NMSC Reverses PRC for Lack of Procedural Due Process

Resolute Wind 1, LLC v. N.M. Public Regulation Commission is another case arising out of the New Mexico Supreme Court’s jurisdiction over appeals from the PRC. Although substantively this case involves state and federal regulations governing the purchase of clean energy, the Court reversed the PRC’s final order based on violations of procedural due process.

Resolute Wind filed a petition with the PRC seeking a declaration that Lea County Electric was required to pay Resolute Wind for its energy and capacity. Under PURPA, an electric utility is required in some circumstances to purchase energy from certain types of small producers. A utility can, however, transfer this mandatory purchase obligation. In its answer, Lea County alleged that it was not obligated to purchase from Resolute Wind because it had transferred its obligation to Western Farmers Electric.

For reasons that are unclear, the PRC then ordered Lea County and Western Farmers Electric (the “Utilities”) to file affidavits in support of the factual contentions in their answer. The utilities did so in two nearly identical two-page affidavits. Based on the affidavits, the PRC entered a final order dismissing Resolute Wind’s petition with prejudice.

It would be shocking if a court did this in a civil lawsuit. Not surprisingly, it is equally improper in the administrative context in which the PRC operates. A fundamental requirement of procedural due process is the opportunity to be heard and present any claim or defense. The PRC’s ad hoc procedure, which precluded Resolute One from presenting evidence and developing a record, violated that requirement:

The procedural path taken by the Commission plainly violated an essential element of the procedural due process rights of Resolute Wind: the opportunity to be heard. 

Administrative decisions are reviewed for whether they are arbitrary, capricious, or an abuse of discretion. Framing the analysis in those terms, the Court easily concluded that the PRC had abused its discretion. According to the Court, the PRC’s procedure “lacked a rational basis and was not the product of reasoned decision-making.” As a result, the PRC’s findings were not supported by the evidence.

The Court emphasized that its ruling dealt with the procedural problems only–the opinion expressed no view on the substantive merits of the case. Having concluded that the PRC’s order was error, it remanded for further proceedings.

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