Tobin’s Arizona Water Vote Raises Questions, Concerns

Arizona Corporation Commission at a meeting in April [Photo from Arizona Corporation Commission]

In April, after a highly unusual move by Arizona Corporation Commissioner Andy Tobin, attorneys for Arizona Water Company requested a rehearing in a matter involving its Certificate Of Convenience And Necessity. In its application, the company accuses the Commission of violating its due process rights.

In February, the Commission approved the company’s Certificate Of Convenience And Necessity (CC&N), in a 3-2 vote. In Arizona, companies must obtain a CC&N through the Commission in order to provide water in a defined service area.

Commissioners Andy Tobin, Doug Little, and Bob Burns voted in favor of Arizona Water.

Rehearing Application Highlights:

To this point, the Company notes that every item on the Commission’s February 2017 Open Meeting agenda has resulted in a signed and docketed order, except for the Commission’s decision on this matter. Because the Commission’s April 2017 decision to reconsider this matter preceded the service of a written order reflecting the February decision, it is procedurally deficient…..

Apart from the procedural issues, the Commission abused its discretion in the April Open Meeting by failing to meet the substantive standard governing the rescission, modification, and amendment of prior CC&N decisions under A.R.S. §40-252. Arizona courts have made clear that ‘ the exercise of the Commission’ s power [to rescind, alter , or amend a certificate of convenience and necessity once it has been granted] requires showing due cause for such action – an affirmative s owing that the public interest would thereby be benefited.” Ariz. Corp. Comm. v. Tucson Ins. and Bonding Agency, 3 Ariz. App. 458, 463, 415 P.2d 472, 477 (Ct. App. 1966).

An order memorializing the CC&N approval should have then been signed by the commissioners. “Despite the unambiguous legal requirement that the Commission “make and file an order containing its [February] decision,” see A.R.S. § 40-257(B), the Commission failed to do so,” according to the application for rehearing. ”Instead, almost two months later, on March 29, 2017 – just seven days before the April 5 Open Meeting – the Commission filed the April Open Meeting agenda in this docket listing reconsideration of that February 7 decision as an item for discussion.”

At its April 5, 2017 Open Meeting, the Commission then voted to reopen and reconsider its February 2017 decision. According to the application, “The impetus for reconsidering the February decision was not new evidence related to the CC&N dispute, but the reservations of a single Commissioner who had voted in the majority and believed that “the issue of the CC&N needs a deeper dive.”

Tobin’s “deeper dive” essentially vacated the February 7, 2017, vote to approve the December 22, 2016 Recommended Opinion and Order in Arizona Water’s favor and denied Cornman Tweedy’s request to delete the portion of Arizona Water’s CC&N that includes property owned by Cornman Tweedy.

Arizona Water has been engaged in a legal battle with Cornman Tweedy 560 L.L.C. over the CC&N for years. Tobin’s move appears to prolong that fight in favor of Cornman Tweedy, which is controlled by the powerful Robson family.

Arizona Water was forced back to the negotiating table with Cornman Tweedy.

Arizona Water’s attorney, Meghan Grabel, wrote in the application for rehearing: “Arizona Water will pursue settlement conversations with Cornman Tweedy in good faith as the Commission has ordered and as the Company has done on several occasions during the more than 13 year duration of the proceedings in this docket. Nevertheless as explained in detail below, the Commission’s April 201 7 determination to rescind its February decision, order the parties to attempt settlement as if the February decision had never happened, and formally rule on the reconsideration 60 days later was both procedurally and substantively deficient as a matter of law. Arizona Water is therefore compelled to file this Application under A.R.S. § 40- 253 to preserve its right to appeal the Commission’s action.”

Uncertain futures

Tobin’s move could unsettle many utilizes. As Grabel wrote in the application:

“There is little doubt that the Commission has continuing regulatory authority over those it regulates, and there may be circumstances when the public interest requires reopening a decision. However, to reopen a decision for the single purpose of changing policy or encouraging settlement talks between the parties as if the Commission had never ruled on the matter would result in tremendous uncertainty for all of the utilities under this Commission’ s jurisdiction including Arizona Water, which must act in reliance on Commission decisions. Any such decision on the facts of this CC&N deletion matter is an abuse of the Commission’s discretion and erroneous as a matter of law.”

“A regulatory regime that requires compliance with Commission decisions but that deprives a corporation from the benefit of being able to rely on the reasonable finality of those same decisions would render regulated entities functionally paralyzed, unable to provide efficient, cost-effective public service. See id.

The Commission’s February decision affirmed that it had previously found Arizona Water’s CC&N for the Cornman Tweedy property to be unconditional, a holding that has important legal consequences . The legal standard governing a forceful deletion of a CC&N on a § 40-252 proceeding is clear: “Once granted, the certificate confers upon its holder the exclusive right to provide the relevant service for as long as the grantee can provide adequate service at reasonable rates.” Id. at 137 Ariz. 426, 429, 671 P.2d 404, 407. There is not now nor has there ever been evidence that Arizona Water is unwilling or unable to provide service to the Cornman Tweedy property. It is for this reason that the Administrative Law Judge recommended, and the Commission approved in February, an order preserving Arizona Water’s CC&N against Cornman Tweedy’s attack.

Nothing has changed since the Commission’s February 7, 2017 decision that would justify the Commission reopening the matter for the purpose of “diving deeper’ into the issuance of the CC&N. There is no new evidence that Arizona Water is unwilling or unable to provide adequate service at reasonable rates, and any concern the Commission has about the lack of present development on the property or the Commission’s past practice in granting CC&N extensions is not adequate justification to alter the Company’s CC&N on the record of this case.

In June, the company requested an extension of time after being forced into settlement negotiations.

Unsettled commissioners

Commissioner Andy Tobin’s call for a “deeper dive” clearly raised concerns for Commissioners Little and Burns, and according to the application for rehearing, the “directive left the “Company is in a procedural quandary.”

Prior to the vote, Commissioner Little signaled that he wanted to weigh-in. “I am still very concerned about the irregularity of the process that we are going through. There was a decision made at the February meeting,” stated Little. “There were 3 votes cast in favor. I believe that the more proper approach to do this and if you look at the timing of this it would not prevent the discussion from beginning between the parties. I think a more proper way to do this would be to issue an order. There was a decision made by this commission, it was a lawful decision. The order should be issued and the time clock should start 40-252 could be picked up by commissioner Tobin’s office and we can proceed in a way that would not place us in the legal jeopardy I believe this process places us in.”

Prior to casting his vote, Commissioner Burns stated, “I am in support of the comments made by Commissioner Little and I vote no.”


The optics aren’t good

2018 1st Report (4th Quarter)
Committee Date Amount
2018 Contributions for – Robson, Ed
Forese For Arizona 12/12/2016 $1,500.00
2018 Contributions for – Robson, Mark
Forese For Arizona 12/12/2016 $500.00
2018 Contributions for – ROBSON, ROBERT D
Forese For Arizona 12/21/2016 $500.00
2018 Contributions for – Robson, Steven S.
Forese For Arizona 12/09/2016 $500.00
2018 Contributions for – TAYLOR, KARRIN
Forese For Arizona 11/17/2016 $500.00
2018 Contributions for – ROBSON, EDWARD
Ducey for Governor 12/29/2016 $5,000.00
2018 Contributions for – ROBSON, ED
Yarbrough/House 12/22/2016 $500.00
Vote Mesnard 2016 12/22/2016 $500.00

In 2016, Arizona Governor Doug Ducey sought and received a change to the conflict-of-interest standards for commissioners from his buddies at the Legislature in order to appoint Tobin to the Commission. The standards were weakened and so was the public’s perception that the Commission was above the fray.

The public’s perception of the Commission has been negative due to its efforts to prevent transparency in campaign contributions from Arizona Power Service, the state’s largest utility company. Burns has been trying to get APS to reveal the beneficiaries of their campaign contributions in the 2014 election. In August 2016, Burns filed subpoenas for the production of records and information relating to a range of expenditures from 2011 through 2016 by APS and its parent company Pinnacle West Capital Corp. including information concerning marketing and advertising expenditures, charitable donations, lobbying expenses, contributions to 501(c)(3) and (c)(4) nonprofits and political contributions.

His fellow commissioners continue to deny him support in his fight for transparency.

Contributions for – Boyd Dunn 2016
Robson, Edward $5,000
Robson, Kim A $2,500
Robson, Linda $4,500
Robson, Mark E $4,500
Robson, Robert D $2,500
Robson, Steve $4,500

The Corporation Commission took a deep dive into controversy in May when former Commissioner Gary Pierce and his wife were indicted. The Pierces were indicted along with water company owner George Johnson, and lobbyist Jim Norton “with conspiracy, bribery, mail fraud and wire fraud, over what prosecutors lay out as a scheme to pay off Pierce in return for favorable regulation by the Corporation Commission surrounding a special $18 million wastewater plant deal,” according to the Center for Investigative Reporting.

The fact that Robson family members appear on the 2018 (4th Quarter) finance report for Commission Forese’s campaign, doesn’t help the Commission’s profile. The fact that family members gave considerable money to the Boyd Dunn 2016 campaign makes it look even worse.

As of June 27, there do not appear to be any contributions from any Arizona Water principals listed on the Secretary of State’s website.

Despite the almost daily headlines about the Commission, the majority of commissioners seem oblivious as to the scrutiny under which they now practice. That scrutiny now extends to those that come before them whether it is earned or not.

Read Application For Rehearing and history from Arizona Corporation Commission Opinion and Order dated December 22, 2016 here.