What better way to bid farewell to 2017 than with a whopper case from the Hawaii Supreme Court? And we're not exaggerating -- this one is really big.
Now you might think that given the amount of time this blog devotes to property interests and property rights, we'd be downright tickled when our home court -- which may not be the friendliest court in the land for property owners and property rights -- goes against expectations and actually recognizes a constitutional property right. A right that, as far as we can tell, no other court, state or federal, has ever recognized.
Despite the Hawaii Supreme Court's recognition of a property right, however, we're not at all on board, because In re Maui Electric Co., No. SCWC-15-0000640 (Dec. 14, 2017), concluded the Sierra Club possesses a constitutional property right in a "clean and healthful environment" entitling the organization to due process protections. This allowed the Club to intervene in a Public Utilities Commission petition regarding a power purchase agreement for a now-defunct electric plant on Maui.
Read that again in case it didn't quite sink in: the court recognized a property right in a clean and healthful environment.
Before we get to our thoughts about why we characterize this as a whopper conclusion, some background.
A Defunct Coal-Powered Sugar Power Plant
Maui Electric filed an application with the State PUC, seeking the Commission's approval of an agreement between the utility and Hawaiian Commercial and Sugar Company which, if approved, would allow a rate increase to account for the additional production charges associated with the Puunene Plant, a coal-powered facility on former sugar lands in central Maui which transformed bagasse, the byproduct of sugar production, into electric power. We use the past tense because by the time the Supreme Court decided the case, the plant had closed, following the recent closure of the sugar plantation. No sugar plantation, no sugar, no bagasse.
Sierra Club asked the PUC to intervene in the administrative process under the PUC's rules, asserting its own rights as well as several of its Maui members. The power plant, the petition asserted, would "impact Sierra Club's members' health, aesthetic, and recreational interests. Sierra Club also asserted its organizational interest in reducing Hawaii's dependence on imported fossil fuels and advancing a clean energy grid." Slip op. at 5.
Standing vs. Administrative Intervention
Pretty vague stuff, and more like policy questions than something best resolved by an adjudicative proceeding, but under existing judicial standing rules in similar cases in original jurisdiction actions brought in Hawaii courts, nothing too far from the norm. There's little doubt that if this were a case brought in a Hawaii trial court, that Sierra Club adequately alleged judicial standing. Anyone questioning that conclusion need only recall the Superferry case in which the Hawaii Supreme Court held that Sierra Club had standing to raise an environmental challenge to the now-defunct inter-island ferry because the ferry threatened the organization with four types of injury: (1) endangered species could be adversely impacted by a high-speed ferry; (2) the Superferry could increase the introduction of alien species; (3) surfers, divers, and canoe paddlers who use Kahului Harbor could suffer adverse impacts; and (4) the threat of increased traffic on the road next to the harbor entrance. Again, that's a pretty vague connect-the-dots logic to gain standing. But for better or worse, that's the current state of Hawaii's standing law.
However, the Maui Electric case was not an original jurisdiction action, it was an administrative proceeding in the Commission under the PUC's admin rules, governed by a different standard, one based in the Hawaii Administrative Procedures Act. Under the APA, an outsider may intervene in a "contested case" (an quasi-judicial adjudicative administrative process) when an agency rule or a statute gives the party a seat at the table, or when intervention is required by law because the agency is adjudicating that party's rights (in this case, the law was the Hawaii Constitution's due process clause). See Kaleikini v. Thielen, 237 P.3d 1067, 1082-83 (Haw. 2010).
Here, the Sierra Club alleged both that PUC statutes and the Hawaii Constitution's procedural due process protections gave it the right to intervene in the agency proceedings:
Sierra Club argued that its members were concerned that the Puunene Plant relied too heavily on coal in order to meet its power obligations under the existing agreement and also that its members were concerned "about the public health and visibility impacts of burning coal."
Slip op. at 5.
Intervention Denied
Neither the PUC nor the court of appeals bought the Sierra Club's theory. The Commission denied intervention and decided Maui Electric's application without the Club's presence. The Club appealed to the Intermediate Court of Appeals which agreed with Maui Electric and dismissed the appeal for lack of jurisdiction. It concluded that because Sierra Club was not "aggrieved" by the decision by the PUC (because it correctly excluded the Club form the case), the appellate court did not have jurisdiction.
At Long Last, a Vehicle for the Supreme Court
The issue had been brewing in Hawaii's agencies and lower courts for awhile, and giving the current Hawaii Supreme Court the opportunity to make this ruling had been on wish lists at least since former Governor Neil Abercrombie appointed the majority of the five Justice court back in 2014. But until now, this issue (and others with a similar approach -- recognizing certain rights in the Hawaii Constitution as property, for example) had never secured the necessary three votes.
So up to the Hawaii Supreme Court they went, on the same two theories: the Club should have been allowed to intervene, either because the PUC's governing statutes gave it the right to do so, or because due process required it because the Club's property was at stake in the PUC proceeding.
Three-Justice Majority: No Statutory Right to Intervene, But Sierra Club Owns "Property"
The Gov. Abercrombie-appointed three Justice majority, in an opinion authored by Justice Pollack, rejected two arguments which could have avoided this difficult and groundbreaking result. First, as we noted above, by the time the case reached the court, the Puunene Plant was offline, a victim of Hawaii's loss of the sugar industry. Maui Electric argued the Sierra Club's appeal was thus moot and the court should dismiss. Or, the majority might have combed through the PUC's statutes and concluded that Sierra Club possessed a statutory (and not a constitutional) right to intervene.
But the majority accepted neither argument, first concluding that the case even though moot was nonetheless crying out for resolution by the court (the so-called "public interest" exception to the usual mootness rules), and also rejecting Sierra Club's claim for a statutory right to intervene. See slip op. at 12-15 for the majority's mootness analysis, and pages 19-21 for its rejection of the statutory argument.
Having disposed of these preliminaries, the court got to the constitutional question: does the Hawaii Constitution recognize Sierra Club's environmental concerns as a property interest entitling it to procedural due process?
The majority based its conclusion on Article XI, section 9 of the Hawaii Constitution (a provision added by the 1978 constitutional convention):
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.
That, the majority held, created a legitimate claim of entitlement to a clean and healthful environment, and thus it is a property right. It "is a substantive right guaranteed to each person." Slip op. at 23-24. The majority noted that the court had earlier held that Native Hawaiian rights -- a right also found in the Hawaii Constitution -- are "property" rights, and that environmental concerns are no different. Slip op. at 23 (citing In re Īao Ground Water Mgmt. Area High-Level Source Water Use Permit Applications, 287 P.3d 129, 142 (Haw. 2012)). As a self-executing right, it is a legitimate entitlement.
Interestingly, the majority seemed to anticipate criticisms of this conclusion by noting that the constitutional text itself limited this property right to being exercised within the framework of existing environmental statutues, rules, and ordinances. This will, the majority reasoned, keep things in check. What made it interesting is that the opinion concluded that the very PUC statutes which it had earlier rejected as providing Sierra Club with the right to intervene, were environmental statutes that gave it a property right to intervene.
We therefore conclude 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 greenhouse gas emissions in the decision-making of the Commission. Accordingly, we hold that Sierra Club has established a legitimate claim of entitlement to a clean and healthful environment under article XI, section 9 and HRS Chapter 269.
Slip op. at 34-35.
After reaching the conclusion that Sierra Club owns property in a clean and healthful environment, it was all over but the shouting and the majority held that the PUC had a duty to provide a hearing before it deprived the Club of its property:
The risks of an erroneous deprivation are high in this case absent the protections provided by a contested case hearing, particularly in light of the potential long-term impact on the air quality in the area, the denial of Sierra Club’s motion for intervention or participation in the proceeding, and the absence of other proceedings in which Sierra Club could have a meaningful opportunity to be heard concerning HC&S’s performance of the Agreement.
Slip op. at 30.
Finally, in a footnote, the majority made it clear that the result is immune from future legislative tinkering. This is a ruling based on the Hawaii Constitution, and thus no mere legislature can mess with it too much. See slip op. at 43 & n.33 ("Our ultimate authority is the Constitution; and the courts, not the legislature, are the ultimate interpreters of the Constitution.").
Two-Justice Dissent
We won't walk through the complete rationale of the two-Justice dissent, because it is a relatively short 20 pages, and it would be easier for you to read it yourself. In sum, Chief Justice Recktenwald (joined by Justice Nakayama), would have concluded that neither the PUC statutes nor Hawaii's due process clause gave Sierra Club the right to intervene in the power plant's PUC application. The dissenters warned of "unintended" consequences which will flow from this decision:
Respectfully, the Majority’s expansive interpretation of what constitutes a protected property interest in these circumstances may have unintended consequences in other contexts, such as statutes where the legislature has mandated consideration of specific factors by executive agencies when implementing a statute.
Dissent at 14.
The dissent concluded the majority's result was unnecessary, because it was more of a policy choice than a judicial decision, and ultimately, if denied administrative intervention in the PUC, Sierra Club could deploy the loose standing rules which we mentioned earlier in this post, and institute an original jurisdiction action. Dissent at 17.
How Do You Exclude Others From a Clean and Healthful Environment?
The biggest question we have about the majority's conclusion is this: if the most fundamental aspect of owning "property" is the right to exclude others from the res, how in the world do members of the public have the right to exclude other members of the public from a clean and healthful environment?
As the U.S. Supreme Court held in Nollan v. California Coastal Comm'n, 483 U.S. 825 (1987), "[w]e have repeatedly held that, as to property reserved by its owner for private use, 'the right to exclude [others is] 'one of the most essential sticks in the bundle of rights that are commonly characterized as property.'' Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 433 (1982), quoting Kaiser Aetna v. United States, 444 U.S. 164, 176 (1979)." Or maybe Stevie Wonder said it better when he sang "this is mine, you can't take it."
Either way, the ability to keep others off of what you own -- and have the law support you -- is one of the defining sticks in the bundle of rights which we call property.
Thus, we think the court didn't grapple with the real foundational question built into the arguments -- should these types of environmental concerns even be shoehorned into the concept of "property" as that term has been used for thousands of years? Doesn't "property" as used in the Hawaii Constitution's due process clause mean private property? After all, as far as we can tell, every other time this court has dealt with property in Hawaii's due process clause, it has either expressly defined, or implicitly assumed, that the property interest at stake was private property, and not a right that looks more like something "owned" collectively by everyone. Essentially what the majority accomplished was a subtle redefinition of property from a private right to a public resource.
We understand the Hawaii Supreme Court's commitment to keeping courthouse doors open to resolve claims, especially when the claims involve the environment and those who profess to protect it. As we noted earlier, the court's standing doctrine for original jurisdiction cases sets the bar so low that it is, for all practical purposes, a mere pleading speed bump, and not a substantive check on dragging the courts into political and policy questions. The standing rule, as our courts have held, is a "prudential rule of judicial self-governance" for courts exercising their original jurisdiction, and does not, technically speaking, govern courts' appellate jurisdiction in appeals under the Administrative Procedures Act. But now the barn doors are open in both. On that, we think the dissenting opinion is right when it concluded that rejecting intervention in the PUC only meant Sierra Club could have instituted an original action in a Maui trial court. Thus, the courthouse door could remain open without needlessly undermining the concept of property.
On The Horizon: Public Trust as a "Property" Right?
Also as we noted earlier, this decision was a long time coming, and anyone paying attention has been expecting this shoe to drop whenever the Justice Pollack-led branch could garner that critical third vote. Now that it has, this naturally leads to the follow up question, what could be next?
It stands to reason the next candidate for the second shoe is "public trust" rights, which in the recent telescope cases just missed that third vote. There, Justice Pollack and Justice Wilson concurred, concluding that both Native Hawaii and public trust are property interests. They argued that article XI, section 1 of the Hawaii Constitution created a property property interest in natural resources which are to be administered for public benefit. See Concurring op. at 29-30. Now that this same telescope case is back in the Supreme Court, we would not be surprised if the same three Justices who found that environmental concerns are property take a hard look at extending that rationale.
Other Thoughts
Two final thoughts before wrapping up this long post in farewell to 2017:
1. If environmental concerns grounded in the Hawaii Constitution are property, and Native Hawaiian interests are property, and if public trust principles are property, are there other, similar interests in the constitution where property could be found? We think there is one that deserves a hard look. Article XI, section 3 reads a lot like sections 1 and 9:
The State shall conserve and protect agricultural lands, promote diversified agriculture, increase agricultural self-sufficiency and assure the availability of agriculturally suitable lands. The legislature shall provide standards and criteria to accomplish the foregoing.
Farmers and ranchers may want to consider raising arguments similar to those which carried the day in Maui Electric. After all, we don't have a hierarchy of state constitutional rights, where some rights are more equal than others.
2. Citizens United lovers, rejoice: in Hawaii's courts, corporations are persons entitled to constitutional rights. Yes, you read that correctly. The constitutional provision at issue here provides that "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." The Maui Electric majority held that the Sierra Club has a property right under this provision meaning that hey, the Sierra Club is a "person."
Aloha and welcome to Hawaii jurisprudence, Citizens United!
In re Maui Electric Co., No. SCWC-15-0000640 (Haw. Dec. 14, 2017)
In re Maui Electric Co., No. SCWC-15-0000640 (Dec. 14, 2017) (Recktenwald, C.J., dissenting)
