Legal

Arizona Supreme Court will hear ‘dark money’ records case

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PHOENIX — The state Supreme Court has agreed to decide whether a majority of the Arizona Corporation Commission can block one of its members from seeking access to corporate records to see if the company is funneling “dark money” into the campaigns of regulators.

In a brief order, the justices agreed to review a Court of Appeals ruling that denied Bob Burns, who was a member of the panel, the independent right to look at the books of Arizona Public Service and Pinnacle West Capital Corp., its parent. Burns specifically wanted to know about the money it has spent — and may spend in the future — to elect candidates of its choice.
The order, by itself, does not guarantee Burns will win his multiyear battle with the state’s largest electric utility.

It is, however, a setback for APS whose lawyer had urged the justices to leave in place the appellate court ruling which concluded that such investigations require the consent of a majority of the commission. In fact, the remaining commissioners also had asked the Supreme Court to stay out of the fray.

The decision of the justices to weigh in will have no immediate effect. That’s because Burns has left the panel and the APS rate case that was pending at the time has been decided.

But if the court ultimately sides with Burns, that could forever change how the Corporation Commission operates, giving future commissioners more independent license to probe the actions of regulated utilities.

Burns issued a subpoena in 2016 in a bid to determine if APS or its parent was the source of the $3.2 million spent in 2014 by “dark money” groups that don’t disclose their donors to help elect Republicans Tom Forese and Doug Little to the commission board.

The company initially would not confirm it was the source of those dollars.

It took until 2019 for an admission it actually had put $10.7 million into that campaign. But that took a subpoena from Commissioner Sandra Kennedy, which was supported by two other regulators.

Burns contends — and wants the Supreme Court to rule — that individually elected regulators have power on their own and are not subject to being overruled by their colleagues.

His attorney, William Richards, told the justices there is no authority for the appellate court conclusion that the Arizona Constitution, which spells out the power of the utility regulatory board, allows a majority of commissioners to forbid individual members from using their investigatory powers.

“The language expresses no such veto rights,” he wrote.

Richards said the power to investigate and inspect the records, business, methods and affairs of any corporation is given to the commission “and the several members thereof.” That same language, he said, extends to the ability of individual regulators “to enforce the attendance of witnesses and the production of evidence by subpoena, attachment and punishment.”

He acknowledged the state constitution empowers the commission to adopt rules. But here, too, Richards said nothing authorizes the panel to limit the investigatory powers of the full commission or any individual member.

“Instead, it references only enactments that enlarge the powers and extend the duties of the corporation commission,’” he wrote.

“Moreover, statutes and agency rules cannot alter or limit constitutional delegations of government authority,” Richards continued. “So the ACC subpoena rules could not create limits on the plain language delegation (in the constitution) authorizing independent commissioner investigations.”

Richards also reminded the justices of a separate constitutional provision that specifically prohibits them from spending money to influence any election. He said individual regulators need the power to “uncover and sanctions any such attempts.”

“The Court of Appeals decision undermines these objectives and gives the worst corporate offenders a clear playbook,” Richards wrote. “They need only spend enough to capture the loyalty of a majority of the commissioners to receive favorable treatment, and to stop any commissioner dissenters from gathering facts and discussing matters that might hurt or expose them.”

In finally releasing data on its 2014 spending on the commission race, APS also admitted at that time that it provided $50,000 to the Republican Governors Association, which helped the first election of Gov. Doug Ducey, and $425,000 to the Republican Attorney Generals Association which, in turn, bought commercials to elect Republican Mark Brnovich.

Jeff Gulder, who took over the reins of APS in 2019, told regulators the company would not fund future candidates running for the commission. A company spokeswoman said it did not contribute to the 2020 race and the promise still holds for future campaigns.
The Supreme Court order was not a total victory for Burns.

The justices rebuffed a request by Burns to also consider whether he also has the power to investigate whether the millions of dollars of campaign support that other utility regulators had received tainted them to the point where they might have to recuse themselves on voting on the company’s rate hike proposals.

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