I am writing today to announce the closure of the New Mexico Independent. After three and a half years of operation in New Mexico, the board of the American Independent News Network, has decided to shift publication of its news…
While environmental activists played their part yesterday during demonstrations at the capitol building, going so far as to dress up as solar panels and to sing the tune of “You Are My Sunshine,” their counterparts, the anti-cap-and-trade contingency who has…
Roughly one quarter of University of New Mexico students are unimpressed with the state’s flagship public school, according to a survey that questioned college students about their higher education experiences.
The Public Regulation Commission (PRC) might not issue a record $850,000 fine or order a fraud audit of a Las Cruces water utility’s finances despite protests from some of its staff.
The difference of opinion emerged during a hearing Tuesday and included a reference to a letter submitted by one staff attorney reiterating staff’s desire to see the utility face stiff punishment.
“If penalties are not warranted here, where will they be,” reads a letter penned by PRC attorney Ashley Schannauer.
The company “violated almost every procedural order in this case, illustrating disregard and defiance of Commission authority,” Schannauer wrote.
The alleged violations by Picacho Hills Utility Company — the company at the center of Tuesday’s hearing — include failing to comply with a PRC order to extend a sewer discharge line to the Rio Grande in order to avoid sewer contamination of ground and surface water at the Picacho Hills Country Club, southwest of Las Cruces, according to a PRC staff report.
The report is separate from Schannauer’s letter.
“There are turds floating on the golf course pond,” Commissioner Jason Marks said. “There’s no polite way to put that.”
The commission will vote by Aug. 12 to refer the case to state district court so the company can be placed into receivership, commissioners said Tuesday. Such an action would remove owner Stephen Blanco from the helm, replacing him with a court-ordered trustee.
Blanco, who did not attend Tuesday’s meeting in person, was placed on speaker phone. At times Blanco sounded combative and ready to resist any move by the commission to put his for-profit company into court receivership or depose him as its chief executive.
“It’s clear we’ll probably end up in the Supreme Court,” Blanco said to commissioners, suggesting he would fight the effort to place his company in the hands of a court-appointed trustee.
After a heated exchange over construction of a sewer line to the Rio Grande, in which Blanco and commissioners repeatedly interrupted one another, Blanco hung up.
Blanco could not be reached for comment after Tuesday’s meeting.
Sewer line is most important
A staff examination of Blanco’s utility found that he had secured at least $775,345 in bank loans for the company without receiving PRC authorization first, and that he inappropriately transferred company money to other accounts, including his personal bank account. It is unclear how that money was spent, according to PRC records. It was not used to construct the sewer discharge line extension. PRC investigators found unexplained bank transfers from the company’s bank account to other accounts.
The company already has had run-ins with the New Mexico Environment Department over the sewer-line issue, which fined the company $85,850 May 24 for waste water discharge permit violations. The company is required to treat waste water before spraying it on the golf course, but residents have complained about repeated failures to treat sewer water, according to a letter submitted to the PRC by the owner of the Pichaco Hills Country Club.
Determining exactly where the loan money went would require an audit, according to a PRC staff report.
But commissioners seemed to sidestep the issue of an audit Tuesday.
“Starting another docket with an audit wouldn’t be the greatest use of our resources,” Marks said. “Some entity’s going to have to operate the business and do the books. They’ll have to figure out what the finances are. The most pressing need is to stop the bleeding. …We need to get this utility under the control of somebody who can go to a bank, get the money and build the (sewer) discharge line.”
The commission’s first goal should be to ensure that the sewer discharge line is built, Commissioner Sandy Jones and PRC chairman David King said.
“I don’t know how we accomplish that,” Jones said. “It doesn’t matter to me if we put (the company) in receivership or not. The question is, how do we get that line built?”
Some commissioners seemed persuaded by another PRC attorney, Margaret C. Moquin, who argued that an $850,000 fine could leave the utility insolvent and unable to pay for the sewer line — a scenario that wouldn’t help the utility’s 800 customers.
The recommended $850,000 fine is “probably excessive, given the concern here is to maintain some degree of solvency in the utility,” Moquin told commissioners at the hearing Tuesday.
Instead, she recommended reinstituting a $35,000 imposed in September 2009 for earlier violations “send the proper signal regarding (the company’s) lack of compliance.”
But Schannauer disagreed.
“Staff submits that an already (ordered) $35,000 penalty for four prior violations is not a sufficient penalty for the 43 additional violations at issue here,” Schannauer wrote in a letter to the Commission. “(The company) and Mr. Blanco committed substantive violations such as engaging in unauthorized borrowings and failing to construct the sewage discharge line.”
It’s not unusual for staff to file an exception letter when a hearing examiner doesn’t agree with their recommendations, Marks said.
“A fine wouldn’t serve any real purpose,” Marks said. “The message we’re sending is he’s losing his utility.”
But commissioners were anxious to focus on getting the company into receivership so that the discharge line could be built, saying it was clear that Blanco would not build it.
“This case needs to move,” Marks said. “This guy’s capable of running a water company but he’s not capable of running a regulated water company. …Time after time, he doesn’t follow the specific procedures that are required of a regulated company. What’s his motive? It could be a number of things, but time after time after time he doesn’t follow orders or submit things in the right form or on time.”
Moving quickly to get the company placed in receivership, which Marks described as “essentially, a forced sale,” appeared foremost in his mind.
The Picacho Hills Utility Company was registered as a for-profit corporation by developer Blanco in 1979, according to PRC corporation records. The system, which serves approximately 800 water customers and 750 waste water customers, has been bedeviled over recent years by billing problems and repeated service disruptions affecting residents and fire hydrants — there were four outages in 2009 alone, according to media reports.
Even when there is water, water pressure is frequently a problem, customers complained at a PRC public hearing held Aug. 26, 2009 in Las Cruces, according to the Las Cruces Sun-News.
