,000 barrels of fuel oil saved.” The PUC also noted the
following:
HELCO asserted that the totality of circumstances
should be considered when reviewing whether the
purchased power costs are reasonable, . . . including
governmental policies and objectives, contributions
towards RPS, reducing dependency on fossil fuels,
decreased price volatility, de-linking energy costs
from fossil fuel pricing, realization of tax
incentives, and community benefits.
. . . .
LOL asserted that “[t]he cost of biofuel includes both
financial and non-financial components, which Hu Honua
has failed to adequately address.” LOL asserted that
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the “non-financial components” include impacts on
climate change and endangered species that were not
explicitly quantified or monetized in HELCO’s
benefit/cost ratio.
. . . .
LOL is not in favor of commission approval of the
[Amended] PPA, but focused its rationale on concerns
outside of the scope of its limited participation,
namely climate change and comparative pricing with
other forms of energy.
(Emphases added).
It appears the PUC adopted HELCO’s analysis of the
biomass facility’s economic and customer bill impact under the
Amended PPA, stating, “[p]er HELCO, . . . the Project provides
significant renewable energy-related benefits, primarily through
its firm capacity and contribution to the State’s RPS goals. For
the island of Hawaii, with the Project, the RPS goal levels
increase by approximately 11% over the 30-year life of the
Project.” The PUC also made the following findings and
conclusions:
[T]he commission finds that the Project will . . . add
to the diversity of HELCO’s existing portfolio of
renewable energy resources.
. . . .
Consistent with [Hawaii Revised Statutes (HRS)] §
269-27.2(c)[(Supp. 2016)], the proposed pricing
structure is delinked from fossil fuel pricing.
. . . .
[I]t appears that the addition of the Project may
primarily displace fossil fuel generation resources.
Accordingly, the commission anticipates that, based on
the representations made in HELCO’s [Power Supply
Improvement Plan], this Project will accelerate the
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retirement of fossil fuel plants[.]
(Emphases added).
The PUC addressed, inter alia, the following two
issues: (2.a.i) whether the energy price components in the
Amended PPA properly reflect the cost of biomass fuel supply; and
(2.b) whether HELCO’s purchase power arrangements under the
Amended PPA are prudent and in the public interest. The PUC
found the purchased power costs to be reasonable and that the
arrangements under the Amended PPA were prudent and in the public
interest. Accordingly, the PUC approved the Amended PPA,
concluding that:
HELCO has met its burden of proof in support of its
request for the commission to approve the [Amended]
PPA. The purchased power costs and arrangements set
forth in the [Amended] PPA appear reasonable, prudent,
in the public interest, and consistent with HRS
chapter 269 in general, and HRS § 269-27.2(c), in
particular. While the commission, in this instance,
finds the pricing to be reasonable, the commission
makes clear that its decision to approve the [Amended]
PPA is not based solely on pricing, but includes other
factors such as the State’s need to limit its
dependence on fossil fuels and mitigate against
volatility in oil pricing.
(Emphases added).
B. Direct Appeal
LOL directly appealed the PUC’s order denying LOL’s
Motion to Upgrade Status and the 2017 D&O to this court. See HRS
§ 269-15.51 (Supp. 2018) and HRS § 91-14 (2012 & Supp. 2018).
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LOL presents three points of error:8 (1) the PUC was required,
under HRS § 269-6(b) (Supp. 2016), to explicitly consider GHG
emissions in determining whether the costs of the Amended PPA
were reasonable, but failed to do so; (2) the PUC denied LOL due
process to protect its right to a clean and healthful
environment, as defined by HRS Chapter 269, by restricting its
participation in the PUC proceedings; and (3) the PUC erred in
denying LOL’s Motion to Upgrade Status from “participant” to
“intervenor.”
II. STANDARDS OF REVIEW
A. Jurisdiction
“The existence of jurisdiction is a question of law
that [the appellate court reviews] de novo under the right/wrong
standard.” Captain Andy’s Sailing, Inc., v. Dep’t of Land & Nat.
Res., 113 Hawaii 184, 192, 150 P.3d 833, 841 (2006) (internal
quotation marks and citation omitted).
B. Direct Appeal
Because this is a direct appeal from a decision of the
PUC, the standard of review, as set forth in HRS § 91-14, is as
follows:
Upon review of the record, the court may affirm the
decision of the agency or remand the case with
instructions for further proceedings; or it may
reverse or modify the decision and order if the
8
LOL did not specifically challenge any findings of fact contained
in the PUC’s 2017 D&O in its Opening Brief. “Findings of fact . . . that are
not challenged on appeal are binding on the appellate court.” Bremer v.
Weeks, 104 Hawaii 43, 63, 85 P.3d 150, 170 (2004) (citations omitted).
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substantial rights of the petitioners may have been
prejudiced because the administrative findings,
conclusions, decisions, or orders are:
(1) In violation of constitutional or statutory
provisions;
(2) In excess of the statutory authority or
jurisdiction of the agency;
(3) Made upon unlawful procedure;
(4) Affected by other error of law;
(5) Clearly erroneous in view of the reliable,
probative, and substantial evidence on the whole
record; or
(6) Arbitrary, or capricious, or characterized by
abuse of discretion or clearly unwarranted
exercise of discretion.
HRS § 91-14(g).
Conclusions of law are reviewed de novo, pursuant to
subsections (1), (2) and (4); questions regarding
procedural defects are reviewable under subsection
(3); findings of fact (FOF) are reviewable under the
clearly erroneous standard, pursuant to subsection
(5), and an agency's exercise of discretion is
reviewed under the arbitrary and capricious standard,
pursuant to subsection (6). Save Diamond Head Waters
LLC, 121 Hawaii [16,] 24, 211 P.3d [74,] 82 [(2009)].
Mixed questions of law and fact are “‘reviewed under
the clearly erroneous standard because the conclusion
is dependent upon the facts and circumstances of the
particular case.’” Id. at 25, 211 P.3d at 83 (quoting
Del Monte Fresh Produce (Haw.), Inc. v. Int’l
Longshore & Warehouse Union, 112 Hawaii 489, 499, 146
P.3d 1066, 1076 (2006)).
A court reviewing the decision of an agency should
ensure that the “agency . . . make its findings
reasonably clear. The parties and the court should
not be left to guess . . . the precise finding of the
agency.” In re Water Use Permit Applications, 94
Hawaii 97, 157, 9 P.3d 409, 469 (2000) (“Waiahole I”)
(quoting In re Kauai Elec. Div. of Citizens Utilities
Co., 60 Haw. 166, 183, 590 P.2d 524, 537 (1978)). An
agency’s findings should be “sufficient to allow the
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reviewing court to track the steps by which the agency
reached its decision.” Kilauea Neighborhood Ass'n v.
Land Use Comm’n, 7 Haw. App. 227, 230, 751 P.2d 1031,
1034 (1988)[; see] also In re Waiola O Molokai, Inc.,
103 Hawaii 401, 432, 83 P.3d 664, 695 (2004)
(explaining that any presumption of validity, given to
an agency’s decision, “presupposes that the agency has
grounded its decision in reasonably clear” findings of
fact and conclusions of law).
Kauai Springs, Inc. v. Planning Comm’n of Cty. of Kauai, 133
Hawaii 141, 164, 324 P.3d 951, 974 (2014).
C. Constitutional Law
“We review questions of constitutional law de novo,
under the right/wrong standard.” Jou v. Dai–Tokyo Royal State
Ins. Co., 116 Hawaii 159, 164–65, 172 P.3d 471, 476–77 (2007)
(quoting Onaka v. Onaka, 112 Hawaii 374, 378, 146 P.3d 89, 93
(2006)) (internal quotation marks omitted).
III. DISCUSSION
A. Jurisdiction
This court must determine, as a threshold matter,
whether it has jurisdiction over LOL’s appeal. Pub. Access
Shoreline Haw. by Rothstein v. Haw. Cty. Planning Comm’n by
Fujimoto, 79 Hawaii 425, 431, 903 P.2d 1246, 1252 (1995)
(quoting Pele Def. Fund v. Puna Geothermal Venture, 77 Hawaii
64, 67, 881 P.2d 1210, 1213 (1994)). Hu Honua and HELCO argue
that this court lacks jurisdiction because LOL’s appeal of the
PUC’s 2017 D&O constitutes an improper collateral attack on the
PUC’s 2012 D&O. Additionally, Hu Honua, HELCO, and the PUC argue
that this court lacks jurisdiction because LOL’s appeal does not
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arise from a contested case and LOL failed to comply with the
applicable agency rules by not requesting a contested case
hearing.
As set forth below, LOL’s appeal is not a collateral
attack on the PUC’s 2012 D&O. LOL has appealed the PUC’s 2017
D&O to directly challenge its validity, rather than to indirectly
impeach the validity of the PUC’s 2012 D&O. Furthermore, the
requirements for judicial review under HRS § 91-14(a) – a
contested case hearing, finality, and compliance with agency
rules – have been satisfied. The PUC’s 2017 Docket was a
contested case hearing because a hearing was required by
constitutional due process in order to consider the impacts of
approving the Amended PPA on LOL’s right to a clean and healthful
environment, as defined by HRS Chapter 269, and such a hearing
would have determined the rights, duties, and privileges of
HELCO. It is undisputed that the 2017 D&O is a final decision of
the PUC. Finally, LOL followed the applicable agency rules, as
it was involved in the contested case as a participant in the
2017 Docket and the PUC’s administrative rules do not require a
request for a contested case hearing as a prerequisite to
judicial review. We therefore have jurisdiction to consider the
merits of LOL’s appeal.
1. Collateral Attack
“A collateral attack[, as opposed to a direct attack,]
is an attempt to impeach a judgment or decree in a proceeding not
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instituted for the express purpose of annulling, correcting or
modifying such judgment or decree.” Kapiolani Estate v.
Atcherly, 14 Haw. 651, 661 (1903) (citations and internal
quotation marks omitted). The ICA has observed that “the
collateral attack doctrine is implicated when an independent suit
seeks to impeach a judgment entered in a prior suit.” Smallwood
v. City and Cty. of Honolulu, 118 Hawaii 139, 150, 185 P.3d 887,
898 (App. 2008). This court has similarly stated that
“[a]ppellate courts in Hawaii have typically only applied the
collateral attack doctrine in situations in which a second
lawsuit has been initiated challenging a judgment or order
obtained from a prior, final proceeding.” In re Thomas H. Gentry
Revocable Tr., 138 Hawaii 158, 169 n.5, 378 P.3d 874, 885 n.5
(2016) (citation omitted).
The party asserting that an action constitutes an
impermissible collateral attack on a judgment must
establish that: (1) a party in the present action
seeks to avoid, defeat, evade, or deny the force and
effect of the prior final judgment, order, or decree
in some manner other than a direct post-judgment
motion, writ, or appeal; (2) the present action has an
independent purpose and contemplates some other relief
or result than the prior adjudication; (3) there was a
final judgment on the merits in the prior
adjudication; and (4) the party against whom the
collateral attack doctrine is raised was a party or is
in privity with a party in the prior action.
Smallwood, 118 Hawaii at 150, 185 P.3d at 898.
As set forth below, LOL’s appeal is a direct attack of
the PUC’s 2017 D&O, not a collateral attack on the PUC’s 2012
D&O.
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The first Smallwood element requires a showing that “a
party in the present action seeks to avoid, defeat, evade, or
deny the force and effect of the prior final judgment, order, or
decree in some manner other than a direct post-judgment motion,
writ, or appeal.” 118 Hawaii at 150, 185 P.3d at 898 (emphases
added). “If an appeal is taken from a judgment, . . . the attack
is obviously direct, the sole object of the proceeding being to
deny and disprove the apparent validity of the judgment.”
Kapiolani Estate, 14 Haw. at 661. Rather than attacking the
validity of the PUC’s 2012 D&O, LOL’s appeal was instituted for
the express purpose of denying the force and effect the PUC’s
2017 D&O. Thus, the first Smallwood element is not satisfied and
LOL’s appeal cannot be construed as a collateral attack.
See Kapiolani Estate, 14 Haw. at 661 (“A collateral attack is an
attempt to impeach a judgment or decree in a proceeding not
instituted for the express purpose of annulling, correcting or
modifying such judgment or decree.”) (emphasis added).
Hu Honua and HELCO argue that, even if LOL’s challenge
appears to be a direct appeal of the PUC’s 2017 D&O, it functions
as a collateral attack on the PUC’s 2012 D&O. Hu Honua and HELCO
contend that the primary purpose of LOL’s appeal is to force the
PUC to consider the effect of the State’s reliance on fossil
fuels on GHG emissions and climate change. However, they argue,
consideration of GHGs was not within the scope of the PUC’s final
statement of issues in the 2017 Docket. According to Hu Honua
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and HELCO, the 2017 Docket only involved increasing the term of
the Original PPA and revisions to the contract price and
milestone events, which do not directly relate to the effect of
the State’s reliance on fossil fuels on GHG emissions or climate
change. Hu Honua and HELCO therefore contend that, to the extent
the PUC was required to consider the effect of the State’s
reliance on fossil fuels on GHG emissions and climate change, “it
did so only in the 2012 Docket.” Because LOL failed to directly
and timely challenge the 2012 D&O, Hu Honua and HELCO argue that
LOL’s appeal is an improper and untimely attempt to raise the
PUC’s failure to address GHGs in the 2012 D&O.
As discussed further infra, a majority of this court
recently determined that “HRS § 269–6(b)’s requirement to reduce
reliance on fossil fuels and to consider [GHG] emissions applies
to the fulfillment of all of the [PUC’s] duties.” In re
Application of Maui Elec. Co. (MECO), 141 Hawaii 249, 263, 408
P.3d 1, 15 (2017) (citing HRS § 269–6(b)). LOL was entitled to
appeal the PUC’s 2017 D&O due to the PUC’s alleged failure to
perform statutory and constitutional duties. Hu Honua and
HELCO’s argument that the collateral attack doctrine precludes
this court from exercising appellate jurisdiction over LOL’s
appeal because the PUC’s consideration of GHGs was outside the
scope of the 2017 Docket is therefore without merit.
Accordingly, this court’s appellate jurisdiction is not
precluded by the collateral attack doctrine.
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2. Contested Case
PUC decisions are appealable to this court pursuant to
HRS § 269-15.51, which provides, in relevant part:
Any other law to the contrary notwithstanding,
including chapter 91, any contested case under this
chapter shall be appealed from a final decision and
order or a preliminary ruling that is of the nature
defined by section 91-14(a) upon the record directly
to the supreme court for final decision. Only a
person aggrieved in a contested case proceeding
provided for in this chapter may appeal from the final
decision and order or preliminary ruling.
Judicial review over an agency appeal is authorized by
HRS § 91-14(a)9 when the following requirements have been met:
[F]irst, the proceeding that resulted in the
unfavorable agency action must have been a contested
case hearing . . . ; second, the agency’s action must
represent a final decision or order, or a preliminary
ruling such that deferral of review would deprive the
claimant of adequate relief; third, the claimant must
have followed the applicable agency rules and,
therefore, have been involved in the contested case;
and finally, the claimant’s legal interests must have
been injured — i.e., the claimant must have standing
to appeal.
MECO, 141 Hawaii at 258, 408 P.3d at 10 (quoting Kilakila O
Haleakala v. Bd. of Land & Nat. Res., 131 Hawaii 193, 200, 317
P.3d 27, 34 (2013)).
Accordingly, there are three jurisdictional
9
HRS § 91-14(a) provides, in relevant part:
Any person aggrieved by a final decision and order in
a contested case or by a preliminary ruling of the
nature that deferral of review pending entry of a
subsequent final decision would deprive appellant of
adequate relief is entitled to judicial review thereof
under this chapter; but nothing in this section shall
be deemed to prevent resort to other means of review,
redress, relief, or trial de novo, including the right
of trial by jury, provided by law.
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requirements for judicial review over an agency appeal: (1) a
contested case hearing, (2) finality, and (3) compliance with
agency rules. Id. Hu Honua, HELCO, and the PUC argue that this
court lacks jurisdiction over LOL’s appeal because the appeal
does not arise from a contested case and LOL failed to comply
with the applicable agency rules by not requesting a contested
case hearing.10
a. The Proceeding Was a Contested Case Hearing
“A contested case hearing is one that is (1) required
by law and (2) determines the rights, duties, and privileges of
specific parties.” MECO, 141 Hawaii at 258, 408 P.3d at 10
(internal quotation marks omitted) (citing Kilakila, 131 Hawaii
at 200, 317 P.3d at 34). As set forth below, the PUC’s 2017
Docket was a contested case hearing because a hearing was
required by law that would have determined the rights, duties,
and privileges of HELCO.
i. “Required by Law”
“In order for an administrative agency hearing to be
required by law, it may be required by (1) agency rule, (2)
statute, or (3) constitutional due process.” Id. (internal
quotation marks omitted) (citing Kilakila, 131 Hawaii at 200,
317 P.3d at 34). LOL contends that a contested case hearing was
10
The parties do not dispute that the PUC’s 2017 D&O was a final
decision or order for the purpose of satisfying the requirements for judicial
review of an agency appeal. Accordingly, that requirement is not addressed
further.
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required under HRS §§ 269-16 (Supp. 2018) and 269-27.2 (2007 &
Supp. 2018), and constitutional due process. We hold that
although a hearing was not required by statute, one was required
pursuant to constitutional due process.
(A) HRS § 269-16(b)
HRS § 269–16(b) requires the PUC to conduct a contested
case hearing whenever a utility seeks an increase in rates, but
specifically exempts rate adjustments “established pursuant to an
automatic rate adjustment clause previously approved by the
commission[.]”11 HAR § 6-60-6 (effective June 19, 1981)
similarly provides that automatic rate adjustment clauses that
apply to fuel and purchased energy––or fuel adjustment
11
HRS § 269-16(b) provides, in relevant part:
No rate, fare, charge, classification, schedule, rule,
or practice, other than one established pursuant to an
automatic rate adjustment clause previously approved
by the commission, shall be established, abandoned,
modified, or departed from by any public utility,
except after thirty days’ notice to the commission as
prescribed in section 269-12(b), and prior approval by
the commission for any increases in rates, fares, or
charges. . . . A contested case hearing shall be held
in connection with any increase in rates, and the
hearing shall be preceded by a public hearing as
prescribed in section 269-12(c), at which the
consumers or patrons of the public utility may present
testimony to the commission concerning the increase.
The commission, upon notice to the public utility,
may:
. . . .
(2) After a hearing, by order:
. . . .
(G) Regulate its financial transactions[.]
(Emphases added).
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clauses––do not require a hearing.12 Thus, not only are
automatic rate adjustment clauses exempted from HRS § 269–16(b)’s
hearing requirement, they are also defined by the relevant agency
rule as provisions that allow for rate changes without a prior
hearing.
The PUC approved the Amended PPA pursuant to, in part,
HAR § 6-60-6 (effective June 19, 1981). In so doing, it
authorized HELCO to include energy power purchase costs in its
Energy Cost Adjustment Clause (ECAC) and to include non-energy
purchased power costs in its Purchased Power Adjustment Clause
(PPAC). According to the 2017 D&O, HELCO’s ECAC and PPAC are
“fuel adjustment clauses” under HAR § 6-60-6.13 The PUC
12
The utility’s rate schedules may include automatic rate
adjustment clauses, only for those clauses previously
approved by the commission. Upon effective date of
this Chapter, any fuel adjustment clause submitted for
commission approval shall comply with the following
standards:
(1) “Fuel adjustment clause” means a provision of a
rate schedule which provides for increases or
decreases or both, without prior hearing, in
rates reflecting increases or decreases or both
in costs incurred by an electric or gas utility
for fuel and purchased energy due to changes in
the unit cost of fuel and purchased energy.
(2) No changes in fuel and purchased energy costs
may be included in the fuel adjustment clause
unless the contracts or prices for the purchase
of such fuel or energy have been previously
approved or filed with the commission.
HAR § 6-60-6 (emphases added).
13
The Amended PPA defines “Energy Cost Adjustment Clause” as:
[HELCO]’s cost recovery mechanism for fuel and
purchased energy costs approved by the PUC in
(continued...)
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specifically noted that HAR § 6-60-6 “generally governs the
propriety of fuel adjustment clauses[,]” and stated in its
Findings and Conclusions that:
[I]n the Underlying [2012] Decision and Order
regarding the Original PPA, the commission found it
“reasonable to authorize recovery of the purchased
energy charges through [HELCO’s] ECAC, and to recover
the non-energy purchased power costs (including the
related revenue taxes) through [HELCO’s] PPAC, to the
extent that such costs are not included in base
rates.” Because the energy and capacity payments in
the [Amended PPA], as in the Original PPA, continue to
not be included in another cost recovery mechanism,
and given the above findings concerning pricing under
the [Amended PPA], the commission authorizes the same
recovery under the [Amended PPA].
In MECO, we considered whether a hearing was required
under HRS § 269–16(b) before the PUC could approve Maui
Electric’s request to recover costs through its existing ECAC.
MECO, 141 Hawaii at 259-60, 408 P.3d at 11-12. In making our
determination that a hearing was not required by HRS § 269–16(b),
we stated the following:
[T]he Commission authorized Maui Electric to recover
charges for purchased energy under the Agreement
through Maui Electric’s existing energy cost
adjustment clause. There is nothing in the record
indicating that Maui Electric’s energy cost adjustment
clause was not previously approved by the Commission
13
(...continued)
conformance with [HAR] § 6-60-6 whereby the base
electric energy rates charged to retail customers are
adjusted to account for fluctuations in the costs of
fuel and purchased energy or such successor provision
that may be established from time to time.
“Purchased Power Adjustment Clause” is defined as “[t]he Purchased
Power Adjustment Clause approved by the PUC in Decision and Order
No. 30168 in Docket No. 2009-0164 on February 8, 2012.”
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or that the Commission’s decision revised the existing
adjustment clause. Additionally, the record does not
suggest that the use of the fuel adjustment clause in
this case would cover anything other than increases or
decreases in the unit cost of purchased energy
determined by the last rate case proceeding for the
utility. See HAR § 6–60–6(3).
Id.
Similarly here, the PUC authorized HELCO to recover
charges for purchased power through its existing ECAC and PPAC.
The record indicates that these adjustment clauses were
previously approved and were not revised by the PUC’s 2017 D&O.
Furthermore, the record does not suggest that the adjustment
clauses would cover anything other than changes in the unit cost
of purchased power determined by the last rate case proceeding.
Accordingly, because the rate adjustments implicated by
the Amended PPA were established pursuant to automatic adjustment
clauses previously approved by the PUC, the PUC was not required
to hold a contested case hearing under HRS § 269-16(b) prior to
approving the Amended PPA.
(B) HRS § 269-27.2(d)
Pursuant to HRS § 269–27.2(d), the PUC may only allow a
public utility to impose an interim increase in rates to recover
payments made to “nonfossil fuel producers for firm capacity and
related revenue taxes” after an evidentiary hearing.14 As
14
HRS § 269–27.2(d) provides, in pertinent part:
Upon application of a public utility that supplies
electricity to the public, and notification of its
customers, the commission, after an evidentiary
(continued...)
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discussed above, in approving the Amended PPA, the PUC authorized
HELCO to include energy power purchase costs and non-energy
purchased power costs in its ECAC and PPAC, respectively, to the
extent that such costs were not included in its base rates.
However, HELCO’s ECAC and PPAC are fuel adjustment clauses
specifically exempt from hearing requirements and do not
constitute an “interim increase in rates” for the purposes of HRS
§ 269-27.2(d).
In MECO, we similarly considered whether a hearing was
required under HRS § 269–27.2(d). MECO, 141 Hawaii at 259, 408
P.3d at 11. In determining that a hearing was not required by
HRS § 269–27.2(d), we stated that:
Sierra Club has not argued that the [PUC]’s decision
authorized Maui Electric to impose an interim increase
in rates for the purpose of recovering payments for
firm capacity, nor has Sierra Club argued that Maui
Electric ever sought permission to do so. Indeed, the
record indicates that one of the features of the
Agreement was to eliminate the capacity payments that
Maui Electric was paying to HC & S under the existing
agreement. Accordingly, the requirement of a hearing
provided for in HRS § 269-27[.2](d) is not applicable
to the Application in this case.
Id.
As in MECO, LOL does not argue that the PUC authorized
an interim increase in HELCO’s base rates when it approved the
14
(...continued)
hearing, may allow payments made by the public utility
to nonfossil fuel producers for firm capacity and
related revenue taxes to be recovered by the public
utility through an interim increase in rates[.]
(Emphases added).
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Amended PPA, or that HELCO sought permission to impose such an
increase. As such, the PUC was not required to hold a contested
case hearing under HRS § 269-27.2(d) prior to approving the
Amended PPA.
(C) Constitutional Due Process
LOL argues that a contested case hearing was required
by constitutional due process prior to the PUC’s approval of the
Amended PPA. As set forth below, we agree.
This court engages in a two-step inquiry when
evaluating claims of a due process right to a hearing: “(1) is
the particular interest which [the] claimant seeks to protect by
a hearing ‘property’ within the meaning of the due process
clauses of the federal and state constitutions, and (2) if the
interest is ‘property,’ what specific procedures are required to
protect it.” Sandy Beach Def. Fund v. City Council of Honolulu,
70 Haw. 361, 376, 773 P.2d 250, 260 (1989) (citing Aguiar v. Haw.
Hous. Auth., 55 Haw. 478, 495, 522 P.2d 1255, 1266 (1974)).
Accordingly, to determine whether LOL was entitled to a
contested case hearing pursuant to constitutional due process, we
must first determine whether LOL possesses “an interest which
qualifies as ‘property’ within the meaning of the constitution.”
Id. If LOL does possess such a property interest, we must then
consider whether a contested case hearing was required to protect
that interest. Id.
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(1) Constitutionally Cognizable
Property Interest
“[A] protected property interest exists in a benefit —
tangible or otherwise — to which a party has a legitimate claim
of entitlement.” MECO, 141 Hawaii at 260, 408 P.3d at 12
(internal quotation marks omitted) (citing Sandy Beach Def. Fund,
70 Haw. at 377, 773 P.2d at 260). This court has explained that:
The legitimate claims of entitlement that constitute
property interests are not created by the due process
clause itself. Instead, “they are created and their
dimensions are defined by existing rules or
understanding that stem from an independent source
such as state law — rules or understanding that secure
certain benefits and that support claims of
entitlement to those benefits.”
Id. (quoting In re Īao Ground Water Mgmt. Area High-Level Source
Water Use Permit Applications, 128 Hawaii 228, 241, 287 P.3d
129, 142 (2012)).
LOL argues that it was entitled to due process to
protect its constitutional right to a clean and healthful
environment provided by article XI, section 9 of the Hawaii
Constitution and HRS Chapter 269. Article XI, section 9
provides:
Each person has the right to a clean and healthful
environment, as defined by laws relating to
environmental quality, including control of pollution
and conservation, protection and enhancement of
natural resources. Any person may enforce this right
against any party, public or private, through
appropriate legal proceedings, subject to reasonable
limitations and regulation as provided by law.
In MECO, this court similarly considered whether the
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PUC violated Sierra Club’s due process rights by approving a
power purchase agreement between a utility company and a producer
of electricity without holding a contested case hearing to
consider the environmental impacts of approving the agreement.
Id. at 260-65, 408 P.3d at 12-17. This court recognized that
Sierra Club’s interest in its right to a clean and healthful
environment, as defined by laws relating to environmental
quality, is a property interest protected by due process, as it
is a substantive right guaranteed by the Hawaii Constitution.
Id. at 260-61, 408 P.3d at 12-13.
This court then determined that “HRS Chapter 269 is a
law relating to environmental quality that defines the right to a
clean and healthful environment under article XI, section 9 by
providing that express consideration be given to reduction of
[GHG] emissions in the decision-making of the Commission.” Id.
at 264, 408 P.3d at 16. This court held that Sierra Club’s
assertion of a right to a clean and healthful environment, as
defined by HRS Chapter 269, therefore established a protectable
property interest under article XI, section 9 and HRS Chapter
269. Id.
Like the appellant in MECO, LOL seeks to protect its
property interest in a clean and healthful environment, as
defined by HRS Chapter 269. LOL stated in the 2017 Docket that:
Life of the Land is a non-profit Hawaii-based
organization. Our members are very deeply concerned
about climate change, biodiversity, and the spread of
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invasive species. Life of the Land believes that the
efforts to protect our archipelago from the ravages of
climate change, and the introduction of alien species
has not been adequately protected and funded by
legislative actions.
LOL asserts that “its members are located in Hawaii
and are directly concerned with preventing climate change
impacts, biodiversity, and the spread of invasive species, all of
which are affected by GHG emissions, as well as other
environmental and public interest impacts of [the] PUC’s
decisionmaking on the [Amended PPA].” Consequently, pursuant to
article XI, section 9 of the Hawaii Constitution and HRS Chapter
269, as interpreted by this court in MECO, LOL has shown a
constitutionally cognizable property interest in this case.
(2) A Contested Case Hearing was
Required
Having determined that LOL has demonstrated a protected
property interest in a clean and healthful environment as defined
by HRS Chapter 269, “we next consider what procedures due process
requires in this case.” MECO, 141 Hawaii at 265, 408 P.3d at
17. When determining the procedures required to comply with
constitutional due process, we consider the following three
factors: “(1) the private interest which will be affected; (2)
the risk of an erroneous deprivation of such interest through the
procedures actually used, and the probable value, if any, of
additional or alternative procedural safeguards; and (3) the
governmental interest, including the burden that additional
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procedural safeguards would entail.” Sandy Beach Def. Fund, 70
Haw. at 378, 773 P.2d at 261 (citations omitted). Upon
consideration of each of these factors, we conclude that a
contested case hearing was required.
First, the private interest to be affected is LOL’s
right to a clean and healthful environment, which “includes the
right that explicit consideration be given to reduction of [GHG]
emissions in Commission decision-making, as provided for in HRS
Chapter 269.” MECO, 141 Hawaii at 265, 408 P.3d at 17. The
Amended PPA involves the construction and operation of a biomass
combustion facility by Hu Honua, and reliance on the facility by
HELCO for an extended term of thirty years. As in MECO, as part
of the 2017 Docket, the PUC was asked to consider the
reasonableness of the energy charges implicated by the Amended
PPA, and to determine whether the arrangement was prudent and in
the public interest. This “would necessarily include an
evaluation of the hidden and long-term costs of the activities”
of the Hu Honua facility. Id. at 266, 408 P.3d at 18. Because
the PUC’s determinations of these issues would require
consideration of the level of GHG emissions generated by the Hu
Honua facility, LOL’s right to a clean and healthful environment,
as defined by HRS Chapter 269, was directly affected by the PUC’s
approval of the Amended PPA under MECO.
Further, the PUC’s 2017 D&O concluded that the Amended
PPA was “consistent with HRS chapter 269” and was approved based
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in part on “the State’s need to limit its dependence on fossil
fuels and mitigate against volatility in oil pricing.” The PUC’s
decision thus implicated LOL’s constitutional right to a clean
and healthful environment, as defined by HRS Chapter 269.
Accordingly, the PUC’s approval of the Amended PPA under the
terms of the 2017 D&O adversely affected LOL’s private interest.
Second, the risk of erroneous deprivation is high in
this case, absent the protections provided by a contested case
hearing. Consistent with public comments in opposition to the
project, LOL posits that the PUC’s approval of the Amended PPA
could have adverse environmental impacts. Yet, the restricted
scope of the 2017 Docket prevented LOL from addressing these
potential impacts. See MECO, 141 Hawaii at 266, 408 P.3d at 18
(risk of erroneous deprivation of Sierra Club’s interest was high
due to potential impact on air quality and absence of
opportunities to be heard concerning electricity producer’s
performance under the agreement).
Finally, regarding the governmental interest, the
burden of affording LOL a contested case hearing is slight
because the PUC is already statutorily required to consider the
long-term effects of its decisions. See id. (affording Sierra
Club a hearing would not unduly burden the PUC in light of its
statutory duty to consider the long-term effects of its
decisions).
Accordingly, and consistent with this court’s
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conclusion in MECO, a hearing conducted by the PUC was required
by constitutional due process to protect LOL’s right to a clean
and healthful environment, as defined by HRS Chapter 269. Id. at
269, 408 P.3d at 21.
ii. “Rights, Duties, and Privileges”
A contested case hearing is one that is (1) required by
law and (2) determines the rights, duties, and privileges of
specific parties. MECO, 141 Hawaii at 258, 408 P.3d at 10
(citing Kilakila, 131 Hawaii at 200, 317 P.3d at 34) (internal
quotation marks omitted). Having determined that a contested
case hearing was required by constitutional due process, the
question becomes whether the 2017 Docket, in which the PUC
approved the Amended PPA, constituted a contested case hearing.
We conclude that the 2017 Docket was a contested case hearing
because the hearing required by law would have determined HELCO’s
rights, duties, and privileges.
This court has explained that:
HRS § 91–1 [Supp. 2018] does not contain the
requirement that the hearing be a “trial-type
evidentiary hearing” or that the hearing exhibit a
particular level of “adversarial” quality. Rather,
. . . there are only two requirements for a hearing to
be regarded as a contested case hearing: (1) that the
hearing be required by law and (2) that the hearing
determine the rights, duties, or privileges of
specific parties.
E & J Lounge Operating Co. v. Liquor Comm’n of City & Cty. of
Honolulu, 118 Hawaii 320, 333, 189 P.3d 432, 445 (2008).
In Kilakila, the Board of Land and Natural Resources
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(BLNR) approved an application submitted by the University of
Hawaii (UH) to permit construction of astronomy facilities near
the summit of Haleakalā on Maui. 131 Hawaii 193, 317 P.3d 27.
The circuit court dismissed an appeal of the BLNR’s decision for
lack of jurisdiction under HRS § 91-14 because no formal
contested case hearing had been held. The ICA affirmed. Id. at
196, 317 P.3d at 30. This court determined that, although no
formal contested case hearing occurred, the BLNR proceedings that
resulted in the granting of UH’s application constituted a
contested case hearing. Id. at 200-02, 317 P.3d at 34-36.
We first determined that UH’s application “necessitated
a hearing by law - i.e., by the administrative rules governing
[Department of Land and Natural Resources] and BLNR.” Id. at
202, 317 P.3d at 36. We then stated the following regarding the
“rights, duties, and privileges” requirement of a contested case
hearing:
In this case, no formal contested case hearing was
actually held before the BLNR voted to grant the
permit in this case, so the question becomes whether a
formal hearing would have determined — or whether the
proceedings that did take place determined — the
“rights, duties, and privileges of specific parties.”
The inquiry here is “directed at the party whose
application was under consideration.” Thus, we focus
on the rights, duties, and privileges of UH.
. . . . UH’s proposed project involves construction
of a substantial complex of astronomy facilities on
conservation district land. . . . UH could not
legally commence that construction without first
submitting an application for a permit and having that
application reviewed and approved by BLNR. Approval,
including any conditions attached thereto, or denial
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of the application clearly implicates whether UH would
or would not be able to engage in the requested use of
building astronomy facilities at the telescope project
site. Thus, a formal contested case hearing approving
o[r] denying UH’s application would have determined
UH’s rights, duties, or privileges with regard to the
project. Even in the absence of a formal contested
case hearing, we point out that the proceedings that
otherwise took place, including the vote to grant the
permit, in fact did determine UH’s rights, duties, and
privileges.
Id. (emphases added) (citations omitted).
Because approval of UH’s permit was required before it
could construct astronomy facilities at the project site, the
proceedings that took place determined UH’s rights, duties, and
privileges. Id. We therefore concluded that, although no formal
contested case hearing was conducted, the BLNR proceedings
nevertheless constituted a contested case hearing within the
meaning of HRS § 91-14. Id.
Similar to the BLNR proceedings at issue in Kilakila,
no formal contested case hearing was held before the PUC approved
the Amended PPA in the 2017 D&O. We must therefore address
“whether a formal hearing would have determined - or whether the
proceedings that did take place determined - the ‘rights, duties,
and privileges’” of HELCO. Kilakila, 131 Hawaii at 202, 317
P.3d at 36 (noting that the inquiry is “directed at the party
whose application was under consideration”) (citation and
quotation marks omitted).
Pursuant to HRS § 269-27.2(c), HELCO and Hu Honua’s
Amended PPA would be of no force and effect without approval by
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the PUC. Thus, had the PUC held a formal contested case hearing
to determine whether the Amended PPA should be approved or
rejected, that hearing would have determined the rights, duties,
and privileges of HELCO. Even in the absence of a formal
contested case hearing, the proceedings that took place in the
2017 Docket resulted in the PUC’s approval of the Amended PPA,
and therefore did in fact determine HELCO’s rights, duties, and
privileges. Accordingly, the PUC’s proceedings in the 2017
Docket constituted a contested case hearing within the meaning of
HRS § 91-14.
b. LOL Followed Agency Rules and Was Involved in the
Contested Case
Judicial review over an agency appeal under HRS § 91-14
is only available where the claimant “followed the applicable
agency rules and, therefore, [was] involved in the contested
case.” MECO, 141 Hawaii at 258, 408 P.3d at 10 (quoting
Kilakila, 131 Hawaii at 200, 317 P.3d at 34). Hu Honua, HELCO,
and the PUC argue that LOL was not entitled to a contested case
hearing because it failed to request such a hearing. As set
forth below, this argument is without merit, as LOL was not
required to request a contested case hearing.
i. A Request for a Contested Case Hearing Was
Not Required Pursuant to Administrative Rule
Hu Honua argues that LOL was required to request a
contested case hearing pursuant to HAR §§ 6-61-74 (effective
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1992-2018) and 6-61-55.15 However, the PUC’s administrative
rules do not contain such a requirement. HAR § 6-61-74 provided
the substantive requirements for applications and petitions to
the PUC generally, and HAR § 6-61-55 described the substance of
an application to intervene as a party in a PUC proceeding.
Neither of these rules, which remain effective in HAR title 16,
chapter 601, requires a party to request a contested case
hearing. Moreover, no other rule that governs the rules of
15
HAR § 6-61-74 provided:
All applications and petitions shall:
(1) State clearly and concisely the authorization or
relief sought;
(2) Cite the appropriate statutory provision or
other authority under which commission
authorization or relief is sought; and
(3) In addition to specific requirements for
particular types of applications (see
subchapters 7 to 10), state the following:
(A) The applicant's legal name and location of
principal place of business, and, if a
corporation, trust, association, or other
organization, the state under whose laws
the applicant was organized;
(B) The name, title, and address of the person
to whom correspondence or communications
in regard to the application are to be
addressed. Notices, orders, and other
documents shall be served upon the person
named, and that service shall be deemed to
be service upon the applicant; and
(C) If ex parte action or relief pending full
hearing is sought, the necessity or
emergency justifying the requested action.
See infra note 22. HAR § 16-601-74 (effective Jan. 1, 2019)
provides identical requirements.
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practice and procedure before the PUC imposes such a requirement.
Furthermore, it is undisputed that LOL was involved in the PUC’s
proceeding as a participant. Accordingly, judicial review over
LOL’s appeal is not precluded on this basis.
In contrast, HAR Chapter 13-1, governing the rules of
practice and procedure before the Department of Land and Natural
Resources, contains a requirement that a claimant “request a
contested case and petition the board to hold a contested case
hearing.” HAR § 13-1-29(a) (effective Feb. 27, 2009).16 This
court has recognized that “HAR § 13–1–29 is the applicable agency
rule delineating the specific procedures for requesting a
contested case hearing.”17 Hui Kakoo Aina Hoopulapula v. Bd. of
16
HAR § 13-1-29(a) provides:
On its own motion, the board may hold a contested case
hearing. Others must both request a contested case
and petition the board to hold a contested case
hearing. An oral or written request for a contested
case hearing must be made to the board no later than
the close of the board meeting at which the subject
matter of the request is scheduled for board
disposition. An agency or person so requesting a
contested case must also file (or mail a postmarked)
written petition with the board for a contested case
no later than ten calendar days after the close of the
board meeting at which the matter was scheduled for
disposition. For good cause, the time for making the
oral or written request or submitting a written
petition or both may be waived.
(Emphasis added).
17
HAR § 13-1-29 has been amended slightly since this court decided
Hui Kakoo Aina Hoopulapula. When the case was decided, HAR § 13-1-29(a)
stated:
A hearing on a contested matter may be requested by
the board on its own motion or upon the written
(continued...)
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Land & Nat. Res., 112 Hawaii 28, 40, 143 P.3d 1230, 1242 (2006),
abrogated on other grounds by Tax Found. of Hawaii v. State,
SCAP-16-462, 2019 WL 1292286 (Haw. Mar. 21, 2019). We noted that
the appellants had made oral requests for a contested case
hearing prior to the close of a BLNR meeting, but had failed to
subsequently submit a written petition to the BLNR requesting a
contested case hearing. Id. We thus determined that “inasmuch
as the DLNR had properly promulgated specific procedures for a
contested case hearing . . . and the Appellants failed to follow
the requisite procedures, there was no contested case from which
the Appellants could appeal, pursuant to HRS § 91-14(a).” Id. at
41, 143 P.3d at 1243.
In contrast, the PUC’s administrative rules do not
require claimants to request a contested case hearing. Thus, LOL
did not fail to adhere to the applicable agency rules in seeking
judicial review of its agency appeal without requesting a
17
(...continued)
petition of any government agency or any interested
person who then properly qualifies to be admitted as a
party. An oral or written request for a contested
case hearing must be made by the close of the public
hearing (if one is required) or the board meeting at
which the matter is scheduled for disposition (if no
public hearing is required). In either situation, the
person or agency requesting the contested case hearing
must file (or mail and postmark) a written petition
with the board not later than ten days after the close
of the public hearing or the board meeting, whichever
is applicable. The time for making an oral or written
request and submitting a written petition may be
waived by the board.
(Emphasis added).
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contested case hearing.
ii. A Request for a Contested Case Hearing Was
Not Required by Hawaii Case Law
The PUC argues that “[t]his court’s case law on
contested case hearings clearly indicates that a request for a
contested case hearing is a necessary prerequisite to judicial
review of the kind LOL seeks.” The PUC cites MECO, 141 Hawaii
at 255, 408 P.3d at 7, Mauna Kea Anaina Hou v. Bd. of Land & Nat.
Res., 136 Hawaii 376, 380, 363 P.3d 224, 228 (2015), Kilakila,
131 Hawaii at 195, 204, 317 P.3d at 29, 38, Kaleikini v.
Thielen, 124 Hawaii 1, 4, 237 P.3d 1067, 1070 (2010), and Pele
Defense Fund, 77 Hawaii at 66, 881 P.2d at 1212, for the
proposition that “at the very least, a party must have requested
a contested case hearing before it can object to the denial of
such a hearing.” To the contrary, this court’s case law does not
require a party to request a hearing to gain access to the
courts, where the relevant agency has not promulgated a rule
requiring such a request and the party has participated in a
contested case proceeding.
A formal request for a contested case hearing is not a
prerequisite for judicial review over an appeal under the cases
cited by the PUC. In MECO, this court noted that, although the
Sierra Club was not allowed to participate in the PUC’s
proceeding, it formally requested a contested case hearing.
MECO, 141 Hawaii at 255-57, 408 P.3d at 7-8. This court did
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not, however, hold that a formal request for a contested case
hearing is a prerequisite for judicial review. Furthermore,
MECO is distinguishable from the instant case because unlike the
Sierra Club in MECO, LOL actively participated in the 2017
Docket. Mauna Kea Anaina Hou, Kilakila, and Kaleikini are also
distinguishable because each of those cases concerned appeals of
BLNR decisions, and as explained supra, agency rules of the BLNR,
unlike those of the PUC, require that a formal request for a
contested case hearing be submitted to attain judicial review
over an agency appeal.
Pele Defense Fund, which involved an appeal of a
Department of Health (DOH) decision, is similarly distinguishable
because DOH rules provide that in order to obtain judicial
review, an interested person seeking a contested case hearing
must submit a complaint or application requesting such a
hearing.18 77 Hawaii at 69, 881 P.2d at 1215 (“Appellees
submitted ‘Application[s] for Contested Case[s]’ on forms
provided by the DOH and in full compliance with the agency’s
rules.”). Accordingly, the cases cited by the PUC do not
establish that LOL was required to request a contested case
hearing as a prerequisite to judicial review.
18
DOH rules also allow the DOH to hold a contested case hearing on
its own motion. See Pele Defense Fund, 77 Hawaii at 69 n.12, 881 P.2d 1215
n.12.
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B. Standing
In the context of administrative appeals brought
pursuant to HRS § 91-14(a), this court has interpreted the
concept of standing to be comprised of two components.19 Jordan
v. Hamada, 64 Haw. 451, 457-58, 643 P.2d 73, 75-76 (1982).
“First, one must be a person aggrieved, inter alia, by a final
decision and order in a contested case. Second, the aggrieved
person must have participated in the contested case from which
the decision affecting him resulted.” Id. (citation and internal
quotation marks omitted); see also Mahuiki v. Planning Comm’n, 65
Haw. 506, 515, 654 P.2d 874, 880 (1982).
1. “Person Aggrieved”
To be a person aggrieved, “one must be specially,
personally, and adversely affected” by the final decision and
order at issue. Life of the Land, Inc. v. Land Use Comm’n, 61
Haw. 3, 7, 594 P.2d 1079, 1082 (1979) (quoting East Diamond Head
Ass’n v. Zoning Board of Appeals, 52 Haw. 518, 523 n.5, 479 P.2d
796, 799 n.5 (1971)). An unfavorable final decision and order is
not enough to satisfy this prong of the analysis - “[t]here must
be a special injury or damage to one’s personal or property
rights[,] as distinguished from the role of being only a champion
of causes.” Id.
19
HRS § 91-14(a) provides, in pertinent part, “[a]ny person
aggrieved by a final decision and order in a contested case . . . is entitled
to judicial review thereof under this chapter[.]” Pursuant to HRS § 91-1, the
term “persons” includes individuals, associations, and public or private
organizations.
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We have previously recognized the right to a clean and
healthful environment, as defined by HRS Chapter 269, as a
“legally protected interest” adequate to confer standing. MECO,
141 Hawaii at 270-71, 408 P.3d at 22-23; see also Life of the
Land v. Land Use Comm’n, 63 Haw. 166, 176-77, 177 n.10, 623 P.2d
431, 441, 441 n.10 (1981).
There is sufficient evidence in the record to
demonstrate that the PUC’s approval of the Amended PPA specially,
personally, and adversely affected LOL’s members. As set forth
above, LOL is a Hawaii-based nonprofit organization comprised of
members who live, work, and recreate in Hawaii. Such activity
includes visiting and exploring the Big Island’s Hāmākua Coast,
where the Hu Honua facility is located. LOL asserts that the Hu
Honua facility’s use of biofuels for energy production may cause
adverse environmental impacts on the Big Island. In addition to
submitting several IRs regarding the GHG emissions associated
with the Amended PPA, LOL submitted an IR to Hu Honua regarding
the potential for ocean contamination caused by the improper
disposal of wastewater at the facility. It also expressed
concern regarding the environmental impacts associated with
“acquiring bioenergy crops” from an area of the Big Island that
already serves as a source for another biofuel facility, and
whether the Hu Honua facility will “cut into the utilities[’]
purchase of energy from existing and/or planned wind and solar
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farms.”20 These impacts could affect the Big Island in general,
and the Hāmākua Coast in particular.
Thus, LOL has demonstrated an injury to its members,
including their right to a clean and healthful environment as
defined by HRS Chapter 269, due to the PUC’s approval of the
Amended PPA. LOL has therefore satisfied the first prong of the
standing analysis. See MECO, 141 Hawaii at 270-71, 408 P.3d at
22-23; see also Sierra Club v. Hawaii Tourism Authority ex rel.
Bd. of Directors, 100 Hawaii 242, 271, 59 P.3d 877, 906 (2002)
(“An organization may sue on behalf of its members even though it
20
The PUC impliedly recognized this potential injury when it
determined that, inter alia, “LOL’s concerns regarding the proposed project’s
impact on existing renewable projects on the Big Island” were sufficient to
satisfy the requirements of HAR § 6-61-56.
The grounds for participation without intervention in PUC proceedings, as set
forth by HAR § 6-61-56(c) were:
(1) . . . [T]he direct and substantial interest of
the applicant;
(2) The applicant’s position regarding the matter in
controversy;
(3) The extent to which the participation will not
broaden the issues or delay the proceeding;
(4) The extent to which the applicant’s interest
will not be represented by existing parties;
(5) A statement of the expertise, knowledge or
experience the applicant possesses with regard
to the matter in controversy;
(6) Whether the applicant can aid the commission by
submitting an affirmative case; and
(7) . . . [T]he relief desired.
(Emphases added). HAR § 16-601-56(c) sets forth identical grounds for
participation without intervention.
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has not been injured itself when: (1) its members would
otherwise have standing to sue in their own right; (2) the
interests the organization seeks to protect are germane to the
organization's purpose; and (3) neither the claim asserted nor
the relief itself requested requires the participation of
individual members in the lawsuit”).
2. Participation
Although an aggrieved person must have participated in
a contested case in order to invoke judicial intervention, we
have not “conditioned standing to appeal from an administrative
decision upon formal intervention in the agency proceeding.”
Mahuiki, 65 Haw. at 515, 654 P.2d at 880 (quoting Jordan, 62 Haw.
at 449, 616 P.2d at 1371). Where “the appellants have been
aggrieved by the action of the PUC, and where they were involved
as participants during the [contested case,] the appellants may
challenge the order of the PUC in this court.” Life of the Land,
Inc. v. Land Use Comm’n, 61 Haw. at 9, 594 P.2d at 1083 (internal
quotation marks and ellipsis omitted) (quoting In Re Application
of Hawaiian Electric Co., 56 Haw. 260, 265, 535 P.2d 1102, 1106
(1975)). Because LOL was involved in the 2017 Docket as a
participant, it has met the second prong of the analysis. LOL
therefore has standing under HRS § 91-14(a) to appeal the PUC’s
2017 D&O and the denial of its Motion to Upgrade Status.
C. Merits of LOL’s Appeal
Pursuant to HRS § 269-6(b), the PUC must explicitly
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consider the effect of the State’s reliance on fossil fuels on,
inter alia, GHG emissions. We have characterized this as a
“requirement to reduce reliance on fossil fuels and to consider
[GHG] emissions[, which] applies to the fulfillment of all of the
[PUC’s] duties.” MECO, 141 Hawaii at 263, 408 P.3d at 15. That
the facility involved in the Amended PPA is a biofuel facility
does not absolve the PUC of this duty. Thus, in approving the
Amended PPA, the PUC was required to expressly consider the
reduction of GHG emissions. Id. at 264, 408 P.3d at 16.
Further, LOL was entitled to a meaningful opportunity to be heard
on the issue of the Amended PPA’s impact on its constitutional
right to a clean and healthful environment, as defined by HRS
Chapter 269.
The findings and conclusions in the PUC’s 2017 D&O do
not show that the PUC expressly considered the reduction of GHG
emissions in reaching its decision. The PUC also denied LOL due
process by preventing LOL from addressing the impacts of
approving the Amended PPA on LOL’s right to a clean and healthful
environment, as defined by HRS Chapter 269.
1. The PUC Failed to Satisfy its Statutory Obligations
Under HRS § 269-6(b)
HRS § 269-6(b) provides:
The public utilities commission shall consider the
need to reduce the State’s reliance on fossil fuels
through energy efficiency and increased renewable
energy generation in exercising its authority and
duties under this chapter. In making determinations
of the reasonableness of the costs of utility system
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capital improvements and operations, the commission
shall explicitly consider, quantitatively or
qualitatively, the effect of the State’s reliance on
fossil fuels on price volatility, export of funds for
fuel imports, fuel supply reliability risk, and [GHG]
emissions. The commission may determine that
short-term costs or direct costs that are higher than
alternatives relying more heavily on fossil fuels are
reasonable, considering the impacts resulting from the
use of fossil fuels.
(Emphases added).
In MECO, this court observed that “[i]n 2011, the
legislature amended HRS § 269-6(b) to make it mandatory for the
Commission when exercising its duties to recognize the ‘need’ to
reduce reliance on fossil fuels and to ‘explicitly consider’ the
levels and effect of [GHG] emissions[.]” 141 Hawaii at 262, 408
P.3d at 14 (emphasis in original). This court determined that “a
primary purpose of the [2011 amendment] was to require the
Commission to consider the hidden and long-term costs of reliance
on fossil fuels, which subjects the State and its residents to
increased air pollution and potentially harmful climate change
due to the release of harmful [GHGs].”21 Id. at 263, 408 P.3d at
21
Relatedly, we note that the State has committed to furthering the
goals of the Paris Climate Agreement. 2018 Haw. Sess. Laws. Act 15, § 1 at
46-47 (“The legislature notes that Hawaii, as part of the United States
Climate Alliance . . . committed to upholding the objectives of the 2015 Paris
Agreement.”). This commitment is advanced through HRS Chapter 225P, which
provides, in part:
The purpose of [the] chapter is to address the effects
of climate change to protect the State’s economy,
environment, health, and way of life. [The] chapter
establishes the framework for the State to:
1) Adapt to the inevitable impacts of global
warming and climate change, including rising sea
(continued...)
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15 (quoting H. Stand. Comm. Rep. No. 1004, in 2011 House Journal,
at 1332) (internal quotation marks omitted). This court then
concluded that “HRS § 269-6(b)’s requirement to reduce reliance
on fossil fuels and to consider [GHG] emissions applies to the
fulfillment of all of the Commission’s duties.” Id. (emphasis
added). Accordingly, pursuant to MECO, HRS § 269-6(b) requires
that “express consideration be given to reduction of [GHG]
emissions in the decision-making of the Commission.” Id. at 264,
408 P.3d at 16. Thus, it is clear that the PUC was required to
expressly consider the reduction of GHG emissions in deciding
whether to approve the Amended PPA.
In determining whether the PUC satisfied this duty
pursuant to HRS § 269-6(b), this court “should ensure that the
agency . . . [made] its findings reasonably clear. The parties
and the court should not be left to guess . . . the precise
finding of the agency.” Kauai Springs, Inc. v. Planning Comm’n
of Cty. of Kauai, 133 Hawaii 141, 164, 324 P.3d 951, 974 (2014)
(citation and quotation marks omitted). “An agency’s findings
should be sufficient to allow the reviewing court to track the
21
(...continued)
levels, temperatures, and other risk factors;
and
2) Mitigate its greenhouse gas emissions by
sequestering more atmospheric carbon and
greenhouse gases than the State produces as
quickly as practicable, but no later than 2045.
HRS § 225P-1 (Supp. 2018).
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steps by which the agency reached its decision.” Id. (citation
and quotation marks omitted); see also In re Waiola O Molokai,
Inc., 103 Hawaii 401, 432, 83 P.3d 664, 695 (2004) (explaining
that any presumption of validity, given to an agency’s decision,
“presupposes that the agency has grounded its decision in
reasonably clear” findings of fact and conclusions of law).
Because the 2017 D&O does not reflect that the PUC
explicitly considered the reduction of GHG emissions in approving
the Amended PPA, we conclude that the PUC failed to comply with
HRS § 269-6(b). The only reference to GHG emissions in the 2017
D&O appears in the “Procedural Background” section. It reads,
“[c]omments in opposition to the Project tended to focus on
potential adverse environmental impacts, an expected rise in
[GHG] emissions, . . . and general objections to biomass as a
fuel resource.” The 2017 D&O does not provide responses to those
comments, nor is there any mention of GHG emissions in the PUC’s
“Statement of Issues” or “Discussion and Findings.” Further,
although the PUC restated HELCO’s representations that the
biomass facility could potentially save approximately 15,700
barrels of fuel per year and contribute to the State’s RPS goals,
it made no express findings or conclusions regarding the biomass
facility’s GHG emissions.
In its findings and conclusions, the PUC found that Hu
Honua’s biomass facility may displace fossil fuel generation
resources and accelerate the retirement of fossil fuel plants,
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and noted that its decision to approve the Amended PPA was based
on “factors such as the State’s need to limit its dependence on
fossil fuels and mitigate against volatility in oil pricing.”
These findings and conclusions do not constitute “express
consideration” of the reduction of GHG emissions, as provided for
under HRS § 269-6(b). See MECO, 141 Hawaii at 264, 408 P.3d at
16.
In MECO, Maui Electric requested that the PUC determine
whether its proposed PPA was prudent and in the public interest,
and consider the reasonableness of the associated energy charges.
Id. at 265-66, 408 P.3d at 17-18. This court explained that when
reviewing the PPA, the PUC was required under HRS § 269-6(b) to
consider the hidden and long-term costs of energy produced under
the Agreement, including the potential for increased air
pollution due to GHG emissions. Id. at 266, 408 P.3d at 18.
This court further stated that the consideration of potential
health risks is “axiomatic” in the PUC’s analysis of the level of
GHG emissions, “as contemplated by the legislature when it
amended HRS § 269-6(b) in 2011[.]” Id.
Similarly, in the instant case, HELCO requested that
the PUC determine whether the energy charges under the Amended
PPA were reasonable and if its arrangement with Hu Honua was
prudent and in the public interest. In its review of the Amended
PPA, the PUC found that the “purchased power costs and
arrangements set forth in the [Amended] PPA appear reasonable,
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prudent, in the public interest, and consistent with HRS chapter
269 in general, and HRS § 269-27.2(c), in particular.” The PUC
did not, however, substantiate this finding by addressing the
hidden and long-term environmental and public health costs of
reliance on energy produced at the proposed facility, as
required. These costs include “the potential for increased air
pollution as a result of GHG emissions” directly attributed to
energy generation at the facility, as well as GHG emissions
produced at earlier stages in the production process, such as
fuel production and transportation. See MECO, 141 Hawaii at
263, 408 P.3d at 15 (“a primary purpose of [amending HRS § 269-
6(b)] was to require the [PUC] to consider the hidden and long-
term costs of reliance on fossil fuels, which subjects the State
and its residents to increased air pollution and potentially
harmful climate change due to the release of harmful [GHGs].”)
(internal quotation marks and citation omitted).
Accordingly, the 2017 D&O was not supported by findings
regarding GHG emissions of the Hu Honua facility “sufficient to
allow the reviewing court to track the steps by which the [PUC]
reached its decision.” Kauai Springs, Inc., 133 Hawaii at 164,
324 P.3d at 974. Without such explicit findings, this court
cannot determine whether the PUC adequately considered GHG
emissions as required by HRS § 269-6(b).
“A remand pursuant to HRS § 91–14(g) is appropriate if
an agency’s findings are incomplete and provide no basis for
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review.” Int’l Bhd. of Elec. Workers, Local 1357 v. Hawaiian
Tel. Co., 68 Haw. 316, 328, 713 P.2d 943, 953 (1986) (citing In
re Kauai Elec. Div. of Citizens Util. Co., 60 Haw. 166, 185–86,
590 P.2d 524, 538 (1978)). HRS § 91–14(g) provides as follows:
Upon review of the record, the court may affirm the
decision of the agency or remand the case with
instructions for further proceedings; or it may
reverse or modify the decision and order if the
substantial rights of the petitioners may have been
prejudiced because the administrative findings,
conclusions, decisions, or orders are:
(1) In violation of constitutional or statutory
provisions;
. . . .
(6) Arbitrary, or capricious, or characterized by
abuse of discretion or clearly unwarranted exercise of
discretion.
Where the PUC’s failure to make sufficient findings
leaves this court unable to determine the validity of its
conclusions, it is appropriate to remand the case to the PUC for
further proceedings, pursuant to HRS § 91-14(g), in order for the
PUC to make findings necessary for judicial review. Application
of Hawaiian Tel. Co., 54 Haw. 663, 669, 513 P.2d 1376, 1379
(1973); see also In re Kauai Elec. Div. of Citizens Util. Co. 60
Haw. at 185, 590 P.2d at 537 (remanding the case to the PUC for
further proceedings, pursuant to HRS § 91-14(g), because the
PUC’s order was “unsupported by findings of fact and
conclusions”).
Here, remand to the PUC for further proceedings is
appropriate. On remand, the PUC shall give explicit
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consideration to the reduction of GHG emissions in determining
whether to approve the Amended PPA, and make the findings
necessary for this court to determine whether the PUC satisfied
its obligations under HRS § 269-6(b).
2. The PUC’s Failure to Provide LOL an Opportunity to Be
Meaningfully Heard in the 2017 Docket Denied LOL Due
Process
“The basic elements of procedural due process of law
require notice and an opportunity to be heard at a meaningful
time and in a meaningful manner before governmental deprivation
of a significant property interest.” Sandy Beach Def. Fund, 70
Haw. at 378, 773 P.2d at 261 (citing Matthews v. Eldridge, 424
U.S. 319, 333 (1976)). As discussed supra, this court has
recognized that the “right to a clean and healthful environment,
as defined by laws relating to environmental quality,” is a
property interest protected by due process because it is a
substantive right guaranteed by article XI, section 9 of the
Hawaii Constitution. MECO, 141 Hawaii at 253, 260-61, 408 P.3d
at 5, 12-13. In MECO, after concluding that Sierra Club’s
asserted property interest required a hearing by the PUC to
comply with due process, this court observed that procedural due
process includes “the right to submit evidence and argument on
. . . the impact of the Agreement on the asserted property
interest.” Id. at 269, 408 P.3d at 21 (citation omitted). This
court then stated that the PUC “has the authority to set
limitations in conducting the proceedings so long as the
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procedures sufficiently afford an opportunity to be heard at a
meaningful time and in a meaningful manner on the issue of the
Agreement’s impact on the asserted property interest.” Id. at
270, 408 P.3d at 22.
As explained above, procedural due process necessitated
a contested case hearing because the 2017 D&O, which approved the
Amended PPA, adversely affected LOL’s constitutionally protected
right to a clean and healthful environment, as defined by HRS
Chapter 269. See id. at 265, 408 P.3d at 17 (agency hearing
required “when the challenged State action adversely affects the
constitutionally protected rights of others”) (quoting Pele Def.
Fund, 77 Hawaii at 68, 881 P.2d at 1214) (internal quotation
marks omitted). Accordingly, LOL was entitled to an opportunity
to be heard at a meaningful time and in a meaningful manner
regarding the Amended PPA’s impact on its right to a clean and
healthful environment, as defined by HRS Chapter 269. See id. at
270, 408 P.3d at 22.
LOL was not afforded a sufficient opportunity to
address the Amended PPA’s impact on its constitutional right to a
clean and healthful environment, as defined by HRS Chapter 269,
throughout the 2017 Docket. The PUC allowed LOL to participate
in the 2017 Docket with respect to two sub-issues: (2.a.i)
whether the energy price components in the Amended PPA properly
reflect the cost of biomass fuel supply, and (2.b) whether
HELCO’s purchase power arrangements under the Amended PPA are
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prudent and in the public interest. LOL argued that the proposed
biomass facility was not in the public interest and should be
rejected. LOL further argued that “the issue of climate change
is embedded in both issues the Commission assigned to LOL to
consider[,]” that Hu Honua’s proposal failed to fully address the
environmental impact of its operations, and that Hu Honua’s
claims of carbon-neutrality were unsupported.
However, HELCO refused to respond to LOL’s IRs
regarding environmental impacts of the project and production of
an environmental site assessment because those topics were
outside the scope of LOL’s participation. Hu Honua similarly
objected to LOL’s IRs regarding loss of stored carbon from tree
harvesting, environmental impacts of the project, and production
of an environmental site assessment as outside the scope of LOL’s
restricted participation. LOL filed a Motion to Compel, seeking
lease agreements and a forestry operations report from Hu Honua,
in order to address the cost of biomass fuel supply and GHG
emissions from the facility’s operations. However, the PUC
denied LOL’s motion, finding that “LOL’s Motion to Compel, if
granted, would cause an undue delay in this proceeding.”
Thus, although the 2017 D&O acknowledged LOL’s attempts
to discuss the Amended PPA’s impacts on LOL’s right to a clean
and healthful environment, as defined by HRS Chapter 269, in
addressing whether the Amended PPA is prudent and in the public
interest, the PUC did not afford LOL an opportunity to be heard
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regarding this issue at a meaningful time and in a meaningful
manner. Rather, the PUC prevented LOL from meaningfully
addressing the impact that approving the Amended PPA would have
on LOL’s asserted property interest, based on its determination
that LOL’s environmental concerns were beyond the scope of the
2017 Docket. Accordingly, the PUC’s procedures violated LOL’s
due process right to be meaningfully heard regarding the impacts
that approving the Amended PPA would have on LOL’s right to a
clean and healthful environment, as defined by HRS Chapter 269.
Due to the PUC’s failure to allow LOL to present
evidence and argument concerning its right to a clean and
healthful environment, as defined by HRS Chapter 269, this court
must vacate the PUC’s 2017 D&O and remand this case to the PUC
for a hearing that complies with procedural due process. In
order to comply with statutory and constitutional requirements,
the PUC’s post-remand hearing must afford LOL an opportunity to
meaningfully address the impacts of approving the Amended PPA on
LOL’s members’ right to a clean and healthful environment, as
defined by HRS Chapter 269. The hearing must also include
express consideration of GHG emissions that would result from
approving the Amended PPA, whether the cost of energy under the
Amended PPA is reasonable in light of the potential for GHG
emissions, and whether the terms of the Amended PPA are prudent
and in the public interest, in light of its potential hidden and
long-term consequences. See MECO, 141 Hawaii at 269, 408 P.3d
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at 21.
3. The PUC’s Denial of LOL’s Motion to Upgrade Status
LOL asserts that the PUC’s denial of its Motion to
Upgrade Status in Order No. 34651 was clearly erroneous and
constituted an abuse of discretion. LOL further argues that its
“participant” status and the restriction of its participation to
two issues in the 2017 Docket denied it a sufficient opportunity
to protect its constitutional right to a clean and healthful
environment, as defined by HRS Chapter 269.
Hu Honua, HELCO, and the PUC argue that it was within
the PUC’s discretion to find that LOL’s motion failed to satisfy
the factors under HAR § 6-61-55 for party-intervenor status.
HELCO additionally argues that LOL is time-barred from
challenging the PUC’s denial because it did not do so within the
thirty-day time period required by HRS § 91-14(b). We conclude
that LOL’s appeal of Order No. 34651 is timely, but we need not
determine whether the PUC abused its discretion or violated LOL’s
due process right in denying LOL’s Motion to Upgrade Status.
a. Timeliness of LOL’s Appeal of Order No. 34651
Denying LOL’s Motion to Upgrade Status
LOL’s appeal of Order No. 34651 is timely. Under HRS
§ 91-14(b), appeals are timely where the appellant files its
notice of appeal “within thirty days after service of the
certified copy of the final decision and order of the agency[.]”
HELCO cites Kilakila, 131 Hawaii at 195, 317 P.3d at 29, for the
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proposition that “denied requests to intervene are final orders
as defined in HRS § 91-14,” and argues that Order No. 34651,
which denied LOL’s Motion to Upgrade Status to party-intervenor,
was a “final decision and order” subject to the thirty-day time
limit under HRS § 91-14(b). Because Order No. 34651 was issued
on June 23, 2017 and LOL appealed that determination sixty-four
days later on August 26, 2017, HELCO contends that LOL’s appeal
is untimely.
In Kilakila, this court considered whether the BLNR’s
decision to approve a permit, without either granting or denying
Kilakila’s request for a contested case hearing, was a “final
decision and order” within the meaning of HRS § 91-14. 131
Hawaii at 202-03, 317 P.3d at 36-37. We noted that in
Kaleikini, 124 Hawaii at 26, 237 P.3d at 1092, the “DLNR’s
decision to deny Kaleikini’s request for a contested case hearing
constituted a final decision and order of the agency because it
ended the litigation.” Id. at 203, 317 P.3d at 37 (internal
quotations omitted). We then determined that the BLNR’s vote to
grant the permit effectively denied Kilakila’s request for a
contested case hearing, and was therefore a “final decision and
order,” as it provided the requisite finality to enable Kilakila
to appeal. Id.
Here, Order No. 34651 Denying LOL’s Motion to Upgrade
Status was not required to be appealed within thirty days because
it did not constitute a “final decision and order” of the PUC.
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The order denied LOL party status and confirmed LOL’s limited
participant status, but did not resolve all other outstanding
issues in the 2017 Docket. Thus, unlike the agency decisions in
Kaleikini and Kilakila, which provided appellants the “requisite
finality” by “end[ing] the litigation[,]” the PUC’s Order No.
34651 merely maintained LOL’s participation in the proceeding.
See Kilakila, 131 Hawaii at 203, 317 P.3d at 37. Therefore,
LOL’s appeal would have been unripe until the PUC issued the 2017
D&O, which represents the “final decision and order” of the PUC.
The PUC issued the 2017 D&O on July 28, 2017, which, along with
Order No. 34651 Denying LOL’s Motion to Upgrade Status, was
appealed by LOL on August 26, 2017. As LOL filed its notice of
appeal twenty-nine days after the PUC’s 2017 D&O, its appeal is
timely.
b. We Need Not Decide Whether the PUC Abused its
Discretion or Violated Due Process by Denying
LOL’s Motion to Upgrade Status
HAR § 6-61-55 set forth nine factors for the PUC to
consider in determining whether to grant a motion to intervene as
a party in a PUC proceeding. The rule further provided that the
PUC would not grant intervention “except on allegations which are
reasonably pertinent to and do not unreasonably broaden the
issues already presented.”22 Pursuant to HAR § 6-61-55(a),
22
HAR § 6-61-55 provided:
(a) A person may make an application to intervene
and become a party by filing a timely written
(continued...)
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(...continued)
motion in accordance with sections 6-61-15 to
6-61-24, section 6-61-41, and section 6-61-57,
stating the facts and reasons for the proposed
intervention and the position and interest of
the applicant.
(b) The motion shall make reference to:
(1) The nature of the applicant’s statutory or
other right to participate in the hearing;
(2) The nature and extent of the applicant’s
property, financial, and other interest in
the pending matter;
(3) The effect of the pending order as to the
applicant’s interest;
(4) The other means available whereby the
applicant's interest may be protected;
(5) The extent to which the applicant’s
interest will not be represented by
existing parties;
(6) The extent to which the applicant’s
participation can assist in the
development of a sound record;
(7) The extent to which the applicant’s
participation will broaden the issues or
delay the proceeding;
(8) The extent to which the applicant’s
interest in the proceeding differs from
that of the general public; and
(9) Whether the applicant's position is in
support of or in opposition to the relief
sought.
(c) The motion shall be filed and served by the
applicant in accordance with sections 6-61-21
and 6-61-57.
(d) Intervention shall not be granted except on
allegations which are reasonably pertinent to
and do not unreasonably broaden the issues
already presented.
Other than the HAR section numbers it references, HAR 16-601-55
(continued...)
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“[i]ntervention as a party in a proceeding before the PUC is not
a matter of right[,] but is a matter resting within the sound
discretion of the commission[,]” as long as that discretion is
not exercised arbitrarily or capriciously. Application of
Hawaiian Elec. Co., Inc., 56 Haw. 260, 262, 535 P.2d 1102, 1104
(1975) (citation omitted).
LOL argues that the limitation of its participation to
Sub-issue Nos. 2.a.i and 2.b denied it a meaningful opportunity
to address its constitutional right to a clean and healthful
environment. However, as discussed above, the record does not
establish that the PUC explicitly considered the reduction of GHG
emissions at all in the 2017 Docket. It is therefore clear that
the PUC misconstrued this aspect of its statutory duty, which was
fundamental to LOL’s potential role in the proceeding. As such,
it appears the PUC’s denial of LOL’s Motion to Upgrade Status was
premised on a flawed understanding of the relevant inquiry, and
therefore we cannot say whether such denial constituted an abuse
of discretion.
LOL further argues that the PUC’s denial of its Motion
to Upgrade Status violated its due process rights by impeding its
ability to obtain access to documents. However, the record does
not establish that the PUC restricted LOL’s access to documents
(...continued)
(effective Jan. 1, 2019) is identical to HAR 6-61-55 (effective
1992-2018).
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due to its status as a limited participant. Order No. 34597,
which established, inter alia, a final statement of the issues
and LOL’s scope of participation in the 2017 Docket, limited
LOL’s participation to Sub-issue Nos. 2.a.i and 2.b, but did not
restrict the manner of its participation within those issues.
Further, Protective Order No. 34555, which “govern[ed] the
classification, acquisition, and use of trade secrets, and other
confidential information” produced in the docket, provided that
“[a]ll parties or participants to all or any portion of this
docket . . . shall be entitled to all confidential information
under the provisions of this Protective Order to the extent
allowed by the commission.” (Emphasis added). LOL does not
allege or demonstrate that access to documents designated as
“confidential” was given to parties, but denied to participants.
Accordingly, it is not apparent from the record that LOL would
have had greater access to documents had the PUC granted its
Motion to Upgrade Status.
In sum, on remand, it is within the PUC’s discretion to
determine the extent of LOL’s participation in the proceeding,
pursuant to HAR § 16-601-55, provided that the PUC complies with
its statutory and constitutional obligations to consider the
reduction of GHG emissions and to allow LOL a meaningful
opportunity to be heard regarding the Amended PPA’s impact on its
right to a clean and healthful environment, as defined by HRS
Chapter 269.
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IV. CONCLUSION
As set forth above, HRS § 269-6(b) requires the PUC to
expressly consider the reduction of GHG emissions in its
decision-making. The PUC failed to do so in determining whether
the costs associated with the Amended PPA were reasonable, and in
approving the Amended PPA. The PUC also failed to afford LOL an
opportunity to be heard at a meaningful time and in a meaningful
manner regarding the Amended PPA’s impact on LOL’s property
interest in a clean and healthful environment, as defined by HRS
Chapter 269.
The PUC’s 2017 D&O is therefore vacated and this case
is remanded to the PUC for proceedings consistent with this
opinion.
Lance D. Collins /s/ Mark E. Recktenwald
for appellant
/s/ Paula A. Nakayama
Clyde J. Wadsworth
(Kalikoonalani D. /s/ Sabrina S. McKenna
Fernandes with him
on the brief) /s/ Richard W. Pollack
for appellee PUC
/s/ Michael D. Wilson
Margery S. Bronster
(Rex Y. Fujichaku and
Kelly A. Higa with
her on the brief)
for appellee
Hu Honua Bioenergy, LLC
Joseph A. Stewart
(David M. Louie and
Aaron R. Mun with
him on the brief)
for appellees
HECO and HELCO
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