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

Decision Date24 November 1981
Docket NumberNo. 80-2282,80-2282
Citation313 N.W.2d 863,105 Wis.2d 457
PartiesWISCONSIN'S ENVIRONMENTAL DECADE, INC., Petitioner-Respondent, v. PUBLIC SERVICE COMMISSION OF WISCONSIN, Respondent-Appellant, Wisconsin Electric Power Company, Intervenor-Respondent-Appellant. *
CourtWisconsin Court of Appeals

Bronson C. La Follette, Atty. Gen., Steven M. Schur, Chief Counsel, and Barbara E. James, Asst. Chief Counsel, Madison, for appellant Public Service Commission of Wisconsin.

Larry J. Martin, Andrew M. Barnes and Quarles & Brady, Milwaukee, for appellant Wisconsin Elec. Power Co.

Kathleen M. Falk, Gen. Counsel, Madison, for respondent.

Before FOLEY, P. J., and DEAN and CANE, JJ.

FOLEY, Presiding Judge.

The Public Service Commission of Wisconsin (PSC) and the Wisconsin Electric Power Company (WEPCO) appeal from a judgment reversing portions of a PSC rate order. The circuit court concluded that the inclusion of nuclear fuel costs in WEPCO's fuel adjustment clause 1 violated the public hearing requirements of sec. 196.20(2), Stats. 2 The court also concluded that the PSC had failed to comply with the requirements of the Wisconsin Environmental Protection Act (WEPA), sec. 1.11, Stats., by its failure to adequately assess the potential environmental consequences of the depreciation rates 3 it allowed for WEPCO's eventual retirement of its Point Beach nuclear generating station. Because we conclude that the trial court erroneously interpreted sec. 196.20(2) and WEPA, we reverse the judgment and affirm the order of the PSC.

The construction of a statute is a question of law, and a reviewing court is not bound by an administrative agency's interpretation of a statute. Milwaukee County v. DILHR, 80 Wis.2d 445, 455, 259 N.W.2d 118, 123 (1977). The agency's construction of a statute is, however, entitled to great weight. Id. In fields in which an agency has particular competence or expertise, a reviewing court should not substitute its judgment for the agency's application of a particular statute to the found facts if a rational basis exists in law for the agency's interpretation and if it does not conflict with the statute's legislative history, prior court decisions, or constitutional prohibitions. Pabst v. Department of Taxation, 19 Wis.2d 313, 323-24, 120 N.W.2d 77, 82 (1963).

I. SCOPE OF THE ADJUSTMENT CLAUSE

Wisconsin's Environmental Decade, Inc. (WED) contends that the inclusion of nuclear fuel in an adjustment clause conflicts with the Wisconsin Supreme Court's construction of sec. 196.20(2) in Wisconsin's Environmental Decade, Inc. v. PSC, 81 Wis.2d 344, 260 N.W.2d 712 (1978). In WED IV, 4 an "expanded" adjustment clause, designed to pass along to ratepayers the increases in the cost of labor, supplies, supervision, and other non-fuel items, was found to be invalid under sec. 196.20(2). The court noted, however, that the use of "limited" adjustment clauses, which passed only increased fuel costs, was not an issue in the case. WED IV, 81 Wis.2d at 348, 260 N.W.2d at 714. 5

We conclude that WED IV does not require the exclusion of nuclear fuel costs from adjustment clauses. The inclusion of nuclear fuel in an adjustment clause does not expand the clause. Although nuclear fuel was not traditionally included in adjustment clauses, this was no doubt due to the fact that nuclear fuel is not a traditional fuel. Its non-traditional nature does not alter the fact that it is still a fuel rather than a non-fuel, which was the distinguishing characteristic of the objectionable items included in the expanded adjustment clause rejected in WED IV. 6 Because it is a fuel, it is, like other fuels, not subject to WEPCO's cost control. This provides a rational basis for treating it like other fuels by including it in an adjustment clause. Because this treatment does not conflict with the WED IV decision, this court will not substitute its judgment for that of the PSC. The PSC's order including nuclear fuel in WEPCO's fuel adjustment clause must therefore be affirmed.

II. NEED FOR AN ENVIRONMENTAL IMPACT STATEMENT

Prior to the present rate proceeding, the PSC, pursuant to sec. 196.09, Stats., entered an order establishing depreciation rates for WEPCO's Point Beach nuclear plant. The purpose of the depreciation rates was to provide WEPCO with funds for the eventual decommissioning of the Point Beach facility at the end of its useful service life. 7 During the present rate proceeding, a hearing was held at WED's request to determine whether the depreciation rates should be changed. The PSC decided not to change the rates, in part because of pending federal rules governing the accumulation of decommissioning funds. The PSC's final order also discussed the environmental consequences of new electric service rates. In its order, the PSC accepted the recommendations contained in a preliminary environmental impact assessment memorandum prepared by PSC staff. This impact assessment concluded that new service rates would produce no significant environmental effects and, therefore, that the preparation of a detailed EIS was not required. In its final order, the PSC recognized "the need for continuing evaluation of decommissioning policy, particularly in light of federal policy reformation which is presently underway and in which the commission intends to participate." 8

On circuit court review, WED argued that the PSC failed to adequately assess whether the depreciation rates would provide WEPCO with sufficient funds for the decommissioning of the Point Beach facility in an environmentally safe manner. The circuit court concluded that the establishment of depreciation rates constituted agency action under sec. 1.11(2)(c), 9 and that contrary to sec. 1.11(2)(c), the PSC's preliminary environmental impact assessment did not adequately assess the consequences of the rates. See WED III.

We conclude that the PSC's establishment of depreciation rates is not an agency action of the kind for which WEPA requires the preparation of an EIS. WEPA requires agencies to assess the environmental consequences of their proposed actions. WED II. WEPA does not specify at what point in the process leading to proposed action an agency must prepare an EIS. Because WEPA was patterned after the National Environmental Policy Act (NEPA), federal cases interpreting NEPA are persuasive authority for the interpretation of WEPA. WED I, 69 Wis.2d at 11, 230 N.W.2d at 248.

In Kleppe v. Sierra Club, 427 U.S. 390, 96 S.Ct. 2718, 49 L.Ed.2d 576 (1976), the Sierra Club argued that § 102(2)(C) of NEPA 10 required the Interior Department to prepare an EIS discussing the effects of the development of coal reserves in a large region of the northern Great Plains. No "proposal" for action of a regional scope existed, but federal agencies contemplated a regional plan. The Court held that where there was no evidence in the record of an action or proposal for action, no EIS was required because "there ... (was) nothing that could be the subject of the analysis envisioned by the statute for an impact statement." Kleppe, 427 U.S. at 401, 96 S.Ct. at 2726. The Court added that "the contemplation of a project and the accompanying study thereof do not necessarily result in a proposal for major federal action ...." Kleppe, 427 U.S. at 406, 96 S.Ct. at 2728. Accord: Westinghouse Electric Corp. v. United States Nuclear Regulatory Commission, 598 F.2d 759, 777-78 (3rd Cir. 1979).

The PSC, in this case, has proposed no decommissioning action. None of the methods by which decommissioning might proceed were approved, in part because federal regulations pertaining to decommissioning methods were not then in existence. 11 The depreciation rates were merely set in contemplation of eventual decommissioning. Additionally, there is no evidence in the record to show that WEPCO will be financially unable to safely decommission its Point Beach facility when decommissioning becomes necessary.

Kleppe, 427 U.S. at 414, 96 S.Ct. at 2732, also recognized that "practical considerations of feasibility might well necessitate restricting the scope of comprehensive (environmental impact) statements." Here, practical considerations limited the PSC's ability to prepare an EIS. Frederick Huebner, the administrator of the PSC's Accounts and Finance Division, was the only person to testify at the hearing at which the depreciation rates were considered. Huebner refused to testify as an expert on matters of nuclear physics, nuclear reactor engineering, or the biological and environmental effects of nuclear radiation. He was unable to form an opinion as to the technical and safety considerations involved in decommissioning. He noted that new information regarding decommissioning methods and nuclear waste disposal, as well as pending federal regulations governing decommissioning, would influence the costs of decommissioning. As a result, exact predictions of the cost of decommissioning were difficult to make. Finally, he stated that as new decommissioning information became available, the PSC could adjust depreciation rates and accounting methods accordingly.

We cannot conclude that the PSC's failure to set forth detailed facts bearing on the environmental impact that present depreciation rates would have on decommissioning was contrary to the requirements of WEPA. It is clear from Huebner's testimony that the PSC could not accurately predict decommissioning methods or costs. In WED V, 98 Wis.2d at 690, 298 N.W.2d at 208, we stated: "The duty of an agency to prepare an EIS does not require it to engage in remote and speculative analysis. ... Instead, the statute must be construed in the light of reason." (Citation omitted.) In the absence of information as to how decommissioning would proceed and how much it would cost, there were no factual predicates for the production of a meaningful preliminary impact assessment. 12

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