State ex rel. Corbin v. Arizona Corp. Com'n

• Decision Date: 29 May 1992
• Docket Number: CA-CV,No. 2,2
• Citation: 174 Ariz. 216,848 P.2d 301
• Parties: STATE of Arizona, ex rel., Robert L. CORBIN, The Attorney General; US West NewVector Group, Inc., a Colorado corporation; Citizens Utilities Company, a Delaware corporation; Phelps Dodge Corporation, a New York corporation; Morenci Water & Electric Company, an Arizona corporation; AJO Improvement Company, an Arizona corporation; Alltel Corporation, a Delaware corporation; CP National Corporation, a California corporation; Great Southwest Telephone Company, a Texas corporation; Navajo Communications Company, Inc., a New Mexico corporation; Southern Union Company, an Arizona corporation; Pinnacle West Capital Corporation, an Arizona corporation; Arizona Sierra Utility Company; First National Utilities, Inc.; Bella Vista Water Company; Granite Oaks Water Users Association; Water Utility of Greater Tonopah; Water Utility of Greater Buckeye; West Valley Utility Water Combine; the Mountain States Telephone and Telegraph Company, doing business as US West Communications; Tucson Electric Power Company; Arizona Public Service Company; Southwest Gas Corporation, Plaintiffs-Appellees, v. ARIZONA CORPORATION COMMISSION, and Renz D. Jennings, Marcia Weeks; and Dale H. Morgan, as members thereof, Defendants-Appellants. 92-0052.
• Court: Arizona Court of Appeals

Page 301

848 P.2d 301

174 Ariz. 216

STATE of Arizona, ex rel., Robert L. CORBIN, The Attorney General; US West NewVector Group, Inc., a Colorado corporation; Citizens Utilities Company, a Delaware corporation; Phelps Dodge Corporation, a New York corporation; Morenci Water & Electric Company, an Arizona corporation; AJO Improvement Company, an Arizona corporation; Alltel Corporation, a Delaware corporation; CP National Corporation, a California corporation; Great Southwest Telephone Company, a Texas corporation; Navajo Communications Company, Inc., a New Mexico corporation; Southern Union Company, an Arizona corporation; Pinnacle West Capital Corporation, an Arizona corporation; Arizona Sierra Utility Company; First National Utilities, Inc.; Bella Vista Water Company; Granite Oaks Water Users Association; Water Utility of Greater Tonopah; Water Utility of Greater Buckeye; West Valley Utility Water Combine; the Mountain States Telephone and Telegraph Company, doing business as US West Communications; Tucson Electric Power Company; Arizona Public Service Company; Southwest Gas Corporation, Plaintiffs-Appellees, v. ARIZONA CORPORATION COMMISSION, and Renz D. Jennings, Marcia Weeks; and Dale H. Morgan, as members thereof, Defendants-Appellants.

No. 2 CA-CV 92-0052.

Court of Appeals of Arizona Division 2, Department A.

May 29, 1992.

As Corrected June 3, 1992.

Reconsideration Denied July 16, 1992.

Review Denied April 13, 1993.

[174 Ariz. 217] Grant Woods, Atty. Gen. by Charles S. Pierson, Phoenix, for plaintiffs/appellees State of Ariz.

Johnston, Maynard, Grant & Parker by Michael M. Grant, Phoenix, for plaintiffs/appellees US West and NewVector Group, Inc.

Beus, Gilbert & Morrill by Leo R. Beus, Susan Plimpton Segal and Scott D. Larmore, Phoenix, for plaintiffs/appellees Pinnacle West Capital Corp.

Martinez & Curtis, P.C. by James M. Flenner, Phoenix, for plaintiffs/appellees Arizona Sierra Utility Co., First Nat. Utilities, Inc., Bella Vista Water Co., Granite Oaks Water Users Ass'n., Water Utility of Greater Buckeye and West Valley Utility Water Combine.

Fennemore Craig, P.C. by C. Webb Crockett, Timothy Berg, Steven M. Banzhaf and Dennis R. Nelson, Phoenix, for plaintiffs/appellees Mountain States Tel. and Tel. Co. d/b/a US West Communications and Tucson Elec. Power Co.

Snell & Wilmer by Steven M. Wheeler, Phoenix, for plaintiff/appellee Arizona Public Service Co.

Brown & Bain by Lex J. Smith and Terrence W. Thompson, Phoenix, for plaintiffs/appellees Citizen Utilities Co., Phelps Dodge Corp., Morenci Water & Elec. Co., Ajo Imp. Co., ALLTEL Corp., CP Nat. Corp., Great Southwest Telephone Co., Inc. and Southern Union Co.

Andrew Bettwy, Las Vegas, NV, for plaintiff/appellee Southwest Gas Corp.

Arizona Corp. Com'n by Janet Wagner and Janice M. Alward, Phoenix, for defendants/appellants.

OPINION

HOWARD, Judge.

After a public hearing the corporation commission, on March 14, 1990, promulgated A.A.C. R14-2-801 through R14-2-806 in Commission Decision No. 56844 (the "order"). These rules regulate the formation of holding companies by public service corporations, govern the ability of public service corporations to invest in business activities that may pose a risk to the utility's ratepayers, and regulate transactions between public service corporations and their affiliates. The second paragraph of the "order" stated: "[T]he rules adopted herein shall become effective upon filing with the Office of the Secretary of State pursuant to A.R.S. § 41-1032 or 90 days after the submission of the rules to the Attorney General, whichever is earlier."

The state and a number of utilities challenged the rule in the superior court on the ground that the above quoted paragraph would allow the rules to become effective even if not approved by the attorney general as required by A.R.S. § 41-1041(A), a provision of the Administrative Procedure Act (APA). The trial court subsequently found that the paragraph at issue was unlawful and that the proposed rules could not become effective until they were certified by the attorney general.

While this appeal was pending, the commission, without waiving the APA issues on appeal, requested that the attorney general proceed with the certification process notwithstanding the appeal. The proposed rules were submitted to the attorney general for certification pursuant to A.R.S. § 41-1041(D) and the attorney general, after studying the rules, informed the commission that he would not certify because they were not within the commission's power to adopt. See A.R.S. § 41-1041(A)(3).

The commission then filed a special action in the Arizona Supreme Court challenging the attorney general's refusal to certify. The result of this special action is Arizona Corporation Commission v. State of Arizona, 171 Ariz. 286, 830 P.2d 807 (1992), where the court held that the proposed rules were within the ratemaking powers of the commission and ordered the attorney general to certify them. In footnote 3 of this decision the supreme court noted that the instant appeal was pending in this court but it did not purport to decide the issue which we now have before us, which is whether the corporation commission must submit its ratemaking rules to the attorney general for certification pursuant to A.R.S. § 41-1041. We hold that it need not.

At oral argument the state contended that this appeal should be dismissed as moot because of the decision in Arizona Corporation Commission v. State of Arizona, supra. We do not agree. The court of appeals will determine issues in a moot case where the case presents issues of great public importance or issues likely to be faced again. Fiesta Mall Venture v. Mecham Recall Committee, 159 Ariz. 371, 767 P.2d 719 (App.1988). At oral argument the state represented that it would continue to challenge corporation commission ratemaking rules that have not been submitted to the attorney general for certification.

The Arizona Constitution and Arizona precedent established the corporation commission as a separate, popularly-elected branch of the state government. Ariz. Const. art. 15, § 1. The broad power of the corporation commission is established by art. 15, § 3:

The Corporation Commission shall have full power to, and shall, prescribe just and reasonable classifications to be used and just and reasonable rates and charges to be made and collected, by public service corporations within the State for service rendered therein, and make reasonable rules, regulations, and orders, by which such corporations shall be governed in the transaction of business within the State, and may prescribe the forms of contracts and the systems of keeping accounts to be used by such corporations in transacting such business, and make and enforce reasonable rules, regulations, and orders for the convenience, comfort, and safety, and the preservation of the health, of the employees and patrons of such corporations; Provided, that incorporated cities and towns may be authorized by law to exercise supervision over public service corporations doing business therein, including the regulation of rates and charges to be made and collected by such corporations; Provided further, that classifications,...