Brnovich files petition to oust Susan Bitter Smith from Arizona Corporation Commission

Arizona's attorney general says utility regulator Susan Bitter Smith should be removed from her elected position because of her private-sector work with companies that are overseen by her public office.

Attorney General Mark Brnovich filed a petition Monday with the Arizona Supreme Court seeking her ouster.

Bitter Smith is violating the state conflict-of-interest law by serving as a Corporation Commission member while also working as executive director of the Southwest Cable Communications Association, the petition said.

"Sometimes we talk about gray areas of the law," Brnovich said. "But that's not what we have in the case today we filed with the state Supreme Court. What we have here is an instance where the law clearly prohibits Corporation Commissioner Susan Bitter Smith from holding (this) office."

The petition centers on Bitter Smith's work as executive director of the cable association and the fact that Cox Communications lists her as a lobbyist. State law prohibits Corporation Commission members from working for or having a financial interest in companies regulated by the commission.

The telecommunications affiliates of Cox, Comcast Corp. and other members of the SWCCA group are regulated by Bitter Smith and the other four commissioners. The Corporation Commission does not oversee cable companies.

Bitter Smith said that because the cable group’s members are not regulated by the commission, she has no conflict.

She also said she has been listed as a lobbyist for Cox only because of her work with SWCCA and does not get paid by Cox other than through her salary at the cable group.

“The AG’s office has taken a very broad view of what they believe conflict-of-interest statutes to suggest,” Bitter Smith said Monday. “It would appear to me and to others that any commissioner in receipt of a solar rebate would be in the same position. … Some commissioners who are (Arizona Public Service Co.) customers, do they have a conflict? They make decisions that benefit them financially.”

She said she looks forward to the court’s review.

“I hope for a very speedy resolution of this issue,” she said.

If the court decides to remove Bitter Smith, who has already served most of her full term, which ends in 2016, the governor would appoint a replacement for the remaining time. Her removal would not affect her votes taken while on the commission, Brnovich said.

Tax records from 2014 show Bitter Smith earned $162,000 that year from the Southwest Cable Communications Association. She is paid $79,500 annually as a state regulator but told Brnovich's representatives during their investigation that she works 40 hours a week at her other jobs. She also runs a public-relations company called Technical Solutions.

"Of course that raises the question ... what is she doing for her time as corporation commissioner?" Brnovich said.

An initial complaint against Bitter Smith was filed in September by Tom Ryan, a Chandler attorney. The conservative Public Integrity Alliance also has been seeking her removal for the same reasons.

“I’m pleased the attorney general and his staff did what I hoped they would do, which is further the investigation,” Ryan said Monday. “She admits to everything and is not recognizing that what she admits to is a conflict of interest.”

The Attorney General's Office agreed with Ryan's assessment.

Brnovich said that because cable companies or their affiliates offer telephone service, often as part of a "bundle" with television and Internet, they are effectively companies regulated by the commission, and Bitter Smith should not be allowed to work for them while in office.

Brnovich also said a criminal investigation of Bitter Smith’s actions remains open, in addition to the civil action taken Monday.

Robert Graham, head of the state GOP party,  said he left Bitter Smith a long voice mail asking her to consider resigning. He said the two have had numerous discussions about her options over the past couple of months, after allegations involving her potential ineligibility surfaced. He said Bitter Smith told him that she was committed to the job and that it was not her intent to skirt conflict-of-interest laws.

"Turn the clock forward today, the discussion has shifted a little bit," Graham said Monday. "The cost associated with this is not just a financial burden with the legal fees, it's also the impact it's going to have on the commission, the state of Arizona (and) obviously I'm interested in the party."

He added, "You want what's best for the people of Arizona. Sometimes cutting your losses and moving on are the best for everyone. At this particular point, I can give advice all day long, but when it comes down to it is what she ultimately wants to do."

Bitter Smith is a Republican who has held office as a member of the Scottsdale City Council and the Central Arizona Water Conservation District board and made four unsuccessful runs for U.S. Congress. She is no stranger to controversy in her more than a quarter-century in politics.

Brnovich said he considers only the letter of the law, not political affiliation, when pursuing such cases.

“We are doing this because we feel we have to,” he said.

He said the facts of the case are not in dispute. Bitter Smith made no attempt to hide her affiliations with Cox and the cable group during her campaign or after taking office, listing them on the websites for her public-relations company and the Corporation Commission.

The last corporation commissioner to be removed by the conflict-of-interest law was Republican Tony West in 1999. West had a license to sell securities when he took office, and gave it up a month later.

Because the commission oversees securities dealers in the state, the court determined West was in violation. He had to step down, and the incumbent commissioner he replaced, Democrat Renz Jennings, temporarily filled the vacancy until Republican Gov. Jane Hull appointed Republican Bill Mundell to the post in February 2000.

Jennings was the person who petitioned the court to remove West from office shortly after West had defeated Democrat Paul Newman in the 1998 election.

The other four Corporation Commission members, as well as a former commissioner, are all involved in separate investigations by Brnovich’s office.

“It’s the full-employment act for our office,” Brnovich joked with reporters.

Commissioner Robert Burns also faces a complaint at the Attorney General's Office seeking his removal for a conflict of interest. The complaint was filed by Warren Woodward, a frequent critic of the commission who successfully challenged a utility fee for people who decline to use wireless “smart meters” to track their electricity.

Burns was listed as a lobbyist for a telecom group when he was elected, but said he resigned from the group after taking office. He said it was a mistake, and he didn’t even know the group had listed him as a lobbyist.

Brnovich’s office is no longer investigating criminal proceedings against Burns, but the civil investigation is ongoing, according to Brnovich spokesman Ryan Anderson.

“I take my oath of office seriously and am disappointed that my commitment to public service was questioned by Mr. Woodward,” Burns said in a response to the complaint.

Ryan, the lawyer who filed the initial complaint against Bitter Smith, did not file one against Burns but said it appears he violated the same law.

“Robert Burns should be removed from office as well,” Ryan said.

Brnovich’s office also seized and recovered thousands of deleted text messages from Commissioner Bob Stump's cellphone. The messages are at the center of an ongoing public-records dispute with the Checks and Balances Project, a clean-energy group.

Stump sent messages to the two newly elected commissioners, Tom Forese and Doug Little, during their 2014 campaign. Checks and Balances Project has suggested the messages could show improper coordination with independent political groups that spent $3.2 million helping the two win office.

Roberts: Brnovich files to oust Susan Bitter Smith

And former Commissioner Gary Pierce has been under investigation since February in the wake of a whistleblower letter suggesting he improperly worked on political campaigns while in office.

“We hope to have resolution shortly to all investigations related to Corporation Commissioners,” Anderson said.

Republic reporter Yvonne Wingett Sanchez contributed to this story.