Elephant Butte Irrigation Dist. v. N.M. Water Quality Control Comm'n

• Court: New Mexico Court of Appeals
• Decided: May 16, 2022
• Status: Unpublished

Opinion

The slip opinion is the first version of an opinion released by the Chief Clerk of the Supreme Court. Once an opinion is selected for publication by the Court, it is assigned a vendor-neutral citation by the Chief Clerk for compliance with Rule 23- 112 NMRA, authenticated and formally published. The slip opinion may contain deviations from the formal authenticated opinion. IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO

Opinion Number: _____________

Filing Date: May 16, 2022

Nos. A-1-CA-38474 and A-1-CA-38478 (consolidated for purpose of opinion)

ELEPHANT BUTTE IRRIGATION DISTRICT,

Petitioner-Appellant,

and

TURNER RANCH PROPERTIES, L.P.; HILLSBORO PITCHFORK RANCH, LLC; and GILA RESOURCES INFORMATION PROJECT,

Petitioners-Appellants,

v.

NEW MEXICO WATER QUALITY CONTROL COMMISSION,

Respondent-Appellee,

NEW MEXICO COPPER CORPORATION and NEW MEXICO ENVIRONMENT DEPARTMENT, Intervenors-Appellees,

IN THE MATTER OF THE APPLICATION FOR NEW MEXICO COPPER CORPORATION FOR A GROUND WATER DISCHARGE PERMIT FOR THE COPPER FLAT MINE, DP- 1840, DOCKETED AS GWB 18-06(P).

APPEAL FROM THE WATER QUALITY CONTROL COMMISSION Jennifer J. Pruett, Chair

Barncastle Law Firm Samantha R. Barncastle Las Cruces, NM

for Appellant Elephant Butte Irrigation District

New Mexico Environmental Law Center Charles de Saillan Santa Fe, NM

for Appellants Turner Ranch Properties, L.P., Hillsboro Pitchfork Ranch, LLC, and Gila Resources Information Project

Hector H. Balderas, Attorney General Robert F. Sánchez, Assistant Attorney General Santa Fe, NM

for Appellee New Mexico Water Quality Control Commission

Modrall, Sperling, Roehl, Harris & Sisk, P.A. Stuart R. Butzier Christina C. Sheehan Albuquerque, NM

for Appellee New Mexico Copper Corporation

Andrew P. Knight, Special Assistant Attorney General Albuquerque, NM for Appellee New Mexico Environment Department OPINION

HANISEE, Chief Judge.

{1} These appeals arise from an order of the New Mexico Water Quality Control

Commission (the Commission) upholding the grant of New Mexico Copper

Corporation’s (N.M. Copper) application for a discharge permit for the Copper Flat

Mine (the Mine) in Sierra County, New Mexico issued by the New Mexico

Environment Department (the Department) under the New Mexico Water Quality

Act (the Act), NMSA 1978, §§ 74-6-1 to -17 (1967, as amended through 2019), and

its implementing regulations, 20.6.2 NMAC and 20.6.7 NMAC.1 Determining that,

in upholding the grant of the discharge permit (DP-1840), the Commission did not

act arbitrarily, capriciously, or otherwise not in accordance with the law, we affirm.

BACKGROUND

A. The New Mexico Water Quality Act

{2} Before turning to the facts at hand, we first provide a brief overview of the

statutory framework governing the issues before us. The Act was enacted by the

New Mexico Legislature who sought “to abate and prevent water pollution.” Bokum

Res. Corp. v. N.M. Water Quality Control Comm’n, 1979-NMSC-090, ¶ 59, 93 N.M.

1 This opinion resolves the parties’ challenges to the Commission’s Order in case numbers A-1-CA-38474 and A-1-CA-38478. Because these cases raise related issues arising from the same application for a discharge permit, we consolidate both for decision. See Rule 12-317(B) NMRA. 546, 603 P.2d 285. The Act authorizes the Commission to “adopt water quality

standards for surface and ground waters of the state,” which must “protect the public

health or welfare, enhance the quality of water and serve the purposes of the . . .

Act.” Section 74-6-4(C). The Act provides that, “the [C]ommission may require

persons to obtain from a constituent agency designated by the [C]ommission a

permit for the discharge of any water contaminant or for the disposal or reuse of

septage or sludge.” Section 74-6-5(A). The Act further mandates that the constituent

agency shall deny any application for a permit if:

(1) the effluent would not meet applicable state or federal effluent regulations, standards of performance or limitations;

(2) any provision of the . . . Act would be violated;

(3) the discharge would cause or contribute to water contaminant levels in excess of any state or federal standard.

Section 74-6-5(E). {3} In 2009, the Act was amended to direct the Commission to adopt regulations

particular to specific industries, including the copper mining industry, specifying

“the measures to be taken to prevent water pollution and to monitor water quality.”

Section 74-6-4(K); Gila Res. Info. Project v. N.M. Water Quality Control Comm’n,

2018-NMSC-025, ¶ 3, 417 P.3d 369. The regulations were to be developed by the

Department and proposed for adoption by the Commission. Section 74-6-4(K).

Pursuant to these regulations, the Department proposed and the Commission adopted

2 the Copper Rule. See Gila Res. Info. Project, 2018-NMSC-025, ¶ 1 (affirming the

Commission’s adoption of the Copper Rule). The Copper Rule is a “supplement [to]

the general permitting requirements . . . to control discharges of water contaminants

specific to copper mine facilities.” 20.6.7.6 NMAC. The Copper Rule acknowledges

that “open pit copper mining leads inevitably to some degree of contaminant

discharge” and “operates from the premise that the most effective way to mitigate

these inevitable discharges is through containment.” Gila Res. Info. Project, 2018-

NMSC-025, ¶ 43. Considering the inevitable discharges associated with open pit

copper mining, the Copper Rule specifies that “[d]uring operation of an open pit,”

the groundwater quality standards set forth by 20.6.2.3103 NMAC “do not apply

within the area of open pit hydrologic containment.” 20.6.7.24(D) NMAC.

B. DP-1840 and the Relevant Proceedings

{4} We now describe the factual background leading to this appeal. N.M. Copper

intends to reopen and operate the Mine, a historic open pit copper mine located

approximately five miles northeast of Hillsboro in Sierra County, New Mexico. The

Mine sits adjacent to and shares a border with both Hillsboro Ranch Properties and

the Ladder Ranch (collectively, the Ranches). Several mining companies have

attempted to operate the Mine over the past fifty years. See State ex. rel. Off. of State

Eng’r v. Elephant Butte Irrigation Dist., 2021-NMCA-066, ¶¶ 6-31, 499 P.3d 690

(explaining the complex history of the ownership and operation of the mine). In

3 2009, N.M. Copper entered into an agreement to purchase the Mine and associated

mineral claims, and did so in 2011.

{5} In March 2011, N.M. Copper submitted an application to the Department for

a modification of the existing groundwater discharge permit for the Mine. In

February 2018, the Department’s Groundwater Quality Bureau published a public

notice of the Department’s proposal to issue DP-1840, stating that the Department

would accept public comment on the proposed permit for thirty days, which was

extended for an additional sixty days at the request of several parties. The

Department held a public hearing on the proposed permit from September 24-28,

2018, at which N.M. Copper, the Department, as well as the Ranches and the

Elephant Butte Irrigation District (EBID) (collectively, Appellants) presented the

testimony of technical witnesses. As well, forty-eight members of the general public

made oral statements. In December 2018, the Administrative Hearing Officer (AHO)

issued a report (the AHO Report) alongside proposed findings of fact and

conclusions of law, determining that the discharge did not pose an “undue risk to

property” and that the open pit water body will not be a water of the state, and

therefore is not subject to surface water quality standards. That same month, the

Secretary of the Department (the Secretary) issued its order (the NMED Order), in

which the Secretary adopted the AHO’s Report of proposed findings of fact and

conclusions of law and added thirteen additional findings and conclusions. Finally,

4 in September 2019, the Commission adopted its final order (the Final Order),

adopting the NMED Order with additional revisions, and granting N.M. Copper’s

application for DP-1840. DP-1840 authorizes N.M. Copper to discharge a maximum

25,264,000 gallons per day of tailings slurry, including “mine tailings, process water,

impacted storm[]water, and domestic wastewater to a lined tailing impoundment,”

known as the Tailings Storage Facility. Additionally, DP-1840 regulates “discharges

from other mine units, including waste rock stockpiles, ore stockpiles, mineral

processing units, process water impoundments, an open pit, sumps, tanks, pipelines,

and other areas within the permit boundary of approximately 2,190 acres.”

C. The Final Order

{6} In the Final Order, the Commission concluded that the opposing parties,

including EBID and the Ranches, “did not prove that the discharges from DP-1840’s

permitted mine operations will cause undue risk to [the Ranches’] property.”

Although the Commission provided only limited insight into its reasoning, through

the NMED Order the Secretary explained that “[t]he phrase ‘undue risk to property’

as used in the Copper Rule pertains to potential impacts to water quality from the

permitted discharges, not to the depletion of groundwater.” Similarly, the Secretary

explained that its conclusion that “the discharges from permitted mine operations

will not cause undue risk to the property of the Ranches, or [EBID], or anyone else”

was based on a totality of expert witness testimony, specifically expert testimony

5 based on “site-specific modeling and analysis, and addressed scientific likelihoods

rather than speculation.” And while the Final Order issued by the Commission did

not articulate specific reasoning as it relates to the proposed pit lake, the Secretary

explained, “The future pit lake at Copper Flat will not be a surface water of the state

subject to the water quality standards in 20.6.4 NMAC.”

DISCUSSION

{7} EBID asserts that in granting N.M. Copper’s discharge permit the

Commission “ignored its determination that the phrase ‘undue risk to property’ as

used in the Copper Rule, 20.6.7 NMAC, may be broader than potential impacts to

water quality from the permitted discharges.”2 The Ranches similarly contend that

2 EBID additionally contends that that the Commission “failed to consider that the Department had failed to engage in appropriate interagency coordination related to the [Mine], which itself, poses an undue risk to the Elephant Butte Irrigation District.” Specifically, EBID argues that “it would have assisted the [AHO] and the Secretary” when evaluating the risk to property presented by the Mine to “have access to items that are part of the [State Engineer’s] Dam Safety Bureau application process,” such as a design report, operation and maintenance manual, and emergency action plan. Similarly, EBID asserts that an emergency action plan developed in collaboration with EBID, the U.S. Bureau of Reclamation and all affected state agencies that addresses catastrophic events “should have been required as a permit condition” to ensure that the Mine does not pose an “undue risk to property.” While EBID emphasizes the importance of such coordinated efforts, it is not supported by statutory authority requiring such efforts. See In re Adoption of Doe, 1984-NMSC- 024, ¶ 2, 100 N.M. 764, 676 P.2d 1329 (“We assume where arguments in briefs are unsupported by cited authority, counsel after diligent search, was unable to find any supporting authority. . . . Issues raised in appellate briefs which are unsupported by cited authority will not be reviewed by us on appeal.” (citation omitted)). Our own research has revealed no such requirements, much less authority suggesting such an omission would be structurally fatal to a discharge permit. Because we have no

6 the Commission failed to adequately explain its conclusion that DP-1840 will not

pose an “undue risk to property.” Additionally, the Ranches assert that DP-1840

violates the Act, and the Commission did not adequately explain its conclusion that

surface water standards will not apply to the pit lake. We first set forth the standard

of review, then analyze Appellants’ arguments as they relate to the Commission’s

interpretation of “undue risk to property,” and then turn to the Ranches’ remaining

arguments.

I. Standard of Review

{8} The Act provides that we “shall set aside the [C]ommission’s action only if it

is found 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 74-6-7(B). “A ruling by an administrative agency is arbitrary and capricious

if it is unreasonable or without a rational basis, when viewed in light of the whole

record.” Colonias Dev. Council v. Rhino Env’t Servs., 2005-NMSC-024, ¶ 13, 138

N.M. 133, 117 P.3d 939 (internal quotation marks and citation omitted).

Additionally, “[a]n agency’s action is arbitrary and capricious if it provides no

rational connection between the facts found and the choices made, or entirely omits

consideration of relevant factors or important aspects of the problem at hand.”

authority to apply conditions not within the Act, nor employ regulations not promulgated by the Commission, we reject these arguments.

7 Albuquerque Cab Co. v. N.M. Pub. Regul. Comm’n, 2017-NMSC-028, ¶ 8, 404 P.3d

1 (internal quotation marks and citation omitted). An agency decision is not in

accordance with the law “if the agency unreasonably or unlawfully misinterprets or

misapplies the law.” Princeton Place v. N.M. Hum. Servs. Dep’t, 2018-NMCA-036,

¶ 27, 419 P.3d 194 (internal quotation marks and citation omitted), rev’d on other

grounds, 2022-NMSC-005, ¶ 3.

{9} Although not bound by the agency’s interpretation, we “confer a heightened

degree of deference to legal questions that implicate special agency expertise or the

determination of fundamental policies within the scope of the agency’s statutory

function.” Morningstar Water Users Ass’n v. N.M. Pub. Util. Comm’n, 1995-

NMSC-062, ¶ 11, 120 N.M. 579, 904 P.2d 28 (internal quotation marks and citation

omitted). However, “statutory construction itself is not a matter within the purview

of the [agency]’s expertise,” so we “afford little, if any, deference to the [agency]”

on questions of law not involving this expertise or policy determination. N.M. Indus.

Energy Consumers v. N.M. Pub. Regul. Comm’n, 2007-NMSC-053, ¶ 19, 142 N.M.

533, 168 P.3d 105 (internal quotation marks and citation omitted).

II. The Commission’s Order Determining That the Mine Did Not Pose an Undue Risk to Property Was Not Arbitrary, Capricious, or Otherwise Not in Accordance With the Law {10} The parties dispute the meaning and factors that must be considered in

determining whether a discharge permit creates an “undue risk to property.” EBID

8 and the Ranches contend that “undue risk” should encompass the Mine’s impact on

both water quality and quantity. They also argue that they presented compelling

evidence of an “undue risk” to their respective properties from both contamination

and depletion.

A. The Scope of “Undue Risk”

{11} Appellants contend that the Commission erred in determining that the Mine

did not present “an undue risk to property” because the Commission failed to

consider the Mine’s inevitable depletion of surface water. EBID asserts that because

the Commission did not provide a definition of the phrase, but instead explained that

the consideration of undue risk “may be broader than potential impacts to water

quality from the permitted discharges and shall be reviewed on a case[-]by[-]case

basis,” the Commission rendered the phrase “superfluous in violation of the law.” 3

3 EBID similarly contends that the meaning of “undue risk” requires a consideration of depletion because the Commission rejected the Secretary’s finding No. 4 which provided, “the phrase undue risk to property pertains to potential impacts to water quality from the permitted discharges, not to the depletion of groundwater” and instead explained that “the phrase . . . as used in the Copper Rule 20.6.7 NMAC, may be broader than potential impacts to water quality from the proposed discharges and shall be reviewed on a case[-]by[-]case basis.” We disagree. Such modified language employed by the Commission does not mean that it considered, or must consider, potential depletion of groundwater in its discharge determination. Rather, in replacing the limiting language set forth by the Secretary, the Commission explained that in making a determination that a discharge permit poses an “undue risk,” it may broadly consider “potential impacts to water quality.” We simply do not view the Commission as having—by rejecting the Secretary’s wording in its order applicable only to this case—expanded the permit application process beyond the context of the discharge at issue on a case-by-case basis. Indeed,

9 Similarly, the Ranches argue that because the Commission failed to consider the

relevant factor of water depletion, its order is arbitrary, capricious, or an abuse of

discretion.

{12} We disagree with Appellants’ contention that a determination of whether a

mine presents “an undue risk to property” requires consideration of potential

depletion. This appeal arises from an order granting an application for a discharge

permit, and the scope of the issues available for our review are neither broader nor

narrower than that. Granting a discharge permit requires compliance with the Copper

Rule and a determination that any discharge authorized under a permit creates no

hazard to public health nor undue risk to property owners. 20.6.7.10(J) NMAC.

Thus, any challenge asserting that the permit should not be granted must relate to

“undue risk” attributed to the discharge authorized under DP-1840. As the NMED

Order provides, DP-1840 “only regulates discharges of water at the [M]ine site,” and

“does not allocate water for use . . . or permit the pumping of groundwater.” Stated

differently, DP-1840 has nothing to with and does not authorize or permit water from

any source to be used at the Mine. Indeed, neither the Department nor the

Commission has the authority to regulate the source from which a discharger

to do so would require more than a vague declaration lacking regulatory specificity. In any event, the Commission did not expressly provide that depletion is a factor to be considered in making a determination that a discharge permit would create an “undue risk to property.”

10 receives the water that is utilized in the processes resulting in the discharge. Rather,

our Legislature has delegated such authority solely to the Office of the State

Engineer. See NMSA 1978, § 72-2-9 (1907) (“The state engineer shall have the

supervision of the apportionment of water in this state according to the licenses

issued by him and his predecessors and the adjudications of the courts.”); see also

NMSA 1978, § 72-2-9.1(B)(2-3) (2003) (“The state engineer shall adopt rules for

priority administration . . . so as to create no impairment of water rights . . . and . . .

so as to create no increased depletions.”).

{13} At oral argument for this appeal, when asked to define the phrase, the

Department described “undue risk to property” to be “a larger than acceptable

chance that these discharges permitted by this permit [would] cause harm to

surrounding properties.” While we accept for purposes of this appeal—and given

that there is no statutory, regulatory or jurisdictional direction pointing this Court to

a broader or more inclusive inquiry in the context of a discharge permit—the

Commission’s interpretation of the phrase “undue risk to property,” we decline to

formally adopt the definition provided by the Department. The formal adoption of

such an interpretation, or a different one altogether, requires agency rulemaking in

our view. See New Energy Econ., Inc. v. Shoobridge, 2010-NMSC-049, ¶ 14, 149

N.M. 42, 243 P.3d 746 (explaining that the Legislature “delegate[s] both

adjudicative and rule-making power to administrative agencies”); see also

11 Earthworks’ Oil & Gas Accountability Project v. N.M. Oil Conservation Comm’n,

2016-NMCA-055, ¶ 8, 347 P.3d 710 (“A court may not intervene in administrative

rule-making proceedings before the adoption of a rule or regulation.” (alteration,

internal quotation marks, and citation omitted)). Although the phrase “undue risk to

property” does not include technical language such that it would be beyond the

understanding of those without expertise, the question of what constitutes an “undue

risk” requires agency knowledge within the scope of the Commission’s statutory

function. See Morningstar, 1995-NMSC-062, ¶ 11 (explaining that although not

bound by the agency’s interpretation, “[t]he [C]ourt will confer a heightened degree

of deference to legal questions that implicate special agency expertise or the

determination of fundamental policies within the scope of the agency’s statutory

function.” (internal quotation marks and citation omitted)); see also Gila Res. Info.

Project, 2018-NMSC-025, ¶ 35 (“We will overturn the administrative construction

of statutes by appropriate agencies only if they are clearly incorrect.” (internal

quotation marks and citation omitted)).

{14} We therefore conclude that the Commission’s Final Order, as it relates to the

scope of “undue risk to property” and its related decision not to consider potential

depletion, was not arbitrary, capricious, or otherwise not in accordance with the law.

Nothing the Commission said within the Final Order or adopted or modified from

the wording employed by the Secretary convinces us otherwise. We now turn to

12 Appellants’ contentions that the Commission failed to adequately address

compelling evidence of “undue risk” to their respective properties.

B. The Sufficiency of the Commission’s Final Order

{15} We review the Commission’s Final Order to determine if it is supported by

substantial evidence. “For questions of fact, [the appellate court] looks to the whole

record to determine whether substantial evidence supports the [agency]’s decision.”

Pub. Serv. Co. of N.M. v. N.M. Pub. Regul. Comm’n, 2019-NMSC-012, ¶ 14, 444

P.3d 460 (alteration, internal quotation marks, and citation omitted). “Substantial

evidence requires that there is evidence that is credible in light of the whole record

and that is sufficient for a reasonable mind to accept as adequate to support the

conclusion reached by the agency.” Id. (internal quotation marks and citation

omitted). “Substantial evidence on the record as a whole is evidence demonstrating

the reasonableness of an agency’s decision, and we neither reweigh the evidence nor

replace the fact[-]finder’s conclusions with our own.” Albuquerque Bernalillo Cnty.

Water Util. Auth. v. N.M. Pub. Regul. Comm’n, 2010-NMSC-013, ¶ 18, 148 N.M.

21, 229 P.3d 494 (internal quotation marks and citation omitted).

{16} In applying whole record review, we consider the AHO’s Report, as well as

the NMED Order and the Commission’s Final Order. Over the course of a five-day

hearing in September 2018, the AHO considered an assortment of evidence,

including expert testimony from N.M. Copper, EBID, and the Ranches, as well as

13 public comment and nearly 18,000 pages of administrative record. Although the

AHO recognized that “[t]he fears expressed by the Ranches, EBID, and many of the

public commenters are understandable,” the AHO declared, “Migration of

significant water contaminants over very long distances, or in directions contrary to

typical groundwater flow” to be unlikely. To best understand the AHO’s conclusion

that such contamination is unlikely, we highlight selected findings of fact provided

in the AHO’s Report, and emphasize that neither EBID nor the Ranches challenges

the AHO’s findings of fact.

{17} The AHO Report notes that N.M. Copper used “[forty] years of data from

exploration drilling programs, monitoring wells, aquifer testing, including

groundwater samples from the previous mining operations . . . to characterize the

hydrologic settling of the [M]ine site.” The AHO Report also explains that the East

Animas Fault—which sits adjacent to the Mine—“could not serve as a conduit for

the migration of contaminants through groundwater flow” as the “general direction

of the groundwater flow at the [M]ine site is west to east.” Regarding the waste rock

stockpiles, the AHO concluded that “[n]o impacts to groundwater will occur should

there be any seepage,” and if seepage did occur, “all parameters of predicted

groundwater chemistry are below New Mexico’s groundwater standards.” Similarly,

addressing the Tailings Storage Facility, the AHO determined that “[t]here will be

no water quality impacts to groundwater or surface water from the [facility].”

14 Because these uncontested findings of fact require the application and understanding

of technical expertise, we accord them proper deference. See Pickett Ranch, LLC v.

Curry, 2006-NMCA-082, ¶ 49, 140 N.M. 49, 139 P.3d 209 (“Particularly where

specialized technical or scientific knowledge is involved, we will give great

deference to an agency’s factual findings.”).

{18} The AHO Report underscored that “what constitutes ‘undue risk’ in

connection with the issuance of a groundwater discharge permit has not been set out

in a regulation or guidance document, statute or New Mexico case law,” and

expressly declined to make a recommendation regarding undue risk. However, the

AHO noted that “[a]part from this issue of undue risk, the recommended findings

and conclusions support the issuance of . . . [DP-1840] as based on substantial

evidence.” Although the AHO declined to make a conclusion regarding undue risk,

we conclude that substantial evidence, including the evidence highlighted above,

supports the Commission’s Final Order determining that the Mine does not present

an “undue risk to property.”

{19} In the Final Order, the Commission also noted that its “decision [to grant DP-

1840] is based on the totality of expert witness testimony . . . with more weight given

to that from experts who based their conclusions on site-specific modeling and

analysis and who addressed scientific likelihoods rather than speculation.” The

Ranches contend that this “is hardly a sufficient explanation of the Commission’s

15 decision,” and argues that the Commission should have identified which evidence it

found to be speculative. In asking us to consider the evidence and expert testimony

it presented, the Ranches effectively ask us to reweigh the evidence, which we

cannot do. See Albuquerque Bernalillo Cnty. Water Util. Auth., 2010-NMSC-013,

¶ 18. Moreover, at oral argument, the Ranches described the nature of the expert

testimony of its hydrologists, explaining generally that one or more of them told the

AHO that the East Animas Fault “could actually serve as a conduit and move the

contamination in unpredictable ways.” We need not conclude that such evidence is

or is not speculative, or whether it is persuasive or unpersuasive. Instead, we

emphasize only that it appears to be reasonable for the AHO, and later the

Commission, to give less weight to this evidence and hold that the factual findings

of the AHO are supported by substantial evidence. See Montano v. N.M. Real Est.

Appraiser’s Bd., 2009-NMCA-009, ¶ 8, 145 N.M. 494, 200 P.3d 544 (“We will not

disturb the agency’s factual findings [that are] supported by substantial evidence.”).

{20} Because we decline to disturb the uncontested factual findings within the

AHO Report, and determine that the Commission’s Final Order as it relies on such

factual findings is supported by substantial evidence, we hold that the Commission’s

determination that the Mine does not pose undue risk to property is not arbitrary,

capricious, or otherwise not in accordance with the law.

16 III. DP-1840 Does Not Violate the Act and the Commission’s Order Determining That the Pit Lake Is Not a Surface Water of the State Is Not Arbitrary, Capricious, or Otherwise Not in Accordance With the Law {21} In addition to the arguments raised by both Appellants related to the

Commission’s interpretation of “undue risk to property,” the Ranches additionally

assert that DP-1840 violates the Act because (1) the future pit lake will be a surface

water of the state, and (2) DP-1840 will cause water contaminant levels in excess of

state standards. In making these arguments, the Ranches contend that the

Commission failed to adequately explain its conclusion that the pit lake is not a

surface water of the state. The Department answers that the Commission correctly

concluded that the water in the future open pit is eligible for the private waters

exemption under the Act because there is no potential for outward migration from

the pit such that water will contaminate other surface or groundwater. Agreeing with

the Department that the pit lake is eligible for the private waters exemption of the

Act, the Commission explains that the pit lake does not fall within the definition of

“surface waters” of the State as it is not “naturally occurring,” a tributary, a

“manmade bod[y] of water that [was] originally created in surface waters,” or a

water of the United States. See 20.6.4.7(S)(5) NMAC. To address the Ranches’

arguments, we briefly discuss New Mexico’s surface waters of the state rule, then

address the Commission’s Final Order as it relates to the pit lake.

A. “Surface Waters of the State”

17 {22} All surface waters of the state of New Mexico are subject to the water

standards set forth by the Act. Pursuant to 20.6.4.7(S)(5)(a) NMAC, “surface waters

of the state” are defined broadly as “all surface waters situated wholly or partly

within or bordering upon the state,” including lakes, rivers, streams, wetlands, wet

meadows, reservoirs and natural ponds and all tributaries of such waters, including

“any manmade bodies of water that were originally created in surface waters of the

state or resulted in the impoundment of surface waters of the state, and any ‘waters

of the United States’ as defined under the Clean Water Act that are not included in

the preceding description.” 20.6.4.7(S)(5)(b) NMAC. However, this expansive

definition “does not include private waters that do not combine with other surface or

subsurface water.” 20.6.4.7.S(5)(c) NMAC. The private waters exemption, which

the Commission determined is applicable to the pit lake, derives from the statutory

definition of “water” in the Act. Under the Act, “water” means “all water, including

water situated wholly or partly within or bordering upon the state, whether surface

or subsurface, public or private, except private waters that do not combine with other

surface or subsurface water.” Section 74-6-2(H) (emphasis added). In other words,

as the AHO correctly explained, “[t]o be exempt from the definition of a “[s]urface

waters of the state” and therefore not subject to the requirements of the Act, “a water

body[] (1) must not combine with other surface or subsurface waters, (2) must not

be a water of the United States, and (3) must be located entirely on private lands.”

18 B. The Commission’s Order

{23} The Ranches contend that the “Commission did not adequately explain its

conclusion that surface water standards will not apply to the pit lake,” and argues

that the pit lake is encompassed within the expansive definition of surface waters of

the state because it will combine with surface waters—“act[ing] as a hydraulic sink,

drawing in groundwater from the surrounding areas, and that water will combine

with the water in the lake.” The Department, the Commission, and N.M. Copper

respond that the Commission correctly upheld the Department’s conclusion because

the pit lake does not meet the regulatory definition of surface waters of the state as

it will be located entirely on private land, and will not combine with other surface

water or ground water.

{24} In determining that the pit lake qualifies for the private waters exemption, the

Commission adopted the AHO and Department’s reasoning that the pit lake will not

combine with other surface waters, such to render it a surface water of the state. The

AHO explained that the Department’s understanding of the phrase “combine with

other surface or subsurface waters” as contemplated by the private waters exemption

“refers only to water flowing out of a polluted water body into surrounding water,

and not to surrounding water flowing into a polluted water body.” The Ranches are

correct that 20.6.4.7.S(5)(c) NMAC, supplying the private waters exemption, does

not include such a distinction. However, the application of the private waters

19 exemption requires the application of highly technical agency expertise. See N.M.

Indus. Energy Consumers, 2007-NMSC-053, ¶ 19 (stating that we “will confer a

heightened degree of deference to legal questions that implicate special agency

expertise or the determination of fundamental policies within the scope of the

agency’s statutory function” (internal quotation marks and citation omitted)); see

also Rio Grande Chapter of Sierra Club v. N.M. Mining Comm’n, 2003-NMSC-005,

¶ 17, 133 N.M. 97, 61 P.3d 806 (providing that when resolving ambiguities in

regulations, “which an agency is charged with administering, [we] generally will

defer to the agency’s interpretation if it implicates agency expertise.” (internal

quotation marks and citation omitted)). We are further persuaded by the evidence

relied upon by the Commission in making its determination and adopted in the

findings of fact in the AHO’s Report, including that the “pit lake will be a hydrologic

sink,” and that “[t]here will be no outflow to groundwater or surface water,”—

meaning that only evaporation will cause water loss in the pit lake—and that “[t]here

is no potential that the open pit water body could contaminate any other groundwater

or surface water of the [s]tate.” Although we decline to formally adopt the distinction

set forth in the AHO’s Report—because it is not for the Court to establish definitions

that are within the purview of our Legislature or appropriate regulatory entity—we

conclude that its interpretation of the definition of surface waters of the state and the

related private waters exemption is not arbitrary, capricious, or otherwise not in

20 accordance with the law. See New Energy Econ., 2010-NMSC-049, ¶ 14;

Albuquerque Cab Co., 2017-NMSC-028, ¶ 8.

C. Contaminant Levels in Excess of State Standards

{25} The Ranches assert that DP-1840 violates Section 74-6-5(E)(3) of the Act,

which provides that “[t]he constituent agency shall deny any application for a permit

. . . if . . . the discharge would cause or contribute to water contaminant levels in

excess of any state or federal standard.” The Ranches argue that “[d]ischarges from

the disturbed mine areas into the future pit lake will cause [s]tate surface water

standards to be exceeded,” and contends that N.M. Copper’s “own modeling shows

that the future pit lake will exceed the applicable surface water standards” of

mercury, selenium, and vanadium. Section 74-6-5(E)(3) generally requires the

denial of a discharge permit if the anticipated discharge “would cause or contribute

to water contaminant levels in excess of [20.6.2.3103 NMAC] standards.” Gila Res.

Info. Project, 2018-NMSC-025, ¶ 22 (internal quotation marks and citation omitted).

However, under the Copper Rule, the 20.6.2.3103 NMAC standards are inapplicable

to an “area of open pit hydrologic containment.” 20.6.7.24(D) NMAC; see Gila Res.

Info. Project, 2018-NMSC-025, ¶ 43 (acknowledging that under the Copper Rule

the standards set forth by 20.6.2.3103 NMAC may be exceeded because the Rule

“accepts that some discharge contamination is inevitable, seeks to contain that

contamination, and relies on the hydrologic phenomenon produced by the open pit

21 to contain it”). Because we uphold the Commission’s determination that the pit lake

is not a surface water of the state, we necessarily conclude that the pit lake is not

required to meet the contamination standards in 20.6.2.3103 NMAC.

CONCLUSION

{26} For the reasons articulated above, we conclude that Appellants have not

established that the Commission’s Final Order upholding the grant of DP-1840—

including its interpretation of the phrase “undue risk to property” and its related

determination that the Mine does not present an undue risk to their respective

properties, as well its conclusion that the pit lake does not constitute a surface water

of the state—was arbitrary, capricious, or unsupported by substantial evidence. We,

therefore, affirm.

{27} IT IS SO ORDERED.

_____________________________ J. MILES HANISEE, Chief Judge WE CONCUR:

_____________________________ KRISTINA BOGARDUS, Judge

_____________________________ JACQUELINE R. MEDINA, Judge