Arizona Public Service offered to settle its dispute with Arizona Corporation Commissioner Bob Burns, but Burns rejected the proposal, public records show.
APS and its parent company, Pinnacle West Capital Corp., wanted Burns to agree to drop his quest for disclosure of potential political spending conducted by the companies in previous years. In exchange, APS would support new disclosure rules on future expenditures by regulated and unregulated entities with business before the commission, according to documents obtained through a public records request.
Burns’ response? No thanks, delivered in a strongly worded 6-page letter from his attorney.
“The proposal includes people who are not regulated who I believe will object and object strongly to being forced into that kind of a situation. I think it has all kinds of weak points, if you will, opportunities for somebody else besides APS to basically torpedo the proposal,” Burns told the Arizona Capitol Times today.
Burns said he wants to see what APS and Pinnacle West have historically spent on commission elections or charitable spending, plus some sort of guarantee that any future rule would actually be implemented.
“The reason for the look-back is to understand the mechanism that’s in place and what other mechanisms might be available to, if you will, work around the rules. … If you don’t know what’s broken, how do you fix it?” Burns told the Capitol Times.
APS said in a statement today that the settlement offer speaks for itself.
“Our proposal offered unprecedented transparency and disclosure – more than the law requires,” APS said.
Interestingly, Pinnacle West openly spent more than $1 million supporting Burns in the 2016 election through a group called the AZ Coalition for Reliable Electricity. The group spent about $4 million total supporting GOP candidates Burns, Andy Tobin and Boyd Dunn, all of whom won election.
Burns’ issue with APS stems from political spending on the 2014 Corporation Commission election, which the commissioner says affected the public’s perception of the commission and its integrity.
More than $3 million flooded the race to support now-commissioners Doug Little and Tom Forese and oppose their challengers. Many allege the money, spent by dark money groups Save Our Future Now and the Arizona Free Enterprise Club, originally came from APS or Pinnacle West. The company has not confirmed or denied any involvement.
For more than a year, Burns has tried various methods to ascertain whether APS participated in any electioneering on the commission election, to no avail. He first asked all regulated and unregulated entities to “voluntarily refrain” from spending on commission elections. He then requested APS turn over records related to political spending, eventually sending subpoenas to the companies requesting the information. APS and Pinnacle West then sued Burns in Maricopa County Superior Court, arguing his subpoenas were unlawful and part of a “campaign of harassment.”
On November 7, Burns’ attorney, William Richards, wrote a letter to APS’s attorney, Thomas Loquvam, explaining Burns’ opposition to a settlement. Burns still wants to continue his plan to disclose previous spending while also developing “robust new rules” for campaign spending transparency, the letter says.
Burns is “justly suspicious” of creating new transparency rules without disclosure of what APS or Pinnacle West may have done in the past, Richards writes.
“Commissioner Burns expects that APS and Pinnacle West leaders understand why any sort of hasty move to foreclose disclosure concerning 2014 events in return for illusory new rule proposals could only heighten public perceptions that APS and Pinnacle West have something material to hide or have succeeded in procuring unfair protection from the ACC,” he writes.
It wouldn’t be effective to write new rules when it’s not clear what’s transpired with previous election spending, Richards argues. He offers a few hypothetical situations: A regulated entity could donate to a nonprofit run by a commissioner’s spouse. A regulated entity could use a go-between to figure out the best use of funds for certain candidates. But, Richards said, it’s unknown if any of those things happen now, so there’s no way to know how best to address them. Rules written without any factual understanding of the past could be overly focused or unnecessarily broad, he said.
The proposed rules, attached to a Nov. 10 response to Richards’ letter from APS’s Loquvam also obtained through a public records request, call for any intervenors to commission dockets to disclose political contributions. Intervenors run the gamut, from small water companies in rural areas to large corporations like Wal-Mart and SolarCity.
The rules would require intervenors to disclose any political contributions supporting or opposing commission candidates, whether indirect or direct expenditures, monetary or in-kind, within 10 days. The rules wouldn’t apply to people who make public comments in dockets or appear at open meetings.
Richards contends APS’s proposed new rules would “just elicit so much objection they will be a political dead-letter.”
“Commissioner Burns’ concession to stop his investigation and support rules APS knows stand little practical hope of ever being passed would warrant criticism that he allowed APS to thwart exposure of APS’s and Pinnacle West’s past dealings in exchange for an illusory commitment to a lost cause,” Richards writes.
“Commissioner Burns will not be party to any such tactics, nor would he expect any other commissioners to shed their integrity and the public’s confidence in them for such a move,” he continued.
The proposed settlement would also enlist Little and Forese, who have been painted as APS loyalists, to support hasty rules, inviting allegations of a cover-up, Richards said.
“There will likely be no end to critics who might assert that APS was enlisting commissioners it improperly captured to quash inquiry into APS’s potential wrongdoing,” he said.
The letter also says APS would be criticized if it attempted to get other commissioners to push such rules and overrun Burns. Burns first wants APS to turn over the records he’s demanded, then he would welcome the company’s involvement in putting together disclosure rules for the future, the letter says.
Burns “is not willing to trade the ACC’s rights and responsibilities to undertake a meaningful investigation” in favor of the “hastily conceived proposal” offered by APS, the letter says. The settlement would “draw fire as illusory, politically expedient and driven by the desires of APS, Pinnacle West or even other commissioners to hide the facts of how regulated entities might try to control the regulatory system at the (literal) expense of their customers,” Richards concluded.
In a response to Richards on Nov. 10, APS attorney Thomas Loquvam said the company was disappointed in the tone of the letter and in Burns’ “unwillingness to commit to dialogue over litigation.”
APS was willing to help create and agree to a campaign finance rule “mandating more disclosure than is required by any law, rule, regulation or decision of which APS is aware,” Loquvam wrote.
The proposed rules weren’t set in stone, and APS was willing to add in any elements Burns thought necessary, APS said.
“APS also offered to work through any other modifications needed to ensure that the rule was not ‘illusory,’ but in fact would attract widespread support and withstand legal challenges,” Loquvam wrote, adding that APS would offer its legal expertise and support the rule in all forums, including the courts if a challenge arose.
APS also offered to follow the rule while it was being formed and before it was completed by the commission, Loquvam’s letter said.
“APS remains committed to pursuing policies that are best for its customers and Arizona as a whole, whether that emerges from one-on-one dialogue with its commissioners, or involves a broader group of interested stakeholders,” Loquvam concluded.
Burns told the Capitol Times the early-November letters exchanged by his attorney and APS were the most recent happenings in the case. The APS lawsuit against him is still on hold for now, and he’s continuing to meet with his attorney to figure out what to do next, Burns said.