Doña Ana Mut. Domestic Water v. Prc

• Decision Date: 20 June 2006
• Docket Number: No. 29,242.,29,242.
• Citation: 139 P.3d 166,2006 NMSC 032
• Court: New Mexico Supreme Court
• Parties: DOÑA ANA MUTUAL DOMESTIC WATER CONSUMERS ASSOCIATION, Appellant, v. NEW MEXICO PUBLIC REGULATION COMMISSION, and Moongate Water Co., Inc., Appellees.

Page 166

139 P.3d 166

2006 NMSC 032

DOÑA ANA MUTUAL DOMESTIC WATER CONSUMERS ASSOCIATION, Appellant, v. NEW MEXICO PUBLIC REGULATION COMMISSION, and Moongate Water Co., Inc., Appellees.

No. 29,242.

Supreme Court of New Mexico.

June 20, 2006.

Hubert & Hernandez P.A., Rachel A. Brown, Las Cruces, NM, for Appellant.

Lee W. Huffman, Santa Fe, NM, Kyle W. Gesswein, Las Cruces, NM, Cuddy, Kennedy, Hetherington, Albetta & Ives, Patricia Salazar Ives, Santa Fe, NM, for Appellees.

OPINION

MINZNER, Justice.

{1} This is a direct appeal under NMSA 1978, Section 62-11-1 (1993), from a Final Order of the New Mexico Public Regulatory Commission (PRC) determining that Moongate Water Company, Inc. (Moongate) has the exclusive right to provide water service in an area east of Interstate 25 (I-25) and north of Las Cruces, and that Doña Ana Mutual Domestic Water Consumers Association (Doña Ana) may not pursue construction of two water storage tanks and connecting lines it had planned for this area. On appeal, Doña Ana argues that: (1) the PRC used an improper standard to determine the scope of Moongate's protection under NMSA 1978, Section 62-9-1 (2000, prior to 2005 amendment); (2) the PRC's finding that Doña Ana's service within the disputed area would result in unreasonable interference with Moongate's service or system is not supported by substantial evidence; (3) the PRC erred in determining that Moongate had an exclusive right to serve Sandhill Center; (4) the PRC lacked jurisdiction to issue a general statement regarding the future right of Doña Ana to serve customers in the disputed area; and (5) the PRC did not have the power to prevent or condition Doña Ana's planned construction. We conclude that the PRC employed a reasonable standard when determining what constituted interference with a service or system, the order was supported by substantial evidence, and that the PRC acted within the scope of its authority and jurisdiction. We therefore affirm.

I. Background

{2} Doña Ana was created in 1974 to serve the area around the Village of Doña Ana, west of I-25, pursuant to the Sanitary Projects Act, NMSA 1978, Sections 3-29-1 through 3-29-20 (2004). As of March 2005, Doña Ana served approximately 3,133 connections. Doña Ana's eastern boundary has historically been I-25. With the exception of an RV storage unit, a hydrant for bulk sales, and two storage tanks just east of I-25, its facilities are all located west of I-25.

{3} Moongate is a regulated public utility, serving approximately 3,660 customers as of March 2005. Moongate West, a portion of the Moongate system, serves approximately 900 customers in the disputed area just east of I-25. With the exception of the RV storage unit and the hydrant owned by Doña Ana, Moongate West is the only water provider in the disputed area. Moongate West has been providing service, with the approval of the PRC, since 1985.

{4} In 2002, Doña Ana made plans to construct a well, a million gallon water storage tank, and transmission and distribution lines east of I-25 (the East Mesa Project) in an area Moongate claims is part of its service area. Doña Ana has indicated that the new tank is needed to serve its current customers west of I-25. The higher elevation of the East Mesa would allow Doña Ana to improve service to its customers by reducing the need for mechanical pressure in its systems. Doña Ana obtained state and federal funding for the project, estimated to cost $2.8 million. The tank will also have excess capacity that could be used to serve approximately 450 new customers in the disputed area east of I-25. Doña Ana has no plans to serve Moongate's current customers, but does plan to offer service to new customers in the disputed area.

{5} On June 20, 2003, Moongate filed a complaint pursuant to Section 62-9-1, seeking to prevent Doña Ana from constructing the East Mesa Project and alleging that the construction would unreasonably interfere with Moongate's service or system. Following an evidentiary hearing, the Hearing Examiner issued a Recommended Decision including proposed findings and a recommendation that: (1) Moongate should be given protection under Section 62-9-1 for three of the subdivisions in the disputed area; (2) either Doña Ana or Moongate could provide service to Sandhill Center; and (3) Doña Ana should be allowed to proceed with the East Mesa Project so long as Doña Ana did not offer service in the disputed area. Doña Ana, Moongate, and the Utility Division Staff of the PRC all filed written exceptions to the Recommended Decision.

{6} After considering the record and the exceptions filed, the PRC issued its final order adopting the majority of the Hearing Examiner's findings and recommendations, including that Doña Ana had no right to serve the disputed area, but also concluding that Doña Ana may not serve Sandhill Center and may not construct the East Mesa Project. The Order further stated that Doña Ana may resubmit a petition to allow construction of the East Mesa Project for the benefit of customers west of I-25, if Doña Ana first obtains approval of a binding service area agreement from the appropriate federal authorities. Doña Ana appealed. On appeal, Doña Ana argues that: (1) the PRC used an improper standard to determine the scope of Moongate's protection under NMSA 1978, Section 62-9-1 (2000, prior to 2005 amendment); (2) the PRC's finding that Doña Ana's service within the disputed area would result in unreasonable interference with Moongate's service or system is not supported by substantial evidence; (3) the PRC erred in determining that Moongate had an exclusive right to serve Sandhill Center; (4) the PRC lacked jurisdiction to issue a general statement regarding the future right of Doña Ana to serve customers in the disputed area; and (5) the PRC did not have the power to prevent or condition Doña Ana's planned construction. We have jurisdiction under Section 62-11-1 and Rule 12-101(A) NMRA 2006.

II. Discussion

{7} We begin by considering the appropriate standard of review. Doña Ana argues that we should review the agency's decision de novo because the PRC's jurisdiction over Doña Ana is limited by the terms of Section 62-9-1. Moongate argues that the only question presented is whether the order is supported by substantial evidence, is not arbitrary or capricious, and is within the scope of the PRC's jurisdiction. This Court has previously considered the "appropriate standard of review that should be applied when a court reviews an agency's determination of its own jurisdiction." Morningstar Water Users Ass'n v. N.M. Pub. Util. Comm'n, 120 N.M. 579, 582, 904 P.2d 28, 31 (1995). "[W]hether an administrative agency has jurisdiction over the parties or subject matter in a given case is a question of law. . . . [T]he agency's authority and jurisdiction are defined by statute." Id. at 583, 904 P.2d at 32 (citations omitted). We therefore accord little deference to an agency interpreting its own jurisdiction. Id.

{8} In this case, however, we do not view Doña Ana's claims as challenging the jurisdiction of the PRC. Doña Ana is not arguing that the PRC lacks jurisdiction over the parties. Cf. id. at 587-88, 904 P.2d at 36-37. Rather, Doña Ana notes that the PRC's jurisdiction is limited to those cases where construction of facilities "unreasonably interferes or is about to unreasonably interfere with the service or system" of another water utility or mutual domestic water consumer association (MDWCA). See § 62-9-1(A). Doña Ana argues that its East Mesa project will not unreasonably interfere with Moongate's service or system and argues that the PRC therefore lacked authority to prevent construction of the project. This challenge is directed at the correctness of the PRC's determination rather than the PRC's authority to address the issue or power to force the parties to comply with its orders. We therefore review this matter as an agency determination, one that involves determining the Legislature's intent in enacting Section 62-9-1, as well as whether necessary findings are supported by substantial evidence, and whether the conclusions the PRC reached were arbitrary, capricious, or otherwise contrary to law.¹

{9} Doña Ana bears the burden on appeal of showing that the PRC's decision is arbitrary and capricious, not supported by substantial evidence, outside the scope of the agency's authority, or otherwise inconsistent with law. Rio Grande Chapter of the Sierra Club v. N.M. Mining Comm'n, 2003-NMSC-005, ¶ 17, 133 N.M. 97, 61 P.3d 806; Morningstar, 120 N.M. at 582, 904 P.2d at 31. We consider whether the decision presents a question of law, a question of fact, or some combination of the two, applying a distinct standard to questions of law and questions of fact. Morningstar, 120 N.M. at 582-83, 904 P.2d at 31-32.

{10} "[I]t is the function of the courts to interpret the law," and we are therefore not "bound by [an] agency's interpretation (of law) and may substitute (our) own judgment for" that of the agency. Id. at 583, 904 P.2d at 32. We are, however, more likely to defer to an agency interpretation if the relevant statute is unclear or ambiguous, Rio Grande Chapter of the Sierra Club v. N.M. Mining Comm'n, 2001-NMCA-047, ¶ 17, 130 N.M. 497, 27 P.3d 984; see also Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), the legal questions presented "`implicate special agency expertise or the determination of fundamental policies within the scope of the agency's statutory function,'" Morningstar, 120 N.M. at 583, 904 P.2d at 32 (quoting Tesoro Alaska Petroleum Co. v. Kenai Pipe Line Co., 746 P.2d 896, 903 (Alaska 1987)), and it appears that the agency has been delegated policy-making authority in the area. Pub. Serv. Co. of N.M. v. N.M. Pub. Serv. Comm'n, 112 N.M. 379, 382-83, 815 P.2d 1169, 1172-73 (1991).

However, we long have recognized the power of agencies to...