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ORIGINAL E000039195
OFFICE OF THE ARIZONA ATTORNEY GENERAL
SOLICITOR GENERAL'S OFFICE OPEN MEETING LAW ENFORCEMENT TEAM
Mary M. Curtin Senior Litigation Counsel
October 9, 2024
VIA EMAIL & U.S. MAIL
Arizona Corporation Commission c/o Mary R. O'Grady
Osborn Maledon
2929 North Central Avenue Phoenix, Arizona 85012
Re: Disposition of Open Meeting Law Investigation Investigation No. OML2023-0140
Dear Ms.O'Grady:
As you know, the Office of the Attorney General received a complaint alleging Open Meeting Law ("OML'') violations by the Arizona Corporation Commission ("Commission"). The complaint arises. from a joint letter from Chairman O'Connor and Commissioners Thompson, Myers, and Marquez Peterson on letterhead bearing the Commission's official seal, urging Governor Hobbs to take certain action with respect to the San Carlos Irrigation Project, a federally owned and regulated utility in Arizona.
The Office has reviewed the events discussed below and the Commission's February 9, 2024 response to our Inquiry Letter ("Response"). We conclude that the Commission violated the Open Meeting Law because the signatory Commissioners' collective decision to send the Letter constitutes legal action required to be performed at a properly noticed, public meeting of the Commission.
The facts recited in this letter serve as a basis for these conclusions, but are not administrative findings of fact and are not made for purposes other than those set forth in A.R.S.
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Background
The San Carlos Inigation Project (SCIP) is a federally owned electric utility governed by the Bureau of Indian Affairs (BIA). The SCIP provides electric power to homes and businesses on the Gila River and San Carlos Indian Reservations and to neighboring communities in the Coolidge and Florence areas. Because the SCIP is not an Arizona public service c01poration, SCIP rates are set by the BIA, not the Commission.
In 1991, Congress passed a resolution providing for divestiture of the SCIP, so that if certain criteria were met by the end of 1992, SCIP would no longer be federally owned. Response,
p. 2 (citing San Carlos Indian Irrigation Project Divestiture Act of I991 (I05 Stat. 1722) ("Act")). As contemplated by the Act (see Sec. l0(a)(l)), the Commission "initiated proceedings in at least two separate dockets" to consider applications from regulated utilities seeking to provide electric service to SCIP customers. Response, APP]53. In late 1992, the Conunission issued its Decision Nos. 58L12 and 58114, which "approved rate phase-in plans for APS, Trico, and Tucson Electric Power to provide service to former SCIP customers, as well as new future customers who would be located in SCIP's service territory." Response, APP153 and APP159-209. However, for reasons umelated to the Commission, all divestiture criteria were not met prior to the Act's December 31, 1992 deadline and the federal government retained ownership of the SCIP electric system.
In Febrnary 2022, the BIA proposed certain rate adjustments for SCIP customers. After public comment, the BIA determined that it would forgo the 2022 adjustments and implement the 2023 adjustments only. Separately, in September 2021, BIA implemented a purchased power cost adjustment per kilowatt-hour on top of existing electric power rates. BIA claimed that the adjustment would terminate once the 2023 adjustments became effective.
In 2023, SCJP notified customers that, in addition to the higher rates which became effective that year, the purchased power cost adjustment would continue toapply and would double per kilowatt-hour. This prompted significant outrage among SCIP customers and the publjc officials who represent them, including State Senator T.J. Shope. Senator Shope invited Commissioners Thompson and Marquez Peterson to join in his letter to Governor Hobbs. Instead, Commissioner Thompson directed his Policy Advisor, Ryan Anderson, to begin drafting a separate letter to the Governor ("Letter").
On October 10, 2023, Mr. Anderson circulated his draft Letter "via separate emails to policy advisors for Commissioners Myers and Marquez Peterson and Chairman O'Connor." Response, p. 4. The emails did not indicate whether other Commissioners were being invited to sign on. Commissioners Myers and Marquez Peterson and Chairman O'Connor, th.rough their policy advisors, each separately agreed to sign on to the Letter.
On the morning of October 11, 2023, Commissioner Thompson's office emailed Commissioner Tovar's Policy Advisor to invite Commissioner Tovar to sign on to the Letter. She declined and Commissioner Thompson's staff modified the Commission letterhead to remove Commissioner Tovar's name. Shortly thereafter, Commissioner Thompson's office sent the Letter to Governor Hobbs. The Letter bears the official seal of the Commission, and all four signatories used their official titles of "Commissioner" or "Chairman" in the signature block. Despite this, the last paragraph of the Letter states that the signatory Commissioners are writing "in [their] individual capacities." Letter, p. 2.
In the Letter, the signatories urge Governor Hobbs to act to address the "massive" rate increase for SCIP customers that federal regulators approved earlier this year; The Letter raises divestiture ofSCIP as a solution "which could potentially allow current SCIP ratepayers to become customers of Arizona electric utilities." Letter, p. 1. In other words, the Commissioners sought theGovernor's assistance in converting SCIP customers to ratepayers of existing utilities regulated by the Commission. According to the Commissioners, renewed divestiture discussions should have an "end goal of transferring generation, transmission, and customer responsibility to regulated Arizona utilities." Id.
Analysis
"All legal action of public bodies shall occur during a public meeting." A.R.S. § 38- 431.0I(A). It is undisputed that the Commission did not discuss or approve the Letter at a public meeting. To determine whether the Commission violated the Open Meeting Law, we must therefore decide whether the fom signatory Commissioners' decision to send a joint letter asking Governor Hobbs to "advocate for Arizona ratepayers" (Letter, p. 2) constitutes "legal action" within the meaning of A.R.S. § 38431(3). For the reasons below, we conclude it does.
The Commission's Response repeatedly emphasizes that the Letter was sent in the signatory Commissioners' "individual capacities" and cites to the language in the Letter asserting the same. However, the Response falls short of arguing that any potential OML violation is avoided by the Commissioners' inclusion of such language. And rightly so, because the Open Meeting Law does not recognize a distinction between a public body member's "official" and "individual" capacity. Rather, it is "the substance of the matters discussed and not the label given to the meeting or its location" that determines whether the Open Meeting Law applies to a gathering of members of a public body. Ariz. Att'y Gen. Op. 179-4.
A meeting is any "gathering, in person or through technological devices, of a quorum of the members of a public body at which they discuss, propose or take legal action, including any deliberations by a quorum with respect to that action." A.R.S. § 38-431(4)(a). This includes "[a] one-way electronic communication by one member of a public body that is sent to a quorum of the members of a public body and that proposes legal action." A.R.S. § 38-431(4)(b). In other words, when determining whether a particular act or discussion was required to have been undertaken at a public meeting, the focus of the inquiry is on the nature of the act being considered and the nuniber of members involved in that discussion. See Ariz. Att'y Gen. Op. 182-108 ("It is important to realize that an open meeting can be held under a variety of titles. However, the legal
impact is the same, no matter what they are called. Whether a meeting is called a regular meeting, special meeting, study session, or any other title, the law must be obeyed.").
Therefore, regardless of whether the Commissioners purported to be acting in their "individual capacities," we consider whether the four signatory Commissioners' decision to send the Letter constitutes "legal action" within the meaning of the Open Meeting Law.
"Legal action" is "[ 1] a collective decision, commitment or promise [2] made by a public body pursuant to the constitution, the public body's charter, bylaws or specified scope of appointment and the laws of this state." A.R.S. § 38-431(3).
There was a "collective decision" to send the Letter. The fact that Commissioner Thompson's staff sent his sign-on requests to the other Commissioners via separate emails and through staff does not suggest otherwise.
First, the fact that the communicationssoliciting sign-on approval were by and among staff at the direction of a Commissioner does not absolve otherwise violative conduct. A.R.S. § 38- 431.01(J) ("A member of a public body shall not knowingly direct any staff member to communicate in violation of this article.''). Here, the emails from Commissioner Thompson's staff make clear that Commissioner Thompson requested that staffsend the draft letter for consideration and possible sign-on. See Response, APP222-250.
Second, discussions and deliberations (in person or otherwise) between parts of a governing body, even when no single part constitutes a quorum, can still violate the Open Meeting Law when used to circumvent the purposes of the Open Meeting Law. Ariz. Att'y Gen. Op. 75-
8. Public officials may not circumvent the public deliberation requirement by splintering the quornm and having separate or serial discussions with a majority of the public body members. Ariz. Att'y Gen. Agency Handbook§ 7.5.2. However, the OML does not prohibit an individual member of a public body from voicing an opinion or discussing an issue with the public, so long as the "opinion or discussion is not principally directed at or directly given to another member of the public body," and "there is no concerted plan to engage in col1ective deliberation to take legal action." A.R.S. § 38-431.09(B); Ariz. Att'y Gen. Op.!07-013.
Here, Commissioner Thompson (1) drafted a letter stating his opinion that SCIP should be divested and (2) intentionally sent that letter to each of his fellow commissioners asking them to adopt the same position. When three other Commissioners agreed to adopt that opinion and issue a joint letter, there was a "collective decision" within the meaning of A.R.S. § 38-431(3).
A collective decision is "legal action" if it is made "by a public body pursuant to the constitution, the public body's charter, bylaws or specified scope of appointment and the laws of this state." A.R.S. § 38-431(3). We conclude that the Letter constituted legal action under this definition.
The Commission urges us to adopt a na1Tow understanding of "legal action/' arguing that the Letter was not subject to OML because·"the Arizona Corporation Commission's jurisdiction
The Letter advocates for a scenario in which electricity generation, transmission, and customer responsibilitywould be transferred from the federally owned SCIP "to regulated Arizona utilities." Letter, p. l. In this way, the Letter is, essentially, a joint proposition by four Commissioners that someone else take action on a matter which may ultimately cause the Commission to determine how to allocate the SCIP's plant, teITitory, and customers.
TheCommission is,first and foremost, a creation of the Arizona Constitution. Ariz. Const. ait. 15, § 1. Thus, the Commission's legal authority to act, including any associated authority to speak on matters of statewide utility policy, de1ives from and is "pursuant to" its constitutional foundation. The Commission's abiJity to opine on matters of utility policy also de1ives from its broad statutory authority to "supervise and regulate every public service corporation in trus state and do all things, whether specifically designated in this.title or in addition thereto, necessary and convenient in the exercise of that power and jurisdiction." A.R.S. § 40-202(A).
Throughout the Letter, the Commission expresses clear support for policies a_nd changes which would reduce rate shock and increase financial protections to SCIP ratepayers, and observes that"costly upgrades to the SCIP electrical system are necessary." Letter, p. 1. The Commission's decision to weigh in on the issue arises from its constitutional and statutory status as the regulatory authority for utilities in Atizona, even if the Commission alone cannot accomplish the policy outcomes for which the Letter advocates.
This Office has stated that "legal action" includes "all discussions, deliberations, considerations or consultations among a majority of the members of a governing body regarding matters which may foreseeably require final action or a final decision of the governing body." Atiz. Att'y Gen. Op. 175-8; see also Valencia v. Cota, 126 Atiz. 555, 556-57 (App. 1980) ("deliberations by a majority of a public body in respect to a matter that foreseeahly could come to a vote by that body constitute[] 'legal action' for purposes of the open meeting law[.]").
That the Commission could one day regulate the SCIP or its ratepayers is foreseeable because a similar situation has happened before. Indeed, documents produced by the Commission show that the Commission has at least once before considered and approved electric utilities' requests to set rates for former SCIP ratepayers. Response APP153 and APP159-209. Thus, we need not imagine a scenario in which the law might change because, decades ago, the Commission already considered and voted to approve applications from regulated utilities seeking to acquire SCIP ratepayers after divestment nearly occtmed.
It is therefore foreseeable that, should that for which the Commission advocates in the Letter come to fruition, the Commission would once again be required.to vote on how to divide the former SCIP system, service territory and customers among existing regulated utilities.
does not extend to SCIP[.]" Response, p. 6. The Commission contends that we must limit the scope of "legal action" to include only those matters which fall within the Commission's current authority because any other result would be too speculative and unforeseeable. Response, p. 6. Specifically, the Commission argues that the phrase "pursuant to the constitution, the public body's charter, bylaws or specified scope of appointment and the laws of this state" means legal action can occur only as to "matter[s] within the Commission's jurisdiction." Response, p. 1 & p. 5. While the OML does use that precise phrasing in other sections, it notably does not do so when it defines legal action in A.RS.§ 48-431(3).
A.R.S. § 38-431.0l(f) permits a public body to allow public comment "on anyissue within the jurisdiction of the public body." The Legislature chose not to use that construction when it set forth the definition oflegal action, instead using the phrase "pursuant to the tonstitution, the pubJjc body's charter, bylaws or specified scope of appointment and the laws of this state." A.R.S. § 38-
431(3). Thus, the phrase "within the jurisdiction of the public body'' must mean something different than the phrase "pursuant to [] the public body's chaiier, bylaws or specified scope of appointment and the laws of this state" as it is used in A.RS. § 38-431(3) to define legal action.
See Stambaugh v. Killian, 242 Ariz. 508, 509 ,r 7 (2017) ("In construing a specific provision, we
look to the statute as a whole and we may also consider statutes that are in pari materia--of the same subject or general purpose-for guidance and to give effect to all of the provisions involved."); Garcia v. Butler in &for Cnty. of Pima, 25I Ariz. 191, 195 ,r 16 (2021) ("The
legislature's use of restrictive language in one section of the statute but not in the other section indicates that it intended the restriction to apply only where it was designated.").
We ai·e obligated to interpret the Open Meeting Law "in favor of open and public meetings." A.R.S. § 38-43l.09(A). Because the Open Meeting Law as a whole does not support the Commission's narrow reading of A.R.S. § 38-431(3), we decline to adopt it.
The Open Meeting Law controls the '"business of the public body'' (Response, p. 5), and the business of the Commission is, among other things, Arizona utility policy. We therefore conclude that the signatory Commissioners took legal action when they decided to send a letter bearing the seal of the Commission and advocating for an "end goal of transferring generation, transmission, and customer responsibility [from SCIP] to regulated Arizona utilities" (Letter, p. 1).
Simply put, when the Commissioners decide to speak collectively on matters of Arizona utility policy and recommend specific changes that would expand the pool of ratepayers subject to Commission regulation, they must do so at a properly noticed public meeting. Because they did not do so here, we find that the Commission violated the Open Meeting Law.
Remedy
The Commission asserts that "[t]he Letter was drafted and signed based on a good faith understanding that the OML did not apply[.]" Response, p. 8. We have some questioQ, however, as to why Commissioner Thompson's office solicited sign-on approval from each Commissioner individually, a tactic often used to avoid initiating a discussion among a quorum of public body members. Nonetheless, om investigation revealed no direct evidence that the signatory Commissioners intentionally and knowingly violated the Open Meeting Law. We therefore decline to impose a monetary penalty on the Commission.
Instead, we require the Commissioners, their staff, and Legal Division staff to receive training on the Open Meeting Law within 60 days of the date of this letter, by December 9, 2024. Training materials must specifically address the scope and requirements of A.RS.§ 38-431.0l(A) and must be pre-approved by this Office. In addition, the Commission must prominently display this letter on the Commission's website for six months from the date of this Jetter, until April 9, 2025
Finally, no later than seven months from the date of this letter, the Commission must provide this Office with documentation demonstrating its compliance with the training and posting requirements noted above.
Conclusion
TI1is letter relates solely to the disposjtion of the aforementioned Open Meeting Law complaint, and does not relate to any non-OML matters. The facts recited in this letter are not administrative findings of fact and are not made for purposes other than those set forth in A.R.S.
§§ 38-431 et seq. This is not a formal opinion of the Attorney General's Office and should not be cited as authority in other matters.
Sincerely,
Mary M. Curtin
Senior Litigation Counsel
