Court Opinion

ID: 8203909
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:50:02.971839+00
Date Added: 2024-06-11T16:41:04.853508
License: Public Domain

ANN WALSH BRADLEY, J.
¶ 61. {dissenting). The reason that the Public Service Commission (PSC) can regulate the construction of the Bent Tree Wind Farm, even though the facility is located across the state border, has nothing to do with the majority's distinction between "persons" and "public utilities." Rather, the reason that the PSC can regulate the construction of this 200-megawatt out-of-state facility is that it is a public utility that will generate electricity solely for Wisconsin consumers and the $497 million construction costs as well as the operational costs will be paid exclusively by ratepayers in Wisconsin.
¶ 62. Like the majority, I recognize that both statutes are silent on their application to out-of-state facilities. Neither the Certificate of Authority (CA) statute nor the Certificate of Public Convenience and Necessity (CPCN) statute is perfectly tailored to address the PSC's regulation of an out-of-state facility. I part ways with the majority, however, when it transforms that silence into an unambiguous directive that erodes the legislative policy of providing protection for Wisconsin ratepayers.
*612¶ 63. I conclude that the protections found in the CPCN statute better comport with the legislative policy of protecting Wisconsin ratepayers, and that the PSC should have applied that statute to this large facility. Because the majority's interpretation unreasonably seizes upon a distinction between persons and public utilities, concludes that it is a clear indicator of unambiguous legislative intent, and ignores the reason for regulating the construction of these facilities, I respectfully dissent.
I
¶ 64. The majority recognizes that both statutes are silent on their application to out-of-state facilities. Majority op., ¶ 39. It implicitly acknowledges that neither the CA statute nor the CPCN statute is perfectly tailored to address the PSC's regulation of an out-of-state facility. See id,., ¶ 44. Nevertheless, it contends that the "the CPCN [law applies] exclusively to in-state facilities." Id. This contention is rooted in a distinction between the CA statute that regulates "public utilities" and the CPCN law that regulates "persons," as well as the "general rule" that a state cannot "prohibitü 'persons' from engaging in activities outside the state." Id., ¶ 46.
¶ 65. The majority asserts that the PSC can review an application for an out-of-state facility submitted by a public utility because "it is a statutory entity that is being regulated, not a person's activity of constructing a facility, as is the case under the CPCN law." Id., ¶ 42 (emphasis omitted). However, it asserts, "the CPCN's regulation of 'persons' demonstrates that that law does not contemplate regulation of out-of-state activities." Id., ¶ 44.
¶ 66. The majority further posits that if the CPCN were interpreted "to apply to out-of-state persons and facilities, the CPCN's law's plain language could prohibit *613a person in Texas from constructing a 'facility' like Bent Tree in California, unless the person complied with all the factors listed in [the CPCN] and obtained permits from the Wisconsin DNR." Id., ¶ 45. Ultimately, the majority contends that even though the statutes are silent on the issue, "neither statute is ambiguous as to out-of-state application." Majority op., ¶ 39. It concludes that the CA statue alone regulates out-of-state facilities.
II
¶ 67. Given that the CPCN statute does not specify whether it can be applied to an out-of-state facility that generates more than 100 megawatts of electricity for Wisconsin consumers, the court is required to make a policy choice. It can apply the CA statute to this "large electric generating facility," meaning that it must sacrifice those portions of the CPCN statute that are intended to provide greater protection to Wisconsin ratepayers. Alternatively, it can apply the greater ratepayer protections in the CPCN but sever those site-specific provisions of that statute that cannot be applied to out-of-state facilities.
¶ 68. Rather than acknowledging that it is making a policy choice, the majority infers legislative intent from a distinction between "persons" and "public utilities." Because it attaches such significance to this distinction, it fails to acknowledge the obvious — the reason that the PSC can regulate the Bent Tree facility is not only because it is constructed by a public utility, but also, because the energy it produces will be sold to Wisconsin consumers who will bear the cost of the facility.
¶ 69. The majority's inference about legislative intent is based on a generalization about principles of extraterritorial jurisdiction that is not established in the cases it cites. The majority cites State v. Mueller, 44 Wis. 2d 387, 171 N.W.2d 414 (1969) for the "general *614rule" that a state cannot "prohibit^ 'persons' from engaging in activities outside the state." Majority op., ¶ 46. In fact, Mueller also stands for the opposite proposition that the state may, under some circumstances, regulate the out-of-state actions of "persons."
¶ 70. In that case, a statute required Wisconsin residents who owed child support from a prior marriage to obtain a court order prior to remarrying in Wisconsin or elsewhere. 44 Wis. 2d at 390. Mueller, who owed child support for the children of two prior marriages, remarried in Illinois without obtaining a court order. The court held that the statute was constitutional, even though it punished Mueller for an act that occurred outside the boundaries of the state. Additionally, the court acknowledged that "every state may, in the regulation of its own internal affairs, authorize certain acts to be done outside of its limits, and describe what effect they shall have within them." Id. at 393 (quoting State ex rel. Chandler v. Main, 16 Wis. 422 (1863).
¶ 71. Because the majority imputes undue weight to the distinction between "persons" and "public utilities," its interpretation of both statutes is unreasonable. It determines that under the CPCN statute, Wisconsin can never regulate an out-of-state facility built by a person that is not a public utility — even if the construction of the facility will be funded solely by Wisconsin ratepayers. Conversely, it concludes that under the CA statute, Wisconsin can regulate any facility built by a public utility registered in Wisconsin, even if that facility will have no effect on Wisconsin ratepayers.
¶ 72. At once, the majority construes the CPCN statute too narrowly and the CA statute too broadly. In this case, the reason that the PSC can regulate the "person" constructing the Bent Tree Wind Farm under the CPCN statute is straightforward. The electricity *615produced by the out-of-state facility will be sold in Wisconsin to Wisconsin consumers. Wisconsin can regulate both persons and public utilities that build large electrical generating facilities when Wisconsin consumers will pay for the construction of the facility through their rates.
¶ 73. The majority's construction of the CA statute is likewise unreasonable. It contends that the CA law is applicable to an out-of-state facility because "every 'public utility' has availed itself of Wisconsin's regulatory jurisdiction," majority op., ¶ 42, and, "as a public utility, WPL is subject to the CA law's mandate that any public utility seeking to construct a new facility must comply with any applicable rules or orders of the PSC," id., ¶ 40.
¶ 74. Under this interpretation, Wisconsin could regulate the construction of a facility that a Wisconsin public utility builds in Texas for the purpose of supplying power to California residents, even if that facility had no bearing on the rates paid by Wisconsin residents. What interest would Wisconsin have in regulating the construction of such a facility, unless the facility would somehow affect the cost or the services provided to Wisconsin residents?1
¶ 75. If the legislature made a determination that the CPCN should not be applied to out-of-state facilities, *616it had at its disposal a much more direct way to signal its intent than declaring that the statute applied to "persons." It could have, and I suspect would have, demonstrated this intent by declaring that "the CPCN statute will not be applied to out-of-state facilities." This, the legislature did not do.
¶ 76. Further, there is a much more logical explanation for the legislature's choice to use the word "persons" in the CPCN statute, and this alternative explanation is consistent with the basis of regulation set forth above. Wisconsin public utilities distribute electricity to Wisconsin consumers. However, not all electricity distributed by public utilities is generated by public utilities. Rather, a public utility can contract with an independent producer who will supply the public utility with electricity to sell to Wisconsin consumers.2
¶ 77. The legislature's selection of the term "persons" in the CPCN statute signals its intent to regulate not just public utilities, but the construction of facilities by independent producers that supply large quantities of electricity to public utilities in Wisconsin. It appears that the legislature made a policy choice to regulate the *617construction of facilities by "persons" when the facilities will be large enough and produce enough electricity to influence the rates paid by Wisconsin consumers.
¶ 78. I recognize that some of the provisions of the CPCN statute cannot be applied to an out-of-state facility. It would not be wholly unreasonable to conclude that, because of this difficulty, it is easier to apply the CA statute and trust the Commission to appropriately exercise its discretion under the CA statute. However, it is unreasonable to seize upon a distinction between persons and public utilities, conclude that it is a clear indicator of unambiguous legislative intent, and ignore the reason for regulating the construction of these facilities — that Wisconsin ratepayers are on the hook for the improvements.3
¶ 79. Likewise, the majority ignores the statutory authority that provides for greater ratepayer protections under the CPCN statute. It chastises the dissent for providing "incomplete authority for its repetitive assertion" that the CPCN statute provides greater protections. Majority op., ¶ 49 n.12. The authority, however, is in plain sight.
*618¶ 80. More rigorous economic and environmental review requirements as well as procedural protections are embodied in the CPCN statute. The following chart summarizes the statutory authority for some of these greater protections:
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*619¶ 81. The chart above demonstrates that the CPCN law is a plant siting law that provides greater ratepayer protections than does the CA law.4
Ill
¶ 82. Having determined that the majority's analysis is unpersuasive, I turn to an examination of the relevant statutes. There are two statutory procedures for regulating the construction of electrical generation facilities, the CA procedure under Wis. Stat. § 196.49 and the CPCN procedure under Wis. Stat. § 196.491. Neither the CA statute nor the CPCN statute explicitly addresses whether it can be applied to a proposed out-of-state facility, the costs of which will be paid by Wisconsin ratepayers.5
¶ 83. For purposes of this discussion, there are three significant differences between these procedures. First, it is the size of a proposed electric generating facility that triggers the provisions of the CPCN stat*620ute. While the CA statute is implicated by the construction of "any public utility plant, extension or facility," the CPCN statute applies only when a "person" seeks to build a "large" facility which will produce over 100 megawatts of electricity.6
¶ 84. Second, the CPCN statute provides more protections for the ratepayers who bear the costs of these larger facilities. Most significantly, the CPCN statute requires the PSC to hold a hearing.7 Further, the PSC cannot approve the proposal unless it determines that the proposed facility satisfies the reasonable needs of the public and that, when considering economic factors and alternatives, the design of the facility is in the public interest. Wis. Stat. §§ 196.491(3)(d)2, 196.491(3)(d)3.
¶ 85. By contrast, as the chart above demonstrates, the CA statute leaves more to the PSC's discretion.8 The PSC may, in its discretion, hold a contested *621case hearing, or it may choose to approve a project without holding a hearing.9 The PSC has discretion to approve a project even if the facility will substantially impair the efficiency of the service of the public utility. Wis. Stat. § 196.49(3)(b)l. The PSC may approve a project even if the facility is unreasonably in excess of the probable future energy requirements. Wis. Stat. § 196.49(3)(b)2. The PSC may approve the project even if it is not cost effective. Wis. Stat. § 196.49(3)(b)3. Additionally, according to Commissioner Azar who dissented to the PSC's interim order, the PSC may delegate all of these discretionary decisions to a Division Administrator.10
*622¶ 86. Third, in addition to providing greater protections for ratepayers, the CPCN statute also sets forth additional site-specific considerations not included in the CA statute. Many of these considerations, such as scenic beauty and some environmental factors, do not fit comfortably with the Commission's regulation of a facility located in another state.11
¶ 87. If the Bent Tree facility were located in Wisconsin, there would be no doubt that it would be subject to the CPCN statute. It is projected to produce 200 megawatts of electricity, double the threshold for invoking the greater ratepayer protections and site-specific considerations of the CPCN. However, the facility is not located within the state's borders.
¶ 88. Although everyone agrees that the CA statute can be applied to an out-of-state facility, the parties disagree about whether the CPCN statute can be applied to an out-of-state facility. As stated above, the answer is not found in the text of the statute.12
*623¶ 89. As I read the CPCN, it appears to reflect a legislative decision that some facilities require more scrutiny from the PSC because they are too big, too expensive, and produce too much electricity to leave it within the PSC's discretion whether to hold a hearing and whether to provide ratepayer protections. In her dissent to the PSC's interim order, Commissioner Azar concluded that application of the CPCN was necessary to protect the ratepayers of Wisconsin. Otherwise, she feared, large out-of-state projects could be certified with minimal scrutiny.
*624¶ 90. According to Commissioner Azar, the PSC has empowered the Division Administrator to make decisions on applications for electric construction orders which do not require a CPCN. She stated that if the CPCN statute is not applicable, "[t]he Division Administrator could approve the construction of a two billion dollar 600 megawatt out-of-state coal plant that would be paid for by Wisconsin ratepayers." The construction could be approved even if the plant was "unnecessary," "was not cost effective," and "would impair the service of the utility." According to Commissioner Azar, the Division Administrator could approve the project without showing the application or the final decision to the PSC.
¶ 91. I share Commissioner Azar's concerns. When Wisconsin ratepayers will fund the costs of large facilities, whether in-state or out-of-state, it is sensible to require a hearing and scrutiny by the commission that is empowered by statute to regulate Wisconsin energy.
¶ 92. I recognize that portions of the CPCN statute are difficult to square with regulation of a facility outside of Wisconsin's borders.13 The best solution to this problem would be for the legislature to craft a statute that squarely addresses PSC oversight of out-of-state facilities. However, while the PSC waits for the legislature to act, any provision that requires an exercise of extraterritorial jurisdiction could be severed. See Wis. Stat. § 990.001(11).
¶ 93. I conclude that the CPCN statute should have been applied to the application for construction of the Bent Tree Wind Farm. While neither statute is perfectly tailored to address the PSC's regulation of an out-of-state facility, I conclude that the protections *625found in the CPCN statute better comport with the legislative policy of protecting Wisconsin ratepayers. Accordingly, I respectfully dissent.
¶ 94. I am authorized to state that CHIEF JUSTICE SHIRLEY S. ABRAHAMSON joins this dissent.

 Wisconsin Admin. Code § PSC 112.05(2) provides that a Wisconsin electric utility must "notify" the PSC if it intends to construct a facility in another state the utility serves, and that it may be required to apply for approval "if a significant portion of the cost of the project will be allocated to Wisconsin for ratemaking purposes." Accordingly, under this regulation, a Wisconsin utility that proposes to build an out-of-state facility will not be required to secure the PSC's approval if a significant portion of the cost of the facility will not be allocated to Wisconsin ratepayers.

 The Commission's website provides the following explanation: "The electricity used in your home or place of business can come from many sources. The generating plant may be owned and operated by your local utility and located in or near your community. Or the power can be bought from another producer who may be located nearby, within your area of the state or in another state entirely. These generation owners could be another regulated utility or an Independent Power Producer (IPP). An IPP is an unregulated entity that produces electricity and sells it under contract or on the open market.... The PSC has statutory jurisdiction over the construction of generation plants of 100MW or larger." Electric Industry Overview, available at http://psc. wi.gov/utilityinfo/electric/index-electric.htm (last visited June 14, 2012).

 Additionally, the majority errs by applying due weight deference to the Commission's decision. De novo review is appropriate because the Commission has never been given occasion to determine whether it can apply the CPCN statute to an out-of-state facility, see majority op., ¶ 25, and because this is a question about the scope of the Commission's jurisdiction and authority, see id., ¶¶ 6, 26.
Nevertheless, this is not a problem because there is no significant difference between due weight deference and de novo review. In both cases, the court is required to select the more reasonable interpretation of the statute. Racine Harley Davidson v. State Division of Hearings & Appeals, 2006 WI 86, ¶¶ 18-19, 292 Wis. 2d 549, 717 N.W.2d 184.

 The majority misconstrues the dissent by setting up a false dichotomy. It asserts that the dissent concludes "that the legislature intended the CPCN law to be a 'ratepayer protection' law, rather than, as this court recently recognized, a 'plant siting law.'" Majority op., ¶ 49 n.15.
In setting up this dichotomy, the majority suggests that the purposes are mutually exclusive. They are not. The legislature did not intend that the purposes be an either-or proposition. Rather, as the chart above illustrates, the legislature intended that the CPCN law is a plant siting law that also provides greater ratepayer protections than does the CA law.

 As the circuit court explained, "the statute's silence on the in state/out of state distinction is deafening to this court." And, as the Commission asserted in its interim order, "Both laws are written broadly enough that, on first impression, they appear to regulate both in-state and out-of-state electric utility construction projects."

 See Wis. Stat. § 196.491(3)(a) ("no person may commence the construction of a facility. . ."); § 196.491(l)(e) ("In this section: ..." 'Facility' means a large electric generating facility or a high-voltage transmission line."); § 196.491(l)(g) (" 'Large electric generating facility' means electric generating equipment and associated facilities designed for nominal operation at a capacity of 100 megawatts or more.")

 See Wis. Stat. § 196.491(3)(b) ("The commission shall hold a public hearing on an application filed under par. (a)l.. .").

 The majority seems to contend that by virtue of administrative regulations related to the CA law, the ratepayer protections offered by the CA law and the CPCN law are essentially identical. See, e.g., majority op., ¶¶ 29-32, 49 (discussing Wis. Admin. Code §§ PSC 112.05-.07). This is not accurate.
It is correct that applicants under the CA law are required to provide detailed applications. Wis. Admin. Code § 112.06(lm). This does not alter the crucial fact that under the CPCN law the PSC must deny an application if it finds, among other things, *621that the project will substantially impair the efficiency of the service of the public utility, will provide facilities unreasonably in excess of the probable future requirements, or will add to the cost of service without proportionately increasing the value or available quantity of service. See Wis. Stat. § 196.491(3) (d)5.
Under the CA law, on the other hand, the PSC is not so constrained. In fact, under the CA law, the PSC could grant an application even if it found that the project would substantially impair efficiency, provide facilities unreasonably in excess of probable future requirements, and add to the cost of service without proportionally increasing value. Even given those circumstances, under the CA law the PSC has the discretion to approve or disapprove the application. See Wis. Stat. § 196.49(3) (b) (providing that the PSC "may refuse to certify a project" if it will have the negative effects on ratepayers listed above (emphasis added)).

 By way of example, in this very case, one of the three Commissioners voted not to hold a public hearing prior to approving the Bent Tree facility.

 Commissioner Lauren Azar's dissent to the PSC's interim order provided the "following hypothetical [as] an example of what the majority decision could lead to’:
The Division Administrator could approve the construction of a two billion dollar 600 megawatt (MW) out-of-state coal plant that *622would be paid for by Wisconsin ratepayers. This would be possible even if that plant: (1) was unnecessary, and/or (2) was not cost effective, and/or (3) would impair the service of the utility. The commission would neither see the application nor the final decision.
Application by Wisconsin Power and Light Company to Construct up to 200 MW of Wind Generation to be Called Bent Tree Wind Farm, in Freeborn County, in South Central Minnesota, No. 6680-CE-173, PSC Interim Order, Nov. 6, 2008 (Commissioner Azar, dissenting, at 1).

 Although site-specific factors are not incorporated into the CA statute, the PSC has incorporated many analogous provisions into the administrative rules governing CA approval. Majority op., ¶¶ 29-30. Accordingly, just as some of the statutory site-specific criteria do not fit comfortably with a CPCN application for an out-of-state facility, some of the site-specific criteria found in the CA regulations likewise do not fit comfortably with a CA application for an out-of-state facility.

 In her dissent to the PSC's interim order, Commissioner *623Azar posited that the reason that neither statute explicitly addresses the possibility of out-of-state facilities is because of the historical context in which both statutes were drafted. The CA statute was created in 1931, and the CPCN statute was created in 1975. Commissioner Azar asserted that the legislature would not have considered whether the statute could be applied to out-of-state facilities because building a facility in Minnesota to generate energy for Wisconsin ratepayers was not part of the "old utility world" approach:
Given the historical context within which the CPCN law was written, it is clear that the Legislature was considering only in-state projects in the law. The CPCN statute was written in 1975 during the "old" utility world, before the Public Utility Regulatory Policies Act, Energy Policy Act of 1992 and Federal Energy Regulatory Commission Order 888 — events that have dramatically reshaped the electric industry. Specifically, the CPCN statute was created when utilities were generally expected to build generation within their own service territories. The thought of wheeling power across state lines was unnecessary unless a utility service territory happened to span between neighboring states. Beginning in 1996, the "new" energy world saw the creation of the open access transmission grid, allowing public utilities to begin building generation facilities far away from their service territories, indeed, even in other states because they knew they would have the opportunity to transmit the energy back to their service territory. Hence, it was only after 1996, twenty-one years after the passage of the CPCN law, that the wheeling of power across state lines became common place.
Bent Tree Wind Farm, PSC Interim Order (Commissioner Azar dissenting, at 3-4).

 Likewise, in applying the CA procedure, it may be necessary to sever some site-specific provisions that do not comport well with regulation of out-of-state facilities.