Corp Comm ethics code a long time coming as scandal swirls

The Arizona Corporation Commission is still without an ethics code, despite an initial pledge a year ago to come up with one and a federal bribery case casting a shadow over the regulatory body.

Chairman Tom Forese first announced a plan to create a code of ethics one year ago, when it became public the FBI was looking into 2014 election spending involving former Commissioner Gary Pierce.

The conversation about creating a code of ethics reignited again after Pierce was indicted in May for an alleged bribery scheme unrelated to election spending.

Federal prosecutors charged Pierce, his wife Sherry, longtime Capitol lobbyist Jim Norton, and Johnson Utilities owner George Johnson with felony conspiracy, bribery, mail fraud and five counts of wire fraud.

The indictment alleged that Pierce, his wife, Johnson and Norton conspired to have Johnson pay the Pierce couple through Norton and an “unindicted coconspirator” in exchange for Pierce’s votes.

Creating an ethics code could help the commission address an ongoing negative image problem, partly the result of years of a protracted battle between utilities and solar companies that led to millions in campaign spending on the previously sleepy regulatory body.

The issue also came up multiple times during the 2016 commission election. Democrats Bill Mundell and Tom Chabin released their own ethics policies at one point, which included prohibitions on accepting campaign money from utilities and disclosing communications with regulated companies.

Forese again promised a code of ethics when he was selected as chairman in January. He set up subcommittees within the commission in March, including one headed by Commissioner Boyd Dunn to explore ethics, but not much had been done on advancing a code of ethics until after the recent indictment.

Dunn wrote that the ethics committee should look at conflicts of interest, bias, standards for holding office and political spending disclosure.

Forese said that setting up the committee was the “most important step so far” in getting a code of ethics in place. He also said he didn’t have the support to put a code together until January, when he took over as chairman.

In a Corporation Commission press release in June 2016, Doug Little, then the chairman of the commission, said he supported creating an ethics code. But the plan never got off the ground then.

“It’s over a year in the making, but I think we’re getting pretty close,” Forese said.

Forese said the idea of adopting a code of ethics, which has surfaced twice in the past year immediately following an FBI investigation, has not been meant as simple window dressing.

He said Dunn was more than capable of handling the code of ethics issue and that Dunn was a “very thorough” person.

Dunn wrote a letter June 7 saying the commission should now start looking at other codes of ethics to see what theirs should include, as well as review the commission’s authority and what ethical obligations apply to it already.

Attorney and frequent Corporation Commission critic Tom Ryan said the commission seems to be pulling out the idea of a code of ethics whenever the FBI comes around.

“It’s a dog and pony show. How hard is this? It is a discouragingly slow process. This is not that hard,” Ryan said.

A potential code should include a process requiring recusal for commissioners who receive large donations from regulated entities, Ryan said. He also said it should be clear that commissioners shouldn’t accept bribes or vote on matters when they have conflicts of interest. The lack of an ethics code isn’t helping the commission with its image problem, Ryan said, and the inaction on setting one up so far isn’t helping either.

“What Commissioner Dunn is doing right now is hardly antiseptic at all. It’s like spraying a little Bactine down a sewer hole,” Ryan said.

Commissioner Bob Burns, who has repeatedly pushed for Arizona Public Service, the state’s largest utility, to disclose political spending, said he has no problem with the commission writing up an ethics policy. He said he took an ethics seminar conducted by the Residential Utility Consumer Office when he was first elected, which he found helpful.

But Burns said his colleagues, with whom he has clashed over the APS issue, haven’t reached out to him for his input.

Dunn said that, while the code of ethics process could have moved faster, he intends to have a draft by the end of the year, using input from a workshop in August he has scheduled.

He said it’s a major priority for the commission, but said it has taken some time for him to get up to speed on all other commission issues while handling the code of ethics.

Dunn said he told his policy adviser to get the research moving faster, particularly in light of the recent indictment.

“That just reminded me of the importance of a code of ethics,” he said.

He also said having a thorough process is important to him, and he wants to focus on creating a good ethics code that includes input from various stakeholders and other commissioners.

“I’m not going to go out there and pick something off a tree or copy someone’s code of ethics just so we have one,” he said.

But, Ryan said, the commission should have been able to talk to other public utility commissions and done research on existing codes of ethics by now, especially since the commission belongs to national groups that could easily put them in touch.

Ethics codes vary widely. The National Association of Regulatory Utility Commissioners, whose conferences all the Arizona commissioners regularly attend, has a three-page ethics code. The city of Phoenix code is 43 pages long.

Some codes may be aspirational, setting up expected behavior, said Hana Callaghan, director of the ethics program at Santa Clara University’s Markkula Center for Applied Ethics. Others have teeth, providing enforcement mechanisms if ethics rules are breached. Neither is perfect, and those that include enforcement can be used as political tools sometimes, she said.

Putting a code together may sound easy, but figuring out what kind of code is warranted and how it interplays with state laws and regulations can take time, Callaghan said.

 But, she said, the impetus for creating a code of ethics often comes from a common source.

“Ethics codes do evolve following some sort of ethical lapse,” Callaghan said, noting that the federal government’s Office of Government Ethics sprung from the Watergate investigation.