In re Maui Elec. Co., Ltd., SCWC-15-0000640

Decision Date14 December 2017
Docket NumberSCWC-15-0000640
Citation408 P.3d 1
CourtHawaii Supreme Court
Parties IN RE APPLICATION OF MAUI ELECTRIC COMPANY, LIMITED, For Approval of the Amended and Restated Power Purchase Agreement With Hawaiian Commercial & Sugar Company.

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, Honolulu, for respondent Public Utilities Commission

McKENNA, POLLACK, and WILSON, JJ., WITH RECKTENWALD, C.J., DISSENTING, WITH WHOM NAKAYAMA, J., JOINS

OPINION OF THE COURT BY POLLACK, J.

Article XI, section 9 of the Hawai‘i Constitution guarantees each person "the right to a clean and healthful environment, as defined by laws relating to environmental quality." Article I, section 5 provides that "[n]o person shall be deprived of life, liberty or property without due process of law." This case raises the issue of whether the protections of the due process clause apply to the right to a clean and healthful environment as defined by laws related to environmental quality. We hold that, under the circumstances of this case, the petitioners asserted a protectable property interest in a clean and healthful environment as defined by environmental regulations; that the agency decision adversely affected this interest; and that a due process hearing was required given the importance of the interest, the risk of an erroneous deprivation, and the governmental interests involved.

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. Hawaii Revised Statutes (HRS) § 269–16.22, relating to power purchase agreements, allows electric utility companies to recover all power purchase costs from customers subject to the approval of the Public Utilities Commission ("Commission" or PUC).2

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 Pu‘unene, Maui (the "Pu‘unene Plant"). The Pu‘unene 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 Pu‘unene 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 payments Maui Electric was making to HC & S under the existing agreement; eliminate Maui Electric's existing minimum purchase obligation; and extend the arrangement between the parties from 2014 to 2017.

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 Pu‘unene 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 Pu‘unene 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 Pu‘unene 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 Pu‘unene 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 Pu‘unene 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 HRS § 269–92(b)(4), which relates to standards that prescribe what portions of the renewable portfolio standards may be met by specific types of energy sources. Sierra Club maintained that the proceedings would determine the future obligations of the Pu‘unene Plant to supply power to Maui Electric, "which is a de facto determination [of] whether the plant will continue to burn coal."

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 Pu‘unene Plant's smokestack from her home, stated the following in her affidavit:

4. I have concerns about the coal burning at Pu‘unene. 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 Pu‘unene 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 Pu‘unene, 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 Pu‘unene 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 Pu‘unene 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...

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