The Hawai\u2018i Supreme Court has issued a ruling that makes clear what it thinks of the Public Utilities Commission\u2019s effort to push the companies it regulates to reduce greenhouse gas emissions.<\/p>\n\n\n\n
And that is: Not much.<\/p>\n\n\n\n
In a decision issued June 9, the four justices who heard the case found unanimously in favor of the two groups who had appealed a PUC decision allowing The Gas Company, LLC, to raise its rates. The rate increase was needed, the company said, to allow it to recoup costs associated with construction of infrastructure required to import liquefied natural gas (LNG). Although The Gas Company did not specify the exact sources of the fuel, the groups that appealed suspect that much of it would come from fracking, the controversial practice of extracting fossil fuels from deep underground by injecting pressurized liquid into bedrock formations.<\/p>\n\n\n\n
Three groups \u2013 Life of the Land, Hui Aloha \u2018Aina o Ka Lei Maile Ali\u2018i, and 350 Hawai\u2018i \u2013 sought to intervene when The Gas Company, doing business as Hawai\u2018i Gas (HG), petitioned the LUC for the rate hike. The PUC did not allow them full intervenor status but did permit them to participate on a limited basis on the question of whether the PUC should disallow as unreasonable costs associated with importing LNG \u201cdue to the effects of HG\u2019s use of imported LNG on the state\u2019s reliance on fossil fuels and greenhouse gas emissions.\u201d
<\/p>\n\n\n\n
The PUC specifically forbade them to discuss how Hawai\u2018i Gas\u2019s use of LNG might impact the environment beyond the state\u2019s borders. It also ruled out of bounds any mention of the link between greenhouse gas emissions and climate change, and generalized statements about LNG and fracking.<\/p>\n\n\n\n
On December 21, 2018, the commission issued its order allowing Hawai\u2018i Gas a rate increase of 8.39 percent, amounting to about $9 million a year and giving the company a rate of return on investment of roughly 7.1 percent. The 233-page order was dismissive of the concerns raised by the three groups. Instead, it quoted argument from Hawai\u2018i Gas that concerns over fracking were \u201cinapposite\u201d to the proceeding.<\/p>\n\n\n\n
The commission\u2019s order repeated the conditions imposed on the participant groups granted, noting that their \u201casserted interest in a clean and healthful environment beyond the state\u2019s borders\u201d and \u201cevidence of a causal connection between greenhouse gas emissions and climate change\u201d were \u201coutside the scope of this rate case proceeding.\u201d<\/p>\n\n\n\n
Two of the groups \u2013 Life of the Land and Hui Aloha \u2018Aina \u2013 then filed their appeal to the Supreme Court.<\/p>\n\n\n\n
No Room to Quibble<\/strong><\/p>\n\n\n\n The Supreme Court\u2019s judgment leaves no room for further quibbling about the PUC\u2019s responsibility to consider greenhouse gas emissions and the impact of climate change in the matters that come before it.<\/p>\n\n\n\n In a succinct summation of the issues raised in the appeal and the resolution of them, Chief Justice Mark Recktenwald and Associate Justices Paula Nakayama, Sabrina McKenna, and Richard Pol- lack (Associate Justice Michael Wilson recused himself after oral arguments were made), first dispense with the issue of standing. Hawai\u2018i Gas had argued that the groups should not have been granted standing to appeal to the court. The justices dismissed the claim. The appellants met the two-pronged test for standing to bring the appeal since \u201cthey demonstrated their members\u2019 right to a clean and healthful environment was especially, personally, and adversely affected by the PUC\u2019s Decision and Order, and they were participants in HG\u2019s contested case.\u201d<\/p>\n\n\n\n As to the question of whether the PUC had complied with the Hawai\u2018i law requiring it to consider the need to reduce the state\u2019s reliance on fossil fuels, the court found that the commission \u201cdid not fulfill its obligations under [Hawai\u2018i Revised Statutes] Section 269- 6(b) because the Decision and Order simply reiterated HG\u2019s representations that its LNG projects would decrease GHG [greenhouse gas] emissions. Further, the PUC\u2019s geographic limitation demonstrated that the PUC did not intend to consider GHG emissions from production, development, and transportation of LNG occurring outside of the state. Without that information, however, the PUC could not have explicitly considered the hidden and long-term costs of the state\u2019s reliance on fossil fuels.\u201d<\/p>\n\n\n\n The Supreme Court also determined that the PUC had violated the groups\u2019 due-process rights by denying them the opportunity to discuss greenhouse gas emissions.<\/p>\n\n\n\n On two questions relating to constitutional obligations to protect native Hawaiian practices and to exercise its role as trustee of Hawai\u2018i\u2019s natural resources, the court determined that because the PUC had improperly curtailed the ability of the groups to raise substantive questions on these issues, \u201cthe record is not sufficiently developed\u201d for the court to address them. \u201cOn remand, the PUC should consider its constitutional obligations,\u201d the justices wrote.<\/p>\n\n\n\n One matter the groups raised was definitively rejected by the court. The groups had argued that the PUC abused its discretion by not promulgating rules to assess greenhouse gas emissions. \u201cThe PUC did not attempt to bypass a rule, amended rule, or pending rule concerning how it should measure GHG emissions,\u201d the justices found.<\/p>\n\n\n\n Beyond the Borders<\/strong><\/p>\n\n\n\n The court put the PUC\u2019s order in context. It noted that in December 2017, just four days before the PUC set its procedural schedule for hearing the rate increase request, the court issued its opinion in an appeal of an earlier PUC decision involving a power purchase agreement between Maui Electric Co. (MECO) and HC&S, which operated a power plant at Pu\u2018unene.<\/p>\n\n\n\n The Sierra Club had asked the PUC to be granted intervenor status or, failing that, to be allowed to participate in the proceeding. The PUC denied the request on both counts, and the Sierra Club appealed. In deciding that appeal, the justices said, \u201cwe held that there is a \u2018protectable property interest\u2019 in the \u2018right to a clean and healthful environment,\u2019\u201d as guaranteed in the Hawai\u2018i Constitution and in HRS Chapter 269, the law governing the PUC. The case was remanded to the Intermediate Court of Appeals, which was instructed to address the matter of whether the PUC had abused its discretion in denying the request of the Sierra Club to intervene. (By the time the Supreme Court issued its decision in the Maui Electric case, the Pu\u2018unene plant, owned by Alexander & Baldwin, had been removed from service. In January 2018, the Sierra Club withdrew its appeal.)<\/p>\n\n\n\n In an order issued in the Hawai\u2018i Gas case on February 6, 2018, the PUC denied the groups\u2019 request to intervene but did grant limited standing to participate in the proceeding.<\/p>\n\n\n\n Just how limited?<\/p>\n\n\n\n The PUC summed up issues the groups could address in one sentence: \u201cwhether the commission should disallow as unreasonable [Hawai\u2018i Gas\u2019s] LNG costs due to the effect of [its] use of imported LNG on the state\u2019s reliance on fossil fuels and greenhouse gas emissions.\u201d<\/p>\n\n\n\n On the other hand, the list of issues deemed to be \u201coutside the scope of this rate proceeding\u201d ran on for several hundred words. Among those out-of- bounds subjects was the participants\u2019 \u201casserted interest in a clean and healthful environment beyond the state\u2019s borders…,\u201d \u201cevidence of a causal connection between greenhouse gas emissions and climate change,\u201d whether the company\u2019s use of LNG should be banned or prohibited by law, and whether fracking and all new oil, coal, and gas projects should be banned.<\/p>\n\n\n\n The participants\u2019 interest in a healthful environment outside the borders of Hawai\u2018i, the PUC said, was not guaranteed by the state Constitution. As to the link between greenhouse gas emissions and climate change, the PUC dispensed with this by merely taking \u201cofficial notice\u201d of legislative actions that made such connection explicit.<\/p>\n\n\n\n With those constraints, the PUC had little difficulty finding in favor of Hawai\u2018i Gas. The groups opposed to the rate increase, the PUC stated in its order, \u201chave not produced any credible evidence\u201d that contradicts the company\u2019s evidence or its statements that greenhouse gas production inside the state would increase with the use of LNG. Instead, the groups \u201crely on general assertions, without credible evidentiary support, that [HG\u2019s] use of imported LNG will increase greenhouse gas emissions.\u201d<\/p>\n\n\n\n \u2018Appellants Are Correct\u2019<\/strong><\/p>\n\n\n\n The court didn\u2019t buy it. The commission, it found, violated the specific language of HRS Section 269-6(b), which requires it to \u201cexplicitly consider, quantitatively or qualitatively, the effect of the state\u2019s reliance on fossil fuels on … greenhouse gas emissions.\u201d<\/p>\n\n\n\n Both the PUC and Hawai\u2018i Gas argued to the court that the \u201cplain language\u201d of the law doesn\u2019t require consideration of greenhouse gases beyond the state\u2019s borders. The company\u2019s own analysis of the impact on greenhouse gas emissions that would result from the use of LNG in Hawai\u2018i, the PUC argued, provided the \u201conly credible evidence in the record.\u201d<\/p>\n\n\n\n On this point, the court wrote, \u201cAppellants are correct.\u201d In contrast to the PUC\u2019s reading of the \u201cplain language\u201d of the law, \u201cWe note that the plain language of HRS Section 269-6(b) does not limit the PUC\u2019s consideration of [greenhouse gas] emissions to those only occurring within the state.\u201d<\/p>\n\n\n\n The court went on to point out that in the Maui Electric decision, \u201cwe noted \u2018a primary purpose\u2019 of the statute is to \u2018require the [PUC] to consider the hidden and long-term costs <\/em>of reliance on fossil fuels, which subjects the state and its residents to \u2018increased air pollution\u2019 and \u2018potentially harmful climate change due to the release of harmful greenhouse gases.\u2019\u201d<\/p>\n\n\n\n In the present case, the justices agreed with the groups that the company \u201chas quite literally \u2018hidden\u2019 the GHG emissions impact of its imported LNG. The \u2018hidden\u2019 GHG emissions impact Appellants are concerned with include GHG emissions from the extraction, development, production, and transportation of imported LNG, which occur out-of-state, but which, nonetheless impact Hawai\u2018i due to the global nature of GHG emissions. We agree with this contention.\u201d<\/p>\n\n\n\n Referring to Act 234 of the 2007 Legislature, which established the Greenhouse Gas Emissions Reduction Task Force, the court noted that even then, the Legislature was concerned with minimizing \u201cleakage\u201d \u2013 the reduction of in-state emissions that comes at the cost of increases elsewhere.<\/p>\n\n\n\n \u201cIn this rate proceeding, HG and the PUC have largely disregarded any possible GHG emission leakage from imported LNG,\u201d the court wrote. In this, \u201cthe PUC\u2019s action was contrary to law and, therefore, an abuse of discretion.\u201d<\/p>\n\n\n\n \u2018Just a Rate Case\u2019<\/strong><\/p>\n\n\n\n In defending its order approving the rate hike, the PUC noted that this was \u2018just a rate case,\u2019 with the commission already having met the requirements of the law in earlier dockets that approved the projects associated with the importation of liquefied natural gas.<\/p>\n\n\n\n Specifically, with respect to LNG, Hawai\u2018i Gas sought PUC approval in 2014 for investing in improvements that would allow it to displace 30 per- cent of its synthetic natural gas, produced from imported oil, with LNG. As with this case, Life of the Land sought to intervene, but, again as in this case, was granted only participant status on the limited issue of whether the project for which Hawai\u2018i Gas was seeking approval was reasonable. The group submitted articles and statements of position that pointed to the dangers inherent in fracking, employed by the British Columbia firm that was providing LNG to Hawai\u2018i Gas, outlined the threats posed by climate change brought on by increasing use of fossil fuels, and even cited to HRS Section 269-b(b). The gas company objected, arguing that the group\u2019s arguments went well beyond the narrow scope under which its participation was allowed. In the end, Hawai\u2018i Gas was allowed to make the investment, on the condition, however, that it would not be able to \u201cpass through to its customers any costs associated with the project … without subsequent commission approval.\u201d<\/p>\n\n\n\n Life of the Land did not appeal that decision. However, by 2018, the legal landscape had changed. For one thing, Hawai\u2018i law changed in 2016 to allow direct appeals to the Hawai\u2018i Supreme Court of decisions from the PUC and other regulatory agencies. For another, the Supreme Court had issued its decision in MECO.<\/p>\n\n\n\n That decision was pivotal. In MECO, the court had affirmed the obligation of the PUC to address greenhouse emissions, writing that the requirement for the commission \u201cto reduce reliance on fossil fuels and to consider greenhouse gas emissions applies to the fulfillment of all of the commission\u2019s duties.\u201d Here, in approving the gas company\u2019s rate hike, the commission failed to meet that requirement in that, first, it didn\u2019t \u201cexplicitly consider all of the GHG emis- sion impacts\u201d of the company\u2019s projects tied to LNG since it had \u201cerroneously previously determined that the out-of- state GHG emissions … were beyond the scope of the rate proceeding,\u201d and, second, that it \u201cmerely restat[ed], without substantiating, HG\u2019s representation that its LNG projects would decrease GHG emissions.\u201d<\/p>\n\n\n\n By so stringently limiting the scope of the arguments that the groups could raise, the PUC also violated their due-process rights, the court held. This had the effect of \u201ctruncating appellants\u2019 property interest in a manner not required under the plain language ofHRS Section 269-6(b), and in a manner contrary to MECO.\u201d<\/p>\n\n\n\n The order approving the rate hike was thus remanded to the PUC.<\/p>\n\n\n\n \u2014 Patricia Tummons<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":" The Hawai‘i Supreme Court has issued a ruling that makes clear what it thinks of the Public Utilities Commission’s effort to push the companies it regulates to reduce greenhouse gas emissions. And that is: Not much. In a decision issued … Continued<\/a><\/p>\n","protected":false},"author":1,"featured_media":12648,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11,14,471],"tags":[7],"class_list":["post-12647","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-climate-change","category-energy","category-july-2020","tag-patricia-tummons"],"_links":{"self":[{"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/posts\/12647","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=12647"}],"version-history":[{"count":0,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/posts\/12647\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/media\/12648"}],"wp:attachment":[{"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=12647"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=12647"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=12647"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}