81 Hawai'i 459, Hawaiian Elec. Co., Inc., Application of

• Decision Date: 18 June 1996
• Docket Number: BT-849,No. 18156,UM-844,18156
• Citation: 918 P.2d 561
• Parties: 81 Hawai'i 459, 170 P.U.R.4th 395 In the Matter of the Application of HAWAIIAN ELECTRIC COMPANY, INC. for approval to commit funds in excess of $500,000 for Item, construction of Waiau-CIP 138 kV # 1 & # 2, Part 2, transmission lines; for Item, undergrounding of distribution lines and services along Kamehameha Highway; and for a waiver of rule 14 of HECO's tariff to allow HECO to pay for Item service conversions.
• Court: Hawaii Supreme Court

Page 561

918 P.2d 561

81 Hawai'i 459, 170 P.U.R.4th 395

In the Matter of the Application of HAWAIIAN ELECTRIC COMPANY, INC. for approval to commit funds in excess of $500,000 for Item BT-849, construction of Waiau-CIP 138 kV # 1 & # 2, Part 2, transmission lines; for Item UM-844 undergrounding of distribution lines and services along Kamehameha Highway; and for a waiver of rule 14 of HECO's tariff to allow HECO to pay for Item UM-844 service conversions.

No. 18156.

Supreme Court of Hawai'i.

June 18, 1996.

As Amended July 11, 1996.

Colleen H. Sakurai (of Sakurai & Sing) and Stephen W.H.A. Lee (of Ching & Lee), on the briefs, Honolulu, for intervenors-appellants Eloise Yamashita Tungpalan, Brian Kanno, Dennis M. Nakasato, Randall Y. Iwase, Paul T. Oshiro, Julie R. Duldulao, Roy M. Takumi, Samuel S.H. Lee, Henry H. Peters, Peter K. Apo, Annelle C. Amaral, Arnold Morgado, Jr., John Desoto and Rene Mansho.

Thomas W. Williams, Jr. and Craig I. Nakanishi (of Goodsill Anderson Quinn & Stifel), and W. Patrick Fligg, Corporate Attorney (of Hawaiian Electric Co., Inc.), on the briefs, Honolulu, for petitioner-appellee Hawaiian Electric Company, Inc.

Jan N. Sullivan (of Takeyama & Sullivan), on the briefs, Honolulu, for intervenor-appellant Village Park Community Association joins in intervenors-appellants' opening brief.

Rodney I. Kimura, Deputy Attorney General, for appellee Consumer Advocate joins in petitioner-appellee's answering brief.

Before MOON, C.J., KLEIN, LEVINSON and RAMIL, JJ., and HUDDY, Circuit Judge, in place of NAKAYAMA, J., recused.

RAMIL, Justice.

Intervenors-Appellants Eloise Yamashita Tungpalan, Brian Kanno, Dennis M. Nakasato, Randall Y. Iwase, Paul T. Oshiro, Julie R. Duldulao, Roy M. Takumi, Samuel S.H. Lee, Henry H. Peters, Peter K. Apo, Annelle C. Amaral, Arnold Morgado, Jr., John DeSoto, and Rene Mansho (Tungpalan or the Tungpalan Appellants), and Village Park Community Association ¹ (VPCA) (collectively Appellants) appeal from the Public Utilities Commission's (PUC or Commission) decision and order granting the Petitioner-Appellee's (Hawaiian Electric Company, Inc. or HECO) application to commit funds in excess of $500,000 for the construction of high-voltage overhead transmission lines, and undergrounding of certain distribution lines, and overhead to underground service conversions. On appeal, Appellants contend that: (1) the PUC violated the Hawai'i Administrative Procedure Act (HAPA) by failing to promulgate rules properly to establish when transmission lines will be placed underground; (2) the PUC improperly engaged in rule-making in its decision and order; (3) the PUC acted arbitrarily and capriciously in adopting its position on prudent avoidance and electronic magnetic fields (EMFs); (4) the PUC did not consistently apply its standard and used its authority arbitrarily and capriciously; (5) HECO failed to meet its burden of proof in this proceeding; ² and (6) the PUC deferred to other governmental agencies contrary to the PUC's preemptive rights. ³ For the reasons below, we affirm the PUC's decision and order.

I. BACKGROUND

On March 12, 1992, HECO filed an application ⁴ for approval to commit (1) $31,040,600 ⁵ for item BT-849, the construction of Waiau-Campbell Industrial Park (Waiau-CIP) 138 kilovolt ("kV") numbers 1 and 2, part 2, overhead transmission lines from the Ewa Nui substation to Waiau power plant; and (2) $5,658,100 for item UM-844, the underground placement of distribution lines and certain overhead to underground service conversions along Kamehameha Highway. ⁶ These lines were designed to provide electrical power to the increasingly populated Ewa plains.

By an order dated April 22, 1992, the PUC allowed the intervention of Amfac Property Development Corporation and Amfac Property Investment Corporation (collectively Amfac) and WCC Associates (WCC). ⁷ By an order dated March 12, 1993, the PUC allowed the intervention of Village Park Association, James Aki, Joseph M. Souki, the Tungpalan Appellants (collectively Aki, et al.), and VPCA. ⁸ A public hearing was held by the PUC in the Waipahu High School Cafeteria on May 28, 1992. During the public hearing, members of the general public, many of whom were represented by Appellants, voiced their concerns about the project which included: (1) visual impact; (2) electromagnetic radiation coming from the power lines; and (3) degradation of property values. Many argued that the transmission lines should be placed underground.

By Stipulated Prehearing Order No. 11998 filed on October 30, 1992, the following were the issues agreed to by the parties and intervenors:

1. Whether HECO's proposed expenditures for Item Nos. BT-849 and UM-844 will provide facilities which are reasonably required to meet HECO's probable future requirements for utility purposes.

2. Whether HECO's selected routing, location, configuration and method of construction for Item Nos. BT-849 and UM-844 are reasonable and preferable to HECO's other options, comparing the following factors:

a) Cost;

b) Construction time;

c) Health effects, including the effect of EMFs;

d) Safety;

e) Aesthetic considerations;

f) Depreciation of property values;

g) Interference with radio and television reception; and

h) The public welfare in general. [ ⁹]

3. Whether the underground placement of distribution lines and services along Kamehameha Highway is reasonably required.

4. Whether the Commission should waive the application of Rule 14 of HECO's tariff, to allow the utility to pay for the underground secondary service conversions as part of Item No. UM-844.

(Brackets added.)

All parties later submitted written testimony and documentary evidence, and an evidentiary hearing was held by the PUC over a 14-day period, from April 7, 1993, to May 3, 1993, where oral testimony was taken. After briefs were filed by all parties, the PUC rendered its Order No. 13201, approving HECO's application in its entirety.

In its Order, the PUC cited, inter alia, a previous decision, In re Hawaii Electric Company, Decision and Order No. 10620, 1990 WL 488795, entered May 8, 1990, in which the PUC articulated the factors that would lead the PUC to require an electric utility to place its transmission lines underground. The PUC stated:

The Commission agrees that laying transmission lines underground promotes aesthetics and preserves scenic views. However, the utility has the responsibility to minimize the cost to ratepayers in providing reliable electric service.... [T]he cost of placing transmission lines underground is very high and the burden of that cost ultimately falls upon the ratepayers. Thus, unless (1) there is a compelling reason (which outweighs the costs) to place the lines underground or (2) there is a stated public policy requiring the lines to be laid underground or (3) the ratepayers as a whole consent to bear the high cost of putting the lines underground, we do not believe that we should require HECO to place the transmission lines underground. That placing the transmission lines overhead may obstruct one's view plane, in and of itself, is not sufficient cause to require the ratepayers to bear the cost of laying the lines underground.

Id. at 16.

The PUC order in the present case noted that, in light of Decision & Order No. 10620, HECO's proposed project will cause visual impacts and the emission of EMFs. The PUC concluded, however, that neither factor justified the underground placement of the transmission lines because aesthetics and inconclusive health effects of EMF did not constitute compelling reasons that would outweigh the added cost of placing the lines underground. The PUC opined that, because every overhead transmission line would have visual impacts and produce EMFs, if it were to order HECO to place the lines underground under the circumstances, it would be setting a precedent that could very well preclude the placement of any overhead transmission lines in Hawai'i.

The PUC found:

Based on the record in this docket and our earlier findings in this decision and order, we make the following ultimate findings:

1. HECO's proposed expenditures for item BT-849 and item UM-844 will provide facilities that are reasonably required to meet HECO's probable future requirements for utility purposes.

2. HECO's selected routing, location, configuration, and method of construction for item BT-849 are reasonable and preferable to HECO's other options, comparing the following factors: cost; construction time; health effects, including the effect of EMF; safety; aesthetic considerations; depreciation of property values; interference with radio and television reception; and the public welfare in general.

3. Item UM-844, the underground placement of distribution lines and services along Kamehameha Highway, is reasonably required.

4. A waiver of rule 14 of HECO's tariff to allow HECO to pay for the underground secondary service conversions as part of item UM-844, is reasonably required.

5. Item ST-737, the removal of the two 11.5 kV OSC circuits fronting Village Park and services of the loads of these circuits from HECO's existing Ewa substation on Farrington Highway, is reasonably required.

This timely appeal followed.

II. STANDARD OF REVIEW

Under the provisions of HRS § 269-16(f) (1993), an appeal from a "final" order of the PUC is taken to the supreme court. In re Kaanapali Water Corp., 5 Haw.App. 71, 76, 678 P.2d 584, 588 (1984). In such an appeal, the standard of review is set forth in HRS § 91-14(g) (1993). ¹⁰ In re Miller and Lieb Water Co., Inc., 65 Haw. 310, 311, 651 P.2d 486, 488 (1982).

In Outdoor Circle v. Harold K.L. Castle Trust Estate, 4 Haw.App. 633, 638, 675 P.2d 784, 789 (1983), the Intermediate Court of Appeals (ICA) said that HRS § 91-14(g) requires that, in order for the court to revise or modify an agency decision, it must find that an appellant's substantial rights may have been prejudiced by an agency under one of the six...