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N. Alaska Env. Center et al v. Alaska Public Utilities Comm. (8/26/94), 879 P 2d 1015
NOTICE: This is subject to formal correction before
publication in the Pacific Reporter. Readers are
requested to bring errors to the attention of the Clerk
of the Appellate Courts, 303 K Street, Anchorage,
THE SUPREME COURT OF THE STATE OF ALASKA
ALASKA FEDERATION FOR COMMUNITY )
SELF-RELIANCE, TRUSTEES FOR )
ALASKA, NORTHERN ALASKA )
ENVIRONMENTAL CENTER, and ) Supreme Court No. S-6152
DAVE LACEY, )
) Superior Court No.
Appellants, ) 3AN 92-7118 CI
v. ) Consolidated with
) 3AN 92-10144 CI
ALASKA PUBLIC UTILITIES COMMISSION,)
ALASKA INDUSTRIAL DEVELOPMENT )
AND EXPORT AUTHORITY and GOLDEN )
VALLEY ELECTRIC ASSOCIATION, INC., ) O P I N I O N
Intervenor-Appellees. ) [No. 4115 - August 26,
Appeal from the Superior Court of the
State of Alaska, Third Judicial District,
Milton M. Souter,
Appearances: Michael M. Wenig, Trustees
for Alaska, Anchorage, for Appellants.
Virginia A. Rusch, Assistant Attorney
General, Anchorage, Bruce M. Botelho,
Attorney General, Juneau, for Appellee.
Thomas F. Klinkner, Wohlforth, Argetsinger,
Johnson & Brecht, Anchorage, for Intervenor-
Appellee Alaska Industrial Development and
Export Authority. Julie Simon, Ron Saxton,
Paul J. Kaufman, Ater, Wynne, Hewitt, Dodson
& Skerritt, Washington, D.C., for Intervenor-
Appellee Golden Valley Electric Association,
Before: Moore, Chief Justice,
Rabinowitz, Matthews and Compton, Justices,
and Bryner, Justice pro tem.*
RABINOWITZ, Justice, with whom BRYNER,
Justice, pro tem, joins, dissenting.
The Alaska Public Utilities Commission (APUC) issued a
certificate of public convenience and necessity for the Healy
Clean Coal Project (HCCP), a coal-fired power plant in Healy,
Alaska. The Alaska Federation for Community Self-Reliance,
Trustees for Alaska, Northern Alaska Environmental Center and
Dave Lacey (collectively, "the Federation") challenge APUC's
decision. The Federation asserts that APUC failed to consider
all factors bearing on the public interest, including the
environmental "impacts"or "costs"and the costs of the federal
and state subsidies allocated to the project. Additionally, the
Federation seeks to invalidate APUC's decision because two APUC
commissioners failed to participate in the final decision.1
I. FACTUAL AND PROCEDURAL BACKGROUND
In the mid-1980s the United States Department of Energy
(DOE) inaugurated its Clean Coal Technology Program as a
technology development experiment co-funded by government and
industry. It was designed to "demonstrate a new generation of
innovative coal processes in a series of full-scale 'showcase'
facilities built across the country." The facilities would
"comply with environmental, health, and safety requirements at
costs that [would] keep coal competitive in the market place."
DOE selected HCCP for participation in its demonstration program.
HCCP is primarily a conventional coal-fired steam electric
generating plant, designed to demonstrate two innovative
technologies: advanced coal combustors and advanced emission
control technology. HCCP will be located near Denali National
HCCP will be owned by Alaska Industrial Development and
Export Authority (AIDEA) and operated by Golden Valley Electric
Association, Inc. (GVEA). AIDEA and GVEA negotiated an
"Agreement for the Sale and Purchase of the Electric Capability
of the [HCCP]." GVEA is to buy the power produced by HCCP. GVEA
provides generation, transmission and distribution services to
over 27,000 utility customers in Fairbanks, North Pole, Delta,
Nenana, Anderson, Healy, and Cantwell.
There is government support for HCCP. DOE committed
nearly $94 million to the project. The Alaska Legislature
appropriated $25 million, plus the interest on that sum, to AIDEA
for the design and construction of HCCP. Ch. 208, 143, SLA
1990. Additionally, it authorized AIDEA to issue bonds for HCCP
in a principal amount not to exceed $85 million. Ch. 123, 28,
Because AIDEA will be selling power generated by HCCP,
it will be classified as a "public utility." AS 42.05.720(4)(A).
Alaska Statute 42.05.221 provides that a public utility must
obtain a certificate of public convenience and necessity to
provide a utility service. Additionally, AS 42.05.431(b)
requires advance approval by APUC of a wholesale power agreement
between public utilities, such as the power sales agreement
between AIDEA and GVEA.
In December 1991 AIDEA filed an application with APUC
for a certificate of public convenience and necessity to own
HCCP. That same month GVEA filed an application with APUC for
approval of the proposed power sales agreement. In beginning its
examination of the HCCP applications, APUC gave all parties the
opportunity to brief the issue of whether it had jurisdiction to
consider the "environmental externalities." The applicants
specifically asked APUC to confirm that environmental
externalities need not be addressed in the current proceedings.
The Federation argued that APUC should consider the project's
environmental costs in deciding whether to issue a certificate.
APUC's staff concluded that "[APUC] has the legal authority to
consider and include the costs and benefits associated with
environmental externalities during a ratemaking proceeding, when
determining whether a certificate should be granted, or whether a
power sales agreement should be approved." Additionally, the
staff opined that public policy supports investigation into the
environmental externalities. In May 1992 three of the
five APUC commissioners rejected the staff's recommended
approach. APUC ordered that absent an express direction from the
legislature, "environmental externalities will not be considered
in this proceeding." The two remaining commissioners agreed with
the staff that APUC should consider HCCP's environmental impacts
in its decision whether to grant the certificate as "required for
the public necessity." The Federation moved for
reconsideration of the order. The motion was denied. The
Federation next took an appeal to the superior court. AS
42.05.551(a); AS 44.62.560-.570; Appellate Rule 602(a)(2). The
superior court stayed the appeal while APUC completed its
remaining certification deliberations. In July 1992 APUC held an
evidentiary hearing in which four commissioners participated.
The three commissioners who voted against considering the
project's environmental costs participated in the final
certification order. Two of them decided to issue the
certificate. In a lengthy dissenting opinion, the remaining
commissioner objected to issuing the certificate without further
study. The two commissioners who had previously dissented from
the order refusing to consider environmental externalities did
not participate in APUC's final decision, although one of them
actively participated in the hearing.
Appellant Dave Lacey moved unsuccessfully for
reconsideration of APUC's final licensing decision. The
Federation then timely took a second appeal to the superior
court. The superior court consolidated that appeal with the
Federation's first appeal. One procedural argument raised in the
Federation's briefs was that the certificate was invalid because
it lacked the requisite majority vote of the five commissioners
who participated in the overall certification proceeding.
Although it rejected that argument, the superior court raised a
related issue: whether the two commissioners who declined to
participate in the final certification decision violated a legal
duty as sworn public officers to participate. Following oral
argument, the superior court expressed its personal outrage that
the two commissioners had abstained from participating for no
reason articulated in the record, but held that it could find no
relevant law on the issue. Thus it sustained APUC's decision.
The superior court also rejected the Federation's
position that the HCCP certification proceeding requires
consideration of the project's environmental impacts. Although
the court opined that environmental externalities should be
considered, it stated that APUC is not required to consider them.
This appeal followed. The superior court issued an
order granting the Federation's motion to stay issuance of HCCP's
certificate pending this court's decision on the Federation's
appeal. On February 1, 1994, we granted the parties' joint
motion for an expedited appeal prior to the expected start of
construction, which was May 1, 1994. On April 28 we affirmed the
judgment of the superior court. Additionally, we vacated the
superior court's order granting the Federation's motion to stay
the APUC's issuance of the certificate of public convenience and
necessity. In this opinion we articulate the bases for our April
A. STANDARD OF REVIEW.
This court independently reviews APUC decisions. No
deference is given to the superior court's decision when it acts
as an intermediate court of appeal. Tesoro Alaska Petroleum Co.
v. Kenai Pipe Line Co., 746 P.2d 896, 903 (Alaska 1987).
Whether the Alaska Public Utilities Act requires APUC
to consider all of HCCP's costs, including environmental impacts
and public subsidies, in deciding if the service is "required for
the public necessity,"involves a question of law which the court
reviews de novo. Handley v. State, Dep't of Revenue, 838 P.2d
1231, 1233 (Alaska 1992). Additionally, whether a decision of
APUC requires more than a quorum to transact business is a
question of law which the court reviews de novo. Id.
B. DETERMINATION OF THE PUBLIC CONVENIENCE AND
NECESSITY DOES NOT REQUIRE THE APUC TO CONSIDER
THE COSTS ASSOCIATED WITH PUBLIC SUBSIDIES OR
Alaska Statute 42.05.221 requires a public utility to
obtain a certificate of public convenience and necessity in order
to provide a utility service.3 Alaska Statute 42.05.221(a)
provides in part:
A public utility may not operate and
receive compensation for providing a
commodity or service without first having
obtained from the commission . . . a
certificate declaring that public convenience
and necessity require or will require the
service. . . .
Alaska Statute 42.05.241 prohibits issuance of a
certificate "unless the commission finds that the applicant is
fit, willing and able to provide the utility services"and that
the "services are required for the convenience and necessity of
the public." This section then permits APUC to "attach to the
grant of [the certificate] the terms and conditions it considers
necessary to protect and promote the public interest."
The Federation contends that APUC violated its
statutory duty to consider all factors bearing on the public
"necessity" for HCCP or, in other words, on whether allowing
certification of HCCP serves the "public interest." The
Federation asserts that "public necessity" suggests a more
stringent threshold for project approval than "public interest,"
but that both standards require consideration of a broad range of
factors bearing on the overall public good.4 Specifically, it
contends that APUC erred by refusing to consider the public costs
of environmental impacts resulting from HCCP and the costs of the
public subsidies on which it is dependent.5
APUC responds that it is not required by law to
consider factors outside its traditional area of jurisdiction.
It argues that the environmental damage that is caused by
electric generating plants for which society must pay, as well as
costs associated with public subsidies, are not costs that have
in the past been included in the rates
paid by users of the electricity. Since the
traditional purview of utility regulatory
commissions is the reasonableness of rates
charged by utilities and paid by consumers,
any additional costs to society at large are
not within the traditional area of policy
making that the legislatures have assigned to
It argues that the case law presented by the Federation merely
supports a contention that APUC has the discretion to determine
what factors are relevant to certification of a utility service.
It claims that the case law does not support an interpretation of
statutory authority that would compel an examination of factors
which are outside the purview of traditional utility regulation.
APUC concludes that it did "not err in deciding that it would not
consider environmental 'externalities' unless specifically
directed to do so by the legislature."
Additionally, AIDEA posits that the public convenience
and necessity requirement is directed only toward the
authorization of a utility service and is inapplicable to the
construction of a particular facility.
We agree that the language of AS 42.05.221, which
requires a showing of public convenience and necessity, is
limited specifically to "services." As the superior court noted,
APUC only needs to make a determination whether there is a
substantial need for a service. Similarly, the requirement of
section 241 that APUC find the applicant to be "fit, willing and
able to provide the utility services applied for"only requires
the commission to focus on the applicant. Neither inquiry
requires an exploration into the costs associated with
environmental externalities or public subsidies not paid by
consumers as part of the rate charged for the service. APUC is
required only to determine whether the "service"is required for
the public convenience and necessity and whether the applicant is
fit, willing and able. This it has done. APUC's decision is not
invalid by its refusal to consider these costs.6 Therefore, we
affirm APUC's certification determination.7
C. A MAJORITY VOTE OF A STATUTORY QUORUM IS
SUFFICIENT FOR APUC TO TRANSACT BUSINESS.
Two of the five APUC commissioners did not participate
in the final certification decision.8 The nonparticipating
commissioners dissented from APUC's prior order that held there
would be no consideration of environmental externalities. One of
the two did not participate in the evidentiary hearing leading to
the final order. The other who abstained was an active
participant in the hearing, asking questions almost to the end of
the hearing. The Federation asserts that the certificate
for HCCP should be declared void because the two commissioners
who did not participate in the voting had a legal duty to vote on
the issue. It argues that this duty arises from the fact that
they are "public officers" of the State of Alaska.
AS 39.52.960(21)(B) (a member of a commission is a public
officer). As public officers, the commissioners take a
constitutional oath of office, pledging to "faithfully discharge"
their duties to the "best"of their "ability." AS 42.05.081;
Alaska Const. art. XII, 5. Additionally, the Federation
analogizes the duty of the commissioners to vote to the duty of
judges to sit. Amidon v. State, 604 P.2d 575, 577 (Alaska 1979)
("[A] judge has as great an obligation not to disqualify himself,
when there is no occasion to do so, as he has to do so in the
presence of valid reasons."); In re Ellis, 108 B.R. 262, 266 (D.
Hawaii 1989) (a judge may not recuse herself simply because she
does not want to hear the matter, because of the difficulty of
the subject matter, or even because of calendar constraints).
The Federation argues that "as public officers, APUC
Commissioners should be bound by the same duty as Judges, absent
a formal excuse based on sound reasons."9 It asserts that this
will further public trust and promote governmental accountability
by providing a record of official conduct.
APUC, AIDEA, and GVEA respond that even if the court
finds the nonparticipation of the two commissioners wrongful, the
requested relief of setting aside a decision of a statutory
quorum of the commission is inappropriate.10 We agree.
Alaska Statute 42.05.071 provides that "[t]hree members
of the commission constitute a quorum for the transaction of
business, for the performance of a duty, or for the exercise of a
power of the commission."11 See Henry M. Robert, Robert's Rules
of Order Newly Revised 39 (Scott, Foresman & Co. 1990)
[hereinafter Robert's Rules] ("[A] quorum in an assembly is the
number of members entitled to vote who must be present in order
that business can be legally transacted. The quorum refers to
the number of such members present, not the number actually
voting on a particular question.").12 Furthermore, a majority of
the quorum can act for the entire body. See Federal Trade Comm'n
v. Flotill Prods., Inc., 389 U.S. 179, 183 (1967) ("The almost
universally accepted common-law rule is . . . in the absence of a
contrary statutory provision, a majority of a quorum constituted
of a simple majority of a collective body is empowered to act for
the body."); 1976 Formal Op. Att'y Gen. No. 14 ("[W]hen only
three members [of the Public Utilities Commission] are sitting a
minimum of two members concurring is all that is required for the
commission to act."); 2 Am. Jur. 2d Administrative Law 196
(1962) ("[U]nless a statute provides otherwise the generally
accepted rule is that . . . a majority of the quorum concurring
is sufficient to take any particular action.").
Where a statute is silent on the number of votes
necessary for a body to take action, the common law states that a
majority of the quorum is sufficient to transact the business of
the body.13 In this case, a statutory quorum was present. A
majority of the required quorum voted. While it would have been
preferable for all five commissioners to have voted, the
nonparticipation of the two commissioners is not grounds for
invalidating the decision of a majority of a statutory quorum.14
As stated by APUC, "The subject matter of AS 42.05.071 is not a
commissioner's duty of participation. The subject matter of
AS 42.05.071 is the specification of a minimum number of
commissioners who must participate in a valid commission action
on any matter before the commission."15 Therefore, APUC's
decision is not invalid on the ground asserted.
APUC is not required to consider costs associated with
environmental externalities or public subsidies in its inquiry
concerning whether a service is required for the public
convenience and necessity, or whether an applicant is fit,
willing and able to provide the service. It is only required to
determine whether there is a substantial need for the service and
whether the applicant is in fact fit, willing and able.
Furthermore, while it might have been preferable for all APUC
commissioners to have participated in the final certification
decision, nonparticipation by two members does not invalidate a
decision made by the majority of a statutory quorum. Therefore,
we AFFIRM the decision of the superior court.
RABINOWITZ, Justice, with whom BRYNER, Justice, pro
tem, joins, dissenting.
I dissent from the majority's conclusion that APUC's
responsibility for determining whether AIDEA should be granted a
certificate of public convenience and necessity, pursuant to
AS 42.05.221 and 42.05.241,16 for the Healy Clean Coal Project did
not require APUC to consider environmental externalities.
Federal case law supports a contrary holding, to the
effect that under AS 42.05.221 and AS 42.05.241 APUC is required
to consider all factors bearing on the convenience and necessity
of the public, including environmental costs or impacts. Like AS
42.05.221 and AS 42.05.241, 7(e) of the Natural Gas Act of
1938, 15 U.S.C. 717f(e), requires the Federal Energy Regulatory
Commission17 to find that a proposed service is or will be
required by "public convenience and necessity"18 before FERC can
issue a certificate. Under this provision, FERC must consider
"all factors bearing on the public interest." Federal Power
Comm'n v. Transcontinental Gas Corp., 365 U.S. 1, 8 (1961)
(quoting Atlantic Refining Co. v. Public Serv. Comm'n, 360 U.S.
378, 391 (1959)); see also Cascade Natural Gas Corp. v. FERC, 955
F.2d 1412, 1421 (10th Cir. 1992).
In Transcontinental, a single Federal Power Commission
hearing officer held that he could not consider the effects of
proposed utility services on air quality, contrary to recommenda
tions by Federal Power Commission staff. 365 U.S. at 5. The
full Federal Power Commission reviewed the decision, and held
that it could consider effects on air quality under 7. Id. at
5-6. The United States Supreme Court agreed, holding that the
Federal Power Commission had not exceeded its authority. Id. at
31. The Court's holding focused on preemption of facilities and
price. See id. Yet in the absence of more explicit treatment,
it is significant that the Court did not criticize the
consideration, at either stage, of environmental factors.
Indeed, the Court reiterated that the Federal Power Commission
must consider "all factors bearing on the public interest." Id.
Although the majority acknowledges the federal case law
in this area, it fails to cite any contrary decisions, from any
jurisdiction, that construe similar language. It attempts to
distinguish the relevant federal cases by noting that some rely
on statutory language unlike the provisions governing APUC. I
find this argument unpersuasive. Though the argument is
ostensibly made in reference to Transcontinental, United States
v. Detroit & Cleveland Navigation Co., 326 U.S. 236, 241 (1945),
and Cascade, the citations that follow the majority's analysis on
this point are to other cases.19 The existence of these
distinguishable federal cases does not change the fact that those
courts that have considered the issue have held that the term
"public convenience and necessity"includes all factors bearing
on the public interest. It is notable that the majority ends its
discussion of federal cases with a citation to Henry v. Federal
Power Commission, 513 F.2d 395 (D.C. Cir. 1975), and implicitly
acknowledges that Henry represents federal authority that cannot
The majority's central holding is that APUC is required
only to determine whether "service is required for the public
convenience and necessity"and, focusing solely on the applicant,
"whether the applicant is fit, willing and able." It seems
inconceivable that a particularized finding of fitness and
ability can ever be made without a thorough explanation of the
manner in which the applicant proposes to provide the service and
the consequences that might result from provision of the service
in that manner.
The majority also states that "APUC is required only to
determine whether the 'service' is required for the public
convenience and necessity." This begs the question of what
"public convenience and necessity" means. For the reasons
discussed above, I believe that the federal courts are correct in
holding that "public convenience and necessity" encompasses
consideration of environmental externalities.
The two primary policy arguments that the majority
advances in support of its interpretation can be termed
"redundancy"and "uncertainty." The majority suggests that there
is no need for the state to consider environmental impacts, since
the United States Department of Energy (DOE) is involved. DoE
completed a final environmental impact statement for HCCP in
December 1993. Yet DoE based its assessment on the need for
innovative coal-based technology, the goal of the federal Clean
Coal Technology Program. The question DoE asked was whether the
costs of HCCP outweigh the national benefits of potentially
developing new coal-based power-generation technologies. That is
fundamentally different from the question APUC is required to
answer: whether Alaska's public convenience and necessity will
be served by HCCP. Because the two inquiries are distinct,
requiring APUC to consider environmental externalities would not
be redundant. Moreover, I note that in some cases DoE or other
federal agencies may not be involved. Under the majority
opinion, environmental factors bearing on the public interest
could then be overlooked altogether until after the proposed
project has been certified.
As for the assertion that environmental consequences
are too uncertain, and that "economically minded"agencies are
incapable of considering environmental consequences, this seems
overstated. The decisionmaking process can account for
uncertainty or limited agency competence. Discounting for
uncertainty is legitimate, so long as the agency makes a good-
faith attempt to consider all issues affecting the public
interest. And even if, as GVEA asserts, environmental
externalities cannot be quantified, this does not mean they
cannot be considered at all.21
I am also unpersuaded by the majority's emphasis on the
word "service" in the statute. The provision of power is a
"service,"and the consequences of providing that service include
APUC's powers are to be "liberally construed to
accomplish its stated purposes." AS 42.05.141(a)(1). Under the
rules of statutory construction, a grant of express authority
carries with it all powers and duties incidental and necessary to
exercise of the express authority. As APUC's staff has noted:
The Commission has the authority
and duty to ensure: (1) that rates charged
are just and reasonable; (2) the service
provided is safe and efficient and required
for the public convenience and necessity;
and (3) that the conservation of resources
used in the generation of electric energy is
The power to consider environmental externalities follows from
*Sitting by assignment made pursuant to article IV, section
16 of the Alaska Constitution.
1 The Federation included in its points on appeal three
additional arguments that it did not brief: (1) two out of five
APUC commissioners does not constitute a majority authorized to
issue a certificate, (2) APUC's decision is illegal because it
did not consider the number of Railbelt energy consumers whose
rates will rise as a result of the project relative to the number
whose rates will decline, and (3) the reasons articulated by APUC
in support of its finding that HCCP is "required for the public
convenience and necessity"are arbitrary, unreasonable and lack
substantial evidence. Therefore, we treat these points as
abandoned. Jeffries v. Glacier State Tel. Co., 604 P.2d 4, 7 n.8
2 The Federation uses the term "environmental
externalities" interchangeably with the terms "environmental
impacts" and "environmental costs." GVEA argues that
"environmental externalities" are not the equivalent of
"environmental costs" and "impacts." It contends that
environmental externalities encompass only environmental impacts
that are "not internalized elsewhere in the permitting process."
GVEA points out that the environmental issues associated with
this project are currently pending before the appropriate state
and federal agencies in the form of applications for the
necessary permits to operate the facility, including compliance
with procedures required by the National Environmental Policy Act
(NEPA) review process. For example, NEPA requires agencies to
prepare a statement on the environmental impacts for all proposed
federal actions that "significantly affect the quality of the
human environment." 42 U.S.C. 4332(2)(C) (1989).
APUC defines "environmental externalities" as those
impacts on the environment caused by the production of
electricity "which have not historically been reflected in the
costs of electricity." We find APUC's definition the most
3 "'[S]ervice' means, unless the context indicates
otherwise, every commodity, product, use, facility, convenience
or other form of service that is offered for and provided by a
public utility for the convenience and necessity of the public."
4 The Federation cites cases that have expansively
construed the phrase "public convenience and necessity." See,
e.g., Federal Power Comm'n v. Transcontinental Gas Pipe Line
Corp., 365 U.S. 1, 8 (1961) (emphasizing that the duty "to
evaluate all factors bearing on the public interest,"is part of
the "accepted meaning" of the term "public convenience and
necessity."); United States v. Detroit & Cleveland Navigation
Co., 326 U.S. 236, 241 (1945) ("The [Interstate Commerce]
Commission is the guardian of the public interest in determining
whether certificates of convenience and necessity shall be
granted. . . . Its function . . . [includes a determination] from
its analysis of the total situation on which side of the
controversy the public interest lies."); Cascade Natural Gas
Corp. v. Federal Energy Regulatory Comm'n, 955 F.2d 1412, 1421
(10th Cir. 1992) (When making its public convenience and
necessity determination, "the Commission must consider all
factors bearing on the public interest, not simply those
immediately relating to the objects of its jurisdiction.").
Additionally, the Federation has cited cases it asserts
have construed the "public interest"analysis as requiring an
inquiry into environmental factors. APUC and AIDEA correctly
respond that these cases are based on language in the governing
statutes which is not applicable to the deliberations of the
APUC. See, e.g., Scenic Hudson Preservation Conference v.
Federal Power Comm'n, 354 F.2d 608, 614-15 (2d Cir. 1965), cert.
denied sub nom. Consolidated Edison Co. of N.Y. v. Scenic Hudson
Preservation Conference, 384 U.S. 941 (1966) (requirement of
environmental consideration was premised on 16 U.S.C.A. 803(a)
which provided in part that recreational purposes be considered);
Public Serv. Co. v. United States Nuclear Regulatory Comm'n, 582
F.2d 77, 81 (1st Cir.), cert. denied, 439 U.S. 1046 (1978)
(required consideration of environmental effects under the
National Environmental Policy Act (NEPA), rather than the statute
under which the Commission was authorized to certify a facility).
But see Henry v. Federal Power Comm'n, 513 F.2d 395, 406-07 (D.C.
Cir. 1975) (holding that consideration of environmental damage
from only one part of a project is "inconsistent with the FPC's
obligation, both under NEPA and under the Natural Gas Act . . . .
The FPC's concern in, . . . a . . . proceeding to certify [for
public convenience and necessity] the critical interconnection
facilities, will encompass an evaluation of all the elements of
the gasification project. The burden of environmental damage
from that overall project is an important part of this total
evaluation.") (Emphasis added).
Finally, the Federation analogizes APUC's public
necessity inquiry to a statutory charge of the Alaska Department
of Natural Resources (DNR). Alaska Statute 38.05.035(e)
prohibits DNR from disposing of state lands without first
determining that "the interests of the state will be best served"
by such disposals. We are unpersuaded by this analogy. As
discussed infra, we find that the public necessity inquiry
required for certification of a service is more limited.
5 The Federation argues that APUC treated the subsidies
as "freebies"and did not include them as public costs of HCCP.
Additionally, it asserts that APUC assumed no subsidies for
alternative energy sources. It contends that there is no
evidence in the record that HCCP is the only project which could
have been eligible for state and/or federal subsidies. The
Federation asserts that by failing to factor these subsidies into
the requirement of "public convenience and necessity,"HCCP was
treated differently than alternative energy supplies. It argues
that AIDEA and GVEA "have in effect dictated the outcome of the
[APUC's] 'public interest' analysis by their choice, in advance
of that analysis, of which project to seek public subsidies to
6 We are unpersuaded by the dissent's interpretation of
Federal Power Comm'n v. Transcontinental Gas Pipe Line Corp., 365
U.S. 1 (1961). The dissent relies on Transcontinental as
authority to support its view that APUC is required to consider
environmental externalities. We interpret Transcontinental
First, it is significant to point out that although the
Court in Transcontinental utilized the "all factors" dicta in
Atlantic Refining Co. v. Public Serv. Comm'n, 360 U.S. 378
(1959), it noted that "the Natural Gas Act did not give the
[Federal Power Commission] comprehensive powers over every
incident of gas production, transportation and sale."
Transcontinental, 365 U.S. at 8. Additionally, the Court
discussed the Commission's review of air quality and end use in
terms of "abuse of discretion". Id. at 31 ("All we hold is that
the Commission did not abuse its discretion in considering, among
other factors, those of end use, preemption of pipeline
facilities and price in deciding that the public convenience and
necessity did not require the issuance of the certificate
requested."). Therefore, we find the dissent's reliance on
7 The Federation has also alluded to the "public
interest" language in AS 42.05.241. This language requires a
broader inquiry than the limited inquiry concerning public
convenience and necessity and applicant fitness, but it has a
narrower application. It relates solely to the question whether
"terms and conditions" should be attached to a certificate.
Because appellants did not advocate any such terms and conditions
before the commission with respect to environmental factors, the
issue of whether and to what extent environmental factors must be
considered under the public interest standard of section 241 is
not before us. The question at issue in this case is whether
APUC is required to consider costs associated with environmental
externalities and public subsidies in its certification decision.
8 The record does not disclose the reasons for the two
commissioners' nonparticipation other than that offered in oral
argument to the superior court. Counsel asserted that both
commissioners requested to be removed from the panel. One of the
two commissioners was excused at her own request because of other
pressing business. APUC also asserts that it is a long standing
practice of APUC to assign only three commissioners to sit as a
panel on any case.
9 See 2 Am. Jur. 2d Administrative Law 435 (1962) ("As
a general rule the nonparticipation of one or more members of a
board or commission in the rendition of the decision, because of
intervening death, illness, retirement, or similar reason, will
not affect the action taken by remaining members who constitute .
. . the quorum required by statute. However, it is quite
desireable that members of a board which heard the evidence
participate in the decision . . . .") (emphasis added) (footnote
10 AIDEA argues that if this court finds that a
commissioner breaches his or her duty to the public by not
voting, this is nothing more than evidence that the commissioner
should be removed from office. It does not provide a basis for
voiding an action taken by the majority of the quorum.
11 The Federation argues that AS 42.05.071 was intended to
address circumstances when a commissioner's office is vacant.
See AS 42.05.030(c) ("A vacancy in the commission does not impair
the authority of a quorum of commissioners to exercise all the
powers and perform all the duties of the commission."). However,
it cites no support for this proposition.
12 APUC has adopted the 1990 edition of Robert's Rules as
a guide for the conduct of its public meetings. 3 Alaska
Administrative Code (AAC) 48.184 (1993).
13 "So much of the common law not inconsistent with the
Constitution of the State of Alaska or the Constitution of the
United States or with any law passed by the legislature of the
State of Alaska is the rule of decision in this State."
14 One reason to favor participation of all commission
members on each decision is the required diversification of APUC.
The Alaska Public Utilities Commission Act, AS 42.05.010-.721,
requires that the five-member commission be comprised of one
lawyer, one engineer, one business person/accountant and two
consumers. AS 42.05.040. However, as stated supra, the
legislature has not mandated more than a majority vote of the
statutory quorum in order for APUC to transact business.
15 Because we conclude that APUC's decisions are valid
when a majority vote of the statutory quorum is obtained, we do
not address the issue of whether the two nonparticipating
officers breached any public duty.
16 Alaska Statute 42.05.221(a) provides:
A public utility may not operate and
receive compensation for providing a
commodity or service without first having
obtained from the commission under this
chapter a certificate declaring that public
convenience and necessity require or will
require the service. Where a public utility
provides more than one type of utility
service, a separate certificate of
convenience and necessity is required for
each type. A certificate must describe the
nature and extent of the authority granted in
it, including, as appropriate for the
services involved, a description of the
authorized area and scope of operations of
the public utility.
Alaska Statute 42.05.241 further provides:
A certificate may not be issued unless
the commission finds that the applicant is
fit, willing and able to provide the utility
services applied for and that the services
are required for the convenience and
necessity of the public. The commission may
issue a certificate granting an application
in whole or in part and attach to the grant
of it the terms and conditions it considers
necessary to protect and promote the public
interest including the condition that the
applicant may or shall serve an area or
provide a necessary service not contemplated
by the applicant. The commission may, for
good cause, deny an application with or
17 Most of the cases discussed in this dissent refer to
the Federal Power Commission, the predecessor of FERC. See 15
U.S.C. 717e. Although the government body has changed, the
applicable standard has remained the same.
18 Section 7(e) of the Natural Gas Act of 1938, 15 U.S.C.
Except in the cases governed by the
provisos contained in subsection (c)(1) of
this section, a certificate shall be issued
to any qualified applicant therefor,
authorizing the whole or any part of the
operation, sale, service, construction,
extension, or acquisition covered by the
application, if it is found that the
applicant is able and willing properly to do
the acts and to perform the service proposed
and to conform to the provisions of this
chapter and the requirements, rules, and
regulations of the Commission thereunder, and
that the proposed service, sale, operation,
construction, extension, or acquisition, to
the extent authorized by the certificate, is
or will be required by the present or future
public convenience and necessity; otherwise
such application shall be denied. The
Commission shall have the power to attach to
the issuance of the certificate and to the
exercise of the rights granted thereunder
such reasonable terms and conditions as the
public convenience and necessity may require.
19 These cases are distinguishable from the case at bar,
because they do not reach the issue of the meaning of "public
convenience and necessity." Instead, their respective holdings
are based upon another statute, the National Environmental Policy
Act, Public Serv. Co. of New Hampshire v. United States Nuclear
Regulatory Comm'n, 582 F.2d 77, 81 (1st Cir.), cert. denied, 439
U.S. 1046 (1978), and another provision, 803(a) of the Federal
Power Act, Scenic Hudson Preservation Conference v. Federal Power
Comm'n, 354 F.2d 608, 614 (2d Cir. 1965), cert. denied, 384 U.S.
20 In Henry the D.C. Circuit held that both NEPA and
7(e) of the Natural Gas Act required the Federal Power Commission
to consider environmental effects as part of the certification
evaluation. Id. at 406-07.
21 I note that in approving AIDEA's application for a
certificate to provide electrical power APUC stated it had
AIDEA should be granted the requested
certificate and that the power sales
agreement between AIDEA and GVEA should be
approved. These decisions are, however,
subject to certain conditions. First,
approval is subject to receipt by AIDEA of
all environmental permits needed to construct
and operate [the Healy Coal Project]. AIDEA
agreed to this condition.
APUC then ordered AIDEA's application approved subject (in part)
to the condition set forth above.
22 The "public convenience and necessity"standard in 7
of the federal Natural Gas Act applies to a "service"or a "sale,
operation, construction, extension, or acquisition." Because the
federal law uses the conjunctive "or,"the majority opinion's
emphasis on the term "service"in AS 42.05.221(a) does not
mitigate its failure to distinguish federal case law.