Moongate Water Co. v. City of Las Cruces

• Decision Date: 09 May 2013
• Docket Number: No. 33,182.,33,182.
• Parties: MOONGATE WATER COMPANY, INC., a New Mexico Public Utility, Plaintiff–Petitioner, v. CITY OF LAS CRUCES, Defendant–Respondent.
• Court: New Mexico Supreme Court

302 P.3d 405

MOONGATE WATER COMPANY, INC., a New Mexico Public Utility, Plaintiff–Petitioner,
v.
CITY OF LAS CRUCES, Defendant–Respondent.

No. 33,182.

Supreme Court of New Mexico.

May 9, 2013.

[302 P.3d 406]

Tucker Law Firm, P.C., Steven L. Tucker, Santa Fe, NM, William A. Walker, Jr., P.C., William A. Walker, Jr., Las Cruces, NM, for Petitioner.

Keleher & McLeod, P.A., W. Spencer Reid, Thomas C. Bird, Kurt Wihl, S. Charles Archuleta, Albuquerque, NM, Marcia B. Driggers, Las Cruces, NM, for Respondent.

OPINION
CHÁVEZ, Justice.

{1} The Public Regulation Commission (PRC) issued Moongate Water Company (Moongate) a certificate of public convenience and necessity (CCN) authorizing Moongate, as a public utility, to provide water to an area located outside the city limits of Las Cruces, New Mexico, which we shall label the “certificated area.” Las Cruces later annexed three undeveloped tracts of land within Moongate's certificated area, and Las Cruces committed itself to provide water to this area despite Moongate's CCN. We address two questions in this appeal. First, does Moongate have a right to provide water within the certificated area to the exclusion of Las Cruces? Second, did Las Cruces engage in an unlawful taking of Moongate's property entitling Moongate to just compensation when Las Cruces chose to provide water within the certificated area? We answer the first question in the negative because Las Cruces is not subject to the Public Utilities Act (the PUA), NMSA 1978, Sections 62–1–1 to –6–28 (1884, as amended through 2003) and NMSA 1978, Sections 62–8–1 to –13–15 (1941, as amended through 2003).¹ We also answer the second question in the negative because on the record before us, Moongate has not proven that it had established infrastructure and was already serving customers in the annexed area. Absent such proof of a tangible loss, a public utility is not entitled to just compensation when a municipality lawfully exercises its right to serve in the public utility's certificated area. We therefore affirm the Court of Appeals and reverse the district court.

[302 P.3d 407]

BACKGROUND

{2} In 1983 the PRC issued Moongate, as a public utility, a CCN that was extended in 1984, authorizing Moongate to provide water services in an area which at the time was outside the Las Cruces city limits. Las Cruces, a home-rule municipality, subsequently annexed three undeveloped tracts of land within Moongate's certificated area, subdivided the land, and committed itself to provide the subdivisions with municipal water service. Moongate filed a complaint against Las Cruces seeking (1) an injunction and declaratory judgment stating that Moongate was exclusively authorized to serve the three subdivisions, (2) compensation for inverse condemnation of its allegedly exclusive right to serve the subdivisions, and (3) compensation for a regulatory taking of its alleged exclusive right to serve.

{3} Las Cruces filed a motion for summary judgment on all counts of the complaint, and Moongate filed a memorandum in opposition and cross-motion for summary judgment on the second and third counts (inverse condemnation and regulatory takings issues). The district court granted Moongate's motion on the second and third counts, and concluded that because Moongate's rights under the CCN were exclusive, Las Cruces was liable for damages as a result of the taking or inverse condemnation to the extent that damages could be proven. The district court held a trial on the issue of damages and ultimately concluded that Moongate had failed to prove damages; therefore, none were awarded.

{4} Moongate appealed to the Court of Appeals on the issue of damages. Las Cruces appealed the district court's determination that Moongate's rights were exclusive and that there had been a taking. The Court of Appeals reversed the district court's determination that the CCN guaranteed Moongate exclusive service rights. Moongate Water Co. v. City of Las Cruces, 2012–NMCA–003, ¶ 2, ––– N.M. ––––, 269 P.3d 1. The Court also concluded that the district court erred in granting summary judgment in Moongate's favor because the grant was based on the district court's finding that Moongate had exclusive service rights under its CCN. Id. ¶ 27. Moongate appealed to this Court, and we granted certiorari. Moongate Water Co. v. Las Cruces, 2012–NMCERT–001, –––N.M. ––––, 291 P.3d 599.

{5} Moongate argues that (1) its CCN is a “valuable property right[ ]” and gives it the exclusive right to provide water in the certificated area, and although the PRC cannot regulate municipalities operating outside of the PUA such as Las Cruces, those municipalities cannot override the rights granted to public utilities by the PRC; (2) the only way that an unregulated municipality may take over or invade a certificated area is to either submit to PRC regulation or effectuate a taking via the power of eminent domain; and (3) by invading Moongate's certificated area, Las Cruces has “damaged” Moongate's property, thereby effectuating a taking that requires just compensation.

DISCUSSION

{6} This case hinges on the interpretation of various statutes. Statutory interpretation is an issue of law that we review de novo. Pub. Serv. Co. of N.M. v. N.M. Pub. Util. Comm'n, 1999–NMSC–040, ¶ 14, 128 N.M. 309, 992 P.2d 860. When this Court construes statutes, “our charge is to determine and give effect to the Legislature's intent.” Marbob Energy Corp. v. N.M. Oil Conservation Comm'n, 2009–NMSC–013, ¶ 9, 146 N.M. 24, 206 P.3d 135. In doing so, we employ canons of statutory construction, and look first to the plain meaning of the statute. Id. We give words their ordinary meaning, and if the statute is clear and unambiguous, we “refrain from further statutory interpretation.” Id. (internal quotation marks and citation omitted).

A. MOONGATE'S CCN DOES NOT PREVENT LAS CRUCES FROM COMPETING WITH MOONGATE IN ITS CERTIFICATED AREA

{7} The PUA is “a comprehensive regulatory scheme granting the PRC the policy-making authority to plan and coordinate the activities of New Mexico public utilities.” Doña Ana Mut. Domestic Water Consumers Ass'n v. N.M. Pub. Regulation Comm'n, 2006–NMSC–032, ¶ 16, 140 N.M. 6, 139 P.3d 166. The PRC has the authority

[302 P.3d 408]

and responsibility to issue CCNs, which must be obtained by public utilities prior to any construction, operation, or extension of any public utility plant or system. Section 62–9–1(A).

{8} However, with two exceptions, municipalities are not subject to the PUA. Morningstar Water Users Ass'n v. N.M. Pub. Util. Comm'n, 120 N.M. 579, 588, 904 P.2d 28, 37 (1995). The first exception that would bring a municipality under the PRC's authority is set forth in NMSA 1978, Section 62–6–5 (1993). It allows municipalities to “elect to come within the provisions of [the PUA] and to have the utilities owned and operated by it, either directly or through a municipally owned corporation, regulated and supervised under the provisions of [the PUA].” Las Cruces has not elected to become subject to the PUA, and therefore this exception is inapplicable to this case. The second exception brings municipalities with a population of more than 200,000 within the provisions of the PUA in certain circumstances. NMSA 1978, § 62–9–1.1(A), (C) (1991); Morningstar, 120 N.M. at 588, 904 P.2d at 37. Las Cruces does not have a population of more than 200,000, and therefore Las Cruces is not subject to the PUA.

{9} Instead, municipalities are regulated under the provisions of NMSA 1978, Sections 3–23–1 to –10 (1953, as amended through 2001), and NMSA 1978, Sections 3–27–1 to –9 (1953, as amended through 1994). Therefore, while the PRC has exclusive jurisdiction to regulate public utilities, it has no authority over utilities owned and operated by most municipalities. NMSA 1978, § 62–6–4(A) (2003) (“The [PRC] shall have general and exclusive power and jurisdiction to regulate and supervise every public utility.... Nothing in this section, however, shall be deemed to confer upon the commission power or jurisdiction to regulate or supervise the rates or service of any utility owned and operated by any municipal corporation....”).

{10} If Las Cruces were subject to the PUA, the outcome would be clear. Section 62–9–1.1(A) describes the situation at hand and requires a specific remedy:

Notwithstanding any other provision of the [PUA], or any provision of the Municipal Code, or any privilege granted under either act, if any municipality that has not elected to come within the terms of the [PUA] ... constructs or extends or proposes to construct or extend its water or sewer line or system or water pumping station or reservoir into a geographical area described in a[CCN] granted by the [PRC] to a public utility rendering the same type of service, the [PRC], on complaint of the public utility claiming to be injuriously affected thereby, shall, after giving notice to the municipality and affording the municipality an opportunity for a hearing with respect to the issue of whether its water or sewer line, plant or system actually intrudes or will intrude into the area certificated to the public utility, determine whether such intrusion has occurred or will occur. If the [PRC] determines such an intrusion has...