FACT SHEET: Curbing the Overreach of the Corporation Commission

In News by Kadima

Sponsor: Senator Vince Leach  – SB1145 

 The Arizona Corporation Commission currently has authority to issue a subpoena “simply to assure itself that the law is being obeyed.” That gives it power to subpoena anyone at any time. And if you get a subpoena, you can only a) ignore it and risk the Commission seeking enforcement in court, and then raise your legal arguments against the Commission’s jurisdiction—which can carry substantial legal penalties if you lose, or b) file a special action, but that’s discretionary, and courts can reject a special action for any reason or no reason at all. 

Take the Chandler, Arizona company Kadima Ventures. The Corporation Commission began an investigation against Kadmia claiming it was illegally selling securities. But Kadima has never sold securities and argues that the Arizona Corporation Commission has no jurisdiction over it. Nevertheless, the Commission sent Kadima a subpoena, and existing law gives Kadima no way to challenge that subpoena before complying with it. In similar cases involving the EPA’s subpoena powers, the U.S. Supreme Court said that not allowing people to challenge an order from the EPA was unconstitutional—because people are entitled to a pre-compliance hearing and if they’re denied that right, that would violate due process. In the Kadima example, it was not even one of the Commissioners who sent the subpoena, because subpoenas can be issued by mere employees of the Commission. To make matters worse, the Commission refused to keep Kadima’s propriety information confidential, even if Kadima was found to not be under their jurisdiction. 

Our bill does two things to fix this: 

• It requires the Commission to keep trade secrets confidential, and requires the Commission to create rules governing when it will publicly disclose information it gets by subpoena, and 

• Allows businesses to challenge subpoenas when they believe it was wrongfully issued. 

This bill allows someone who’s been subpoenaed to seek to quash that subpoena in the same way that they can already quash subpoenas issued by legal courts. And it requires the Commission to keep trade secrets confidential and to establish clear rules governing when it will release private business information to the public. This bill does not change the Commission’s jurisdiction at all, but simply provides a way for people to challenge subpoenas if they think they’re not under the Commission’s jurisdiction—and keeps private business information from being publicized in ways that can harm law-abiding companies.