In re Application of Hawai'i Electric Light Company, Inc.

445 P.3d 673
Hawaii Supreme Court·Decided May 10, 2019·No. SCOT-17-0000630·Published·Cited by 16 cases

Opinion

RECKTENWALD, C.J., NAKAYAMA, McKENNA, POLLACK, AND WILSON, JJ.

OPINION OF THE COURT BY RECKTENWALD, C.J.

*677 This case arises from the Public Utilities Commission's approval of an amended power purchase agreement (Amended PPA) between Hawai'i Electric Light Company, Inc. (HELCO) and Hu Honua Bioenergy, LLC. Pursuant to the Amended PPA, Hu Honua would construct and operate a biomass-fueled energy production facility, and HELCO would purchase energy from the facility.

Life of the Land (LOL), an environmental nonprofit organization, sought to intervene as a party in the PUC's proceeding in order to address the environmental impacts of the proposed biomass facility. The PUC denied LOL full party status, but granted LOL limited participation in the proceeding. The PUC ultimately approved the Amended PPA without holding a hearing.

LOL directly appealed the PUC's order granting it limited participation in the proceeding, as well as the Decision and Order approving the Amended PPA (2017 D&O), to this court. LOL argues that the PUC: (1) failed to explicitly consider greenhouse gas (GHG) emissions in determining whether to approve the Amended PPA, as required by state law; (2) denied LOL due process to protect its interest in a clean and healthful environment by restricting its participation in the proceeding; and (3) abused its discretion and violated due process by denying LOL full party status in the proceeding. In addition to disputing these allegations, the PUC, HELCO, and Hu Honua contest this court's jurisdiction over the matter.

As a threshold matter, we hold that this court has jurisdiction to consider LOL's appeal. We further hold that the PUC erred by failing to explicitly consider the reduction of GHG emissions in approving the Amended PPA, as required by statute, and that the PUC denied LOL due process with respect to the opportunity to be heard regarding the impacts that the Amended PPA would have on LOL's right to a clean and healthful environment. Finally, we need not resolve whether the PUC abused its discretion or deprived LOL of due process by denying it full party status in the proceeding.

Accordingly, we vacate the 2017 D&O and remand this matter to the PUC for further proceedings.

I. BACKGROUND

A. PUC Proceedings

1. 2012 Docket

In 2012, HELCO submitted an application to the PUC seeking approval of a power purchase agreement (Original PPA) with Hu Honua. Pursuant to the Original PPA, Hu Honua agreed to refurbish an existing biomass power plant located on the Hamakua Coast in Pepe'ekeo, Hawai'i, to allow it to utilize harvested timber and other "woody biomass" as a fuel source. HELCO agreed to purchase energy from the facility over the Original PPA's 20-year term.

LOL filed a Motion to Intervene as a party-intervenor in the PUC proceeding (2012 Docket), pursuant to Hawai'i Administrative Rules (HAR) § 6-61-55 (effective 1992-2018). 1 In its motion, LOL explained that it is a Hawai'i-based nonprofit organization comprised of members who live, work, and recreate in Hawai'i. LOL highlighted its environmental interests and explained that the externalities associated with the use of biofuels for energy production "[can] be very harmful to [its] interests." LOL also stated it "has developed great expertise in biofuels" and has demonstrated its expertise in several regulatory proceedings regarding biofuels.

More specifically, with regard to the proposed Hu Honua facility, LOL stated it had "several concerns, including the fuel source, *678 the comparative cost, ... [and whether] this proposed facility will cut into the utilities['] purchase of energy from existing and/or planned wind and solar farms." Finally, LOL stated it had "unique environmental interests different from the general public," and assured the PUC that its intent was "not to disrupt the process[,] but ... to insure that [LOL's] members and our local environmental communities have a voice in this process."

The PUC found that the "concerns raised in [LOL's] Motion to Intervene provide[d] insufficient basis to justify full intervention[.]" However, it also found that "LOL's concerns regarding the proposed project's impact on existing renewable projects on the Big Island, and the supply and pricing analysis between the biomass resources delineated in the [Original] PPA [were] sufficient to justify LOL having limited participant status in [the 2012 Docket], pursuant to HAR § 6-61-56." Accordingly, the PUC denied LOL's motion, but granted it "limited participant status" sua sponte , allowing it to participate with respect to: (1) whether the energy price components properly reflect the cost of biomass fuel supply; and (2) whether HELCO's purchase power arrangements under the Original PPA are prudent and in the public interest.

The PUC ultimately approved the Original PPA, but HELCO subsequently terminated the agreement. HELCO and Hu Honua agreed to amend the Original PPA, giving rise to the Amended PPA at issue in the instant case.

2. 2017 Docket

In 2017, HELCO filed an application with the PUC, seeking approval of the Amended PPA. The PUC entered Order No. 34554, opening Docket No. 2017-0122 (2017 Docket) to address HELCO's request. The order also granted LOL "conditional participant status" in the proceeding and stated it would reevaluate LOL's status and establish the scope of LOL's participation following its final determination of the issues governing the 2017 Docket.

LOL filed exhibits in response to Order No. 34554, which included an overview of the "agricultural expertise" of Henry Curtis, LOL's Vice President of Consumer Issues. Curtis explained that he had "stayed with friends living in Hamakua, stayed at vacation sites in Hamakua, explored Hamakua, and made several trips to the Hu Honua site, driving around three sides of the site." 2 In support of his agricultural expertise, Curtis also cited to a chapter that he authored in "The Value of Hawai'i: Knowing the Past, Shaping the Future," which cites runoff into the ocean as one of the primary adverse environmental impacts associated with the use of biofuels for energy production.

The PUC entered Order No. 34597, establishing a procedural schedule, statement of the issues, and scope of participation for participants. The PUC permitted LOL to participate in the proceeding, but limited the scope of its participation to the same two issues that it participated on in the 2012 Docket:

2.a.i. Whether the energy price components in the Amended and Restated PPA properly reflect the cost of biomass fuel supply.
2.b. Whether HELCO's purchase power arrangements under the Amended and Restated PPA are prudent and in the public interest.
Specifically, the PUC found that:

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In re Application of Hawai'i Electric Light Company, Inc., 445 P.3d 673 (haw 2019).

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