Arizona Supreme Court holds that a majority of the Arizona Corporation Commission cannot prevent one commissioner from exercising investigative authority under article 15, section 4 of the Arizona Constitution.

During a ratemaking proceeding for a utility company, a commissioner issued subpoenas citing allegations that the company had made anonymous campaign contributions to two of his colleagues.  When the commissioner moved to enforce the subpoenas, a majority of the commissioners found that the information requested bore no relevance to the ratemaking proceeding and denied the motion.  The commissioner filed a separate action for declaratory relief in superior court claiming, among other things, that one commissioner has authority to enforce subpoenas regardless of the disapproval of the other commissioners.  The superior court dismissed the claim, finding that although an individual commissioner has authority to issue subpoenas, the power to enforce those subpoenas rests with the Commission as a whole.

The court of appeals affirmed.  It held that individual commissioners lack authority to enforce investigatory subpoenas during ratemaking proceedings because the Commission, acting through a majority of its members, has ultimate authority to administer such proceedings.

The Arizona Supreme Court reversed.  It held that article 15, section 4 of the Arizona Constitution, which vests investigative power in the Commission “and the several members thereof,” grants both the Commission and each individual commissioner authority to subpoena records and testimony from utility companies and to compel compliance with a subpoena.  The word “several” means separate, respective, or individual, thereby signaling an intent to grant the Commission and each commissioner that investigative authority.  Meanwhile, constitutional provisions creating the Commission’s other powers omit any reference to individual commissioners.

The Court rejected the view that its interpretation undermines the Commission’s plenary authority over ratemaking proceedings under article 15, section 3, or with its rulemaking authority under article 15, section 6.  Instead of allowing the Commission to craft rules that might limit the forums in which an individual commissioner might exercise his or her investigatory powers—here, in a ratemaking proceeding—the Commission’s rulemaking authority must yield where the two conflict.  Indeed, it may be especially pertinent for a commissioner to deploy such investigatory powers to assess possible conflicts of interest in a ratemaking proceeding.  The Court also cited A.R.S. § 40-241(A), which grants “each commissioner” authority to inspect records and examine officers “at any time,” as a further legislative check on the Commission’s rulemaking authority.

The Court assured that a commissioner’s subpoena powers are not unconstrained.  They are bound by the same constitutional limits that constrain the Commission’s own authority.  They are still subject to the “overarching requirements of due process,” which entitles a subpoena target to seek judicial recourse.  And the Commission has separate statutory authority under A.R.S. § 40-243(A) to adopt and enforce subpoena procedures, including in ratemaking cases, if it so chooses.

Justice Bolick authored the majority opinion, in which Justices Beene, Montgomery, and King joined.  Vice Chief Justice Timmer dissented.  Chief Justice Brutinel and Justice Lopez recused themselves.

Disclosure: Osborn Maledon attorneys were involved in this case.

Posted by: Matthew Stanford