Wisconsin's Environmental Decade, Inc. v. Public Service Commission

• Decision Date: 01 July 1977
• Docket Number: No. 75-403,75-403
• Citation: 79 Wis.2d 409,256 N.W.2d 149
• Parties: , 7 Envtl. L. Rep. 20,563 WISCONSIN'S ENVIRONMENTAL DECADE, INC., Respondent, v. PUBLIC SERVICE COMMISSION of Wisconsin, and Wisconsin Electric Power Company, Appellants.
• Court: Wisconsin Supreme Court

Page 149

256 N.W.2d 149

79 Wis.2d 409, 7 Envtl. L. Rep. 20,563

WISCONSIN'S ENVIRONMENTAL DECADE, INC., Respondent, v. PUBLIC SERVICE COMMISSION of Wisconsin, and Wisconsin

Electric Power Company, Appellants.

No. 75-403.

Supreme Court of Wisconsin.

Argued March 29, 1977.

Decided July 1, 1977.

Bronson C. La Follette, Atty. Gen., Steven M. Schur (argued), Chief Counsel, and Steven Levine, Asst. Chief Counsel of Public Service Commission, Madison, on briefs, for appellant Public Service Commission.

Robert H. Gorske, Gen. Counsel, Wisconsin Elec. Power Co., W. Stuart Parsons (argued), T. Michael Bolger and Quarles & Brady, Milwaukee, on briefs, for appellant Wisconsin Elec. Power Co.

Melvin L. Goldberg, Madison, on briefs, for respondent; Kathleen M. Falk, Madison, argued.

ABRAHAMSON, Justice.

On December 4, 1972, Wisconsin Electric Power Company (hereinafter WEPCO) filed an application with the Public Service Commission of Wisconsin for authority to increase its electric rates so as to be "made whole" for increases in taxes, depreciation, the cost of money and other operating costs occurring subsequent to a December 3, 1971, rate order of the Commission. The application requested rate increases such as would permit a return on common stock equity of not less than the 12 percent authorized by the Commission in its December 3, 1971 order. Hearings were held January 16 and 17, 1973, at Madison and the record was closed at the conclusion of the January 17th hearing. Wisconsin's Environmental Decade (hereinafter referred to as Decade) participated in these proceedings, contending, among other things, that the Commission was required by the Wisconsin Environmental Policy Act (WEPA), ch. 274, Laws of 1971, to prepare an environmental impact statement before making its decision on the rate increase.

On March 16, 1973, the Commission issued its order authorizing rate increases averaging approximately 5.2 percent which were designed to provide for an increase in revenue of $12,722,500. The Commission did not address Decade's WEPA contentions in its March 16th order. On April 5, 1973, Decade filed an application for rehearing before the Commission, asserting again that the Commission's order of March 16, 1973 was a major action significantly affecting the quality of the human environment which required the preparation of an Environmental Impact Statement (EIS). Rehearing was granted by order of April 25, 1973, "for the sole, exclusive and limited purpose of receiving briefs and hearing oral argument" on this issue. On August 1, 1973, the Commission issued an order affirming its order of March 16th and holding that no EIS was required, stating in part:

"The . . . rate Order of March 16, 1973, in this proceeding does not have a direct effect upon the environment. Rather the direct effect of the Order is economic, not environmental. Whatever connection such Order has with the environment is remote and indirect. Moreover, nothing has been submitted to the Commission which would cause it to conclude that any environmental impact statement prepared for purposes of this proceeding could be based on anything other than pure speculation. In these circumstances, the Commission is of the opinion that an environmental impact statement is not required."

Chairman William F. Eich and Commissioner Richard D. Cudahy each filed lengthy concurring opinions explaining their reasons for concluding that the impact statement was not required.

On August 28, 1973, Decade petitioned the circuit court for Dane county for review of the Commission's orders pursuant to sections 227.15 and 227.16, Stats. Numerous issues were raised in the petition for review. However, only the Commission's ruling that no environmental impact statement need be prepared was addressed by the circuit court. In a memorandum decision filed June 16, 1975, the trial court concluded that the Commission's order did not demonstrate sufficient consideration of environmental factors to validate its negative EIS determination. The court was of the view that some actual attempt to investigate the environmental consequences of rate orders was required before the Commission's determination that no EIS was warranted could stand. In view of the Commission's apparent failure even to study and analyze in its no-impact statement the various authorities dealing with price/demand relationships for electricity which were cited to the Commission by the parties, the court was unimpressed by the Commission's protestations that an EIS would be a futile exercise. Accordingly, by judgment entered August 25, 1975, the court remanded the matter to the Commission for further investigation and an evidentiary hearing as to whether an environmental impact statement was required. From this judgment both the Commission and WEPCO have appealed.

Two issues are presented:

A. What is the standard for judicial review of the Commission's decision not to prepare an EIS; and

B. Under that standard, was the trial court correct in holding the Commission's decision inadequate?

I.

The Wisconsin Environmental Policy Act is substantially patterned after the National Environmental Policy Act of 1969 (NEPA), 42 U.S.C. sec. 4321, et seq. Like its federal counterpart, WEPA contains a broad statement of governmental commitment to the protection and enhancement of the environment (ch. 274, Laws of 1971, sec. 1) ¹ and imposes upon governmental agencies certain procedural obligations with respect to their decision- making processes to assure that the substantive policies of the Act will be implemented (ch. 274, Laws of 1971, sec. 2, creating sec. 1.11, Stats.).

The evident purpose of WEPA was to effect an across-the-board adjustment of priorities in the decision-making processes of agencies of state government. The Act constitutes a clear legislative declaration that protection of the environment is among the "essential considerations of state policy," and as such, is an essential part of the mandate of every state agency. However, the scheme of the Act is not directly to control agency discretion, but to require that agencies consider and evaluate the environmental consequences of alternatives available to them in the exercise of that discretion, and to require that they undertake that consideration in the framework sec. 1.11 provides.

Of specific concern here is the environmental impact statement provision of sec 1.11(2)(c), Stats. That section requires that "to the fullest extent possible," all agencies of the state shall prepare a detailed environmental impact statement (EIS) on "proposals for legislation and other major actions significantly affecting the quality of the human environment . . . ." The impact statement is to substantially follow the guidelines issued by the United States Council on Environmental Quality under NEPA, ² and must include considerations of:

"1. The environmental impact of the proposed action;

"2. Any adverse environmental effects which cannot be avoided should the proposal be implemented;

"3. Alternatives to the proposed action;

"4. The relationship between local short-term uses of man's environment and the maintenance and enhancement of long-term productivity; and

"5. Any irreversible and irretrievable commitments of resources which would be involved in the proposed action should it be implemented;

"6. Such statement shall also contain details of the beneficial aspects of the proposed project, both short term and long term, and the economic advantages of the proposal." ³

Before making the environmental impact statement the agency is required by sec. 1.11(2)(d), Stats., to obtain the comments of any other agency which has jurisdiction or special expertise with respect to any environmental impact involved. The impact statement together with the comments of the appropriate agencies must be made available to the governor, the Department of Natural Resources and the public, and a public hearing must be held before a final decision on the proposed action is made. ⁴

II.

The Commission contends that the circuit court erred by placing upon the Commission the burden of demonstrating that the rate proceeding herein was not a major action significantly affecting the quality of the human environment. We think this contention somewhat mischaracterizes the circuit court's approach. A reading of the circuit court's well-reasoned decision indicates that the burden it placed upon the Commission was not that of proving the absence of a significant environmental effect, but of producing a reviewable record which demonstrated that its decision was reached upon a sufficient preliminary factual inquiry premised upon a proper construction of the obligations WEPA imposes. As explained below, we believe the circuit court was correct in placing this burden upon the Commission and in determining that it was not met here.

It is important to note that the threshold decision whether an EIS should be prepared is not of the usual variety of administrative determination. The agency is not here adjudicating the rights of parties before it, nor is it exercising a delegated legislative power. WEPA imposes upon agencies of the state duties which the legislature has determined to be necessary for the public welfare. When a negative EIS determination is challenged, the question is whether the agency itself has complied with the letter and spirit of WEPA. What was said in a leading federal case regarding the United States Atomic Energy Commission's responsibilities under NEPA is equally appropriate here:

". . . NEPA establishes environmental protection as an integral part of the Atomic Energy Commission's basic mandate. The primary responsibility for fulfilling that mandate lies with the Commission. Its responsibility is not simply to sit back, like an umpire, and resolve adversary contentions at the hearing stage. Rather, it must itself take the initiative of considering environmental values . . . ." ⁵

...