PRC hearing on AV Water goes on without witnesses

AV Water owner Mark Iuppenlatz's attorney told commissioners her client was exercising his Fifth Amendment right by not appearing at the PRC's hearing

Hannah Grover
Russ Caskey, with contractor JCH, works July 22 on a new pump station for the Morningstar water system. An attorney for AV Water Co., which owns Morningstar, says the company may have secured a buyer for the system.
  • Attorneys expressed concerns that testimony during the PRC hearing could be used against their clients in the future.
  • In December, commissioners ordered AV Water owner Mark Iuppenlatz to attend the public hearing.
  • AV Water is negotiating selling the Morningstar system and transfering ownership of Harvest Gold.

FARMINGTON — Despite the fact that no key witnesses attended the New Mexico Public Regulation Commission's public hearing today in Santa Fe, the commission still proceeded with discussing the situation with AV Water Co.

AV Water owns the Morningstar and Harvest Gold water systems. Both were issued boil water advisories in June, and Harvest Gold remains on the advisory.

On Dec. 21, the PRC issued an order for a public hearing and required AV Water owner Mark Iuppenlatz and representatives of affiliated companies to attend. Neither Iuppenlatz nor any of the other representatives attended today's hearing. Instead, only two attorneys — one for AV Water and the other for Iuppenlatz — attended the hearing, which was streamed live on the PRC’s website.

Commissioners chided the attorneys for not providing witnesses to answer questions during the hearing.

"You didn’t bring anybody," said Sandy Jones, the PRC's chairman. "You didn’t bring the janitor."

AV Water attorney Germaine Chappelle said it was not appropriate to have a public hearing today, citing the short notice and holidays. She did, however, provide documents to answer questions from the Dec. 21 order.

Mid-way through the hearing, Commissioner Lynda Lovejoy questioned the ability to have a hearing without witnesses.

As she spoke, Lovejoy held up a document that included insurance policies and some financial statements AV Water had submitted to the PRC.

"It is obvious there are no witnesses. This is her witness right here," she said, gesturing with the provided document in her hand. "The entire document."

Lovejoy later added: "I want a very good hearing where people can testify, but they’re not here and they may never come."

Despite Lovejoy’s concerns, the commission continued the hearing.

Russ Caskey, with contractor JCH, works July 22 on a new pump station for the Morningstar water system. An attorney for AV Water Co., which owns Morningstar, says the company may have secured a buyer for the system.

In a motion submitted to the PRC late Tuesday, attorneys representing AV Water and its affiliates questioned whether the commission was overextending its power and imposing criminal penalties, rather than civil ones.

Before today's hearing starting, the commission heard the attorneys’ arguments and PRC staff's rebuttal in relation to the motion.

Attorneys said Iuppenlatz would not attend the hearing due to concerns that things he said could be used against him during potential future criminal proceedings. His lawyers said Iuppenlatz’s concerns were based on fines levied against him on Nov. 23 from testimony he gave during an Oct. 12 hearing, as well as statements in a Dec. 7 PRC meeting about the commission sending a letter to the New Mexico Attorney General’s Office over the situation. While PRC staff drafted a letter, it was not sent, Jones said during the meeting.

Michelle Henrie, who represents Iuppenlatz and the AV Water affiliates, said her clients who did not attend the hearing were exercising their Fifth Amendment right, which protects people from being forced to provide information that could be used against them in a criminal case.

"You can claim the Fifth Amendment if you want," Jones said. "You can claim insanity. I don’t care what you do."

He said Iuppenlatz needed to appear before the commission and warned that Iuppenlatz could face additional fines for violating the commission’s order to appear.


PRC fines AV Water Co. and its owner $1 million

AV Water owner: Company is 'strapped for cash'

PRC expresses frustration with AV Water

During the PRC meeting, Henrie said the commission's actions blur the line between civil and criminal penalties. She said that while a fine to bring a company into compliance is a civil penalty, a fine meant to punish is a criminal penalty.

She highlighted the PRC’s consideration of penalties when AV Water failed to immediately provide bottled water to Harvest Gold residents after a Nov. 23 order. Despite the order for immediate water deliveries, residents began receiving delivered water on Dec. 6.

Henrie argued fines imposed for the days before deliveries began would be punitive fines.

Cydney Beadles, a PRC staff representative, argued the commission has fining authority for violations and AV Water violated the commission’s order. She said the commission has the authority to fine between $100 and $100,000 for each day water was not delivered.

Both Chappelle and Henrie said during the pre-hearing meeting that AV Water has made progress toward finding owners to take over the two water systems.

Blanco Mutual Domestic Water Users Association has been working to secure funding for repairs to the Harvest Gold system east of Bloomfield. Blanco has expressed interest in acquiring the system at no cost. In December, a state board of finance approved $85,000 of emergency funding to connect Harvest Gold to Bloomfield’s system and, on Tuesday, the San Juan County Commission approved possibly using capital outlay money to connect Harvest Gold into Blanco’s system.

Henrie said AV Water is also in negotiations with a water utility to sell the Morningstar water system, which serves Crouch Mesa.

“I’m glad to hear that,” said Commissioner Cynthia Hall. “To me that seems to be some sort of progress.”

She asked Henrie about a realistic timeline for the sale. Henrie said she could not provide a timeline and could not disclose the name of potential buyer at this time.

"There’s not a contract in place yet, but there’s a lot of good will and desire to get it done," she said.

Hannah Grover covers government for The Daily Times. She can be reached at 505-564-4652.