Pickett Ranch, LLC v. Curry

• Decision Date: 05 July 2006
• Docket Number: No. 25,888.,25,888.
• Citation: 2006 NMCA 082,139 P.3d 209
• Parties: PICKETT RANCH, LLC, Appellant, v. Ron CURRY, Secretary of the New Mexico Environmental Department, Appellee.
• Court: Court of Appeals of New Mexico

139 P.3d 209

2006 NMCA 082

PICKETT RANCH, LLC, Appellant, v. Ron CURRY, Secretary of the New Mexico Environmental Department, Appellee.

No. 25,888.

Court of Appeals of New Mexico.

July 5, 2006.

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Rodey, Dickason, Sloan, Akin & Robb, P.A., Mark K. Adams, Edward Ricco, Michelle Henrie, Santa Fe, NM, for Appellant.

Patricia A. Madrid, Attorney General, J. Brent Moore, Assistant General Counsel, Special Assistant Attorney General, NM Environment Department, Santa Fe, NM, for Appellee.

OPINION

PICKARD, Judge.

{1} In this case, we interpret regulations promulgated by the New Mexico Environment Department (the Department) governing what a municipality must show regarding its financial capacity in order to obtain a permit for a new landfill. We determine that the relevant regulations were satisfied in this case. Because we also determine that the Secretary of the Department did not abuse his discretion or act arbitrarily or capriciously and that his findings are supported by substantial evidence, we affirm the final order granting the permit.

BACKGROUND

{2} In 2001, the City of Tucumcari submitted to the Department an application for a permit to open a new landfill. In accordance with the Solid Waste Act, NMSA 1978, §§ 74-9-1 to -43 (1990, as amended through 2001) (the Act), the Department held a public hearing. Appellant in this case is a landowner whose land abuts the proposed landfill site. Appellant, through counsel, appeared at the hearing and presented evidence and expert testimony in opposition to the application. After the hearing, the hearing officer issued a detailed report, recommending that the permit be granted with certain conditions. The Secretary of the Department approved the report and issued a final order granting the permit. Appellant appeals the Secretary's final order pursuant to Section 74-9-30. Appellant contends that the permit should not have been granted because Tucumcari failed to comply with certain statutory and regulatory requirements involving financial assurance, because some of the Secretary's findings are not supported by substantial evidence, and because the Secretary abused his discretion and acted arbitrarily and capriciously.

DISCUSSION

{3} Appellant's arguments fall into two categories. First, Appellant argues that the permit should not have been granted because Tucumcari failed to demonstrate that it met the financial assurance requirements of the Act and the relevant regulations. Second, Appellant challenges several of the Secretary's factual findings, arguing that they are either arbitrary and capricious or not supported by substantial evidence. Appellant's contention appears to be that, in light of Tucumcari's poor history of compliance with the regulations at its existing landfill, the Secretary granted the permit for the new landfill without doing enough to ensure that adequate safeguards were in place to protect the public health and welfare. Appellant argues a third issue involving the regionalization scheme set forth in the Act. We do not reach this issue, as it was not raised before the hearing officer. See Rule 12-216(A) NMRA.

1. Financial Assurance Requirements

{4} The hearing officer found that Tucumcari was not required to satisfy certain aspects of the regulations governing financial assurance in order to obtain a permit. Rather, the officer concluded that the regulatory scheme allowed the Department to issue the permit to Tucumcari and then require the City to demonstrate that it was in compliance prior to the initial receipt of waste at the facility. The officer recommended that the Secretary impose a condition slightly more stringent than what was required by the regulations: she recommended that Tucumcari be required to demonstrate the necessary financial compliance before beginning construction, rather than before the initial receipt of waste. The Secretary approved the proposed condition.

{5} The crux of Appellant's argument is that Tucumcari was required to show compliance with all of the regulations governing financial assurance before it could get a permit and that the Department violated its own regulations by allowing Tucumcari to make such a showing after it had already obtained a permit. Because there are no facts in dispute, the question we must answer is whether the Act and the relevant regulations permit the Department to allow post-permit compliance, rather than pre-permit compliance, with some of the regulations governing financial assurance. Under the Act, we may set aside an action of the Department only if we find it to be "(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 74-9-30(B). Our review of the relevant statutes and regulations is generally de novo, State v. Collins, 2005-NMCA-044, ¶ 23, 137 N.M. 353, 110 P.3d 1090, but we will accord deference to the Department's interpretation of its own ambiguous regulations, Colonias Dev. Council v. Rhino Envtl. Servs. Inc., 2005-NMSC-024, ¶ 13, 138 N.M. 133, 117 P.3d 939. In reviewing for substantial evidence, we apply "whole record" review, meaning that we examine all of the evidence in the record, not just the evidence that supports the decision. See Atlixco Coal. v. Maggiore, 1998-NMCA-134, ¶ 23, 125 N.M. 786, 965 P.2d 370.

{6} We begin by setting forth the statutory and regulatory framework governing financial assurance. The Act directs the Department to promulgate regulations that are "designed to assure that there are adequate sources of funds to provide for" various occurrences, including eventual closure of facilities, monitoring of environmental hazards, and clean up or decontamination of facilities if such becomes necessary. Section 74-9-35(A). The Act states that such funds "shall be available during the operating life of the solid waste facility and for a post-closure period[.]" Section 74-9-35(B). The Act mentions various methods by which a facility operator may show that it has the financial resources necessary to eventually close the facility and to deal with problems that may arise during operation of the facility. Section 74-9-35(D). Finally, the Act states that the Secretary "may . . . deny a permit application if the applicant fails to meet the financial responsibility requirements" established by the Department. Section 74-9-24(A).

{7} We next set forth the relevant Department regulations. The regulation that establishes the effective date of the financial assurance regulations, 20.9.1.900(A)(2) NMAC (1995) (citing 40 C.F.R. § 258.70 (2004)), states as follows:

The requirements of this Subpart [20.9.1.900 NMAC, governing financial assurance] are effective upon the earliest of:

(a) when an owner or operator seeks a permit;

(b) when an owner or operator seeks a permit to modify their facility;

(c) when the Secretary has requested a permit application; or

(d) when the date for compliance with financial assurance provisions established in 40 CFR [§ ]258.70, Subpart G — Financial Assurance Criteria, takes effect.

Subsection F of 20.9.1.900 NMAC sets forth eight ways in which an owner or operator of a landfill may demonstrate financial assurance. Subsection F states that an owner or operator must pick one of the eight methods. The method chosen by the City of Tucumcari in this case was the "Local Government Financial Test," which is described in 20.9.1.900(F)(6)(a)-(e) NMAC. For the sake of clarity, we now set forth the relevant parts of that regulation in full:

(a) An owner or operator that satisfies the requirements of [20.9.1.900(F)(6)(b)-(d)] may demonstrate financial assurance up to the amount specified in [20.9.1.900(F)(6)(e)] for closure, post closure, the Phase I and Phase II assessment, and/or corrective action.

(b) Financial component:

(i) The owner or operator must satisfy one of the following: 1) if the owner or operator has outstanding general obligations bonds, it must have a current rating of Aaa, Aa, A, or Baa, as issued by Moody's, or AAA, AA, A, or BBB, as issued by Standard and Poor's on all outstanding general obligation bonds; or, 2) if the owner or operator does not have outstanding general obligation bonds, it must satisfy each of the following financial ratios: a ratio of cash plus marketable securities to total expenditures greater than or equal to 0.05; and a ratio of annual debt service to total expenditures less than or equal to 0.20; and a ratio of long-term debt issued and outstanding to capital expenditures less than or equal to 2.00.

(ii) The owner or operator must prepare its financial statements in conformity with Generally Accepted Accounting Principles for governments.

(iii) An owner or operator is not eligible to assure its obligations under this Subsection F [the Local Government Financial Test] if it: is currently in default on any outstanding general obligation bonds; has an outstanding general obligation bond[] rated lower than Baa as issued by Moody's or BBB as issued by Standard and Poor's; operated at a deficit equal to five percent or more of total annual revenue in either of the past two fiscal years; or receives an adverse opinion, disclaimer of opinion, or other qualified opinion from the independent certified public accountant (or appropriate State agency) auditing its financial statement as required under [20.9.1.900(F)(6)(b)(iii)]. However, the Secretary may evaluate qualified opinions on a case-by-case basis and allow use of the financial test in cases where the Secretary deems the qualification insufficient to warrant disallowance of the test.

. . . .

(d) Record keeping and reporting requirements:

(i) The local government owner or operator must place the following items in the facility's operating record: [1] a letter signed by the local government's chief financial officer that: [a] lists all the current cost estimates covered by a...