Arizona Commissioner Urges Other States to Review Ethics

Arizona Corporation Commissioners voted 4-1 in July to approve an amended ethics code that now prohibits campaign contributions of any amount from regulated utilities and their employees. It covers candidates running for the ACC, commissioners running for reelection and members seeking any other local, state or federal office. It exempts Citizens of Clean Elections Act candidates. The ACC tweaked contribution disclosure rules (see 1906120065).

The ACC had fine-tuned an ethics code it began developing in 2017 (see 1804060058). It's one of 11 states that elects public service commissioners; governors or the legislature choose commissioners elsewhere.

“If you’re going to have clean elections, this seems to be the perfect office to have it apply to because special interests are certainly involved to a great degree,” said Dunn, a Republican who spearheaded development of Arizona's ethics code. “It’s hard to get contributions from anyone but those who are involved in the specialized industry.”

Arizona’s campaign contributions policy “is remarkable and will prove very effective in reining in corruption and undue influence-peddling" that tainted ACC's operations and image, emailed Public Citizen Government Affairs Lobbyist Craig Holman. The policy “prevents those who have business pending before the Commission from handing over a wad of campaign cash to commissioners in an effort to curry favor. It not only prevents the regulated entities from making contributions but also restricts their owners, managers and employees.” Holman has no problem with exempting small contributions to Clean Elections candidates because those “are not large enough to be worrisome,” he said.

Other States

“This type of sweeping ethics restriction should serve as a model for other states to deal with ‘pay-to-play’ abuses,” Holman said. “A small handful of states are making efforts to rein in undue influence-peddling by restricting campaign contributions from those who have business pending.” Connecticut and Georgia prohibit contributions from regulated industries, he said.

Dunn couldn't find models anywhere. “I thought a code of ethics would be more prevalent out there,” he said. “There’s just bits and pieces. Sometimes, a commission will adopt it and sometimes, they undo it.” Dunn shared Arizona’s code with other state commissions, including one that appoints members, he said. A campaign contributions policy would apply only to elected commissions, but many other aspects of Arizona’s code could apply to appointed commissions, Dunn said. That includes requiring members be transparent about financial interests such as stocks, and to make their calendars public on a regular basis. Requiring lobbyists to be registered could also apply to all kinds of commissions, he said.

Such regulations are "excellent and dearly needed in Nebraska,” emailed Common Cause Nebraska Issues Chairman Jack Gould. Common Cause proposed a state bill banning such contributions but lawmakers won’t advance it because they say the rule should apply to commissioners and legislators, he said. "Our Senators get a great deal of campaign money from the telecom industry as well as other utilities. Obviously we would be in favor of prohibiting both but the PSC is directly influenced.”

“Nebraska commissioners “are governed by the Nebraska Accountability and Disclosure Act,” a PSC spokesperson emailed. A change “would require a change in statute.”

NARUC

NARUC has an ethics code for state utility commissioners. The code, adopted in 1977, doesn’t specifically address campaign contributions. It says commissioners should recuse themselves when they have financial interest in the subject, and “refrain from financial and business dealing that tend to reflect adversely on his or her impartiality, interfere with the proper performance or his or her official duties, exploit his or her position, or involve him or her in frequent transactions with persons likely to come before the Commission.”

Dunn supports NARUC updating its code, which appears to be taken largely from the judicial code. However, the group “would have to do one for elected commissions as well as appointed commissions, and I don’t know if there’s a high level of interest to get into the politics of elected commissions,” he said.

State commissions should constantly evaluate ethics policies, said NARUC Second Vice President Paul Kjellander. If a commissioner worries what something “will look like on the front page of the newspaper, don’t do it,” said the Republican president of the Idaho Public Utilities Commission. NARUC addresses ethics at new commissioner orientations it holds twice yearly, since 2008, he said.

"Any member who has specific suggestions or concerns about NARUC’s code of ethics can request that the board of directors review the code to consider suggested changes," a spokesperson emailed. "As of this time, no such request has been made and there are no plans to amend the code in the immediate future."

Unintended Consequences?

"There haven’t been any issues or calls for change in South Dakota law relating to conflicts" involving the state's elected utility commissioners, emailed South Dakota Commissioner Chris Nelson, a Republican. "I would certainly be open to discussions of such but would have to be convinced 1) that there was a problem that needed to be solved and 2) that the solution would actually fix the problem and not have unintended consequences."

"Saying don't take donations from regulated industry doesn't necessarily address this problem," emailed Nebraska Commissioner Crystal Rhoades. Incumbents with more extensive networks or candidates with more personal wealth could be unfairly advantaged, the Democrat said. Or commissioners could funnel money through their political parties or independent expenditure committees, she said. "It's important that regulators are not shareholders or holding ownership in any regulated business," said Rhoades. "But the only way to really solve the problem of campaign finance is to publicly fund campaigns."

Some ACC members called for a stronger code at their July meeting approving the latest tweaks. Noting a “huge amount of concern” about utilities’ influence, Lea Marquez Peterson (R) voted against the amendments because she opposed the carve-out for "clean elections" candidates. Commissioner Justin Olsen (R) sought a more-stringent policy, voting yes because he said it’s a step in the right direction.

The ACC could revisit its code after the next election if issues arise, said Dunn. “No code’s going to be perfect,” he said. “Now we see how well it works.”