Dear Judge Leonardo:
The Arizona Corporation Commission (ACC) is an elected body responsible for regulating the state’s public utilities (electricity, telecommunications, natural gas and water), in addition to facilitating the incorporation of businesses and organizations, securities regulation and railroad/pipeline safety. In carrying out its responsibility to regulate the telecommunications and electric utilities in Arizona, the ACC works closely with both the Federal Energy Regulatory Commission (FERC) and the Federal Communications Commission (FCC). The commission also works closely with the United States Securities and Exchange Commission (SEC), and state and federal law-enforcement in enforcing both federal and state securities statutes. Commissioners function in an Executive capacity, yet they also adopt rules and regulations thereby functioning in a Legislative capacity, and have Judicial powers when making decisions in contested matters, most notably those affecting the utility rates of Arizona consumers.
Given the incredibly powerful and broad scope of their duties, it is imperative that the commission’s ability to impartially carry out its duties isn’t compromised. This is why we are running for two of the commission seats in 2016 – to restore integrity and balance to the commission. However, as more and more information becomes public, it is becoming apparent that an electoral solution alone may not solve the ongoing controversies of the ACC. We are gravely concerned that certain commissioners, and other elected officials, are engaged in unethical and potentially illegal activities.
On March 24, 2016, it was reported in The Arizona Republic that the newest appointed commissioner, Andy Tobin, had not reported the fact that his brother works for Cox Media. Cox Media is an affiliated business of Cox Communications – a business regulated by the ACC. The fact that Mr. Tobin hid this conflict-of-interest during his appointment process is incredibly troubling, and given the fact that he was replacing a Commissioner who also had a conflict-of-interest related to Cox Communications, it is simply inexcusable.
If this were an isolated incident one could chalk it up to a mistake, albeit a big one, but a mistake nonetheless. And if that were the case we most likely wouldn’t be writing this letter today.
However, this is just another in a series of troubling incidents that have surrounded the ACC since the 2014 election cycle. To wit:
- The ongoing issue of Commissioner Stump’s text messages – some of which have been recovered despite vast efforts by Mr. Stump to discard his cell phone and any trail of his communications - with a utility executive, commission candidates, and political operatives running a “dark money” campaign aimed at getting those candidates elected to commission. Arizona Attorney General Mark Brnovich has stated that some of the text messages could be considered public records, yet a Maricopa County judge has ruled the texts are not public record. How is it that hundreds of text messages being sent to political operatives and regulated executives from a public official on a phone paid for by public dollars are not public record? The very notion defies logic.
- It is widely known that Arizona Public Service (APS), the state’s largest utility, spent millions of dollars in undisclosed funds on influencing elections in the 2014 cycle, most notably on the candidacies of now elected Commissioners Doug Little and Tom Forese. The fact that a regulated body is spending millions of dollars on electing its regulators is troubling, to say the least. Simply put, we need to know if the ACC has been bought and sold for by the utilities under its authority. It would be a classic case of the fox guarding the hen house.
- There is evidence to support this theory. Since being elected, both Commissioners Little and Forese have vigorously defended the interests of APS at the expense of ratepayers and other interests. Even to the point of completely stopping fellow Commissioner Bob Burns’ efforts to require disclosure from APS on any political spending around the Arizona Corporation Commission races. The actions of Commissioners Little and Forese are unprecedented.
- In addition to Commissioner Tobin’s undisclosed conflict-of-interest discussed above, he also has another conflict-of-interest which he initially concealed from Governor Ducey during the appointment process: his son-in-law works for SolarCity, another business which is regulated by the ACC. Upon learning about this conflict-of-interest, the commission’s own counsel told Mr. Tobin he wasn’t “electable or appointable”. Yet, this didn’t stop Mr. Tobin, Governor Ducey, or the Arizona legislature from moving forward with his appointment. Which begs the question, if the Governor is concerned about the impartiality of the commission, why would he replace a conflicted commissioner with another person who has not just one conflict, but two?
- Finally, and perhaps most troubling of all, Commissioner Tobin not only moved forward with his appointment, but is now asking his former Arizona Legislative colleagues to rewrite the conflict-of-interest statues to specifically address his situation. Rather than remove a conflicted regulator, the Arizona legislature is working on HB2123 - special legislation designed to help one individual (of the over 6.7 million Arizona residents) retain his appointed position and taxpayer funded salary. This is truly incredible.
So, does all of this mean the ACC has been compromised? We honestly don’t know, but it is with that question in mind that we turn to you.
As the U.S. Attorney for the District of Arizona, we are asking you to initiate a full investigation into possible corruption involving the ACC. Specifically:
- Is Commissioner Tobin eligible to serve on the commission?
- Does HB2123 constitute “special legislation”, which is illegal under Arizona state law? And is it an attempt to conceal an illegal appointment of an unqualified individual to the commission?
- Has the ACC been unduly influenced by Arizona Public Service or any other regulated entity’s political activities?
- Have there been communications between commissioners, candidates and independent political operations in order to illegally coordinate campaign activities?
- Why do Commissioner Stump’s text messages continue to be hidden from the public, even though the Arizona Attorney General has deemed some of them as public record?
- Has there been collusion between certain sitting commissioners and Arizona Public Service to prevent public disclosure of certain campaign expenditures?
We encourage you to look at any other commission related activities you deem appropriate to review. Ensuring an uncompromised commission is of the utmost importance to the consumers of Arizona.
We understand the serious nature of this letter. We turn to you only because we cannot trust the vast majority of our state officials to be unbiased in this matter.
It is obvious we cannot trust the commission to police itself – other than Commissioner Burns, the current commissioners have shown they will do everything to maintain a cloud of secrecy over their activities. It is also obvious that we cannot place faith in the Governor or the legislature to take any action. They have already shown complicity in supporting the questionable activities surrounding the commission and are actively seeking options to expand the influence of dark money on Arizona’s elections, as evidenced with the recent passage of Senate Bill 1516.
The only statewide elected official who has shown any interest in bringing some accountability to the commission is Attorney General Mark Brnovich. He sought the removal of Commissioner Susan Bitter-Smith prior to her resignation and has tried to secure the public release of some of Commissioner Stump’s text message. We have copied him on this letter in hopes that he will join our call to your office to fully investigate the activities of the ACC.
Arizona voters and consumers deserve to know if one of the most powerful regulatory bodies in the state is serving their interests, or if it has instead become a captive body to the very interests it is supposed to be regulating. Thank you for your time and consideration of this serious matter.
Bill Mundell Tom Chabin