Lawyers believe that a Corporate Commission policy to restrict campaign contributions from regulated utilities violates the Arizona Constitution, and the lawmaker who requested the advice is hoping it will persuade the commission to change its position. heading for next year’s elections.

Senator Rick Gray, R-Sun City, asked the Legislative Council to review the 2019 commission code of ethics. Specifically, he wanted the council’s opinion on whether a policy prohibiting commissioners from collecting campaign contributions from regulated utilities, their employees, and lobbyists violates the Arizona or United States constitutions. .

Under the rule, commissioners cannot knowingly take contributions from regulated utility companies, their lobbyists, employees or officers, or accept money from an intervenor in a matter before the commission. The intention of the commission in adopting the rule was to force the commissioners to recuse themselves if they’ve taken money from people involved in business they hear.

Legislative Council reply was that the commission exceeded its authority. The validity of the rules “depends on whether the CCA has the power to prevent a duly appointed or elected member of the commission from participating in the activities of the CCA.” And the Legislative Council has held that nothing in state law or the Arizona Constitution gives it such authority. The power of the commission and its individual members is enshrined in the constitution, the legislative staff said, and the commission cannot limit those powers.

Even though the committee has the power to limit the power of commissioners, the Legislative Council has said that doing so on the basis of campaign contributions may violate the First Amendment, which protects political discourse, including campaign spending, under from the United States Supreme Court precedent.

However, the Legislative Council has not taken a decision on this matter and concluded that there are “reasonable arguments on both sides” as to whether the policy violates the protections of free speech in the First Amendment. They noted that ethics do not actually prohibit contributions to a commissioner. It obliges the commissioners to recuse themselves because of these expenses.

“Therefore, to invalidate the limitations on independent spending, a court would have to find that the disqualification requirement significantly infringes a First Amendment person’s right to independent spending,” Legislative Council counsel wrote. , Ken Behringer.

Gray, Senator Sine Kerr, R-Buckeye, and Representative Gail Griffin, R-Hereford, have sent the notice to the committee, and they are awaiting a response. The Commissioners asked their legal counsel to draft a response for their next staff meeting on October 26.

Commissioners adopted the ethics policy in 2019 in response to controversial spending by Pinnacle West, parent company of energy giant Arizona Public Service, in the 2014 and 2016 Corporation Commission elections.

In 2014, Pinnacle West secretly funded black money groups who spent nearly $ 10.7 million to elect two Republican commissioners deemed sympathetic to his interests and who ran against solar energy advocates in both the GOP primaries and general elections. Two years later, the company, which until now refused to say whether it was behind the 2014 campaign, openly spent $ 4 million in favor of three Republicans in the legislative elections.

Gray, who ran for the commission in 2016 and was defeated in the Republican primary, said he was targeting ethics policy because it is unfair and inequitable. Even if an employee wishes to donate an eligible contribution of $ 5 to help a commission hoping to secure public campaign funding from the Citizens Clean Elections Commission, the ethics policy is an obstacle.

“Employees need to be able to do whatever they want. If they want to give a five, they should be able to give a five. If they want to be able to give 160, they should be able to give 160, ”said Gray, referring to the maximum amount of“ initial capital ”a person can pay a candidate in a clean election.

Gray also asked why the policy should restrict regulated utilities when solar companies that hope to take advantage of commission policies have free rein to spend.

The APS, which has faced years of negative publicity for its decision to break the long-standing unwritten rule that barred utilities from participating in Corporations Commission races, has waived election spending for its regulators. It stayed on the sidelines in 2018, and in 2020 new CEO Jeff Guldner said the company no longer spend in the commission elections.

The code of ethics does not really restrict the ability of public services to engage in the kind of external spending that motivated its adoption in the first place. Rather, it requires commissioners, before voting on a matter involving a regulated entity, to publicly disclose any outside expenditure of at least $ 1,000 by that entity, or at least $ 100 by an individual. The disclosure policy applies to all expenses that directly or indirectly benefit Commissioners or their immediate families, not just independent expenses during elections.

It remains to be seen whether the legislature can actually do anything to influence the policy of the committee. Gray said he hopes the committee will “re-evaluate” its position in response to the Legislative Council’s advice.

If that doesn’t happen, Gray doesn’t know what his next step would be, or if it would be a law, an election measure or whatever.

“We will have to examine it. I’m not a lawyer, so I don’t know what the legal consequences would be. If it has to be questioned, it must be questioned. If we don’t stand up for people’s constitutional rights, then it will evaporate, ”he said.

Whatever happens with the ethics policy of the commission, things will not change for the APS. Company spokeswoman Jill Hanks said the APS does not have a position on ethics and Guldner’s commitment to stay out of commission races is upheld.

It is unclear exactly what the committee’s legal adviser will say in his response to the Legislative Council. But President Lea Marquez Peterson, a Republican, said commissioners clearly believed they were within their rights to draft the code of ethics that is now in place. And there were good reasons for the commission to enact it, she said.

“When I was appointed, and even before that, I had certainly heard of the cloud of corruption surrounding the Arizona Corporation Commission and the elections. So it was important for me as one of my first votes in the committee to work on the code of ethics and then as president to bring it back and finalize it so that we can move forward ”, a she declared.

Peterson said it would have been “legally difficult” to impose an ethics policy involving entities the commission does not regulate, such as solar companies. Due to the controversial APS election campaign, there was “hypersensitivity” to the commission about the involvement of public services in the elections, to the point that they did not want public services or their employees. be involved in the commission elections.

“There are a lot of people in this state, over 7 million, and we can certainly get support by being in the community and visiting Rotary clubs, chambers and different events,” said Peterson.

Democratic Commissioner Anna Tovar, who was not on the committee when the initial policy was implemented, also said it was important to keep the contested rules in place.

“This provides the transparency and accountability that our voters are looking for, where the funds for our campaign are coming from,” Tovar said.

The Legislative Council’s opinion regarding the forced challenge may be a moot point.

According to Wesley Van Cleve, the commission’s deputy general counsel, the code of ethics does not actually force anyone to recuse themselves from anything if they knowingly take a prohibited contribution. The code of ethics states that commissioners “shall not” accept prohibited contributions, but it does not explicitly specify the enforcement mechanisms. Van Cleve described it as a “code of honor” situation.

” It is voluntary. The code is there for the commissioners to basically control themselves, if you will. A commissioner could not demand the disqualification of another commissioner. And they can basically volunteer to recuse themselves or not, ”Van Cleve said.

The code of ethics also stipulates that if the commissioners, with the exception of those who run with public funds in the framework of the state’s own elections, unknowingly accept a prohibited contribution, they must return it. And if they cannot or do not want to do so, the commissioners must withdraw from matters involving this entity, with the exception of the candidates in the clean elections. Candidates for Clean Elections are eligible for public funding by collecting a designated number of $ 5 of eligible contributions from voters, and they are allowed to raise limited amounts of “seed money” outside of the lump sum they pay. they received from the state.

For clean election candidates in such situations, the code of ethics requires that they make a public statement about the contribution and give others the opportunity to say why they think the commissioner should recuse themselves.

The commission said at the time that the code of ethics had been adopted that it intended to exempt candidates in clean elections from the requirement. Four of the five current members of the commission were elected with funding from Clean Elections.

Some of the Legislative Council’s arguments regarding the code of ethics focus on process and procedure. They note that the official comments guiding Commissioners on how to comply include instructions that are not actually part of the written rules. The prohibition on any employee of regulated entities from contributing to commissioners, for example, is in a commentary, not in the text of a rule itself.

These comments also include rules requiring commissioners to disclose contributions and publicly available information on the funding of independent spending on the commission’s website. These requirements are also part of Arizona’s campaign finance laws and must also be disclosed to the Secretary of State’s office.


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