SB1145 Brings Constitutional Common Sense to the Corporation Commission

The Arizona Corporation Commission has the power to investigate companies that it suspects are operating illegally. That power is quite broad. Courts have ruled that it can subpoena businesses and force them to turn over private, proprietary information simply “because it wants assurance” that the law is being followed.

But the Commission has no obligation to keep this private information private. Under current law, it can release this information—including valuable trade secrets— to the public, or to competing businesses, whenever the Commission’s director pleases. There are no oversight or checks and balances on that power. Worse still, Arizona law gives businesses no opportunity to challenge the legality of a subpoena from the Commission. Businesses must comply—or refuse and risk charges for contempt—a practice that the U.S. Supreme Court said violates due process of law at the federal level. In a pair of cases called Sackett and Hawkes, the Court said that when federal agencies assert jurisdiction over people, they have the right to a hearing to challenge the agencies’ jurisdiction. But Arizona law provides no similar protections for innocent businesses. 

Fortunately, SB 1145, which is headed to the House floor, would fix that problem and would protect trade secrets of law-abiding businesses as well. SB 1145 does three things:

1. it would let business owners challenge a subpoena in court if they think a subpoena exceeds the Commission’s power.
2. it would require the Commission to keep trade secrets confidential. (That part of the bill was written by the Commission’s own lawyers.)
3. it would still allow the Commission to release information to the public but would require the Commission to write a regulation saying when and under what circumstances it would do so—instead of allowing the Commission’s director, a single, unelected bureaucrat, to release private information to the public whenever he or she feels like it.

These commonsense reforms preserve the Commission’s power to investigate. In fact, SB 1145 does not reduce or limit the Commission’s subpoena powers in any way. But it does allow people to go before a neutral judge to challenge a subpoena before being forced to obey it, if they think that subpoena was wrongly issued. Also, it does not limit the Commission’s power to release information to the public at all. It simply requires the Commission to write an official regulation that says when it will and specify the rules for publicizing information that it obtains during an investigation. And it requires the Commission to keep valuable trade secrets private.

The Arizona Constitution gives the legislature power to “prescribe rules and regulations to govern proceedings instituted by and before” the Commission. And the legislature often writes rules for how subpoenas operate. For example, the legislature has required subpoenas for medical records to remain confidential, has required certain cell-phone records obtained during investigations to be kept confidential, and has enacted laws regulating how subpoenas to news media operate. These rules apply to subpoenas issued by courts, of course, but since the Corporation Commission has (according to the Constitution) the same subpoena powers as “a court,” it makes sense for the legislature to regulate its subpoena powers as well.

Protecting consumers from fraudulent business practices is an important job, and that’s what the Commission should be doing. But at the same time, it’s important to protect the rights of innocent people who might be wrongly targeted by an investigation. Releasing their private business information to the public harms them and doesn’t help Arizonans. SB 1145 is a modest and meaningful reform that lets the Commission pursue wrongdoers, while better protecting the rights of the innocent.