In re Application of MAUI ELECTRIC COMPANY, LIMITED, For Approval of the Amended and Restated Power Purchase Agreement With Hawaiian Commercial & Sugar Company.
SCWC-15-0000640
IN THE SUPREME COURT OF THE STATE OF HAWAIʻI
DECEMBER 14, 2017
CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS (CAAP-15-0000640; PUC DOCKET NO. 2015-0094)
McKENNA, POLLACK, and WILSON, JJ., WITH RECKTENWALD, C.J., DISSENTING, WITH WHOM NAKAYAMA, J., JOINS
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I. BACKGROUND
This case involves a power purchase agreement between Maui Electric Company, Limited (“Maui Electric“), an electric utility company,1 and Hawaiian Commercial & Sugar Company (HC&S), a producer of electricity.
Maui Electric filed an application with the Commission on March 31, 2015 (the “Application“), seeking approval of a power purchase agreement between Maui Electric and HC&S (the “Agreement“). The Application indicated that the Agreement restated and amended an existing power purchase agreement between Maui Electric and HC&S. Maui Electric sought the Commission’s approval of the Agreement, a finding that the energy charges to be incurred under the Agreement were just and reasonable, a finding that the “purchased power arrangement” under the Agreement was prudent and in the public interest, and an authorization to charge consumers for the energy costs through its existing energy cost adjustment clause.3
The existing agreement between the parties was approved by the Commission in 1990 and was negotiated to continue in effect through December 31, 1999, and on a year-to-year basis thereafter subject to termination. The Application noted that, if the Commission did not issue an order approving the Agreement on or before September 30, 2015, the existing agreement between the parties could be terminated by either party.
Under the existing agreement, Maui Electric had been purchasing energy produced by HC&S at its facility located in Puʻunene, Maui (the “Puʻunene Plant“). The Puʻunene Plant consisted of a sugar processing operation with an internal bagasse-fired power plant that also burned a number of other fuels, including coal and petroleum.4 Under the Agreement, Maui Electric would continue to purchase energy generated at the Puʻunene Plant. According to Maui Electric, the Agreement would, inter alia, amend the pricing structure and rates for energy purchases under the existing agreement between Maui Electric and HC&S; eliminate capacity
On April 17, 2015, Sierra Club timely filed a motion to intervene5 or to participate without intervention6 in the proceedings concerning the Application in order to assist the Commission in fully developing the facts and law regarding the fuel mix at the Puʻunene Plant and other matters at issue in the proceeding. Sierra Club sought intervention on behalf of itself and its members who live in close proximity to the Puʻunene Plant. In its motion, Sierra Club asserted a fundamental due process right to participate in a hearing on the grounds that the Agreement would impact Sierra Club’s members’ health, aesthetic, and recreational interests. Sierra Club also asserted its organizational interest in reducing Hawaii’s dependence on imported fossil fuels and advancing a clean energy grid.
Sierra Club argued that its members were concerned that the Puʻunene Plant relied too heavily on coal in order to meet its power obligations under the existing agreement and also that its members were concerned “about the public health and visibility impacts of burning coal.” Statistics provided by Sierra Club indicated that the fuel mix burned at the Puʻunene Plant for energy generation from 2010 to 2012 was comprised of approximately twenty-five per cent coal and petroleum. Sierra Club asserted that members on an ongoing basis were forced to close the windows of their homes and run air filters to protect against harmful pollution. Sierra Club also noted that the Department of Health sought to impose a fine of over one million dollars on HC&S in the previous year as a result of more than four hundred violations of the Clean Air Act.7 Sierra Club asserted that the Puʻunene Plant was permitted to burn coal and petroleum, operated without modern pollution controls, and consistently violated limits set by the Clean Air Act. Sierra Club also contended that there was an issue of how much energy at the plant could be considered “renewable power” under
Sierra Club attached the affidavits of two of their members to the motion for intervention or participation. Clare Apana, a Wailuku resident who is able to see the Puʻunene Plant’s smokestack from her home, stated the following in her affidavit:
4. I have concerns about the coal burning at Puʻunene. I understand that burning
coal results in emissions of dangerous air pollutants such as particulate matter, sulfur dioxide, nitrogen oxides, mercury, and other toxic pollutants. I know that these pollutants can cause or contribute to a wide range of health problems, including asthma, and respiratory and cardiovascular disease. 5. I have concerns about the impacts of the pollution from the plant on my health and the health of my family. On some days, because the pollution in the area causes hazy conditions, I cannot see the mountains from my house. On these days, I will turn on my air filters and close my windows to limit my exposure.
6. I understand that the Puʻunene plant supplies power to the Maui Electric Company . . . , and that the Commission is considering approving a new power purchase agreement with the plant. I am concerned that the plant burns more coal and produces more air pollution in order to meet its obligations to supply power [to Maui Electric].
7. If the Commission decided not to approve the new power purchase agreement, it might decrease coal-burning at Puʻunene, and therefore decrease some of my concerns about the pollution from the plant. I would feel more comfortable about seeing the plume from the plant if I knew that they were not burning coal, or if they were burning less coal at the plant. It would increase my enjoyment of the area and produce other benefits to my long-term health and well-being.
The other affidavit attached to Sierra Club’s motion was by Wailuku resident Christine Andrews, who also expressed concerns regarding the coal burning at the Puʻunene Plant and the potential impact of the coal burning on her long-term health. The Andrews affidavit referenced violations of limits on emissions by HC&S as follows:
I understand that the Department of Health issued the Puʻunene plant a Notice of Violation in 2014 and a million dollar fine regarding its emissions of opacity. I understand that opacity is a measure of particulate matter pollution. I have concerns about the impacts of the pollution from the plant on my health and the health of my family. I do not want to be exposed to levels of air pollution which exceed the levels permitted by law. I am especially concerned about my exposure to [the] plant’s particulate matter emissions (including the toxic substances that may be contained in particulate matter) because I know particulate matter can penetrate deep into the lungs and can lead to a range of respiratory problems.
Maui Electric filed a memorandum in opposition to Sierra Club’s motion for intervention or participation asserting, inter alia, that Sierra Club failed to establish a right to participate in a hearing. Maui Electric’s memorandum did not address Sierra Club’s assertion of a right to a due process hearing and solely argued that Sierra Club failed to establish a statutory right to participate in the proceeding.
The Commission denied Sierra Club’s motion to intervene or to participate without considering Sierra Club’s due process assertion. The Commission concluded that Sierra Club did not have an interest distinct from the general public and that “its interests in environmental issues and impacts could unreasonably broaden the issues already presented.” The Commission further concluded that the questions and concerns of Sierra Club “fall outside the narrow issues present in the Application, which concern the pricing structure and purchase obligations” of Maui Electric and HC&S. The Commission also found that Sierra Club’s involvement in other energy proceedings indicated that there were sufficient other means for Sierra Club to protect its interests.
Sierra Club subsequently filed a motion with the Commission requesting reconsideration of the order denying its motion to intervene or participate in the proceeding. Sierra Club again asserted a due process right to participate in a contested case hearing related to the Application based on the constitutionally-protected environmental rights of the organization and its members. Sierra Club cited to Pele Defense Fund v. Puna Geothermal Venture, 77 Hawaiʻi 64, 881 P.2d 1210 (1994), in support of its argument that a due process hearing was constitutionally required.
In denying Sierra Club’s motion for reconsideration, the Commission determined that Sierra Club failed to justify intervention or participation in the proceeding. With regard to Sierra Club’s due process argument, the Commission determined that Pele Defense Fund was inapplicable. The Commission did not otherwise address Sierra Club’s assertion of a due process right to participate in a hearing concerning its environmental rights.8
The Commission issued its final Decision and Order concerning the Application on September 24, 2015. In its Decision and Order, the Commission granted the Application to approve the Agreement. Among its findings and conclusions, the Commission observed that the Agreement is “anticipated to help accomplish the State’s policy goals of reaching 100% renewable energy by 2045 as well as increasing the State’s energy self-sufficiency.” Additionally, the Commission approved Maui Electric’s request to file confidentially fuel information provided by HC&S, which includes the type of fuels burned by HC&S. The PUC determined that the information was proprietary and “if disclosed publicly could disadvantage and competitively harm HC&S.”
Sierra Club appealed to the Intermediate Court of Appeals (ICA) challenging the Commission’s order denying its motion to intervene or participate in the proceedings and Sierra Club’s motion for reconsideration. Both the Commission and Maui Electric contested the jurisdiction of the ICA, arguing that the ICA lacked jurisdiction because the appeal did not arise from a contested case. Maui Electric filed a motion to dismiss the appeal, asserting that the appeal should be dismissed for lack of jurisdiction because the motion to intervene was not a contested case proceeding. Maui Electric asserted that Sierra Club’s concern regarding “the public health and visibility impacts of burning coal” did not rise to the level of property within the meaning of the due process clause. Maui Electric also argued that, as a factual matter, the Commission’s approval of the Application would not increase the amount of electricity generated using coal at the Puʻunene Plant.
In its statement of jurisdiction and memorandum in opposition to Maui Electric’s motion to dismiss, Sierra Club asserted that a hearing regarding the Application was required pursuant to
The ICA granted Maui Electric’s motion to dismiss Sierra Club’s appeal, concluding that the Commission was not required to hold a hearing on the Application, and thus, the ICA determined, Sierra Club was not “a person aggrieved in a contested case proceeding” under
II. DISCUSSION
A. Mootness
Maui Electric asserts that this case should be dismissed in light of the recent closing of the Puʻunene Plant. However, to the extent Sierra Club’s claim is moot, it falls within the public interest exception to the mootness doctrine. This court reviews three factors in analyzing the public interest exception: “(1) the public or private nature of the question presented, (2) the desirability of an
The issue in this case is whether, given the circumstances presented, due process under the Hawaiʻi Constitution provides procedural protections to persons asserting the constitutional right to a clean and healthful environment. Resolution of the issue may affect similarly situated parties who in the future seek to assert their right to a clean and healthful environment in proceedings before agencies and other governmental bodies. Ala Loop, 123 Hawaiʻi at 405, 235 P.3d at 1117 (“[T]he ICA’s ruling that there is no private right of action under chapter 205 ‘inject[ed] the requisite degree of public concern’ in support of having the public interest exception apply.” (quoting Doe, 116 Hawaiʻi at 327, 172 P.2d at 1071)); Hamilton ex rel. Lethem v. Lethem, 119 Hawaiʻi 1, 7, 193 P.3d 839, 845 (2008) (noting that “the public interest exception has focused largely on political or legislative issues that affect a significant number of Hawaiʻi residents“); Kahoʻohanohano v. State, 114 Hawaiʻi 302, 333, 162 P.3d 696, 727 (2007) (holding that the question in the case was of a public nature because the outcome would affect all state and county employees); Doe, 116 Hawaiʻi at 327, 172 P.3d at 1071 (constitutionality of a grandparent visitation statute was of a public nature).
Resolution of the issue presented in this case is also desirable because it will guide public officers, especially those working for agencies that exercise quasi-adjudicative authority, as to the manner in which due process and the right to a clean and healthful environment interact and as to the procedural safeguards that may be applicable when these two constitutional rights converge. See Ala Loop, 123 Hawaiʻi at 405, 235 P.3d at 1117 (reasoning that “because the availability of private enforcement is a potentially important consideration for public officers to take into account in performing their own duties under HRS chapter 205, public officials need guidance with regard to whether private citizens have a private right of action to enforce HRS chapter 205“); Kahoʻohanohano, 114 Hawaiʻi at 333—34, 162 P.3d at 727–28 (noting that “determination of the matter would assist public officers in the future” because it “will assist executive officers and legislators in making budgetary decisions involving the benefits of public employees“). Providing guidance in this area is desirable because it will clarify to public officers that they have the duty to properly consider and effectuate safeguards that the Hawaiʻi Constitution provides in the context of agency proceedings. See Mauna Kea Anaina Hou v. Bd. of Land & Nat. Res., 136 Hawaiʻi 376, 414, 363 P.3d 224, 262 (2015) (Pollack, J., concurring) (a majority of the court holding that “an agency . . . must perform its statutory function in a manner that fulfills the State’s affirmative constitutional obligations“).
Finally, given that agencies are “often in the position of deciding issues that affect multiple stakeholders and implicate constitutional rights and duties,” Mauna Kea Anaina Hou, 136 Hawaiʻi at 413–14, 363 P.3d at 261–62, it is likely that the constitutional right to a clean and healthful environment will be asserted or will arise under agency proceedings in the future. Thus, the question that we resolve in this case is likely to recur in the future. See Ala Loop, 123 Hawaiʻi at 405–06, 235 P.3d at 1117–18 (reasoning that “given the volume of land development activity in the State and the frequency with which issues relating to chapter 205 have been litigated, the question regarding whether a private party may seek to enforce HRS chapter 205 is likely to recur in the future“); Kaleikini v. Thielen, 124 Hawaiʻi 1, 13, 237 P.3d 1067, 1079 (2010) (explaining that “the likelihood of future recurrence of the question seems high inasmuch as it is seems probable that iwi will continue to be unearthed at future construction projects“). Accordingly, this case satisfies the three prongs of the public interest exception to the mootness doctrine, and we proceed to address the merits of this case.
B. Appellate Jurisdiction
Commission decisions are appealable to the ICA pursuant to
first, 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.
Kilakila ʻO Haleakala v. Bd. of Land & Nat. Res., 131 Hawaiʻi 193, 200, 317 P.3d 27, 34 (2013) (quoting Kaleikini v. Thielen, 124 Hawaiʻi 1, 16-17, 237 P.3d 1067, 1082-83 (2010)).11 In other words, there are four requirements for judicial review over an agency appeal: a contested case hearing, finality, compliance with agency rule, and standing. As the decision was final and Sierra Club complied with applicable agency rules, we consider whether there was a contested case and whether Sierra Club has standing to appeal.12
1. The Proceeding Was a Contested Case
A contested case hearing is one that is (1) “required by law” and (2) determines “the rights, duties, and privileges of specific parties.” Kilakila ʻO Haleakala, 131 Hawaiʻi at 200, 317 P.3d at 34 (quoting Kaleikini, 124 Hawaiʻi at 16–17, 237 P.3d at 1082–83). Accordingly, we address whether a hearing was required by law and, if required, whether such a hearing would have determined the rights, duties, and privileges of specific parties.
“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.‘”
a. HRS § 269-27.2(d)
Sierra Club has not established that a hearing was required under
b. HRS § 269-16(b)
Sierra Club also failed to demonstrate that a hearing was required under
adjustment clause.20 There is nothing in the record indicating that Maui Electric‘s energy cost adjustment clause was not previously
c. Due Process
i. Property Interests
We next consider whether Sierra Club was entitled to a hearing pursuant to the Hawai‘i Constitution‘s due process protections. We have long recognized that “[c]onstitutional due process protections mandate a hearing whenever the claimant seeks to protect a ‘property interest,’ in other words, a benefit to which the claimant is legitimately entitled.” Pele Def. Fund v. Puna Geothermal Venture, 77 Hawai‘i 64, 68, 881 P.2d 1210, 1214 (1994). We apply a two-step analysis to claims of a due process right to a hearing: “(1) is the particular interest which 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, in order for procedural due process protections to apply, Sierra Club “must possess an interest which qualifies as ‘property’ within the meaning of the constitution.” Id. “These interests--property interests--may take many forms” because courts have long recognized that “property interests protected by procedural due process extend well beyond actual ownership of real estate, chattels, or money.” Bd. of Regents v. Roth, 408 U.S. 564, 571-72, 576 (1972). A property interest does not need to be “tangible” to be protected by the due process clause. Rather, a protected property interest exists in a benefit--tangible or otherwise--to which a party has “a legitimate claim of entitlement.” Sandy Beach Def. Fund, 70 Haw. at 377; 773 P.2d at 260 (quoting Roth, 408 U.S. at 577); see also Alejado v. City & Cty. of Honolulu, 89 Hawai‘i 221, 227, 971 P.2d 310, 316 (App. 1998). We have thus recognized protected property interests in a range of intangible entitlements, including driving privileges, Kernan v. Tanaka, 75 Haw. 1, 22, 856 P.2d 1207, 1218 (1993), and the continued practice of medicine at a publicly funded hospital, Silver v. Castle Mem‘l Hosp., 53 Haw. 475, 486, 497 P.2d 564, 572 (1972).
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.” In re ‘Iao Ground Water Mgmt. Area High-Level Source Water Use Permit Applications, 128 Hawai‘i 228, 241, 287 P.3d 129, 142 (2012) [hereinafter ‘Iao] (quoting Int‘l Broth. of Painters & Allied Trades v. Befitel, 104 Hawai‘i 275, 283, 88 P.3d 647, 655 (2004)).
In ‘Iao, for example, we held that Native Hawaiian water rights constituted “‘property interests’ for the purpose of due process analysis.” Id. at 241-44, 287 P.3d at 142-45. The ‘Iao court rejected the argument that Native Hawaiian practices are similar to general “‘aesthetic and environmental interests’ which the court has held to be insufficient to establish a property interest” because those affected had a genuine interest in the water at issue and there was independent legal authority to support the asserted property interest. Id. at 242, 287 P.3d at 143.
Similar to the Native Hawaiian water rights asserted in ‘Iao, Sierra Club‘s asserted property interest is defined by State constitutional and statutory law. “The right to a clean and healthful environment” is a
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.
Although a person‘s right to a clean and healthful environment is vested pursuant to article XI, section 9, the right is defined by existing law relating to environmental quality. A committee report from the 1978 Constitutional Convention explained that the right would be defined by environmental statutes, rules, and ordinances to lend flexibility to the definition of the right over time:
Your Committee believes that a clean and healthful environment is an important right of every citizen and that this right deserves constitutional protection. The definition of this right would be accomplished by relying on the large body of statutes, administrative rules and ordinances relating to environmental quality. Defining the right in terms of present laws imposes no new legal duties on parties, a point of fairness important to parties which have invested or are investing large sums of money to comply with present laws.
Developing a body of case law defining the content of the right could involve confusion and inconsistencies. On the other hand, legislatures, county councils and administrative agencies can adopt, modify or repeal environmental laws or regulation laws [sic] in light of the latest scientific evidence and federal requirements and opportunities. Thus, the right can be reshaped and redefined through statute, ordinance and administrative rule-making procedures and not inflexibly fixed.
Ala Loop, 123 Hawai‘i at 409 n.24, 235 P.3d at 1121 n.24 (emphases added) (quoting Stand. Comm. Rep. No. 77, in 1 Proceedings of the Constitutional Convention of Hawai‘i 1978, at 689). Accordingly, the parameters of the property interest asserted by Sierra Club under article XI, section 9 is defined in reference to laws related to environmental quality. See id.
Sierra Club has asserted a right to a clean and healthful environment in this case as defined by HRS Chapter 269, which includes the duties and operation of the Commission in regulating public utilities. Thus, we next consider whether Chapter 269 is a law relating to environmental quality within the meaning of article XI, section 9.
In 2011, the legislature amended
(b) The public utilities commission [
may] shall consider the need [for] to reduce the State‘s reliance on fossil fuels through energy efficiency and increased renewable energy [use] generation in exercising its authority and duties under this chapter. In making determinations of the reasonableness of the costs of utility system 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 greenhouse gas 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.
2011 Haw. Sess. Laws Act 109, § 1 at 287-88 (repealed statutory material bracketed and stricken, and new statutory material underscored). The House Committee on Energy and Environmental Protection made the following finding with respect to the 2011 amendment:
Your Committee finds that Hawaii is dangerously reliant on imported fossil fuel, which subjects the State and residents to greater oil and gas price volatility, increased air pollution, and potentially harmful climate change due to the release of harmful greenhouse gases. Your Committee further finds that these adverse conditions carry with them hidden costs that are not always considered by the Public Utilities Commission when the Commission
makes decisions regarding utility system capital improvements and operations. This measure will assist in reducing the State‘s reliance on fossil fuels by requiring the Commission to factor in the hidden and long-term costs of the State‘s detrimental reliance on fossil fuels when exercising its statutory authority.
H. Stand. Comm. Rep. No. 1004, in 2011 House Journal, at 1332 (emphases added). Thus, a primary purpose of the amended law 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 greenhouse gases.”
The dissent presents three interrelated arguments that Sierra Club does not possess a protected interest in a clean and healthful environment as defined by HRS Chapter 269.25 First, the dissent contends that
The dissent‘s initial argument that HRS Chapter 269 does not “provide” anyone “with a protected property interest” misapprehends the source of Sierra Club‘s protected interest in a clean and healthful environment. It is not necessary for HRS Chapter 269 to create a property interest because article XI, section 9 has already done so, as explained next with regard to the dissent‘s second contention.
The dissent‘s second argument that article XI, section 9 of the Hawai‘i Constitution does not create a protected property interest is plainly contradicted by the history of our Constitution and this court‘s own precedent. The Standing Committee Report from the 1978 Constitutional Convention specifically observed that “a clean and healthful environment is an important right of every citizen and that this right deserves constitutional protection.” Stand. Comm. Rep. No. 77, in 1 Proceedings of the Constitutional Convention of Hawai‘i of 1978, at 689 (emphasis added). And the resolution adopting the amendment stated that the provision “gives each person the right to a clean and healthful environment as defined by law.” Res. 30, in 1 Proceedings of the Constitutional Convention of Hawai‘i of 1978, at 543-44. Indeed, we expressly recognized in Ala Loop that article XI, section 9 “recognizes a substantive right.” Ala Loop, 123 Hawai‘i at 409, 235 P.3d at 1121 (emphasis added).
The dissent, in contending that section 9 does not create a protected property interest, also appears to differentiate substantive rights from property interests by arguing that Ala Loop “did not indicate that plaintiffs had a property interest.” Dissent at 15. The distinction is unfounded. As stated, a property interest exists wherever there is a “legitimate claim of entitlement” that “stem[s] from an independent
Lastly, the dissent contends that “[u]nlike the statutes in ‘Iao which described Native Hawaiians’ entitlement to water,” HRS Chapter 269 does not “describe[] . . . property interests” that “establish the content of the substantive right to a clean and healthful environment.” Dissent at 16. Article XI, section 9, however, expressly defines the contours of “a clean and healthful environment” through “laws relating to environmental quality, including control of pollution and conservation, protection and enhancement of natural resources.” That is, the property interest created by article XI, section 9 is shaped by all state laws relating to environmental quality. See Stand. Comm. Rep. No. 77, in 1 Proceedings of the Constitutional Convention of Hawai‘i of 1978, at 689 (“The definition of this right [to a clean and healthful environment] would be accomplished by relying on the large body of statutes, administrative rules and ordinances relating to environmental quality.“). Article XI, section 9 thus guarantees to “[e]ach person” an individual, private right to share in the benefit of environmental laws--regardless of whether the regulation describes a “tangible property interest.”27
Additionally, the dissent mischaracterizes the property rights at issue in ‘Iao as being specifically provided for by statute. Dissent at 16. However, the provisions of the water code relating to Native Hawaiian water rights that we considered were styled as savings clauses, stating that the water code was not intended to abridge rights already in existence.28 The water rights were derived from other sources of law, including traditional practices and article XII, section 7 of our Constitution, which guarantees “all rights, customarily and traditionally exercised for subsistence, cultural and religious purposes and possessed by ahupua‘a tenants who are descendants of native Hawaiians.” See ‘Iao, 128 Hawai‘i at 263, 287 P.3d at 164 (Acoba, J., concurring). Thus, the statutes at issue in ‘Iao specifically preserved “all rights” guaranteed by article XII, section 7, while in this case HRS Chapter 269 defines the contours of the “right” of “each person . . . to a clean and healthful environment” that article XI, section 9 guarantees. Both statutes clarify the content of rights guaranteed by the respective constitutional provisions, which are protectable interests under the due process clause.
We therefore conclude 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 greenhouse gas emissions in the decision-making of the Commission. Accordingly, we hold that Sierra Club has established a legitimate claim of entitlement to a clean and healthful environment under article XI, section 9 and HRS Chapter 269.
We note that this right is not a freestanding interest in general aesthetic and environmental values. See Sandy Beach Def. Fund, 70 Haw. at 376-77, 773 P.2d at 260-61. The
ii. Hearing Procedures
Having determined that Sierra Club has established a protectable “property” interest, we next consider what procedures due process requires in this case given the demonstrated property interest in a clean and healthful environment as defined by HRS Chapter 269. In determining the procedures required to comply with constitutional due process, we consider the following 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 procedural safeguards would entail.” Sandy Beach Def. Fund v. City Council of City & Cty. of Honolulu, 70 Haw. 361, 378, 773 P.2d 250, 261 (1989); see also Mauna Kea Anaina Hou v. Bd. of Land & Nat. Res., 136 Hawai‘i 376, 410, 363 P.3d 224, 258 (2015) (Pollack, J., concurring). We have held that, “as a matter of constitutional due process, an agency hearing is . . . required where the issuance of a permit implicating an applicant‘s property rights adversely affects the constitutionally protected rights of other interested persons who have followed the agency‘s rules governing participation in contested cases.” Pele Def. Fund v. Puna Geothermal Venture, 77 Hawai‘i 64, 68, 881 P.2d 1210, 1214 (1994). In other words, the court in Pele Defense Fund concluded that when the requirements of standing were met and the agency‘s rules were followed, an agency hearing was required when the challenged State action “adversely affects the constitutionally protected rights” of others. Id. (citing other subsections of the opinion addressing the requirements of standing and compliance with agency rules).
As discussed, the private interest to be affected in this case is the right to a clean and healthful environment, which is a substantive right guaranteed by the Hawai‘i Constitution. See Cty. of Haw. v. Ala Loop Homeowners, 123 Hawai‘i 391, 409, 417, 235 P.3d 1103, 1121, 1127 (2010).29 This right to a clean and healthful environment includes the right that explicit consideration be given to reduction of greenhouse gas emissions in Commission decision-making, as provided for in HRS Chapter 269. In this case, Maui Electric sought approval of a power purchase agreement with an energy producer that relies on the burning of coal and petroleum in its operations and has been charged with violation of the State‘s visible emissions standards.30 The approval of Maui Electric‘s Application not only involved the approval of a newly negotiated power-purchase agreement, but it also extended Maui Electric‘s reliance on HC&S for an additional three years. The Commission was statutorily required to consider the hidden and long-term costs of the continued reliance on energy produced at the Pu‘unene Plant, including the potential for increased air pollution as a result of greenhouse gas emissions. The Commission was requested in the Application to consider the reasonableness of the energy charges and determine whether the arrangement between Maui Electric and HC&S was prudent and in the public interest. A review of the Agreement
Given the issues raised by Maui Electric‘s Application, the proceedings directly affected the right to a clean and healthful environment of Sierra Club‘s members as defined by HRS Chapter 269. This is evident, not only from the issues raised in the Application, but also from the findings and conclusions of the Commission in its Decision and Order, granting the Application for approval of the Agreement. For example, the Commission specifically concluded that the Agreement--under which Maui Electric would continue to purchase energy generated at a plant that burned fuels that included coal and petroleum--was “anticipated to help accomplish the State‘s policy goals of reaching 100% renewable energy by 2045 as well as increasing the State‘s energy self-sufficiency.”31 Additionally, in filing its quarterly report setting forth the type of energy purchased, the associated payment, and the type of fuel burned by HC&S, the Commission allowed Maui Electric to keep the fuel information confidential.32 Therefore, the Commission‘s Decision and Order specifically involved determinations related to the State‘s renewable energy goals as set out in HRS Chapter 269, and, by extension, the Commission‘s decision also involved a determination of Sierra Club‘s members’ interest in a clean and healthful environment as defined by HRS Chapter 269.
Accordingly, the Commission‘s approval of the Agreement under the terms of its Decision and Order adversely affected the private interests of Sierra Club‘s members. The risks of an erroneous deprivation are high in this case absent the protections provided by a contested case hearing, particularly in light of the potential long-term impact on the air quality in the area, the denial of Sierra Club‘s motion for intervention or participation in the proceeding, and the absence of other proceedings in which Sierra Club could have a meaningful opportunity to be heard concerning HC&S‘s performance of the Agreement. Additionally, given that the Commission is already statutorily required to consider the long-term effects of its decisions, it would not unduly burden the Commission to afford Sierra Club a contested case hearing under the circumstances of this case. See Mauna Kea, 136 Hawai‘i at 390, 363 P.3d at 238 (concluding that due process required a hearing “[g]iven the substantial interest of Native Hawaiians in pursuing their cultural practices on Mauna Kea, the risk of an erroneous deprivation absent the protections provided by a contested case hearing, and the lack of undue burden on the
government in affording Appellants a contested case hearing”). In its order denying Sierra Club’s motion for intervention or participation, the Commission noted that it allowed
The dissent states that “it appears that Ala Loop would give Sierra Club the ability to bring a separate declaratory judgment action alleging that the PUC failed to comply with its statutory duties under
By way of analogy, in Brown v. Thompson, the State impounded two unattended boats and disposed of them after determining that they were derelict. 91 Hawaiʻi 1, 5-7, 979 P.2d 586, 590-92 (1999). Just as here, there was no dispute that the owner of the boat had the procedural right to bring a private action for declaratory relief. (Indeed, Brown originated as just such an action, though it was filed after the boat’s disposition occurred. Id. at 7, 979 P.2d at 592.) We nonetheless held that the disposition of an impounded vessel was an interest protected by due process under
Similarly, the importance of not restricting the due process protection to the exclusivity approach advocated by the dissent is manifest in this case. A belated post-decision civil action for declaratory relief is not a replacement for participation in a hearing before the PUC, and it does not eliminate the risk of wrongful deprivation.33 Short of the “extraordinary remedy” of a preliminary injunction, Morgan v. Planning Dep’t, Cty. of Kauai, 104 Hawaiʻi 173, 188, 86 P.3d 982, 997 (2004), an administrative decision may go into effect during the pendency of a suit for declaratory relief. This is of particular concern in the context of environmental regulations, where the damage caused by a violation is not easily reversed. And requiring relitigation of agency decisions is inefficient and imposes an increased burden on the State in contrast to resolving the challenge in the initial decision-making process. Brown, 91 Hawaiʻi at 12, 979 P.2d at 597 (concluding
Fund, 70 Haw. at 378, 773 P.2d at 261 (stating that evaluation of whether procedures are required by due process requires weighing the risk of an erroneous deprivation and the probable value of alternative procedural safeguards against the burden on the State). Constitutional due process calls for a far more flexible measure of protection than the one-size-fits-all approach advocated by the dissent. See Sandy Beach Def. Fund, 70 Haw. at 378, 773 P.2d at 261 (“Due process is not a fixed concept requiring a specific procedural course in every situation. ‘[D]ue process is flexible and calls for such procedural protections as the particular situation demands.’” (quoting Morrissey v. Brewer, 408 U.S. 471, 481 (1972) (alteration in original))).
We also do not agree with Maui Electric, the Commission, and the dissent’s assertion that only those living adjacent to the Puʻunene Plant would be able to demonstrate a protectable property interest in this case. Dissent at 10. While proximity to the property at issue may be relevant, there is no requirement in our law that a person must be living adjacent to physical property in order to be adversely affected by the use of that property. Instead, we consider whether a protected property right has been adversely affected. See Pele Def. Fund, 77 Hawaiʻi at 68, 881 P.2d at 1214; Life of the Land v. Land Use Comm’n, 63 Haw. 166, 176–77, 623 P.2d 431, 441 (1981) (holding environmental organization “and its members have a ‘stake’ in the outcome of the alleged controversy adequate to invoke judicial intervention, even though they are neither owners nor adjoining owners of land” because
The United States Supreme Court discussed the issue of interstate air pollution in a recent decision:
Pollutants generated by upwind sources are often transported by air currents, sometimes over hundreds of miles, to downwind States. As the pollution travels out of state, upwind States are relieved of the associated costs. Those costs are borne instead by the downwind States, whose ability to achieve and maintain satisfactory air quality is hampered by the steady stream of infiltrating pollution.
E.P.A. v. EME Homer City Generation, L.P., 134 S. Ct. 1584, 1592 (2014). Indeed, it is commonly understood that “[a]ir pollution is transient” and is “heedless” of even “state boundaries.” Id. Accordingly, those who are adversely affected by greenhouse gas emissions produced by the burning of fossil fuels may not necessarily be limited to those who live in the areas immediately adjacent to the source of the emissions.34
By extension, the fact that HC&S was already burning fossil fuels does not mean that the continued burning of fossil fuel--and subsequent release of additional emissions into the air--is not sufficient to demonstrate an adverse effect on the right to a clean and healthful environment.35 The fact that there was a preexisting agreement between Maui Electric and HC&S does not exempt Maui Electric’s Application from the State’s established policies regarding greenhouse gas emissions and renewable energy as set out in
We conclude that, under the circumstances of this case, the protected property interest in a clean and healthful environment asserted by Sierra Club necessitated a hearing by the Commission to consider the impacts of approving the Agreement on Sierra Club’s members’ right to a clean and healthful environment, including the release of harmful greenhouse gases by the Puʻunene Plant that would result from the Agreement, whether the cost of the energy under the Agreement was reasonable in light of the potential for harmful emissions, and whether the terms of the Agreement were prudent in light of the potential hidden and long-term consequences of the Agreement.39
“We observe that procedural due process requires that a person have an ‘opportunity to be heard at a meaningful time and in a meaningful manner.’” Freitas v. Admin. Dir. of Courts, 108 Hawaiʻi 31, 44, 116 P.3d 673, 686 (2005) (quoting Farmer v. Admin. Dir. of the Courts, 94 Hawaiʻi 232, 238, 11 P.3d 457, 463 (2000)). This includes the right to submit evidence and argument on the issues--in this case the relevant issue being the impact of the Agreement on the asserted property interest. See Application of Haw. Elec. Light Co., 67 Hawaiʻi 425, 430, 690 P.2d 274, 278 (1984). Although the parties have the right to present evidence, cross-examine opposing evidence, and submit rebuttal evidence, “considerations of relevancy, materiality, and repetition” limit the presentation of evidence in contested case proceedings. See id.; see also
2. Standing
“Establishing that a contested case took place does not end the inquiry into justiciability.” Pele Def. Fund, 77 Hawaiʻi at 64, 69, 881 P.2d at 1210, 1215 (1994). Sierra Club must also show that it is “entitled to request a review of the agency determination.” Id. (quoting Mahuiki v. Planning Comm’n, 65 Haw. 506, 513, 654 P.2d 874, 879 (1982)). In order to establish standing, a plaintiff must have suffered an actual or threatened injury; the injury must be fairly traceable to the defendant’s actions; and a favorable decision would likely provide relief for the plaintiff’s injury. 292, 312” court=“Haw.” date=“2007“>Sierra Club v. Dep’t of Transp., 115 Hawaiʻi 299, 319, 167 P.3d 292, 312 (2007). Environmental plaintiffs must meet this three-part standing test but need not assert an injury that is different in kind from an injury to the public generally. Id. at 320, 167 P.3d at 313. We “will recognize harms to plaintiffs’ environmental interests as injuries that may provide the basis for standing.” Id. This lower standard that is applied when environmental rights are asserted has long been established in our law. See Application of Hawaiian Elec. Co., 56 Haw. 260, 264–65 n.1, 535 P.2d 1102, 1105–06 n.1 (1975) (“Aesthetic and environmental well-being, like economic well-being, are important ingredients of the quality of life in our society, and the fact that particular environmental interests are shared by the many rather than the few does not make them less deserving of legal protection through the judicial process.” (quoting United States v. Students Challenging Regulatory Agency Procedures (SCRAP), 412 U.S. 669, 685 (1973))).
Further, we recognize that “where the interests at stake are in the realm of environmental concerns[,] ‘we have not been inclined to foreclose challenges to administrative determinations through restrictive applications of standing requirements.’” Kilakila ʻO Haleakala v. Bd. of Land & Nat. Res., 131 Hawaiʻi 193, 204, 317 P.3d 27, 38 (2013) (alteration in original) (quoting Citizens for Prot. of N. Kohala Coastline v. Cty. of Haw., 91 Hawaiʻi 94, 100, 979 P.2d 1120, 1126 (1999)). “[T]he injury prong of the standing inquiry requires an assertion of a judicially cognizable injury, that is, a harm to some legally protected interest.” Sierra Club v. Dep’t of Transp., 115 Hawaiʻi at 321, 167 P.3d at 314. As discussed, Sierra Club has established that its members possess a right to a clean and healthful environment under
The Apana and Andrews affidavits demonstrate a threatened injury to the right to a clean and healthful environment from the effect of greenhouse gas emissions. Both affidavits explain the potential health effects of burning coal and the potential impacts of the operations of the Puʻunene Plant on Apana and Andrews’s health. The Apana affidavit states that the Commission’s decision could impact the level of coal burning at the Puʻunene Plant, affecting Apana’s “long-term health and well-being.” The Andrews affidavit states that “the Department of Health issued the Puʻunene plant a Notice of Violation in 2014 and a million dollar fine regarding its emissions of opacity.”40 Andrews discloses in her Affidavit that due to her concerns about air pollution, she closes the windows at her home and runs air filters inside her house when emissions levels are high. The Andrews affidavit further expressed concern that HC&S “burns more coal and produced more air pollution in order to meet its obligations” to Maui Electric
Accordingly, a threatened injury to Sierra Club’s members that is fairly traceable to the operations of HC&S was sufficiently established to satisfy standing. See Mottl v. Miyahara, 95 Hawaiʻi 381, 394, 23 P.3d 716, 729 (2001) (“[A]lthough difficult to quantify, deterioration of air quality and odor nuisance are ‘distinct and palpable’ injuries.” (quoting Akinaka v. Disciplinary Bd. of Haw. Supreme Ct., 91 Hawaiʻi 51, 55, 979 P.2d 1077, 1081 (1999))); see also Kilakila ʻO Haleakala, 131 Hawaiʻi at 205, 317 P.3d at 39 (concluding that the organization dedicated to the protection of the sacredness of the summit of Haleakalā had standing to pursue a
III. CONCLUSION
For the reasons discussed above, a due process hearing was required to protect the asserted property right to a clean and healthful environment guaranteed by
Kylie W. Wager and Isaac H. Moriwake for petitioner
Randall C. Whattoff, James E. Abraham, and Rebecca D. Matsushima for respondent Maui Electric Company, Ltd.
Mark J. Kaetsu and Thomas C. Gorak for respondent Public Utilities Commission
/s/ Sabrina S. McKenna
/s/ Richard W. Pollack
/s/ Michael D. Wilson
Notes
The Consumer Advocate also recognizes that, even though Maui Electric refers to the [Puʻunene Plant] as an internal bagasse fired power plant, the unit burns a number of other fuels, including coal and petroleum. The Consumer Advocate also recognizes that continued reliance on older thermal units that burn fossil fuels is not consistent with the State’s goal of 100% renewable energy by 2045.
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.
An appeal from an order of the public utilities commission under this chapter shall lie, subject to chapter 602, in the manner provided for civil appeals from the circuit courts. Only a person aggrieved in a contested case proceeding provided for in this chapter may appeal from the order, if the order is final, or if preliminary, is of the nature defined by section 91-14(a).
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. Notwithstanding any other provision of this chapter to the contrary, for the purposes of this section, the term “person aggrieved” shall include an agency that is a party to a contested case proceeding before that agency or another agency.
Upon application of a public utility that supplies electricity to the public, and notification of its customers, the commission, after an evidentiary 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 until the effective date of the rate change approved by the commission’s final decision in the public utility’s next general rate proceeding under section 269-16 . . . .
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. The commission, in its discretion and for good cause shown, may allow any rate, fare, charge, classification, schedule, rule, or practice to be established, abandoned, modified, or departed from upon notice less than that provided for in section 269-12(b). 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.
No person shall be deprived of life, liberty or property without due process of law, nor be denied the equal protection of the laws, nor be denied the enjoyment of the person’s civil rights or be discriminated against in the exercise thereof because of race, religion, sex or ancestry.
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 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 greenhouse gas 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.