Summers v. New Mexico Water Quality Control Comm'n (In re Final Order in the Alta Vista Subdivision DP # 1498 WQCC 07-11(a)), 29,753.

• Decision Date: 17 August 2011
• Docket Number: No. 29,753.,29,753.
• Citation: 2011 -NMCA- 097,265 P.3d 745,150 N.M. 694
• Parties: In the Matter of the Appeal of FINAL ORDER IN the ALTA VISTA SUBDIVISION DP # 1498 WQCC 07–11(A).Link Summers, Carol Richman, Michael Freebourn, and Sheila Shepherd, Plaintiffs–Appellants, v. New Mexico Water Quality Control Commission, Defendant–Appellee,Sara Edelman, Real–Party–in–Interest–Appellee.
• Court: Court of Appeals of New Mexico

150 N.M. 694
2011 -NMCA- 097
265 P.3d 745

In the Matter of the Appeal of FINAL ORDER IN the ALTA VISTA SUBDIVISION DP # 1498 WQCC 07–11(A).Link Summers, Carol Richman, Michael Freebourn, and Sheila Shepherd, Plaintiffs–Appellants,
v.
New Mexico Water Quality Control Commission, Defendant–Appellee,Sara Edelman, Real–Party–in–Interest–Appellee.

No. 29,753.

Court of Appeals of New Mexico.

Aug. 17, 2011.

[265 P.3d 746]

The Law Offices of Nancy L. Simmons, P.C., Nancy L. Simmons, Albuquerque, NM, for Appellants.

Gary K. King, Attorney General, Zachary Shandler, Assistant Attorney General, Santa Fe, NM, for Appellee.

OPINION VANZI, Judge.

{1} This case requires us to consider the discharge permitting scheme of the Water Quality Act (WQA), NMSA 1978, Sections 74–6–1 to –17 (1967, as amended through 2009). Specifically, we must determine whether a knowing misrepresentation of material fact on a permit application is presumed to have occurred “within the ten years immediately preceding” submission of that application for purposes of

[265 P.3d 747]

Section 74–6–5(E)(4)(a). Because we conclude that the Legislature intended that a knowing misrepresentation of material fact made during the application process comes within the above statutory period, we reverse the New Mexico Water Quality Control Commission's (Commission) order granting a discharge permit to Sara Edelman.

BACKGROUND

{2} On August 16, 2004, Edelman filed an application for a septic waste discharge permit pursuant to the WQA, Sections 74–6–1 to –17, and the New Mexico Water Quality Ground and Surface Water Protection regulations, 20.6.2 NMAC (12/01/95) (amended 1/15/01). Edelman filed the application in anticipation of creating the Alta Vista Subdivision, an area for ten mobile home units located on a 1.78–acre lot in Taos, New Mexico. Pursuant to the application, Edelman proposed to discharge an estimated 3,750 gallons of wastewater per day to two conventional septic tank leachfield systems located on the lot. Because of the large amount of effluent to be discharged, the regulations required that Edelman provide site-specific information that demonstrates the lithography below the site if such information was available.

{3} Between August 2004 and September 2007, the New Mexico Environment Department (NMED), Ground Water Bureau (Bureau), and a hearing officer appointed by the NMED, reviewed Edelman's application and the proposed discharge site. Representatives from the Bureau visited and inspected the site, ran tests, and created models of the expected site lithology, and the hearing officer held hearings and accepted comments from the public. During the 2005–2006 time period, the Bureau twice requested that Edelman supplement her application with additional information. In her initial application, Edelman had only provided information about the lithological description of the Concha Torres well, which was located 1,100 feet from the proposed discharge site. The Bureau's first letter, in September 2005, asked Edelman to provide information about other wells that were located closer to the site than the Concha Torres well and requested “[s]pecific information on the underlying geology at the site, including all well logs from adjacent properties.” In response to the Bureau's letter, Edelman supplemented her application with information from a well that we refer to as the Edelman well, which is on an adjacent property that she owns, and which she claimed was drilled in 2005. After the Bureau received comments from neighbors that no well had been drilled on the adjacent property in 2005, it conducted further inquiry into the matter. In a letter dated July 25, 2006, the Bureau advised Edelman of the discrepancy and asked for “a well log showing well construction and lithological information” for that supply well. Edelman then admitted to the Bureau that the Edelman well was actually drilled without a permit in 1996 and that Edelman had not applied for a permit for that well until 2005. The consultant that Edelman hired to assist her with her application told the Bureau that he had requested information about the Edelman well from the driller and that he had asked the driller to create a well log from memory so that Edelman could respond to the Bureau's inquiry. Edelman submitted the Edelman well log. Several months later, the Bureau discovered that the log had been fabricated; and the information in it could not be verified.

{4} The hearing officer reviewed the application and other materials, considered public comments, and issued a 53–page report to the NMED Secretary. The hearing officer summarized the evidence, made detailed findings of fact, and ultimately recommended granting the permit application with certain conditions, including the installation of an advanced treatment unit. In addressing the fabricated well log, the hearing officer stated that “[t]he material misrepresentation made here was to the State Engineer's Office” and that “[a]lthough the submission [of the log] to the Bureau might have ultimately made a difference in its determination on the approvability of the [a]pplication, it did not.” Nevertheless, the report “encourage[d] the Secretary to carefully review the related documents in the file, and ... make an express finding on this subject as part of his final order.”

[265 P.3d 748]

{5} Upon receipt of the hearing officer's report, the Secretary considered the administrative record and the hearing officer's recommendations. The Secretary adopted all of the regulatory analysis and conclusions contained in the report with the exception of “the misrepresentation of a material fact in the permit application.” Based on the information provided, the Secretary determined that Edelman knowingly misrepresented material facts in her application when she provided a well log for the Concha Torres well as evidence of the proposed site's lithology, when information about the closer Edelman well was available to her. The Secretary denied the permit application in accordance with Section 74–6–5(E)(4)(a), which provides:

E. The constituent agency shall deny any application for a permit or deny the certification of a federal water quality permit if:

....

(4) the applicant has, within the ten years immediately preceding the date of submission of the permit application:

(a) knowingly misrepresented a material fact in an application for a permit[.]

{6} Edelman appealed the Secretary's final order denying the discharge permit to the Commission, arguing that she had not knowingly misrepresented any material facts in her application. Shortly thereafter, Link Summers, Carol Richman, Michael Freebourn, and Sheila Shepherd (collectively, Appellants) successfully intervened in the appeal to the Commission, expressing their support for the Secretary's decision.

{7} The Commission reviewed the record, heard closing arguments, and ultimately entered a final order in July 2009. It sustained the Secretary's adoption of the hearing officer's findings with regard to the regulatory analysis and conclusions contained in the report. In addition, the Commission adopted the hearing officer's findings in their entirety, thereby explicitly adopting the hearing officer's finding that Edelman had made a material misrepresentation to the State Engineer's office. The Commission nevertheless concluded that the record did not demonstrate by substantial evidence that Edelman knowingly misrepresented a material fact in her application “in violation of existing regulatory requirements.” Deciding that the Secretary mistakenly relied on the mandatory denial language in Section 74–6–5(E)(4)(a), a non-unanimous Commission ordered NMED “to issue the permit with all requirements and conditions provided by the [h]earing [o]fficer's [r]eport.” The Commission also concluded as a matter of law, however, that Edelman had failed to fully disclose all information in her permit application and suggested that the Secretary could instead terminate or modify Edelman's permit under Section 74–6–5(M) of the WQA. That provision provides:

M. A permit may be terminated or modified by the constituent agency that issued the permit prior to its date of expiration for any of the following causes:

....

(2) obtaining the permit by misrepresentation or failure to disclose fully all relevant facts[.]

{8} Appellants timely appealed to this Court the order of the Commission approving Edelman's discharge permit application.

DISCUSSION

{9} On appeal, Appellants argue that (1) the Commission erred in rejecting the Secretary's finding that Edelman misrepresented a material fact and that the Commission misapplied the law, (2) there is not substantial evidence that Edelman met her burden under the regulations to demonstrate that public health and groundwater quality will be protected, and (3) procedural errors by the hearing officer mandate reversal. Because we agree with Appellants on the first issue and reverse the Commission's order granting the permit, we do not reach Appellants' second and third arguments.

Standard of Review

{10} On appeal, we will only set aside the Commission's order if it is “(1) arbitrary, capricious or an abuse of discretion; (2) not supported by substantial evidence in the record; or (3) otherwise not in accordance with law.” Section 74–6–7(B)

[265 P.3d 749]

(setting forth the standard of review for appeals arising out of administrative actions under the WQA). Ultimately, our review in this case is based on whether, under Section 74–6–5(E)(4)(a), a knowing misrepresentation of material fact on a permit application is deemed to have occurred “within the ten years immediately preceding”...