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

• Court: Hawaii Supreme Court
• Decided: May 10, 2019
• Docket: SCOT-17-0000630
• Status: Published

Opinion

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Electronically Filed Supreme Court SCOT-XX-XXXXXXX 10-MAY-2019 08:02 AM

IN THE SUPREME COURT OF THE STATE OF HAWAII

---o0o---

In the Matter of the Application of

HAWAII ELECTRIC LIGHT COMPANY, INC.

For Approval of a Power Purchase Agreement for Renewable Dispatchable Firm Energy and Capacity.

SCOT-XX-XXXXXXX

APPEAL FROM THE PUBLIC UTILITIES COMMISSION (Docket No. 2017-0122)

MAY 10, 2019

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

OPINION OF THE COURT BY RECKTENWALD, C.J.

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 *** FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***

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

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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 Hāmākua

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

1 We note that HAR title 6, chapter 61 - Rules of Practice and Procedure Before the Public Utilities Commission (effective 1992-2018) - was repealed on January 1, 2019. It was replaced by HAR title 16, chapter 601 (effective Jan. 1, 2019). All of the repealed administrative rules referenced in this opinion have been replaced by identical rules that remain in effect.

HAR § 6-61-55 (effective 1992-2018) has been replaced by HAR § 16-601-55 (effective Jan. 1, 2019). See infra note 22.

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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, 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

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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

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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:

Because the question of whether HELCO’s purchase power arrangements under the Amended and Restated PPA are prudent and in the public interest continues to be an issue in this proceeding, as it was in Docket No. 2012-0212, the commission finds it appropriate to maintain LOL, Tawhiri, and HEP’s participant status on

2 It appears Curtis was referring to the Big Island’s Hāmākua Coast, of which Pepeekeo is a part.

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this issue (Issue 2.b., above).3 Further, while not explicitly stated, the question of whether the energy price components properly reflect the cost of biomass fuel supply is a consideration when determining whether the purchased power costs to be paid by HELCO pursuant to the Amended and Restated PPA are reasonable (Issue 2.a., above). Accordingly, the commission finds it appropriate to maintain LOL's participant status on the specific sub-issue of whether the energy price components properly reflect the cost of biomass fuel supply (Issue 2.a.i., above).

(Emphasis added).

a. Motion to Upgrade Status

LOL filed a Motion to Upgrade Status, requesting that

the PUC allow it to intervene in the 2017 Docket as a party.4 In

support of its Motion to Upgrade Status, LOL stressed the fact

that the PUC had already “grant[ed] LOL participant status based

on [its] interests in the pending matter.” LOL also cited

previous PUC proceedings in which it was admitted as a party, and

stated that: (1) its Board of Directors “approved continuing to

intervene in energy dockets as a means of promoting sustainable

policies”; (2) LOL’s members “are very deeply concerned about

climate change, biodiversity, and the spread of invasive

species”; (3) the only way to protect LOL’s interest is by

3 Tawhiri Power, LLC (Tawhiri) and Hamakua Energy Partners (HEP) were granted participant status in the 2017 Docket only with regard to Issue 2.b. LOL, Tawhiri, and HEP all filed motions to intervene in the 2012 Docket, which were denied. They were instead granted limited participant status. 4 Although LOL did not cite HAR § 6-61-55 as the relevant authority for its Motion to Upgrade Status, the motion nevertheless touches upon each of the nine requirements for motions for intervention under HAR § 6-61-55(b) (effective 1992 to 2018). HAR § 16-601-55(b) (effective Jan. 1, 2019) contains the same nine requirements. See infra, note 22.

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accessing “classified documents dealing with externalities”; (4)

there are no other means available to protect LOL’s interests;

(5) the Consumer Advocate does not represent LOL’s interests

because it lacks the expertise to understand externalities;5 (6)

the agricultural expertise of LOL’s vice president will assist in

developing an evidentiary record; and (7) while the Consumer

Advocate represents the interests of the general public, “LOL is

concerned with a wider lens that encompasses externalities

including social justice, environmental justice, climate justice,

and [GHG] impacts.” In addition, LOL specifically expressed

5 Pursuant to Hawaii Revised Statutes (HRS) § 269–51 (Supp. 2018) and HAR § 16–601–62 (effective Jan. 1, 2019), the Consumer Advocate represents the consumer and may participate as an ex officio party in Commission proceedings.

HRS § 269–51 provides:

The executive director of the division of consumer advocacy shall be the consumer advocate in hearings before the public utilities commission. The consumer advocate shall represent, protect, and advance the interests of all consumers, including small businesses, of utility services.

The responsibility of the consumer advocate for advocating the interests of the consumer of utility services shall be separate and distinct from the responsibilities of the public utilities commission and those assistants employed by the commission. The consumer advocate shall have full rights to participate as a party in interest in all proceedings before the public utilities commission.

HAR § 16–601–62 provides, in pertinent part:

(a) The consumer advocate is, ex officio, a party to any proceeding before the commission. . . .

(b) The consumer advocate shall further apprise the commission and the parties of record of any facts which relate to the protection or advancement of the consumer interest.

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concern regarding the externalities associated with “acquiring

bioenergy crops” from a specific area of the Big Island that

already serves as a source for another biofuel facility.

The PUC issued Order No. 34651, denying LOL’s motion.

The PUC cited HAR § 6-61-55, specifically noting subsection (d),6

and stated that “intervention is not a guaranteed right of a

movant, but is a matter resting within the sound discretion of

the commission, so long as that discretion is not exercised

arbitrarily or capriciously.” It also cited HAR § 6-61-56

(effective 1992-2018),7 which sets forth the requirements for

6 HAR § 6-61-55(d) (effective 1992-2018) provided that “Intervention shall not be granted except on allegations which are reasonably pertinent to and do not unreasonably broaden the issues already presented.” HAR § 16-601- 55(d) (effective Jan. 1, 2019) contains identical language. See infra note 22. 7 HAR § 6-61-56 provided:

(a) The commission may permit participation without intervention. A person or entity in whose behalf an appearance is entered in this manner is not a party to the proceeding and may participate in the proceeding only to the degree ordered by the commission. The extent to which a participant may be involved in the proceeding shall be determined in the order granting participation or in the prehearing order.

(b) A person who has a limited interest in a proceeding may make an application to participate without intervention by filing a timely written motion in accordance with sections 6-61-15 to 6-61-24, section 6-61-41, and section 6-61-57.

(c) The motion shall provide:

(1) A clear and concise statement of the direct and substantial interest of the applicant;

(continued...)

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participation without intervention. It stated:

As was the case in [the 2012 Docket], upon review of the record, the commission continues to find that the concerns raised in LOL’s Motion, which are identical to or mirror the concerns raised by LOL in its Motion to Intervene in [the 2012 Docket], provide insufficient basis to justify full intervention in this proceeding. The commission finds that LOL has failed to demonstrate any additional interest or expertise sufficient to justify a change in its limited participant status granted on a conditional basis in Order No. 34554, and permanently established pursuant to Order No. 34597.

b. Information Requests

LOL filed several Information Requests (IRs), seeking

information from HELCO, Hu Honua, and the Consumer Advocate

regarding GHG emissions and other potential adverse environmental

impacts of the Hu Honua facility. In its response to LOL’s IRs,

HELCO acknowledged that GHGs would be emitted by equipment used

7 (...continued) (2) The applicant's position regarding the matter in controversy;

(3) The extent to which the participation will not broaden the issues or delay the proceeding;

(4) The extent to which the applicant's interest will not be represented by existing parties;

(5) A statement of the expertise, knowledge or experience the applicant possesses with regard to the matter in controversy;

(6) Whether the applicant can aid the commission by submitting an affirmative case; and

(7) A statement of the relief desired.

(Emphasis added). Other than the HAR section numbers it references, HAR 16- 601-56 (effective Jan. 1, 2019) is identical to HAR 6-61-56 (effective 1992- 2018).

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to raze and transport trees, but stated that it had not

quantified the amount of emissions. HELCO asserted that although

carbon would be released into the atmosphere upon the combustion

of trees in the facility, it would be recaptured upon the

regrowth of the trees. In response to at least one of the IRs

that LOL submitted to HELCO, HELCO objected and refused to

respond, arguing that the information sought was “not relevant to

and [was] outside the scope of LOL’s authorized scope of limited

participation[.]”

One of the IRs that LOL submitted to Hu Honua posed

several questions regarding the quantity of wastewater that would

be produced by the facility, the means by which it would be

produced and managed, and the steps that would be taken to

monitor and prevent ocean contamination. Hu Honua objected to

this IR, as well as those focused on GHG emissions and climate

change, stating that they were “not relevant or material to Issue

Nos. 2.a.i or 2.b, which [were] the only issues for which the

Commission authorized LOL’s participation.”

The Consumer Advocate responded to LOL that it had not

completed an analysis of the impact the project would have on GHG

emissions, and that any analysis should be comprehensive,

including GHGs resulting from harvesting and transporting the

feedstock. The Consumer Advocate further stated that it had not

evaluated the need for a consultant to review GHGs and climate

change in the instant proceeding.

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c. Statements of Position

In its Statement of Position, LOL argued that Hu

Honua’s proposed facility was not in the public interest. LOL

further argued that Hu Honua’s proposal failed to fully address

climate change and the environmental impacts of the proposed

operations. LOL stated:

Hu Honua plans to chop down existing trees for seven years, and then to rely on a rotational system of growing new trees and then chopping them down. Omitting any discussion of the fossil fuels used in the mechanization of growing, chopping, chipping, and transport, Hu Honua alleges that this operation is carbon neutral.

LOL also argued that the pricing of Hu Honua’s proposal

was not in the public interest when compared to lower-priced

solar-based electricity proposals previously approved by the PUC.

In its Reply Statement of Position, Hu Honua argued

that its facility “will make a significant contribution to the

State’s [Renewable Portfolio Standards (RPS),]” noting that

“HELCO estimates that Hu Honua will increase RPS levels by 11%

over the life of the PPA, and avoid the emission of hundreds of

thousands of tons of CO2.” Hu Honua asserted that “the estimated

emissions due to transportation of fuel to the plant pale in

comparison to the emissions reductions that will result from the

displacement of fossil fuel[.]” Hu Honua further stated that

“biomass plants, like wind and solar plants, are renewable and

carbon neutral to a reasonable approximation, and are therefore

deemed fully renewable by applicable state law.”

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d. 2017 Decision and Order

Without holding a hearing, the PUC entered the 2017 D&O

approving the Amended PPA. The PUC noted that comments in

support of the Project focused on issues including the

fulfillment of the RPS targets and energy resource self-reliance,

while comments in opposition focused on issues including

potential adverse environmental impacts, an expected rise in GHG

emissions, and general objections to biomass as a fuel resource.

The PUC then summarized each party’s position, citing

HELCO’s claims that approval of the Amended PPA would be

reasonable due to, inter alia, the project’s contribution to the

State’s RPS goals, the fact that the contract price for the

Amended PPA is de-linked from fossil fuel pricing, and the

assertion that “renewable energy provided by the Project could

potentially save approximately 15,700 barrels of fuel per year,

which over the term of the [Amended] PPA amounts to approximately

329,000 barrels of fuel oil saved.” The PUC also noted the

following:

HELCO asserted that the totality of circumstances should be considered when reviewing whether the purchased power costs are reasonable, . . . including governmental policies and objectives, contributions towards RPS, reducing dependency on fossil fuels, decreased price volatility, de-linking energy costs from fossil fuel pricing, realization of tax incentives, and community benefits.

. . . .

LOL asserted that “[t]he cost of biofuel includes both financial and non-financial components, which Hu Honua has failed to adequately address.” LOL asserted that

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the “non-financial components” include impacts on climate change and endangered species that were not explicitly quantified or monetized in HELCO’s benefit/cost ratio.

LOL is not in favor of commission approval of the [Amended] PPA, but focused its rationale on concerns outside of the scope of its limited participation, namely climate change and comparative pricing with other forms of energy.

(Emphases added).

It appears the PUC adopted HELCO’s analysis of the

biomass facility’s economic and customer bill impact under the

Amended PPA, stating, “[p]er HELCO, . . . the Project provides

significant renewable energy-related benefits, primarily through

its firm capacity and contribution to the State’s RPS goals. For

the island of Hawaii, with the Project, the RPS goal levels

increase by approximately 11% over the 30-year life of the

Project.” The PUC also made the following findings and

conclusions:

[T]he commission finds that the Project will . . . add to the diversity of HELCO’s existing portfolio of renewable energy resources.

Consistent with [Hawaii Revised Statutes (HRS)] § 269-27.2(c)[(Supp. 2016)], the proposed pricing structure is delinked from fossil fuel pricing.

[I]t appears that the addition of the Project may primarily displace fossil fuel generation resources. Accordingly, the commission anticipates that, based on the representations made in HELCO’s [Power Supply Improvement Plan], this Project will accelerate the

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retirement of fossil fuel plants[.]

The PUC addressed, inter alia, the following two

issues: (2.a.i) whether the energy price components in the

Amended PPA properly reflect the cost of biomass fuel supply; and

(2.b) whether HELCO’s purchase power arrangements under the

Amended PPA are prudent and in the public interest. The PUC

found the purchased power costs to be reasonable and that the

arrangements under the Amended PPA were prudent and in the public

interest. Accordingly, the PUC approved the Amended PPA,

concluding that:

HELCO has met its burden of proof in support of its request for the commission to approve the [Amended] PPA. The purchased power costs and arrangements set forth in the [Amended] PPA appear reasonable, prudent, in the public interest, and consistent with HRS chapter 269 in general, and HRS § 269-27.2(c), in particular. While the commission, in this instance, finds the pricing to be reasonable, the commission makes clear that its decision to approve the [Amended] PPA is not based solely on pricing, but includes other factors such as the State’s need to limit its dependence on fossil fuels and mitigate against volatility in oil pricing.

B. Direct Appeal

LOL directly appealed the PUC’s order denying LOL’s

Motion to Upgrade Status and the 2017 D&O to this court. See HRS

§ 269-15.51 (Supp. 2018) and HRS § 91-14 (2012 & Supp. 2018).

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LOL presents three points of error:8 (1) the PUC was required,

under HRS § 269-6(b) (Supp. 2016), to explicitly consider GHG

emissions in determining whether the costs of the Amended PPA

were reasonable, but failed to do so; (2) the PUC denied LOL due

process to protect its right to a clean and healthful

environment, as defined by HRS Chapter 269, by restricting its

participation in the PUC proceedings; and (3) the PUC erred in

denying LOL’s Motion to Upgrade Status from “participant” to

“intervenor.”

II. STANDARDS OF REVIEW

A. Jurisdiction

“The existence of jurisdiction is a question of law

that [the appellate court reviews] de novo under the right/wrong

standard.” Captain Andy’s Sailing, Inc., v. Dep’t of Land & Nat.

Res., 113 Hawaii 184, 192, 150 P.3d 833, 841 (2006) (internal

quotation marks and citation omitted).

Because this is a direct appeal from a decision of the

PUC, the standard of review, as set forth in HRS § 91-14, is as

follows:

Upon review of the record, the court may affirm the decision of the agency or remand the case with instructions for further proceedings; or it may reverse or modify the decision and order if the

8 LOL did not specifically challenge any findings of fact contained in the PUC’s 2017 D&O in its Opening Brief. “Findings of fact . . . that are not challenged on appeal are binding on the appellate court.” Bremer v. Weeks, 104 Hawaii 43, 63, 85 P.3d 150, 170 (2004) (citations omitted).

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substantial rights of the petitioners may have been prejudiced because the administrative findings, conclusions, decisions, or orders are:

(1) In violation of constitutional or statutory provisions;

(2) In excess of the statutory authority or jurisdiction of the agency;

(3) Made upon unlawful procedure;

(4) Affected by other error of law;

(5) Clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record; or

(6) Arbitrary, or capricious, or characterized by abuse of discretion or clearly unwarranted exercise of discretion.

HRS § 91-14(g).

Conclusions of law are reviewed de novo, pursuant to subsections (1), (2) and (4); questions regarding procedural defects are reviewable under subsection (3); findings of fact (FOF) are reviewable under the clearly erroneous standard, pursuant to subsection (5), and an agency's exercise of discretion is reviewed under the arbitrary and capricious standard, pursuant to subsection (6). Save Diamond Head Waters LLC, 121 Hawaii [16,] 24, 211 P.3d [74,] 82 [(2009)]. Mixed questions of law and fact are “‘reviewed under the clearly erroneous standard because the conclusion is dependent upon the facts and circumstances of the particular case.’” Id. at 25, 211 P.3d at 83 (quoting Del Monte Fresh Produce (Haw.), Inc. v. Int’l Longshore & Warehouse Union, 112 Hawaii 489, 499, 146 P.3d 1066, 1076 (2006)).

A court reviewing the decision of an agency should ensure that the “agency . . . make its findings reasonably clear. The parties and the court should not be left to guess . . . the precise finding of the agency.” In re Water Use Permit Applications, 94 Hawaii 97, 157, 9 P.3d 409, 469 (2000) (“Waiahole I”) (quoting In re Kauai Elec. Div. of Citizens Utilities Co., 60 Haw. 166, 183, 590 P.2d 524, 537 (1978)). An agency’s findings should be “sufficient to allow the

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reviewing court to track the steps by which the agency reached its decision.” Kilauea Neighborhood Ass'n v. Land Use Comm’n, 7 Haw. App. 227, 230, 751 P.2d 1031, 1034 (1988)[; see] also In re Waiola O Molokai, Inc., 103 Hawaii 401, 432, 83 P.3d 664, 695 (2004) (explaining that any presumption of validity, given to an agency’s decision, “presupposes that the agency has grounded its decision in reasonably clear” findings of fact and conclusions of law).

Kauai Springs, Inc. v. Planning Comm’n of Cty. of Kauai, 133

Hawaii 141, 164, 324 P.3d 951, 974 (2014).

C. Constitutional Law

“We review questions of constitutional law de novo,

under the right/wrong standard.” Jou v. Dai–Tokyo Royal State

Ins. Co., 116 Hawaii 159, 164–65, 172 P.3d 471, 476–77 (2007)

(quoting Onaka v. Onaka, 112 Hawaii 374, 378, 146 P.3d 89, 93

(2006)) (internal quotation marks omitted).

III. DISCUSSION

This court must determine, as a threshold matter,

whether it has jurisdiction over LOL’s appeal. Pub. Access

Shoreline Haw. by Rothstein v. Haw. Cty. Planning Comm’n by

Fujimoto, 79 Hawaii 425, 431, 903 P.2d 1246, 1252 (1995)

(quoting Pele Def. Fund v. Puna Geothermal Venture, 77 Hawaii

64, 67, 881 P.2d 1210, 1213 (1994)). Hu Honua and HELCO argue

that this court lacks jurisdiction because LOL’s appeal of the

PUC’s 2017 D&O constitutes an improper collateral attack on the

PUC’s 2012 D&O. Additionally, Hu Honua, HELCO, and the PUC argue

that this court lacks jurisdiction because LOL’s appeal does not

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arise from a contested case and LOL failed to comply with the

applicable agency rules by not requesting a contested case

hearing.

As set forth below, LOL’s appeal is not a collateral

attack on the PUC’s 2012 D&O. LOL has appealed the PUC’s 2017

D&O to directly challenge its validity, rather than to indirectly

impeach the validity of the PUC’s 2012 D&O. Furthermore, the

requirements for judicial review under HRS § 91-14(a) – a

contested case hearing, finality, and compliance with agency

rules – have been satisfied. The PUC’s 2017 Docket was a

contested case hearing because a hearing was required by

constitutional due process in order to consider the impacts of

approving the Amended PPA on LOL’s right to a clean and healthful

environment, as defined by HRS Chapter 269, and such a hearing

would have determined the rights, duties, and privileges of

HELCO. It is undisputed that the 2017 D&O is a final decision of

the PUC. Finally, LOL followed the applicable agency rules, as

it was involved in the contested case as a participant in the

2017 Docket and the PUC’s administrative rules do not require a

request for a contested case hearing as a prerequisite to

judicial review. We therefore have jurisdiction to consider the

merits of LOL’s appeal.

1. Collateral Attack

“A collateral attack[, as opposed to a direct attack,]

is an attempt to impeach a judgment or decree in a proceeding not

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instituted for the express purpose of annulling, correcting or

modifying such judgment or decree.” Kapiolani Estate v.

Atcherly, 14 Haw. 651, 661 (1903) (citations and internal

quotation marks omitted). The ICA has observed that “the

collateral attack doctrine is implicated when an independent suit

seeks to impeach a judgment entered in a prior suit.” Smallwood

v. City and Cty. of Honolulu, 118 Hawaii 139, 150, 185 P.3d 887,

898 (App. 2008). This court has similarly stated that

“[a]ppellate courts in Hawaii have typically only applied the

collateral attack doctrine in situations in which a second

lawsuit has been initiated challenging a judgment or order

obtained from a prior, final proceeding.” In re Thomas H. Gentry

Revocable Tr., 138 Hawaii 158, 169 n.5, 378 P.3d 874, 885 n.5

(2016) (citation omitted).

The party asserting that an action constitutes an impermissible collateral attack on a judgment must establish that: (1) a party in the present action seeks to avoid, defeat, evade, or deny the force and effect of the prior final judgment, order, or decree in some manner other than a direct post-judgment motion, writ, or appeal; (2) the present action has an independent purpose and contemplates some other relief or result than the prior adjudication; (3) there was a final judgment on the merits in the prior adjudication; and (4) the party against whom the collateral attack doctrine is raised was a party or is in privity with a party in the prior action.

Smallwood, 118 Hawaii at 150, 185 P.3d at 898.

As set forth below, LOL’s appeal is a direct attack of

the PUC’s 2017 D&O, not a collateral attack on the PUC’s 2012

D&O.

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The first Smallwood element requires a showing that “a

party in the present action seeks to avoid, defeat, evade, or

deny the force and effect of the prior final judgment, order, or

decree in some manner other than a direct post-judgment motion,

writ, or appeal.” 118 Hawaii at 150, 185 P.3d at 898 (emphases

added). “If an appeal is taken from a judgment, . . . the attack

is obviously direct, the sole object of the proceeding being to

deny and disprove the apparent validity of the judgment.”

Kapiolani Estate, 14 Haw. at 661. Rather than attacking the

validity of the PUC’s 2012 D&O, LOL’s appeal was instituted for

the express purpose of denying the force and effect the PUC’s

2017 D&O. Thus, the first Smallwood element is not satisfied and

LOL’s appeal cannot be construed as a collateral attack.

See Kapiolani Estate, 14 Haw. at 661 (“A collateral attack is an

attempt to impeach a judgment or decree in a proceeding not

instituted for the express purpose of annulling, correcting or

modifying such judgment or decree.”) (emphasis added).

Hu Honua and HELCO argue that, even if LOL’s challenge

appears to be a direct appeal of the PUC’s 2017 D&O, it functions

as a collateral attack on the PUC’s 2012 D&O. Hu Honua and HELCO

contend that the primary purpose of LOL’s appeal is to force the

PUC to consider the effect of the State’s reliance on fossil

fuels on GHG emissions and climate change. However, they argue,

consideration of GHGs was not within the scope of the PUC’s final

statement of issues in the 2017 Docket. According to Hu Honua

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and HELCO, the 2017 Docket only involved increasing the term of

the Original PPA and revisions to the contract price and

milestone events, which do not directly relate to the effect of

the State’s reliance on fossil fuels on GHG emissions or climate

change. Hu Honua and HELCO therefore contend that, to the extent

the PUC was required to consider the effect of the State’s

reliance on fossil fuels on GHG emissions and climate change, “it

did so only in the 2012 Docket.” Because LOL failed to directly

and timely challenge the 2012 D&O, Hu Honua and HELCO argue that

LOL’s appeal is an improper and untimely attempt to raise the

PUC’s failure to address GHGs in the 2012 D&O.

As discussed further infra, a majority of this court

recently determined that “HRS § 269–6(b)’s requirement to reduce

reliance on fossil fuels and to consider [GHG] emissions applies

to the fulfillment of all of the [PUC’s] duties.” In re

Application of Maui Elec. Co. (MECO), 141 Hawaii 249, 263, 408

P.3d 1, 15 (2017) (citing HRS § 269–6(b)). LOL was entitled to

appeal the PUC’s 2017 D&O due to the PUC’s alleged failure to

perform statutory and constitutional duties. Hu Honua and

HELCO’s argument that the collateral attack doctrine precludes

this court from exercising appellate jurisdiction over LOL’s

appeal because the PUC’s consideration of GHGs was outside the

scope of the 2017 Docket is therefore without merit.

Accordingly, this court’s appellate jurisdiction is not

precluded by the collateral attack doctrine.

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2. Contested Case

PUC decisions are appealable to this court pursuant to

HRS § 269-15.51, which provides, in relevant part:

Any other law to the contrary notwithstanding, including chapter 91, any contested case under this chapter shall be appealed from a final decision and order or a preliminary ruling that is of the nature defined by section 91-14(a) upon the record directly to the supreme court for final decision. Only a person aggrieved in a contested case proceeding provided for in this chapter may appeal from the final decision and order or preliminary ruling.

Judicial review over an agency appeal is authorized by

HRS § 91-14(a)9 when the following requirements have been met:

[F]irst, the proceeding that resulted in the unfavorable agency action must have been a contested case hearing . . . ; second, the agency’s action must represent a final decision or order, or a preliminary ruling such that deferral of review would deprive the claimant of adequate relief; third, the claimant must have followed the applicable agency rules and, therefore, have been involved in the contested case; and finally, the claimant’s legal interests must have been injured — i.e., the claimant must have standing to appeal.

MECO, 141 Hawaii at 258, 408 P.3d at 10 (quoting Kilakila O

Haleakala v. Bd. of Land & Nat. Res., 131 Hawaii 193, 200, 317

P.3d 27, 34 (2013)).

Accordingly, there are three jurisdictional

9 HRS § 91-14(a) provides, in relevant part: Any person aggrieved by a final decision and order in a contested case or by a preliminary ruling of the nature that deferral of review pending entry of a subsequent final decision would deprive appellant of adequate relief is entitled to judicial review thereof under this chapter; but nothing in this section shall be deemed to prevent resort to other means of review, redress, relief, or trial de novo, including the right of trial by jury, provided by law.

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requirements for judicial review over an agency appeal: (1) a

contested case hearing, (2) finality, and (3) compliance with

agency rules. Id. Hu Honua, HELCO, and the PUC argue that this

court lacks jurisdiction over LOL’s appeal because the appeal

does not arise from a contested case and LOL failed to comply

with the applicable agency rules by not requesting a contested

case hearing.10

a. The Proceeding Was a Contested Case Hearing

“A contested case hearing is one that is (1) required

by law and (2) determines the rights, duties, and privileges of

specific parties.” MECO, 141 Hawaii at 258, 408 P.3d at 10

(internal quotation marks omitted) (citing Kilakila, 131 Hawaii

at 200, 317 P.3d at 34). As set forth below, the PUC’s 2017

Docket was a contested case hearing because a hearing was

required by law that would have determined the rights, duties,

and privileges of HELCO.

i. “Required by Law”

“In order for an administrative agency hearing to be

required by law, it may be required by (1) agency rule, (2)

statute, or (3) constitutional due process.” Id. (internal

quotation marks omitted) (citing Kilakila, 131 Hawaii at 200,

317 P.3d at 34). LOL contends that a contested case hearing was

10 The parties do not dispute that the PUC’s 2017 D&O was a final decision or order for the purpose of satisfying the requirements for judicial review of an agency appeal. Accordingly, that requirement is not addressed further.

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required under HRS §§ 269-16 (Supp. 2018) and 269-27.2 (2007 &

Supp. 2018), and constitutional due process. We hold that

although a hearing was not required by statute, one was required

pursuant to constitutional due process.

(A) HRS § 269-16(b)

HRS § 269–16(b) requires the PUC to conduct a contested

case hearing whenever a utility seeks an increase in rates, but

specifically exempts rate adjustments “established pursuant to an

automatic rate adjustment clause previously approved by the

commission[.]”11 HAR § 6-60-6 (effective June 19, 1981)

similarly provides that automatic rate adjustment clauses that

apply to fuel and purchased energy––or fuel adjustment

11 HRS § 269-16(b) provides, in relevant part:

No rate, fare, charge, classification, schedule, rule, or practice, other than one established pursuant to an automatic rate adjustment clause previously approved by the commission, shall be established, abandoned, modified, or departed from by any public utility, except after thirty days’ notice to the commission as prescribed in section 269-12(b), and prior approval by the commission for any increases in rates, fares, or charges. . . . A contested case hearing shall be held in connection with any increase in rates, and the hearing shall be preceded by a public hearing as prescribed in section 269-12(c), at which the consumers or patrons of the public utility may present testimony to the commission concerning the increase. The commission, upon notice to the public utility, may:

(2) After a hearing, by order:

(G) Regulate its financial transactions[.]

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clauses––do not require a hearing.12 Thus, not only are

automatic rate adjustment clauses exempted from HRS § 269–16(b)’s

hearing requirement, they are also defined by the relevant agency

rule as provisions that allow for rate changes without a prior

The PUC approved the Amended PPA pursuant to, in part,

HAR § 6-60-6 (effective June 19, 1981). In so doing, it

authorized HELCO to include energy power purchase costs in its

Energy Cost Adjustment Clause (ECAC) and to include non-energy

purchased power costs in its Purchased Power Adjustment Clause

(PPAC). According to the 2017 D&O, HELCO’s ECAC and PPAC are

“fuel adjustment clauses” under HAR § 6-60-6.13 The PUC

12 The utility’s rate schedules may include automatic rate adjustment clauses, only for those clauses previously approved by the commission. Upon effective date of this Chapter, any fuel adjustment clause submitted for commission approval shall comply with the following standards:

(1) “Fuel adjustment clause” means a provision of a rate schedule which provides for increases or decreases or both, without prior hearing, in rates reflecting increases or decreases or both in costs incurred by an electric or gas utility for fuel and purchased energy due to changes in the unit cost of fuel and purchased energy.

(2) No changes in fuel and purchased energy costs may be included in the fuel adjustment clause unless the contracts or prices for the purchase of such fuel or energy have been previously approved or filed with the commission.

HAR § 6-60-6 (emphases added). 13 The Amended PPA defines “Energy Cost Adjustment Clause” as:

[HELCO]’s cost recovery mechanism for fuel and purchased energy costs approved by the PUC in (continued...)

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specifically noted that HAR § 6-60-6 “generally governs the

propriety of fuel adjustment clauses[,]” and stated in its

Findings and Conclusions that:

[I]n the Underlying [2012] Decision and Order regarding the Original PPA, the commission found it “reasonable to authorize recovery of the purchased energy charges through [HELCO’s] ECAC, and to recover the non-energy purchased power costs (including the related revenue taxes) through [HELCO’s] PPAC, to the extent that such costs are not included in base rates.” Because the energy and capacity payments in the [Amended PPA], as in the Original PPA, continue to not be included in another cost recovery mechanism, and given the above findings concerning pricing under the [Amended PPA], the commission authorizes the same recovery under the [Amended PPA].

In MECO, we considered whether a hearing was required

under HRS § 269–16(b) before the PUC could approve Maui

Electric’s request to recover costs through its existing ECAC.

MECO, 141 Hawaii at 259-60, 408 P.3d at 11-12. In making our

determination that a hearing was not required by HRS § 269–16(b),

we stated the following:

[T]he Commission authorized Maui Electric to recover charges for purchased energy under the Agreement through Maui Electric’s existing energy cost adjustment clause. There is nothing in the record indicating that Maui Electric’s energy cost adjustment clause was not previously approved by the Commission

13 (...continued) conformance with [HAR] § 6-60-6 whereby the base electric energy rates charged to retail customers are adjusted to account for fluctuations in the costs of fuel and purchased energy or such successor provision that may be established from time to time.

“Purchased Power Adjustment Clause” is defined as “[t]he Purchased Power Adjustment Clause approved by the PUC in Decision and Order No. 30168 in Docket No. 2009-0164 on February 8, 2012.”

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or that the Commission’s decision revised the existing adjustment clause. Additionally, the record does not suggest that the use of the fuel adjustment clause in this case would cover anything other than increases or decreases in the unit cost of purchased energy determined by the last rate case proceeding for the utility. See HAR § 6–60–6(3).

Id.

Similarly here, the PUC authorized HELCO to recover

charges for purchased power through its existing ECAC and PPAC.

The record indicates that these adjustment clauses were

previously approved and were not revised by the PUC’s 2017 D&O.

Furthermore, the record does not suggest that the adjustment

clauses would cover anything other than changes in the unit cost

of purchased power determined by the last rate case proceeding.

Accordingly, because the rate adjustments implicated by

the Amended PPA were established pursuant to automatic adjustment

clauses previously approved by the PUC, the PUC was not required

to hold a contested case hearing under HRS § 269-16(b) prior to

approving the Amended PPA.

(B) HRS § 269-27.2(d)

Pursuant to HRS § 269–27.2(d), the PUC may only allow a

public utility to impose an interim increase in rates to recover

payments made to “nonfossil fuel producers for firm capacity and

related revenue taxes” after an evidentiary hearing.14 As

14 HRS § 269–27.2(d) provides, in pertinent part: Upon application of a public utility that supplies electricity to the public, and notification of its customers, the commission, after an evidentiary (continued...)

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discussed above, in approving the Amended PPA, the PUC authorized

HELCO to include energy power purchase costs and non-energy

purchased power costs in its ECAC and PPAC, respectively, to the

extent that such costs were not included in its base rates.

However, HELCO’s ECAC and PPAC are fuel adjustment clauses

specifically exempt from hearing requirements and do not

constitute an “interim increase in rates” for the purposes of HRS

§ 269-27.2(d).

In MECO, we similarly considered whether a hearing was

required under HRS § 269–27.2(d). MECO, 141 Hawaii at 259, 408

P.3d at 11. In determining that a hearing was not required by

HRS § 269–27.2(d), we stated that:

Sierra Club has not argued that the [PUC]’s decision authorized Maui Electric to impose an interim increase in rates for the purpose of recovering payments for firm capacity, nor has Sierra Club argued that Maui Electric ever sought permission to do so. Indeed, the record indicates that one of the features of the Agreement was to eliminate the capacity payments that Maui Electric was paying to HC & S under the existing agreement. Accordingly, the requirement of a hearing provided for in HRS § 269-27[.2](d) is not applicable to the Application in this case.

As in MECO, LOL does not argue that the PUC authorized

an interim increase in HELCO’s base rates when it approved the

14 (...continued) hearing, may allow payments made by the public utility to nonfossil fuel producers for firm capacity and related revenue taxes to be recovered by the public utility through an interim increase in rates[.]

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Amended PPA, or that HELCO sought permission to impose such an

increase. As such, the PUC was not required to hold a contested

case hearing under HRS § 269-27.2(d) prior to approving the

Amended PPA.

(C) Constitutional Due Process

LOL argues that a contested case hearing was required

by constitutional due process prior to the PUC’s approval of the

Amended PPA. As set forth below, we agree.

This court engages in a two-step inquiry when

evaluating claims of a due process right to a hearing: “(1) is

the particular interest which [the] claimant seeks to protect by

a hearing ‘property’ within the meaning of the due process

clauses of the federal and state constitutions, and (2) if the

interest is ‘property,’ what specific procedures are required to

protect it.” Sandy Beach Def. Fund v. City Council of Honolulu,

70 Haw. 361, 376, 773 P.2d 250, 260 (1989) (citing Aguiar v. Haw.

Hous. Auth., 55 Haw. 478, 495, 522 P.2d 1255, 1266 (1974)).

Accordingly, to determine whether LOL was entitled to a

contested case hearing pursuant to constitutional due process, we

must first determine whether LOL possesses “an interest which

qualifies as ‘property’ within the meaning of the constitution.”

Id. If LOL does possess such a property interest, we must then

consider whether a contested case hearing was required to protect

that interest. Id.

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(1) Constitutionally Cognizable Property Interest

“[A] protected property interest exists in a benefit —

tangible or otherwise — to which a party has a legitimate claim

of entitlement.” MECO, 141 Hawaii at 260, 408 P.3d at 12

(internal quotation marks omitted) (citing Sandy Beach Def. Fund,

70 Haw. at 377, 773 P.2d at 260). This court has explained that:

The legitimate claims of entitlement that constitute property interests are not created by the due process clause itself. Instead, “they are created and their dimensions are defined by existing rules or understanding that stem from an independent source such as state law — rules or understanding that secure certain benefits and that support claims of entitlement to those benefits.”

Id. (quoting In re Īao Ground Water Mgmt. Area High-Level Source

Water Use Permit Applications, 128 Hawaii 228, 241, 287 P.3d

129, 142 (2012)).

LOL argues that it was entitled to due process to

protect its constitutional right to a clean and healthful

environment provided by article XI, section 9 of the Hawaii

Constitution and HRS Chapter 269. Article XI, section 9

provides:

Each person has the right to a clean and healthful environment, as defined by laws relating to environmental quality, including control of pollution and conservation, protection and enhancement of natural resources. Any person may enforce this right against any party, public or private, through appropriate legal proceedings, subject to reasonable limitations and regulation as provided by law.

In MECO, this court similarly considered whether the

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PUC violated Sierra Club’s due process rights by approving a

power purchase agreement between a utility company and a producer

of electricity without holding a contested case hearing to

consider the environmental impacts of approving the agreement.

Id. at 260-65, 408 P.3d at 12-17. This court recognized that

Sierra Club’s interest in its right to a clean and healthful

environment, as defined by laws relating to environmental

quality, is a property interest protected by due process, as it

is a substantive right guaranteed by the Hawaii Constitution.

Id. at 260-61, 408 P.3d at 12-13.

This court then determined that “HRS Chapter 269 is a

law relating to environmental quality that defines the right to a

clean and healthful environment under article XI, section 9 by

providing that express consideration be given to reduction of

[GHG] emissions in the decision-making of the Commission.” Id.

at 264, 408 P.3d at 16. This court held that Sierra Club’s

assertion of a right to a clean and healthful environment, as

defined by HRS Chapter 269, therefore established a protectable

property interest under article XI, section 9 and HRS Chapter

269. Id.

Like the appellant in MECO, LOL seeks to protect its

property interest in a clean and healthful environment, as

defined by HRS Chapter 269. LOL stated in the 2017 Docket that:

Life of the Land is a non-profit Hawaii-based organization. Our members are very deeply concerned about climate change, biodiversity, and the spread of

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invasive species. Life of the Land believes that the efforts to protect our archipelago from the ravages of climate change, and the introduction of alien species has not been adequately protected and funded by legislative actions.

LOL asserts that “its members are located in Hawaii

and are directly concerned with preventing climate change

impacts, biodiversity, and the spread of invasive species, all of

which are affected by GHG emissions, as well as other

environmental and public interest impacts of [the] PUC’s

decisionmaking on the [Amended PPA].” Consequently, pursuant to

article XI, section 9 of the Hawaii Constitution and HRS Chapter

269, as interpreted by this court in MECO, LOL has shown a

constitutionally cognizable property interest in this case.

(2) A Contested Case Hearing was Required

Having determined that LOL has demonstrated a protected

property interest in a clean and healthful environment as defined

by HRS Chapter 269, “we next consider what procedures due process

requires in this case.” MECO, 141 Hawaii at 265, 408 P.3d at

17. When determining the procedures required to comply with

constitutional due process, we consider the following three

factors: “(1) the private interest which will be affected; (2)

the risk of an erroneous deprivation of such interest through the

procedures actually used, and the probable value, if any, of

additional or alternative procedural safeguards; and (3) the

governmental interest, including the burden that additional

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procedural safeguards would entail.” Sandy Beach Def. Fund, 70

Haw. at 378, 773 P.2d at 261 (citations omitted). Upon

consideration of each of these factors, we conclude that a

contested case hearing was required.

First, the private interest to be affected is LOL’s

right to a clean and healthful environment, which “includes the

right that explicit consideration be given to reduction of [GHG]

emissions in Commission decision-making, as provided for in HRS

Chapter 269.” MECO, 141 Hawaii at 265, 408 P.3d at 17. The

Amended PPA involves the construction and operation of a biomass

combustion facility by Hu Honua, and reliance on the facility by

HELCO for an extended term of thirty years. As in MECO, as part

of the 2017 Docket, the PUC was asked to consider the

reasonableness of the energy charges implicated by the Amended

PPA, and to determine whether the arrangement was prudent and in

the public interest. This “would necessarily include an

evaluation of the hidden and long-term costs of the activities”

of the Hu Honua facility. Id. at 266, 408 P.3d at 18. Because

the PUC’s determinations of these issues would require

consideration of the level of GHG emissions generated by the Hu

Honua facility, LOL’s right to a clean and healthful environment,

as defined by HRS Chapter 269, was directly affected by the PUC’s

approval of the Amended PPA under MECO.

Further, the PUC’s 2017 D&O concluded that the Amended

PPA was “consistent with HRS chapter 269” and was approved based

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in part on “the State’s need to limit its dependence on fossil

fuels and mitigate against volatility in oil pricing.” The PUC’s

decision thus implicated LOL’s constitutional right to a clean

and healthful environment, as defined by HRS Chapter 269.

Accordingly, the PUC’s approval of the Amended PPA under the

terms of the 2017 D&O adversely affected LOL’s private interest.

Second, the risk of erroneous deprivation is high in

this case, absent the protections provided by a contested case

hearing. Consistent with public comments in opposition to the

project, LOL posits that the PUC’s approval of the Amended PPA

could have adverse environmental impacts. Yet, the restricted

scope of the 2017 Docket prevented LOL from addressing these

potential impacts. See MECO, 141 Hawaii at 266, 408 P.3d at 18

(risk of erroneous deprivation of Sierra Club’s interest was high

due to potential impact on air quality and absence of

opportunities to be heard concerning electricity producer’s

performance under the agreement).

Finally, regarding the governmental interest, the

burden of affording LOL a contested case hearing is slight

because the PUC is already statutorily required to consider the

long-term effects of its decisions. See id. (affording Sierra

Club a hearing would not unduly burden the PUC in light of its

statutory duty to consider the long-term effects of its

decisions).

Accordingly, and consistent with this court’s

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conclusion in MECO, a hearing conducted by the PUC was required

by constitutional due process to protect LOL’s right to a clean

and healthful environment, as defined by HRS Chapter 269. Id. at

269, 408 P.3d at 21.

ii. “Rights, Duties, and Privileges”

A contested case hearing is one that is (1) required by

law and (2) determines the rights, duties, and privileges of

specific parties. MECO, 141 Hawaii at 258, 408 P.3d at 10

(citing Kilakila, 131 Hawaii at 200, 317 P.3d at 34) (internal

quotation marks omitted). Having determined that a contested

case hearing was required by constitutional due process, the

question becomes whether the 2017 Docket, in which the PUC

approved the Amended PPA, constituted a contested case hearing.

We conclude that the 2017 Docket was a contested case hearing

because the hearing required by law would have determined HELCO’s

rights, duties, and privileges.

This court has explained that:

HRS § 91–1 [Supp. 2018] does not contain the requirement that the hearing be a “trial-type evidentiary hearing” or that the hearing exhibit a particular level of “adversarial” quality. Rather, . . . there are only two requirements for a hearing to be regarded as a contested case hearing: (1) that the hearing be required by law and (2) that the hearing determine the rights, duties, or privileges of specific parties.

E & J Lounge Operating Co. v. Liquor Comm’n of City & Cty. of

Honolulu, 118 Hawaii 320, 333, 189 P.3d 432, 445 (2008).

In Kilakila, the Board of Land and Natural Resources

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(BLNR) approved an application submitted by the University of

Hawaii (UH) to permit construction of astronomy facilities near

the summit of Haleakalā on Maui. 131 Hawaii 193, 317 P.3d 27.

The circuit court dismissed an appeal of the BLNR’s decision for

lack of jurisdiction under HRS § 91-14 because no formal

contested case hearing had been held. The ICA affirmed. Id. at

196, 317 P.3d at 30. This court determined that, although no

formal contested case hearing occurred, the BLNR proceedings that

resulted in the granting of UH’s application constituted a

contested case hearing. Id. at 200-02, 317 P.3d at 34-36.

We first determined that UH’s application “necessitated

a hearing by law - i.e., by the administrative rules governing

[Department of Land and Natural Resources] and BLNR.” Id. at

202, 317 P.3d at 36. We then stated the following regarding the

“rights, duties, and privileges” requirement of a contested case

hearing:

In this case, no formal contested case hearing was actually held before the BLNR voted to grant the permit in this case, so the question becomes whether a formal hearing would have determined — or whether the proceedings that did take place determined — the “rights, duties, and privileges of specific parties.” The inquiry here is “directed at the party whose application was under consideration.” Thus, we focus on the rights, duties, and privileges of UH.

. . . . UH’s proposed project involves construction of a substantial complex of astronomy facilities on conservation district land. . . . UH could not legally commence that construction without first submitting an application for a permit and having that application reviewed and approved by BLNR. Approval, including any conditions attached thereto, or denial

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of the application clearly implicates whether UH would or would not be able to engage in the requested use of building astronomy facilities at the telescope project site. Thus, a formal contested case hearing approving o[r] denying UH’s application would have determined UH’s rights, duties, or privileges with regard to the project. Even in the absence of a formal contested case hearing, we point out that the proceedings that otherwise took place, including the vote to grant the permit, in fact did determine UH’s rights, duties, and privileges.

Id. (emphases added) (citations omitted).

Because approval of UH’s permit was required before it

could construct astronomy facilities at the project site, the

proceedings that took place determined UH’s rights, duties, and

privileges. Id. We therefore concluded that, although no formal

contested case hearing was conducted, the BLNR proceedings

nevertheless constituted a contested case hearing within the

meaning of HRS § 91-14. Id.

Similar to the BLNR proceedings at issue in Kilakila,

no formal contested case hearing was held before the PUC approved

the Amended PPA in the 2017 D&O. We must therefore address

“whether a formal hearing would have determined - or whether the

proceedings that did take place determined - the ‘rights, duties,

and privileges’” of HELCO. Kilakila, 131 Hawaii at 202, 317

P.3d at 36 (noting that the inquiry is “directed at the party

whose application was under consideration”) (citation and

quotation marks omitted).

Pursuant to HRS § 269-27.2(c), HELCO and Hu Honua’s

Amended PPA would be of no force and effect without approval by

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the PUC. Thus, had the PUC held a formal contested case hearing

to determine whether the Amended PPA should be approved or

rejected, that hearing would have determined the rights, duties,

and privileges of HELCO. Even in the absence of a formal

contested case hearing, the proceedings that took place in the

2017 Docket resulted in the PUC’s approval of the Amended PPA,

and therefore did in fact determine HELCO’s rights, duties, and

privileges. Accordingly, the PUC’s proceedings in the 2017

Docket constituted a contested case hearing within the meaning of

HRS § 91-14.

b. LOL Followed Agency Rules and Was Involved in the Contested Case

Judicial review over an agency appeal under HRS § 91-14

is only available where the claimant “followed the applicable

agency rules and, therefore, [was] involved in the contested

case.” MECO, 141 Hawaii at 258, 408 P.3d at 10 (quoting

Kilakila, 131 Hawaii at 200, 317 P.3d at 34). Hu Honua, HELCO,

and the PUC argue that LOL was not entitled to a contested case

hearing because it failed to request such a hearing. As set

forth below, this argument is without merit, as LOL was not

required to request a contested case hearing.

i. A Request for a Contested Case Hearing Was Not Required Pursuant to Administrative Rule

Hu Honua argues that LOL was required to request a

contested case hearing pursuant to HAR §§ 6-61-74 (effective

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1992-2018) and 6-61-55.15 However, the PUC’s administrative

rules do not contain such a requirement. HAR § 6-61-74 provided

the substantive requirements for applications and petitions to

the PUC generally, and HAR § 6-61-55 described the substance of

an application to intervene as a party in a PUC proceeding.

Neither of these rules, which remain effective in HAR title 16,

chapter 601, requires a party to request a contested case

hearing. Moreover, no other rule that governs the rules of

15 HAR § 6-61-74 provided:

All applications and petitions shall:

(1) State clearly and concisely the authorization or relief sought;

(2) Cite the appropriate statutory provision or other authority under which commission authorization or relief is sought; and

(3) In addition to specific requirements for particular types of applications (see subchapters 7 to 10), state the following:

(A) The applicant's legal name and location of principal place of business, and, if a corporation, trust, association, or other organization, the state under whose laws the applicant was organized;

(B) The name, title, and address of the person to whom correspondence or communications in regard to the application are to be addressed. Notices, orders, and other documents shall be served upon the person named, and that service shall be deemed to be service upon the applicant; and

(C) If ex parte action or relief pending full hearing is sought, the necessity or emergency justifying the requested action.

See infra note 22. HAR § 16-601-74 (effective Jan. 1, 2019) provides identical requirements.

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practice and procedure before the PUC imposes such a requirement.

Furthermore, it is undisputed that LOL was involved in the PUC’s

proceeding as a participant. Accordingly, judicial review over

LOL’s appeal is not precluded on this basis.

In contrast, HAR Chapter 13-1, governing the rules of

practice and procedure before the Department of Land and Natural

Resources, contains a requirement that a claimant “request a

contested case and petition the board to hold a contested case

hearing.” HAR § 13-1-29(a) (effective Feb. 27, 2009).16 This

court has recognized that “HAR § 13–1–29 is the applicable agency

rule delineating the specific procedures for requesting a

contested case hearing.”17 Hui Kakoo Aina Hoopulapula v. Bd. of

16 HAR § 13-1-29(a) provides:

On its own motion, the board may hold a contested case hearing. Others must both request a contested case and petition the board to hold a contested case hearing. An oral or written request for a contested case hearing must be made to the board no later than the close of the board meeting at which the subject matter of the request is scheduled for board disposition. An agency or person so requesting a contested case must also file (or mail a postmarked) written petition with the board for a contested case no later than ten calendar days after the close of the board meeting at which the matter was scheduled for disposition. For good cause, the time for making the oral or written request or submitting a written petition or both may be waived.

(Emphasis added). 17 HAR § 13-1-29 has been amended slightly since this court decided Hui Kakoo Aina Hoopulapula. When the case was decided, HAR § 13-1-29(a) stated:

A hearing on a contested matter may be requested by the board on its own motion or upon the written (continued...)

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Land & Nat. Res., 112 Hawaii 28, 40, 143 P.3d 1230, 1242 (2006),

abrogated on other grounds by Tax Found. of Hawaii v. State,

SCAP-16-462, 2019 WL 1292286 (Haw. Mar. 21, 2019). We noted that

the appellants had made oral requests for a contested case

hearing prior to the close of a BLNR meeting, but had failed to

subsequently submit a written petition to the BLNR requesting a

contested case hearing. Id. We thus determined that “inasmuch

as the DLNR had properly promulgated specific procedures for a

contested case hearing . . . and the Appellants failed to follow

the requisite procedures, there was no contested case from which

the Appellants could appeal, pursuant to HRS § 91-14(a).” Id. at

41, 143 P.3d at 1243.

In contrast, the PUC’s administrative rules do not

require claimants to request a contested case hearing. Thus, LOL

did not fail to adhere to the applicable agency rules in seeking

judicial review of its agency appeal without requesting a

17 (...continued) petition of any government agency or any interested person who then properly qualifies to be admitted as a party. An oral or written request for a contested case hearing must be made by the close of the public hearing (if one is required) or the board meeting at which the matter is scheduled for disposition (if no public hearing is required). In either situation, the person or agency requesting the contested case hearing must file (or mail and postmark) a written petition with the board not later than ten days after the close of the public hearing or the board meeting, whichever is applicable. The time for making an oral or written request and submitting a written petition may be waived by the board.

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contested case hearing.

ii. A Request for a Contested Case Hearing Was Not Required by Hawaii Case Law

The PUC argues that “[t]his court’s case law on

contested case hearings clearly indicates that a request for a

contested case hearing is a necessary prerequisite to judicial

review of the kind LOL seeks.” The PUC cites MECO, 141 Hawaii at 255, 408 P.3d at 7, Mauna Kea Anaina Hou v. Bd. of Land & Nat.

Res., 136 Hawaii 376, 380, 363 P.3d 224, 228 (2015), Kilakila,

131 Hawaii at 195, 204, 317 P.3d at 29, 38, Kaleikini v.

Thielen, 124 Hawaii 1, 4, 237 P.3d 1067, 1070 (2010), and Pele

Defense Fund, 77 Hawaii at 66, 881 P.2d at 1212, for the

proposition that “at the very least, a party must have requested

a contested case hearing before it can object to the denial of

such a hearing.” To the contrary, this court’s case law does not

require a party to request a hearing to gain access to the

courts, where the relevant agency has not promulgated a rule

requiring such a request and the party has participated in a

contested case proceeding.

A formal request for a contested case hearing is not a

prerequisite for judicial review over an appeal under the cases

cited by the PUC. In MECO, this court noted that, although the

Sierra Club was not allowed to participate in the PUC’s

proceeding, it formally requested a contested case hearing.

MECO, 141 Hawaii at 255-57, 408 P.3d at 7-8. This court did

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not, however, hold that a formal request for a contested case

hearing is a prerequisite for judicial review. Furthermore,

MECO is distinguishable from the instant case because unlike the

Sierra Club in MECO, LOL actively participated in the 2017

Docket. Mauna Kea Anaina Hou, Kilakila, and Kaleikini are also

distinguishable because each of those cases concerned appeals of

BLNR decisions, and as explained supra, agency rules of the BLNR,

unlike those of the PUC, require that a formal request for a

contested case hearing be submitted to attain judicial review

over an agency appeal.

Pele Defense Fund, which involved an appeal of a

Department of Health (DOH) decision, is similarly distinguishable

because DOH rules provide that in order to obtain judicial

review, an interested person seeking a contested case hearing

must submit a complaint or application requesting such a

hearing.18 77 Hawaii at 69, 881 P.2d at 1215 (“Appellees

submitted ‘Application[s] for Contested Case[s]’ on forms

provided by the DOH and in full compliance with the agency’s

rules.”). Accordingly, the cases cited by the PUC do not

establish that LOL was required to request a contested case

hearing as a prerequisite to judicial review.

18 DOH rules also allow the DOH to hold a contested case hearing on its own motion. See Pele Defense Fund, 77 Hawaii at 69 n.12, 881 P.2d 1215 n.12.

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B. Standing

In the context of administrative appeals brought

pursuant to HRS § 91-14(a), this court has interpreted the

concept of standing to be comprised of two components.19 Jordan

v. Hamada, 64 Haw. 451, 457-58, 643 P.2d 73, 75-76 (1982).

“First, one must be a person aggrieved, inter alia, by a final

decision and order in a contested case. Second, the aggrieved

person must have participated in the contested case from which

the decision affecting him resulted.” Id. (citation and internal

quotation marks omitted); see also Mahuiki v. Planning Comm’n, 65

Haw. 506, 515, 654 P.2d 874, 880 (1982).

1. “Person Aggrieved”

To be a person aggrieved, “one must be specially,

personally, and adversely affected” by the final decision and

order at issue. Life of the Land, Inc. v. Land Use Comm’n, 61

Haw. 3, 7, 594 P.2d 1079, 1082 (1979) (quoting East Diamond Head

Ass’n v. Zoning Board of Appeals, 52 Haw. 518, 523 n.5, 479 P.2d

796, 799 n.5 (1971)). An unfavorable final decision and order is

not enough to satisfy this prong of the analysis - “[t]here must

be a special injury or damage to one’s personal or property

rights[,] as distinguished from the role of being only a champion

of causes.” Id.

19 HRS § 91-14(a) provides, in pertinent part, “[a]ny person aggrieved by a final decision and order in a contested case . . . is entitled to judicial review thereof under this chapter[.]” Pursuant to HRS § 91-1, the term “persons” includes individuals, associations, and public or private organizations.

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We have previously recognized the right to a clean and

healthful environment, as defined by HRS Chapter 269, as a

“legally protected interest” adequate to confer standing. MECO,

141 Hawaii at 270-71, 408 P.3d at 22-23; see also Life of the

Land v. Land Use Comm’n, 63 Haw. 166, 176-77, 177 n.10, 623 P.2d

431, 441, 441 n.10 (1981).

There is sufficient evidence in the record to

demonstrate that the PUC’s approval of the Amended PPA specially,

personally, and adversely affected LOL’s members. As set forth

above, LOL is a Hawaii-based nonprofit organization comprised of

members who live, work, and recreate in Hawaii. Such activity

includes visiting and exploring the Big Island’s Hāmākua Coast,

where the Hu Honua facility is located. LOL asserts that the Hu

Honua facility’s use of biofuels for energy production may cause

adverse environmental impacts on the Big Island. In addition to

submitting several IRs regarding the GHG emissions associated

with the Amended PPA, LOL submitted an IR to Hu Honua regarding

the potential for ocean contamination caused by the improper

disposal of wastewater at the facility. It also expressed

concern regarding the environmental impacts associated with

“acquiring bioenergy crops” from an area of the Big Island that

already serves as a source for another biofuel facility, and

whether the Hu Honua facility will “cut into the utilities[’]

purchase of energy from existing and/or planned wind and solar

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farms.”20 These impacts could affect the Big Island in general,

and the Hāmākua Coast in particular.

Thus, LOL has demonstrated an injury to its members,

including their right to a clean and healthful environment as

defined by HRS Chapter 269, due to the PUC’s approval of the

Amended PPA. LOL has therefore satisfied the first prong of the

standing analysis. See MECO, 141 Hawaii at 270-71, 408 P.3d at

22-23; see also Sierra Club v. Hawaii Tourism Authority ex rel.

Bd. of Directors, 100 Hawaii 242, 271, 59 P.3d 877, 906 (2002)

(“An organization may sue on behalf of its members even though it

20 The PUC impliedly recognized this potential injury when it determined that, inter alia, “LOL’s concerns regarding the proposed project’s impact on existing renewable projects on the Big Island” were sufficient to satisfy the requirements of HAR § 6-61-56.

The grounds for participation without intervention in PUC proceedings, as set forth by HAR § 6-61-56(c) were:

(1) . . . [T]he direct and substantial interest of the applicant;

(2) The applicant’s position regarding the matter in controversy;

(3) The extent to which the participation will not broaden the issues or delay the proceeding;

(4) The extent to which the applicant’s interest will not be represented by existing parties;

(5) A statement of the expertise, knowledge or experience the applicant possesses with regard to the matter in controversy;

(6) Whether the applicant can aid the commission by submitting an affirmative case; and

(7) . . . [T]he relief desired.

(Emphases added). HAR § 16-601-56(c) sets forth identical grounds for participation without intervention.

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has not been injured itself when: (1) its members would

otherwise have standing to sue in their own right; (2) the

interests the organization seeks to protect are germane to the

organization's purpose; and (3) neither the claim asserted nor

the relief itself requested requires the participation of

individual members in the lawsuit”).

2. Participation

Although an aggrieved person must have participated in

a contested case in order to invoke judicial intervention, we

have not “conditioned standing to appeal from an administrative

decision upon formal intervention in the agency proceeding.”

Mahuiki, 65 Haw. at 515, 654 P.2d at 880 (quoting Jordan, 62 Haw.

at 449, 616 P.2d at 1371). Where “the appellants have been

aggrieved by the action of the PUC, and where they were involved

as participants during the [contested case,] the appellants may

challenge the order of the PUC in this court.” Life of the Land,

Inc. v. Land Use Comm’n, 61 Haw. at 9, 594 P.2d at 1083 (internal

quotation marks and ellipsis omitted) (quoting In Re Application

of Hawaiian Electric Co., 56 Haw. 260, 265, 535 P.2d 1102, 1106

(1975)). Because LOL was involved in the 2017 Docket as a

participant, it has met the second prong of the analysis. LOL

therefore has standing under HRS § 91-14(a) to appeal the PUC’s

2017 D&O and the denial of its Motion to Upgrade Status.

C. Merits of LOL’s Appeal

Pursuant to HRS § 269-6(b), the PUC must explicitly

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consider the effect of the State’s reliance on fossil fuels on,

inter alia, GHG emissions. We have characterized this as a

“requirement to reduce reliance on fossil fuels and to consider

[GHG] emissions[, which] applies to the fulfillment of all of the

[PUC’s] duties.” MECO, 141 Hawaii at 263, 408 P.3d at 15. That

the facility involved in the Amended PPA is a biofuel facility

does not absolve the PUC of this duty. Thus, in approving the

Amended PPA, the PUC was required to expressly consider the

reduction of GHG emissions. Id. at 264, 408 P.3d at 16.

Further, LOL was entitled to a meaningful opportunity to be heard

on the issue of the Amended PPA’s impact on its constitutional

right to a clean and healthful environment, as defined by HRS

Chapter 269.

The findings and conclusions in the PUC’s 2017 D&O do

not show that the PUC expressly considered the reduction of GHG

emissions in reaching its decision. The PUC also denied LOL due

process by preventing LOL from addressing the impacts of

approving the Amended PPA on LOL’s right to a clean and healthful

environment, as defined by HRS Chapter 269.

1. The PUC Failed to Satisfy its Statutory Obligations Under HRS § 269-6(b)

HRS § 269-6(b) provides:

The public utilities commission shall consider the need to reduce the State’s reliance on fossil fuels through energy efficiency and increased renewable energy generation in exercising its authority and duties under this chapter. In making determinations of the reasonableness of the costs of utility system

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capital improvements and operations, the commission shall explicitly consider, quantitatively or qualitatively, the effect of the State’s reliance on fossil fuels on price volatility, export of funds for fuel imports, fuel supply reliability risk, and [GHG] emissions. The commission may determine that short-term costs or direct costs that are higher than alternatives relying more heavily on fossil fuels are reasonable, considering the impacts resulting from the use of fossil fuels.

In MECO, this court observed that “[i]n 2011, the

legislature amended HRS § 269-6(b) to make it mandatory for the

Commission when exercising its duties to recognize the ‘need’ to

reduce reliance on fossil fuels and to ‘explicitly consider’ the

levels and effect of [GHG] emissions[.]” 141 Hawaii at 262, 408

P.3d at 14 (emphasis in original). This court determined that “a

primary purpose of the [2011 amendment] was to require the

Commission to consider the hidden and long-term costs of reliance

on fossil fuels, which subjects the State and its residents to

increased air pollution and potentially harmful climate change

due to the release of harmful [GHGs].”21 Id. at 263, 408 P.3d at

21 Relatedly, we note that the State has committed to furthering the goals of the Paris Climate Agreement. 2018 Haw. Sess. Laws. Act 15, § 1 at 46-47 (“The legislature notes that Hawaii, as part of the United States Climate Alliance . . . committed to upholding the objectives of the 2015 Paris Agreement.”). This commitment is advanced through HRS Chapter 225P, which provides, in part:

The purpose of [the] chapter is to address the effects of climate change to protect the State’s economy, environment, health, and way of life. [The] chapter establishes the framework for the State to:

1) Adapt to the inevitable impacts of global warming and climate change, including rising sea (continued...)

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15 (quoting H. Stand. Comm. Rep. No. 1004, in 2011 House Journal,

at 1332) (internal quotation marks omitted). This court then

concluded that “HRS § 269-6(b)’s requirement to reduce reliance

on fossil fuels and to consider [GHG] emissions applies to the

fulfillment of all of the Commission’s duties.” Id. (emphasis

added). Accordingly, pursuant to MECO, HRS § 269-6(b) requires

that “express consideration be given to reduction of [GHG]

emissions in the decision-making of the Commission.” Id. at 264,

408 P.3d at 16. Thus, it is clear that the PUC was required to

expressly consider the reduction of GHG emissions in deciding

whether to approve the Amended PPA.

In determining whether the PUC satisfied this duty

pursuant to HRS § 269-6(b), this court “should ensure that the

agency . . . [made] its findings reasonably clear. The parties

and the court should not be left to guess . . . the precise

finding of the agency.” Kauai Springs, Inc. v. Planning Comm’n

of Cty. of Kauai, 133 Hawaii 141, 164, 324 P.3d 951, 974 (2014)

(citation and quotation marks omitted). “An agency’s findings

should be sufficient to allow the reviewing court to track the

21 (...continued) levels, temperatures, and other risk factors; and

2) Mitigate its greenhouse gas emissions by sequestering more atmospheric carbon and greenhouse gases than the State produces as quickly as practicable, but no later than 2045.

HRS § 225P-1 (Supp. 2018).

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steps by which the agency reached its decision.” Id. (citation

and quotation marks omitted); see also In re Waiola O Molokai,

Inc., 103 Hawaii 401, 432, 83 P.3d 664, 695 (2004) (explaining

that any presumption of validity, given to an agency’s decision,

“presupposes that the agency has grounded its decision in

reasonably clear” findings of fact and conclusions of law).

Because the 2017 D&O does not reflect that the PUC

explicitly considered the reduction of GHG emissions in approving

the Amended PPA, we conclude that the PUC failed to comply with

HRS § 269-6(b). The only reference to GHG emissions in the 2017

D&O appears in the “Procedural Background” section. It reads,

“[c]omments in opposition to the Project tended to focus on

potential adverse environmental impacts, an expected rise in

[GHG] emissions, . . . and general objections to biomass as a

fuel resource.” The 2017 D&O does not provide responses to those

comments, nor is there any mention of GHG emissions in the PUC’s

“Statement of Issues” or “Discussion and Findings.” Further,

although the PUC restated HELCO’s representations that the

biomass facility could potentially save approximately 15,700

barrels of fuel per year and contribute to the State’s RPS goals,

it made no express findings or conclusions regarding the biomass

facility’s GHG emissions.

In its findings and conclusions, the PUC found that Hu

Honua’s biomass facility may displace fossil fuel generation

resources and accelerate the retirement of fossil fuel plants,

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and noted that its decision to approve the Amended PPA was based

on “factors such as the State’s need to limit its dependence on

fossil fuels and mitigate against volatility in oil pricing.”

These findings and conclusions do not constitute “express

consideration” of the reduction of GHG emissions, as provided for

under HRS § 269-6(b). See MECO, 141 Hawaii at 264, 408 P.3d at

16.

In MECO, Maui Electric requested that the PUC determine

whether its proposed PPA was prudent and in the public interest,

and consider the reasonableness of the associated energy charges.

Id. at 265-66, 408 P.3d at 17-18. This court explained that when

reviewing the PPA, the PUC was required under HRS § 269-6(b) to

consider the hidden and long-term costs of energy produced under

the Agreement, including the potential for increased air

pollution due to GHG emissions. Id. at 266, 408 P.3d at 18.

This court further stated that the consideration of potential

health risks is “axiomatic” in the PUC’s analysis of the level of

GHG emissions, “as contemplated by the legislature when it

amended HRS § 269-6(b) in 2011[.]” Id.

Similarly, in the instant case, HELCO requested that

the PUC determine whether the energy charges under the Amended

PPA were reasonable and if its arrangement with Hu Honua was

prudent and in the public interest. In its review of the Amended

PPA, the PUC found that the “purchased power costs and

arrangements set forth in the [Amended] PPA appear reasonable,

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prudent, in the public interest, and consistent with HRS chapter

269 in general, and HRS § 269-27.2(c), in particular.” The PUC

did not, however, substantiate this finding by addressing the

hidden and long-term environmental and public health costs of

reliance on energy produced at the proposed facility, as

required. These costs include “the potential for increased air

pollution as a result of GHG emissions” directly attributed to

energy generation at the facility, as well as GHG emissions

produced at earlier stages in the production process, such as

fuel production and transportation. See MECO, 141 Hawaii at

263, 408 P.3d at 15 (“a primary purpose of [amending HRS § 269-

6(b)] was to require the [PUC] to consider the hidden and long-

term costs of reliance on fossil fuels, which subjects the State

and its residents to increased air pollution and potentially

harmful climate change due to the release of harmful [GHGs].”)

(internal quotation marks and citation omitted).

Accordingly, the 2017 D&O was not supported by findings

regarding GHG emissions of the Hu Honua facility “sufficient to

allow the reviewing court to track the steps by which the [PUC]

reached its decision.” Kauai Springs, Inc., 133 Hawaii at 164,

324 P.3d at 974. Without such explicit findings, this court

cannot determine whether the PUC adequately considered GHG

emissions as required by HRS § 269-6(b).

“A remand pursuant to HRS § 91–14(g) is appropriate if

an agency’s findings are incomplete and provide no basis for

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review.” Int’l Bhd. of Elec. Workers, Local 1357 v. Hawaiian

Tel. Co., 68 Haw. 316, 328, 713 P.2d 943, 953 (1986) (citing In

re Kauai Elec. Div. of Citizens Util. Co., 60 Haw. 166, 185–86,

590 P.2d 524, 538 (1978)). HRS § 91–14(g) provides as follows:

Upon review of the record, the court may affirm the decision of the agency or remand the case with instructions for further proceedings; or it may reverse or modify the decision and order if the substantial rights of the petitioners may have been prejudiced because the administrative findings, conclusions, decisions, or orders are: (1) In violation of constitutional or statutory provisions;

(6) Arbitrary, or capricious, or characterized by abuse of discretion or clearly unwarranted exercise of discretion.

Where the PUC’s failure to make sufficient findings

leaves this court unable to determine the validity of its

conclusions, it is appropriate to remand the case to the PUC for

further proceedings, pursuant to HRS § 91-14(g), in order for the

PUC to make findings necessary for judicial review. Application

of Hawaiian Tel. Co., 54 Haw. 663, 669, 513 P.2d 1376, 1379

(1973); see also In re Kauai Elec. Div. of Citizens Util. Co. 60

Haw. at 185, 590 P.2d at 537 (remanding the case to the PUC for

further proceedings, pursuant to HRS § 91-14(g), because the

PUC’s order was “unsupported by findings of fact and

conclusions”).

Here, remand to the PUC for further proceedings is

appropriate. On remand, the PUC shall give explicit

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consideration to the reduction of GHG emissions in determining

whether to approve the Amended PPA, and make the findings

necessary for this court to determine whether the PUC satisfied

its obligations under HRS § 269-6(b).

2. The PUC’s Failure to Provide LOL an Opportunity to Be Meaningfully Heard in the 2017 Docket Denied LOL Due Process

“The basic elements of procedural due process of law

require notice and an opportunity to be heard at a meaningful

time and in a meaningful manner before governmental deprivation

of a significant property interest.” Sandy Beach Def. Fund, 70

Haw. at 378, 773 P.2d at 261 (citing Matthews v. Eldridge, 424

U.S. 319, 333 (1976)). As discussed supra, this court has

recognized that the “right to a clean and healthful environment,

as defined by laws relating to environmental quality,” is a

property interest protected by due process because it is a

substantive right guaranteed by article XI, section 9 of the

Hawaii Constitution. MECO, 141 Hawaii at 253, 260-61, 408 P.3d

at 5, 12-13. In MECO, after concluding that Sierra Club’s

asserted property interest required a hearing by the PUC to

comply with due process, this court observed that procedural due

process includes “the right to submit evidence and argument on

. . . the impact of the Agreement on the asserted property

interest.” Id. at 269, 408 P.3d at 21 (citation omitted). This

court then stated that the PUC “has the authority to set

limitations in conducting the proceedings so long as the

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procedures sufficiently afford an opportunity to be heard at a

meaningful time and in a meaningful manner on the issue of the

Agreement’s impact on the asserted property interest.” Id. at

270, 408 P.3d at 22.

As explained above, procedural due process necessitated

a contested case hearing because the 2017 D&O, which approved the

Amended PPA, adversely affected LOL’s constitutionally protected

right to a clean and healthful environment, as defined by HRS

Chapter 269. See id. at 265, 408 P.3d at 17 (agency hearing

required “when the challenged State action adversely affects the

constitutionally protected rights of others”) (quoting Pele Def.

Fund, 77 Hawaii at 68, 881 P.2d at 1214) (internal quotation

marks omitted). Accordingly, LOL was entitled to an opportunity

to be heard at a meaningful time and in a meaningful manner

regarding the Amended PPA’s impact on its right to a clean and

healthful environment, as defined by HRS Chapter 269. See id. at

LOL was not afforded a sufficient opportunity to

address the Amended PPA’s impact on its constitutional right to a

clean and healthful environment, as defined by HRS Chapter 269,

throughout the 2017 Docket. The PUC allowed LOL to participate

in the 2017 Docket with respect to two sub-issues: (2.a.i)

whether the energy price components in the Amended PPA properly

reflect the cost of biomass fuel supply, and (2.b) whether

HELCO’s purchase power arrangements under the Amended PPA are

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prudent and in the public interest. LOL argued that the proposed

biomass facility was not in the public interest and should be

rejected. LOL further argued that “the issue of climate change

is embedded in both issues the Commission assigned to LOL to

consider[,]” that Hu Honua’s proposal failed to fully address the

environmental impact of its operations, and that Hu Honua’s

claims of carbon-neutrality were unsupported.

However, HELCO refused to respond to LOL’s IRs

regarding environmental impacts of the project and production of

an environmental site assessment because those topics were

outside the scope of LOL’s participation. Hu Honua similarly

objected to LOL’s IRs regarding loss of stored carbon from tree

harvesting, environmental impacts of the project, and production

of an environmental site assessment as outside the scope of LOL’s

restricted participation. LOL filed a Motion to Compel, seeking

lease agreements and a forestry operations report from Hu Honua,

in order to address the cost of biomass fuel supply and GHG

emissions from the facility’s operations. However, the PUC

denied LOL’s motion, finding that “LOL’s Motion to Compel, if

granted, would cause an undue delay in this proceeding.”

Thus, although the 2017 D&O acknowledged LOL’s attempts

to discuss the Amended PPA’s impacts on LOL’s right to a clean

and healthful environment, as defined by HRS Chapter 269, in

addressing whether the Amended PPA is prudent and in the public

interest, the PUC did not afford LOL an opportunity to be heard

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regarding this issue at a meaningful time and in a meaningful

manner. Rather, the PUC prevented LOL from meaningfully

addressing the impact that approving the Amended PPA would have

on LOL’s asserted property interest, based on its determination

that LOL’s environmental concerns were beyond the scope of the

2017 Docket. Accordingly, the PUC’s procedures violated LOL’s

due process right to be meaningfully heard regarding the impacts

that approving the Amended PPA would have on LOL’s right to a

clean and healthful environment, as defined by HRS Chapter 269.

Due to the PUC’s failure to allow LOL to present

evidence and argument concerning its right to a clean and

healthful environment, as defined by HRS Chapter 269, this court

must vacate the PUC’s 2017 D&O and remand this case to the PUC

for a hearing that complies with procedural due process. In

order to comply with statutory and constitutional requirements,

the PUC’s post-remand hearing must afford LOL an opportunity to

meaningfully address the impacts of approving the Amended PPA on

LOL’s members’ right to a clean and healthful environment, as

defined by HRS Chapter 269. The hearing must also include

express consideration of GHG emissions that would result from

approving the Amended PPA, whether the cost of energy under the

Amended PPA is reasonable in light of the potential for GHG

emissions, and whether the terms of the Amended PPA are prudent

and in the public interest, in light of its potential hidden and

long-term consequences. See MECO, 141 Hawaii at 269, 408 P.3d

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at 21.

3. The PUC’s Denial of LOL’s Motion to Upgrade Status

LOL asserts that the PUC’s denial of its Motion to

Upgrade Status in Order No. 34651 was clearly erroneous and

constituted an abuse of discretion. LOL further argues that its

“participant” status and the restriction of its participation to

two issues in the 2017 Docket denied it a sufficient opportunity

to protect its constitutional right to a clean and healthful

Hu Honua, HELCO, and the PUC argue that it was within

the PUC’s discretion to find that LOL’s motion failed to satisfy

the factors under HAR § 6-61-55 for party-intervenor status.

HELCO additionally argues that LOL is time-barred from

challenging the PUC’s denial because it did not do so within the

thirty-day time period required by HRS § 91-14(b). We conclude

that LOL’s appeal of Order No. 34651 is timely, but we need not

determine whether the PUC abused its discretion or violated LOL’s

due process right in denying LOL’s Motion to Upgrade Status.

a. Timeliness of LOL’s Appeal of Order No. 34651 Denying LOL’s Motion to Upgrade Status

LOL’s appeal of Order No. 34651 is timely. Under HRS

§ 91-14(b), appeals are timely where the appellant files its

notice of appeal “within thirty days after service of the

certified copy of the final decision and order of the agency[.]”

HELCO cites Kilakila, 131 Hawaii at 195, 317 P.3d at 29, for the

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proposition that “denied requests to intervene are final orders

as defined in HRS § 91-14,” and argues that Order No. 34651,

which denied LOL’s Motion to Upgrade Status to party-intervenor,

was a “final decision and order” subject to the thirty-day time

limit under HRS § 91-14(b). Because Order No. 34651 was issued

on June 23, 2017 and LOL appealed that determination sixty-four

days later on August 26, 2017, HELCO contends that LOL’s appeal

is untimely.

In Kilakila, this court considered whether the BLNR’s

decision to approve a permit, without either granting or denying

Kilakila’s request for a contested case hearing, was a “final

decision and order” within the meaning of HRS § 91-14. 131

Hawaii at 202-03, 317 P.3d at 36-37. We noted that in

Kaleikini, 124 Hawaii at 26, 237 P.3d at 1092, the “DLNR’s

decision to deny Kaleikini’s request for a contested case hearing

constituted a final decision and order of the agency because it

ended the litigation.” Id. at 203, 317 P.3d at 37 (internal

quotations omitted). We then determined that the BLNR’s vote to

grant the permit effectively denied Kilakila’s request for a

contested case hearing, and was therefore a “final decision and

order,” as it provided the requisite finality to enable Kilakila

to appeal. Id.

Here, Order No. 34651 Denying LOL’s Motion to Upgrade

Status was not required to be appealed within thirty days because

it did not constitute a “final decision and order” of the PUC.

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The order denied LOL party status and confirmed LOL’s limited

participant status, but did not resolve all other outstanding

issues in the 2017 Docket. Thus, unlike the agency decisions in

Kaleikini and Kilakila, which provided appellants the “requisite

finality” by “end[ing] the litigation[,]” the PUC’s Order No.

34651 merely maintained LOL’s participation in the proceeding.

See Kilakila, 131 Hawaii at 203, 317 P.3d at 37. Therefore,

LOL’s appeal would have been unripe until the PUC issued the 2017

D&O, which represents the “final decision and order” of the PUC.

The PUC issued the 2017 D&O on July 28, 2017, which, along with

Order No. 34651 Denying LOL’s Motion to Upgrade Status, was

appealed by LOL on August 26, 2017. As LOL filed its notice of

appeal twenty-nine days after the PUC’s 2017 D&O, its appeal is

timely.

b. We Need Not Decide Whether the PUC Abused its Discretion or Violated Due Process by Denying LOL’s Motion to Upgrade Status

HAR § 6-61-55 set forth nine factors for the PUC to

consider in determining whether to grant a motion to intervene as

a party in a PUC proceeding. The rule further provided that the

PUC would not grant intervention “except on allegations which are

reasonably pertinent to and do not unreasonably broaden the

issues already presented.”22 Pursuant to HAR § 6-61-55(a),

22 HAR § 6-61-55 provided:

(a) A person may make an application to intervene and become a party by filing a timely written (continued...)

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(...continued) motion in accordance with sections 6-61-15 to 6-61-24, section 6-61-41, and section 6-61-57, stating the facts and reasons for the proposed intervention and the position and interest of the applicant.

(b) The motion shall make reference to:

(1) The nature of the applicant’s statutory or other right to participate in the hearing;

(2) The nature and extent of the applicant’s property, financial, and other interest in the pending matter;

(3) The effect of the pending order as to the applicant’s interest;

(4) The other means available whereby the applicant's interest may be protected;

(5) The extent to which the applicant’s interest will not be represented by existing parties;

(6) The extent to which the applicant’s participation can assist in the development of a sound record;

(7) The extent to which the applicant’s participation will broaden the issues or delay the proceeding;

(8) The extent to which the applicant’s interest in the proceeding differs from that of the general public; and

(9) Whether the applicant's position is in support of or in opposition to the relief sought.

(c) The motion shall be filed and served by the applicant in accordance with sections 6-61-21 and 6-61-57.

(d) Intervention shall not be granted except on allegations which are reasonably pertinent to and do not unreasonably broaden the issues already presented.

Other than the HAR section numbers it references, HAR 16-601-55 (continued...)

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“[i]ntervention as a party in a proceeding before the PUC is not

a matter of right[,] but is a matter resting within the sound

discretion of the commission[,]” as long as that discretion is

not exercised arbitrarily or capriciously. Application of

Hawaiian Elec. Co., Inc., 56 Haw. 260, 262, 535 P.2d 1102, 1104

(1975) (citation omitted).

LOL argues that the limitation of its participation to

Sub-issue Nos. 2.a.i and 2.b denied it a meaningful opportunity

to address its constitutional right to a clean and healthful

environment. However, as discussed above, the record does not

establish that the PUC explicitly considered the reduction of GHG

emissions at all in the 2017 Docket. It is therefore clear that

the PUC misconstrued this aspect of its statutory duty, which was

fundamental to LOL’s potential role in the proceeding. As such,

it appears the PUC’s denial of LOL’s Motion to Upgrade Status was

premised on a flawed understanding of the relevant inquiry, and

therefore we cannot say whether such denial constituted an abuse

of discretion.

LOL further argues that the PUC’s denial of its Motion

to Upgrade Status violated its due process rights by impeding its

ability to obtain access to documents. However, the record does

not establish that the PUC restricted LOL’s access to documents

(...continued) (effective Jan. 1, 2019) is identical to HAR 6-61-55 (effective 1992-2018).

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due to its status as a limited participant. Order No. 34597,

which established, inter alia, a final statement of the issues

and LOL’s scope of participation in the 2017 Docket, limited

LOL’s participation to Sub-issue Nos. 2.a.i and 2.b, but did not

restrict the manner of its participation within those issues.

Further, Protective Order No. 34555, which “govern[ed] the

classification, acquisition, and use of trade secrets, and other

confidential information” produced in the docket, provided that

“[a]ll parties or participants to all or any portion of this

docket . . . shall be entitled to all confidential information

under the provisions of this Protective Order to the extent

allowed by the commission.” (Emphasis added). LOL does not

allege or demonstrate that access to documents designated as

“confidential” was given to parties, but denied to participants.

Accordingly, it is not apparent from the record that LOL would

have had greater access to documents had the PUC granted its

Motion to Upgrade Status.

In sum, on remand, it is within the PUC’s discretion to

determine the extent of LOL’s participation in the proceeding,

pursuant to HAR § 16-601-55, provided that the PUC complies with

its statutory and constitutional obligations to consider the

reduction of GHG emissions and to allow LOL a meaningful

opportunity to be heard regarding the Amended PPA’s impact on its

right to a clean and healthful environment, as defined by HRS

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IV. CONCLUSION

As set forth above, HRS § 269-6(b) requires the PUC to

expressly consider the reduction of GHG emissions in its

decision-making. The PUC failed to do so in determining whether

the costs associated with the Amended PPA were reasonable, and in

approving the Amended PPA. The PUC also failed to afford LOL an

opportunity to be heard at a meaningful time and in a meaningful

manner regarding the Amended PPA’s impact on LOL’s property

interest in a clean and healthful environment, as defined by HRS

The PUC’s 2017 D&O is therefore vacated and this case

is remanded to the PUC for proceedings consistent with this

opinion.

Lance D. Collins /s/ Mark E. Recktenwald for appellant /s/ Paula A. Nakayama Clyde J. Wadsworth (Kalikoonalani D. /s/ Sabrina S. McKenna Fernandes with him on the brief) /s/ Richard W. Pollack for appellee PUC /s/ Michael D. Wilson Margery S. Bronster (Rex Y. Fujichaku and Kelly A. Higa with her on the brief) for appellee Hu Honua Bioenergy, LLC

Joseph A. Stewart (David M. Louie and Aaron R. Mun with him on the brief) for appellees HECO and HELCO