A progressive organization has called for an investigation into the New Mexico Environment Department, filing a complaint over an artificial intelligence-related contract involving a former state Cabinet secretary.
ProgressNow New Mexico submitted the complaint Friday to the Office of the State Auditor, outlining a list of concerns in connection with the Environment Department and what it called the risk of “regulatory capture” at the agency.
The complaint centers on a 2025 contract involving a company led by former Economic Development Secretary Alicia Keyes and draws ties between Keyes’ company and some high-profile regulatory cases before the Environment Department: a pending air quality permit application for the hyperscale AI data center Project Jupiter and a rulemaking on the proposed reuse of treated wastewater from the oil and gas industry, known as “produced water.”
Gabriela Campos/New Mexican file photo
The contract for AI records digitization poses “potential violations” of the New Mexico Procurement Code and the Governmental Conduct Act by the department’s officials as well as potential conflicts of interest, the complaint alleges.
The Environment Department dismissed the allegations.
“There is no connection between the NMED’s effort to digitize regulatory documents — a project that increases public transparency and access to state records while saving taxpayers thousands of dollars in document storage costs — and the matters raised in ProgressNow New Mexico’s complaint,” spokesperson Drew Goretzka said in a statement Friday.
A spokesperson for the Office of the State Auditor declined to answer questions about the complaint Friday, pointing to a state regulation that provides confidentiality for such investigations.
The Environment Department entered into the AI contract involving the companies Speridian Technologies and Apaluma Inc., the complaint states. The latter company is headed by Keyes, who is listed as the founder and CEO of Apaluma on her LinkedIn profile.
ProgressNow alleges in the complaint Environment Secretary James Kenney may have violated state procurement code “by directing agency employees to contract with Apaluma, Inc. without competitive sealed bidding, Request for Proposals, or proper justification for sole-source procurement.” The group cites documents published by the blog “The Candle,” including internal department emails indicating Kenney had personally pushed for the addition of Apaluma to the project.
Goretzka pushed back on the concerns about the contract.
The Environment Department first engaged Speridian in 2025 as part of an effort to organize and digitize decades of its regulatory records, he wrote in an email in response to questions.
The agency’s record digitization project includes the use of an “AI agent” from Apaluma, according to the contract.
Goretzka said Speridian subcontracted Apaluma to create its user interface “following a lengthy vetting process,” adding Speridian’s services “are procured through a Statewide Price Agreement established by the New Mexico General Services Department.”
Apaluma’s website states the company “partnered with the New Mexico Environment Department to digitize and illuminate critical environmental datasets, transforming legacy document systems into an intelligent, searchable platform across air quality, water, waste, and energy programs.”
ProgressNow notes in its complaint Keyes’ connection to Borderplex Digital Assets, a company formed in connection with the planning of Project Jupiter near Santa Teresa in Southern New Mexico. While Keyes was named in 2025 as part of the company’s “leadership” on its website, it isn’t clear whether she still has a direct role with the data center project.
Keyes could not be reached for comment Friday.
The complaint also names attorneys Jennifer Bradfute and Matthias Sayer, who were listed as lobbyists for Apaluma last year. The two have also represented the industry group WATR Alliance in several regulatory proceedings before the department’s Water Quality Control Commission, proposing new environmental regulations that would allow for the reuse of treated produced water, which is a byproduct of oil and gas production.
Bradfute — who was included in a list of “key staff and qualified personnel” in the contract — said allegations that her law firm has a conflict of interest in connection with the contract “misunderstands what a conflict of interest is.”
“Attorneys and lobbyists throughout New Mexico — and in every state — routinely represent multiple clients on unrelated matters,” Bradfute wrote in an email. “A conflict of interest arises when a lawyer represents adverse interests in the same matter. No one alleges that here, because it has not happened.”
Bradfute said her firm’s work for Apaluma as “lobbyists and outside counsel” ended in September 2025, adding the “principal engagement” was legislative advocacy for House Bill 427, a drinking water monitoring bill.
“Neither Mr. Sayer nor myself are employed as contractors for NMED and, to our knowledge, we have never completed work that has been billed to NMED,” she said.
Bradfute noted the ProgressNow complaint “is built almost entirely” on articles by “The Candle,” noting the website’s author, Bruce Wetherbee, is “an active participant in the [Water Quality Control Commission] produced-water proceedings.”
Wetherbee wrote in a post earlier this year it was a “legitimate public concern” that a developer of an AI agent for use by the department “not be even remotely connected with entities that are, or may eventually, be subject to the regulation of NMED’s bureaus or its secretary.”
