IN THE

SUPREME COURT OF THE STATE OF ARIZONA

JOHNSON UTILITIES,L.L.C., AN ARIZONA LIMITED LIABILITY COMPANY,

Petitioner,

V.

ARIZONACORPORATION COMMISSION;TOM FORESE, BOB BURNS, ANDY 

TOBIN,BOYD W. DUNN AND JUSTIN OLSON,IN THEIR OFFICIAL CAPACITIES 

AS MEMBERS OF THE ARIZONA CORPORATION COMMISSION

Respondents.

No. CV-19-0105-PR

Filed July 31, 2020

Arizona Corporation Commission

No. WS-02987A-18-0050

The Hon. Sarah N. Harping, Administrative Law Judge

AFFIRMED

Opinion of the Court of Appeals, Division One

246 Ariz. 287 (App. 2019)

VACATED

COUNSEL:

Daniel E. Fredenberg, Christian C.M. Beams, Fredric D. Bellamy, (argued) 

Fredenberg Beams LLC, Phoenix; Jeffrey W. Crockett, Crockett Law Group

PLLC, Phoenix, Attorneys for Johnson Utilities, L.L.C.

Robin R. Mitchell (argued), Naomi E. Davis, Maureen A. Scott, Wesley C.

Van Cleve, Phoenix, Attorneys for Arizona Corporation Commission

Jason D. Gellman, EPCOR Water Arizona, Inc.; and Michael T. Hallam, 

Lewis Roca Rothgerber Christie LLP, Phoenix, Attorneys for Amicus Curiae 

EPCOR Water Arizona Inc.
JOHNSON UTILITIES, L.L.C. V. ARIZONA CORPORATION COMMISSION, ET AL.

Opinion of the Court

2

Michele L. Van Quathem, Law Offices of Michele Van Quathem PLLC, 

Phoenix, Attorney for Amicus Curiae Home Builders Association of Central 

Arizona and Southern Arizona Home Builders Association

Meghan H. Grabel, Osborn Maledon, P.A., Phoenix, Attorneys for Amicus 

Curiae Arizona Water Company

Evan Bolick, Jonathan Udell, and Court S. Rich, Rose Law Group, PC, 

Scottsdale, Attorneys for Amicus Curiae Trilogy Encanterra Construction, 

LLC

Scott S. Wakefield, Hienton & Curry P.L.L.C., and Daniel Pozefsky, 

Residential Utility Consumer Office, Phoenix, Attorneys for Amicus Curiae 

Residential Utility Consumer Office

Mark Brnovich, Arizona Attorney General, Jeffrey Cantrell, Assistant 

Attorney General, Phoenix, Attorneys for Amicus Curiae Arizona 

Department of Environmental Quality

Kent Volkmer, Pinal County Attorney, Kevin Costello, Deputy County 

Attorney, Florence, Attorneys for Amicus Curiae Pinal County

Kevin Nguyen, Struck Love Bojanowski & Acedo,PLC, Chandler, Attorney 

for Amicus Curiae National Association of Water Companies

JUSTICE GOULD authored the opinion of the Court, in which CHIEF

JUSTICE BRUTINEL, VICE CHIEF JUSTICE TIMMER and JUSTICES 

LOPEZ, MONTGOMERY and PELANDER (RETIRED)* joined. JUSTICE 

BOLICK concurred in part and dissented in part.

JUSTICE GOULD, opinion of the Court:

¶1 The Arizona Corporation Commission (“Commission”) has 

permissive authority under article 15, section 3 of the Arizona Constitution 

to “make and enforce reasonable . . . orders for the convenience, comfort, [ ] 

 ∗ Justice James P. Beene has recused himself from this case. Pursuant to 

article 6, section 3 of the Arizona Constitution, Justice John Pelander 

(RETIRED), was designated to sit in this matter.
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3

safety, and . . . health” of the public at-large. We hold that this authority 

permits the Commission to appoint an interim manager to operate a public 

service corporation (“PSC”) for the purpose of remedying unsafe and 

inadequate facilities, services, and equipment posing a health and safety

risk to its customers, employees, and the public.

¶2 As the parties conceded at oral argument, the sole issue before 

this Court is whether the Commission has authority to appoint an interim 

manager for a PSC. We therefore do not address whether the Commission’s 

order appointing an interim manager for Johnson Utilities, LLC 

(“Johnson”) was supported by the evidence or was a reasonable remedy in 

this case. Thus, to the extent Johnson has preserved its right to appeal the 

actionunder A.R.S. § 40-254, the factual findings and reasonableness of that

Order may be subject to review in superior court. 

I.

¶3 Johnson is an Arizona PSC that provides water and 

wastewater utility services in Pinal County pursuant to a Certificate of 

Convenience & Necessity (“CC&N”) issued by the Commission. In 

February 2018, the Commission opened an investigation involving 

Johnson after receiving numerous complaints from its customers during 

a public comment session. The investigation ultimately resulted in a 

lengthy evidentiary hearing regarding Johnson’s financial management, as 

well as the safety and adequacy of its services, equipment, and facilities. 

¶4 On July 24, 2018, the Commission issued Decision Order No. 

76785 (“Order”). The Order included findings that Johnson had engaged 

in deficient billing practices and financial mismanagement. However, the 

primary focus of the Commission’s findings was that it had failed to 

provide service, equipment, and facilities that sufficiently protected “the 

safety, health, comfort, and convenience of its patrons, employees, and 

the public.” In making this finding, the Order documented Johnson’s 

prior history of alleged health and safety violations, including seventyeight raw sewage overflows between 2010–2018.

 

¶5 Concluding that it was necessary to protect public health 

and safety, the Commission’s Order appointed EPCOR Water Arizona as 

an “interim,” or temporary, manager to conduct Johnson’s “business and 

affairs.” The Order preserved Johnson’s right of ownership and stated that 

either Johnson or EPCOR could seek to terminate the appointment upon 

a showing that Johnson’s services “are in all respects just, reasonable, 
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4

safe, proper, adequate, and sufficient.” 

¶6 The Commission and EPCOR entered an Interim Manager 

Agreement on August 15, 2018. Under the Agreement, EPCOR 

temporarily assumed management of Johnson, including control over

payments made by Johnson’s customers. Further, the Agreement requires 

EPCOR to report solely to the Commission, and not Johnson. 

¶7 After pursuing several unsuccessful lawsuits challenging the 

Order, Johnson filed a special action in the court of appeals seeking to enjoin 

its enforcement. The court of appeals accepted jurisdiction but denied 

relief, holding that the Commission has both constitutional and statutory 

authority to appoint an interim manager of a PSC. Johnson Utils. L.L.C. v. 

Ariz. Corp. Comm’n, 246 Ariz. 287, 288 ¶ 2, 294 ¶ 24 (App. 2019). The court 

stated that the Commission’s constitutional ratemaking powers under

article 15, section 3 authorize it to appoint an interim manager. Id. at 292 

¶ 17. Additionally, the court stated that pursuant to A.R.S. § 40-321(A), the 

legislature had delegated such authority to the Commission. Id. at 293

¶¶ 20-21. 

¶8 We granted review because this case involves constitutional 

and statutory issues of statewide importance. We have jurisdiction 

pursuant to article 6, section 5(3) of the Arizona Constitution.

II.

¶9 Johnson argues that the Order exceeds the Commission’s

constitutional ratemaking authority. Johnson also asserts that the 

legislature has not delegated authority to the Commission to appoint an 

interim manager, and that only the superior court has been granted such 

power. Finally, Johnson argues that the Order violates the managerial 

interference doctrine because it impermissibly allows the Commission to

control Johnson’s internal affairs. 

¶10 The Commission argues that its constitutional ratemaking 

power authorizes it to appoint an interim manager whenever a PSC’s 

inadequate services and operations might impact its rates. The 

Commission also asserts that it has “permissive authority” to appoint an 

interim manager under article 15, section 3 of the constitution. Finally, the 

Commission claims that the legislature, pursuant to § 40-321(A), has 

delegated such power to the Commission.
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¶11 We review the interpretation of constitutional and statutory 

provisions de novo. City of Surprise v. Ariz. Corp.Comm’n, 246 Ariz. 206, 210

¶ 10 (2019) (statutory interpretation); Gallardo v. State, 236 Ariz. 84, 87 ¶ 8 

(2014) (constitutional questions). In construing the Commission’s 

authority, we apply the principle that the Commission “has no implied 

powers and its powers do not exceed those to be derived from a strict 

construction of the [c]onstitution and implementing statutes.” City of 

Surprise, 246 Ariz. at 212 ¶ 20 quoting Commercial Life Ins. Co., v. Wright, 64 

Ariz. 129, 139 (1946).

¶12 For the reasons discussed below, we conclude that based on 

the text and purpose of article 15, section 3, together with cases interpreting

that provision, the Commission possesses authority to appoint an interim 

manager to protect the health and safety of a PSC’s customers, employees,

and the public at-large. In reaching this holding, we recognize that there 

has been some inconsistency and confusion in our jurisprudence regarding 

the Commission’s authority under article 15, section 3. As a result, we

endeavor here to clarify this jurisprudence, as well as explain the extent and 

limits of the Commission’s permissive authority under section 3, by 

reviewing the creation of the provision and this Court’s prior

interpretations of it. 

III.

A.

¶13 One of the primary concerns of the delegates attending the 

Arizona Constitutional Convention of 1910 was to protect the public from 

corporate abuses that had occurred in Arizona during the late nineteenth 

and early twentieth centuries. See John S. Goff, The Records of the Arizona 

Constitutional Convention of 1910, 718–22, 971–75 (December 17, 1991); 

Terence W. Thompson, 6 Arizona Practice Series, Corporate Practice § 1.7, 

Constitutional Convention. In the years leading up to the Convention, 

Arizona had been the subject of “stock swindles involving mining, 

telephone, wireless, and other industrial corporations.” Thompson, supra

at § 1.7 (internal quotations marks omitted). Thus, two important political 

forces at the time, progressives and labor, “were firmly united on the need 

to provide ample authority to regulate corporations.” John D. Leshy, The 

Making of the Arizona Constitution, 20 Ariz. St. L.J. 1, 88 (1988). Consistent 

with this purpose, the progressive delegates repeatedly expressed their 

desire to protect the public from corporate abuses and overreaching. See 

Goff, supra at 971-976. 
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¶14 The Convention delegates, however, “were not content 

simply to give the legislature power to regulate corporate activities.” 

Leshy, supra at 88. Instead, they envisioned an elected Corporation 

Commission “vested with broad powers to regulate the activities of 

[PSC]s.” Id. (internal quotation marks omitted); see Gordon Morris Bakken, 

The Arizona Constitutional Convention of 1910, 1978 Ariz. St. L.J. 1, 14–15 

(1978) (noting that “the progressives sought a powerful [C]ommission for 

the regulation of all corporations”). For example, delegate J. E. Crutchfield 

asserted that corporations should be subject to “honest scrutiny by a 

[C]orporation [C]ommission” to clear Arizona’s reputation from the taint

of “these corporations that have robbed the people of Arizona and enriched 

themselves and in some instances made this state a laughing stock in the 

eyes of the world.” Goff, supra at 974. 

¶15 One area of concern among the delegates was dissatisfaction 

with legislative control over the rates charged by railroads and other PSCs. 

Thompson, supra at § 1.7. As one delegate noted, “the work of fixing rates 

is the most complicated subject in the economic world.” Goff, supra at 979. 

Four years after the Convention, the Arizona Supreme Court issued its first

decision interpreting the authority of the Commission in State v. Tucson Gas, 

Elec. Light & Power Co., 15 Ariz. 294 (1914). Writing for the majority, Justice 

Ross, who had also served as a delegate to the Convention, stated: 

there has long existed a deep-rooted dissatisfaction with the 

results obtained through the Legislatures . . . to adjust and 

regulate rates and classifications between the general public 

and public service corporations . . . . the lack of full 

information on the part of the legislator, and inadequacy of 

time and means of investigation, have tended to foster 

litigation, with the result of suspending and often of defeating 

the object . . . [of] secur[ing] just and reasonable 

classifications, rates, charges, and regulations.

Id. at 305-06. Justice Ross further stated that:

[a]ll persons agree that the capital invested in public service 

[corporations] should receive reasonable remuneration, and 

that the services rendered should be efficient and practicable 

and to all patrons upon equal terms and conditions. With a 

full knowledge that these things had not been accomplished 

under the laws heretofore existing in this and other 

jurisdictions, the people in their fundamental law created the 

Corporation Commission, and clothed it with full power to 
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investigate, hear, and determine disputes and controversies 

between public utility companies and the general public. This 

was done primarily for the interest of the consumer.

Id. 

¶16 However, despite the progressives’ desire for expansive 

regulation, “[t]he great majority of the Arizona framers were themselves 

small businessmen and entrepreneurs,” and “[n]ot surprisingly, they 

admired local entrepreneurship and small businesses.” Leshy, supra at 90. 

Thus, the moderate delegates opposed the more extreme proposals of the 

progressives as “ruinous to the industrial prosperity of Arizona,” and 

“likely to put every small corporation in Arizona out of business.” Bakken, 

supra at 15. For example, when one progressive delegate proposed making 

“shareholders personally liable for corporate debts,” the proposal “was 

defeated after newspapers suggested it would destroy any incentive for 

outsiders to invest in Arizona business.” Leshy, supra at 90. 

¶17 As a result, the “constitution which ultimately emerged from 

the convention was tempered by compromise.” Bakken, supra at 26. 

Indeed, “[t]he scope of the powers ultimately given the [Corporation] 

[C]ommission was not nearly so great as that originally envisaged by the 

progressives.” Id. at 15. Perhaps the biggest compromise occurred when, 

contrary to the wishes of the progressives, the framers limited the 

Commission’s “jurisdiction to public service [corporations] as opposed to 

all private corporations.” Leshy, supra at 90 (internal quotation marks 

omitted).

B.

¶18 Article 15 of the constitution creates the Commission and 

grants it broad authority to regulate PSCs. Ariz. Const. art. 15, § 1; id. § 2 

(defining PSCs). The Commission’s powers are set forth primarily in the 

following two clauses of article 15, section 3 of the Arizona Constitution:

The [C]orporation [C]ommission 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
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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 . . . . (emphasis 

added).

¶19 The first clause of section 3, which describes the 

Commission’s authority to “prescribe just and reasonable 

classifications . . . rates and charges” for PSCs, is referred to as the 

Commission’s “ratemaking authority.” The second clause describes the 

Commission’s power to regulate PSCs to protect the health, safety, comfort, 

and convenience of their customers, employees, and the public, and is 

referred to as the Commission’s “permissive authority.”

¶20 In addition to the powers enumerated in section 3, the 

Commission is granted authority to inspect and investigate records for 

publicly traded corporations and PSCs (art. 15, § 4), issue certificates of 

incorporation and licenses (art. 15, § 5), require reports from publicly traded 

corporations and PSCs (art. 15, § 13), ascertain fair property values for PSCs 

(art. 15, § 14) and impose fines for violations of Commission rules, 

regulations, and orders (art. 15, §§ 16, 19). 

1.

¶21 The Commission’s ratemaking authority under article 15, 

section 3 is plenary. The ratemaking clause states that the Commission has 

“full power” to prescribe rules, regulations, and orders governing PSC rates, 

charges, and classifications. (Emphasis added.) See Tucson Gas, 15 Ariz. at 

297 (holding that the ratemaking clause, by its terms, provides the 

Commission with “complete and perfect or plenary power” over 

ratemaking); Ariz. E. R.R. Co. v. State, 19 Ariz. 409, 413–14 (1918) 

((hereinafter Eastern Railroad) stating that “[t]o prescribe classifications, 

rates, and charges of [PSCs] is the duty, and the exclusive duty, of the 

Corporation Commission”).

¶22 The Commission’s ratemaking authority is also selfexecuting. Specifically, because section 3 grants the Commission authority 

to make rules, regulations and orders, no legislative action is necessary to 

enable the Commission to exercise its ratemaking powers. Miller v. Wilson,

59 Ariz. 403, 408 (1942) (stating that in “determining whether a 
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constitutional provision is self-executing,” courts examine whether the

provision “merely lays down general principles” or “grants a right which 

can be put into operation without further legislative action” ); see also Phelps 

Dodge Corp. v. Ariz. Elec. Power Co-op, Inc., 207 Ariz. 95, 110 ¶ 47 (App. 2004)

(holding that the Commission’s authority under article 15, section 14 to 

determine the fair value of PSCs is self-executing because this provision 

expressly grants the Commission power to determine fair value in setting 

rates).

¶23 Finally, the Arizona Constitution, by its terms, makes 

ratemaking the exclusive responsibility of the Commission; it cannot 

delegate this authority to another agency or branch of government. See Jim

Rossi, The Brave New Path of Energy Federalism, 95 Tex. L. Rev. 399, 404 n.24 

(2016) (discussing the distinction between plenary and exclusive powers); 

see also Cal. Bankers Ass’n. v. Shultz, 416 U.S. 21, 59 (1974) (stating that

Congress’ plenary power to regulate foreign commerce may be delegated).

Specifically, the first clause of section 3 states that the Commission “shall

have full power to, and shall, prescribe” rates, charges, and classifications 

for PSCs. Ariz. Const. 15 § 3. (emphasis added). The drafters stressed the 

mandatory nature of the term “shall” in the ratemaking clause by using the 

permissive term “may” in the second clause of section 3 to describe the 

Commission’s authority over public health and safety. See Members of Bd. 

Of Educ. of Pearce Union High Sch. Dist. v. Leslie, 112 Ariz. 463, 465 (1975) 

(stating that when “may” follows “shall” in the same provision, a court 

presumes that the drafters intended different meanings for different terms; 

as a result, “shall” is given its ordinary permissive construction, and “may” 

is construed as directory); see also Gutierrez v. Indus. Comm’n, 226 Ariz. 395, 

398 ¶ 12 (2011) (to same effect). 

¶24 The only instance in which the legislature may divest the 

Commission of its exclusive ratemaking authority is with respect to 

“incorporated cities and towns.” Ariz. Const. art. 15, § 3; see Tucson Gas, 15 

Ariz. at 298 (stating that under section 3 the legislature is “definitely limited 

and restricted” to authorizing municipalities to engage in ratemaking, and 

that “in no other instance” is it permitted to interfere with the Commission’s 

exclusive ratemaking authority); see also City of Surprise, 246 Ariz. at 211 ¶ 16 

(disapproving of the Commission’s efforts to create a veto over municipal 

acquisition of utilities as a result “at odds with our constitution’s clear 

exclusion of municipalities from Commission regulation”).

¶25 Because the Commission’s ratemaking authority is plenary 

and (except as to towns and cities) exclusive, the legislature has no power 
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to enact statutes prescribing rates and charges, nor may it regulate the 

timing, procedure, or methods the Commission uses in calculating rates. 

Tucson Gas, 15 Ariz. at 298; Ethington v. Wright, 66 Ariz. 382, 394-95 (1948). 

And, although the Commission’s ratemaking decisions are subject to 

judicial review, such review is limited to whether its determinations are 

arbitrary, unlawful, or “supported by substantial evidence.” Simms v. 

Round Valley Light & Power Co., 80 Ariz. 145, 154 (1956); Ariz. Const. art. 15, 

§ 17 (stating that Commission orders may be appealed to state courts); see

also Ethington, 66 Ariz. at 394 (stating the Commission’s ratemaking 

decisions are subject to judicial review).

2.

¶26 As noted above, the Commission’s authority under the 

second clause of section 3 is permissive, not mandatory. Supra ¶ 23; see

Eastern Railroad, 19 Ariz. at 413 (holding that the second clause of section 3 

is “permissive and discretionary”). Under the permissive clause, the 

Commission has authority to regulate PSCs to preserve and protect public 

health, safety, convenience, and comfort. Ariz. Const. art. 15, § 3; Ariz.Corp. 

Comm’n v. Palm Springs Utility Co., 24 Ariz. App. 124 (1975) (stating that “the 

regulatory powers of the Commission” under the permissive clause “are 

not limited to making orders respecting the health and safety, but also 

include the power to make orders respecting comfort, convenience, 

adequacy[,] and reasonableness of service.”); see also Pac. Gas & Elec. Co. v. 

State, 23 Ariz. 81, 84–85 (1921) (holding that the permissive clause of section 

3 grants the Commission authority to protect public health and safety). The 

Commission’s permissive authority, like its ratemaking authority, is selfexecuting. See Eastern Railroad, 19 Ariz. at 414–15 (stating that under the 

“permissive” clause of section 3, the Commission has the authority to 

“make and enforce reasonable rules, regulations, and orders for the 

convenience, comfort, and safety, and the preservation of the health of 

employees and patrons of public service corporations”); Pacific Gas, 23 Ariz. 

at 84 (same); Palm Springs, 24 Ariz. App. at 127–28 (same).

¶27 The Commission’s permissive authority is distinct from, and 

unrelated to, its ratemaking powers. See Eastern Railroad, 19 Ariz. at 414–15 

(stating that the words used to describe the Commission’s permissive and

ratemaking authority do not have “the same meaning and purpose,” and, 

therefore, these “two grants of power not only admit of but demand two 

separate senses”). For example, it is not plenary. In contrast to the 

ratemaking clause, which specifically grants the Commission “full power” 

to prescribe classifications, rates, and charges, such language is lacking in 
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the permissive clause. Rather, section 3 simply states that the Commission

“may” make rules, regulations, and orders to protect public health and 

safety. Ariz. Const, art. 15, § 3. 

¶28 The Commission’s permissive authority is also not exclusive. 

The permissive clause does not, either expressly or impliedly, limit or divest 

the legislature of its police power to protect the health, safety, and welfare 

of the public. See State v. Beadle, 84 Ariz. 217, 221–22 (1958) (stating the 

legislature has the police power over “public health, safety[,] or welfare”); 

Lincoln v. Holt, 215 Ariz. 21, 28 ¶ 25 (App. 2007) (same). Thus, the 

Commission exercises its permissive authority concurrently with the 

legislature. See Pacific Gas, 23 Ariz. at 84 (stating that concurrently with the 

Commission, the legislature may also exercise the “police power of the state 

for the safety, comfort, convenience, and health” of PSC employees); Corp. 

Comm’n v. Pac. Greyhound Lines, 54 Ariz. 159, 176–77 (1939) (stating that the 

“legislature retains power to govern [PSCs] in matters unrelated to [the 

Commission’s] ratemaking authority”); Phelps Dodge Corp., 207 Ariz. at 111 

¶ 5. 

¶29 In addition to its section 3 permissive authority, the 

Commission also shares other non-ratemaking powers under article 15

concurrently with the legislature. Specifically, several provisions in article 

15 state that the Commission’s authority over PSCs is “subject to law,” or 

“as may be prescribed by law,” meaning that the Commission’s authority 

is subject to statutes enacted by the legislature. See Shute v. Frohmiller, 53 

Ariz. 483, 488–90 (1939) (stating that when the Arizona Constitution states 

the duties of the attorney general “shall be ‘as prescribed by law’ 

it . . . clearly makes it the duty of the legislature to say what they shall be”), 

overruled on other grounds, Hudson v. Kelly, 76 Ariz. 255 (1953); see also State 

ex rel. Conway v. Superior Court, 60 Ariz. 69, 75–76 (1942) (to the same effect) 

overruled on other grounds by Adams v. Bolin, 74 Ariz. 269 (1952). Thus, for 

example, section 13 provides that PSCs and publicly traded corporations 

“shall” make reports to the Commission “and provide such information 

concerning their acts and operations as may be required by law, or by the 

[C]orporation [C]ommission.” (Emphasis added). See Ariz. Const. art. 15, §§ 

8, 9 (granting the Commission authority to regulate transportation and 

transmission of messages between common carriers and “connecting 

carriers” “as shall be prescribed by the [C]orporation [C]ommission, or by 

law”); see also art. 15, § 5 (stating that the Commission has the power to issue 

certificates of incorporation and licenses, “as may be prescribed by law”); 

art 15, § 10 (stating that railroads and railways, as common carriers, are 

PSCs “subject to control by law”).
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¶30 However, when there is a conflict between a Commission

regulation and a statute, the legislature’s police authority is “paramount,” 

meaning it has the authority to override the regulations of the Commission. 

Pacific Greyhound, 54 Ariz. at 176–77 (stating that apart from the 

Commission’s ratemaking authority, “under the direct language of the 

constitution and the police power inherent in the legislative authority, the 

paramount power to make all rules and regulations governing PSCs not 

specifically and expressly given to the[C]ommission by some provision of 

the constitution, rests in the legislature”); see Ariz. Const. art. 14, § 2 (stating 

that all corporations doing business in Arizona may “be regulated, limited, 

and restrained by law”); see also State v. Harold, 74 Ariz. 210, 215–16 (1952) 

(holding that the legislature has a duty to exercise its police power to enact 

laws “reasonably necessary for the preservation of the public health, safety, 

morals, or general welfare of the public”).

 

3.

¶31 Under article 15, section 6 of the Arizona Constitution, the 

legislature may “enlarge” the powers of the Commission by delegating

additional powers to the Commission of the same “class” as those already 

granted by the constitution. Compare Menderson v. City of Phoenix, 51 Ariz. 

280, 285, 290–91 (1938) (holding that the legislature could not enlarge the 

Commission’s ratemaking authority to include a municipal transportation 

carrier because section 3 “does not directly, nor by implication” grant the 

Commission such authority “over transportation lines owned and operated 

by municipalities”), with Tonto Creek Estates Homeowners Ass’n v. Ariz. Corp. 

Comm’n, 177 Ariz. 49, 55–56 (App. 1993) (holding that because article 15 

grants the Commission authority to regulate PSCs, the legislature may 

“enlarge” its powers by delegating authority to issue CC&Ns to such 

corporations). 

¶32 Although section 6 permits the legislature to enlarge the 

powers of the Commission, the legislature lacks the power to decrease the 

Commission’s constitutional authority over PSCs. See Selective Life Ins. v. 

Equitable Life Assurance Soc. of U.S., 101 Ariz. 594, 600 (1967) (stating that 

“[t]he Arizona Constitution has entrusted the [C]orporation [C]ommission

with a certain minimum of power, and the legislature may not detract from 

this power by placing it in itself . . . [or] by removing the [C]ommission's 

control over an agency exercising a substantial part of that power”). 

Additionally, section 6 provides that in the absence of legislative action, the 

Commission’s rules and regulations govern.
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C.

¶33 Since the adoption of the Arizona Constitution, few cases 

have addressed the Commission’s permissive authority under section 3. 

Instead, most of our cases have dealt with the Commission’s ratemaking 

powers. Unfortunately, the ratemaking cases have been, at times, 

inconsistent and confusing.

¶34 In the decade following the adoption of the constitution, this 

Court issued three opinions interpreting the limits and extent of the 

Commission’s powers under section 3. The first case, Tucson Gas, addressed 

the Commission’s ratemaking authority. There, a PSC was prosecuted for 

violating a state law prohibiting PSCs from charging customers a 

“minimum rate” for utility services (the PSC charged the customer “$1 for 

illuminating gas for lighting purposes, whereas the gas actually furnished 

him was of the value of 40 cents”). Tucson Gas, 15 Ariz. at 295. The PSC

successfully moved to dismiss the charges on the ground that only the 

Commission had the constitutional authority to enact laws regarding rates 

for utility services. Id. at 296.

¶35 This Court affirmed, holding that because the Commission’s 

ratemaking authority under section 3 is plenary and exclusive, the 

legislature had no authority to prescribe service rates for the PSC. Id. at 

297–99, 308. Unfortunately, the Court incorrectly implied that the 

constitution grants the Commission plenary, exclusive powers over PSCs 

outside ratemaking. For example, the Court stated that “[i]t was clearly the 

policy of the framers of the Constitution, and the people in adopting it, to 

take the powers of supervision, regulation, and control of public utilities 

from the legislative branch and vest them in the Corporation Commission.” Id. at 

302 (emphasis added). The Court also stated that the Arizona Constitution 

granted the Commission “extraordinary and unusual” authority to make 

“reasonable rules, regulations, and orders by which [PSCs] shall be governed 

in the transaction of business within the state.” Tucson Gas, 15 Ariz. at 304–05

(internal quotation marks omitted).

¶36 However, as the Court confirmed a few years later, Tucson Gas

is a “rate case,” and its holding is limited to the Commission’s ratemaking 

authority. Pacific Gas, 23 Ariz. at 84. Indeed, Tucson Gas expressly held:

[w]e are of the opinion that the people, by their Constitution, 

have said, in plain and unequivocal language, that the 
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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 collected, by 

[PSCs] . . . and that the power therein granted to the 

Commission is exclusive, and not to be exercised by the 

Legislature.” 

Tucson Gas, 115 Ariz. at 307 (emphasis added) (internal quotation marks 

omitted). 

¶37 Eastern Railroad was the first case to analyze the Commission’s 

permissive authority under section 3. In that case, the legislature had

enacted a law limiting the maximum number of cars on a train to seventy. 

19 Ariz. at 410. When the state brought an action against a railroad 

company for exceeding the statutory limit, the company argued that the 

statute was unconstitutional because it violated the Commission’s

exclusive, plenary authority to regulate PSCs (railroads, as common 

carriers, are PSCs under article 15, section 2). Id. The superior court granted 

judgment in favor of the state and the Commission appealed. Id.

¶38 This Court held that the statute was constitutional. In 

reaching this holding, the Court stated that the statute regulated public 

safety, an area where, unlike ratemaking, both the Commission and the 

legislature exercised authority. Id. at 415–16. The Court noted that the 

Commission’s “permissive” authority to regulate public health and safety

under section 3, as well as its authority to regulate common carriers under 

section 10, did not divest the legislature of its police power to protect public 

health and safety. Id. at 413, 415–16; see Pacific Gas, 23 Ariz. at 84 (stating 

that Eastern Railroad “involved the power of the Legislature to regulate the 

number of cars in a train[] and was clearly the exercise of the police power 

of the state for the safety, comfort, convenience, and health of employees of 

railroad companies”).

 

¶39 The Court examined the Commission’s permissive authority 

again a few years later in Pacific Gas. There, the Commission issued an 

order “regulating the placing, construction, and maintenance of telephone, 

telegraph, signal, trolley, electric light and power lines within the state.” 23 

Ariz. at 81. A few months later, the voters approved an initiative measure 

(including criminal penalties) “regulating the placing, erection[,] and 

maintenance of electric poles, wires, cables[,] and appliances.” Id. The state 

filed criminal charges against Pacific Gas for violating the initiative 

measure. Id. at 82. Although it was undisputed that the company had 
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complied with the Commission’s regulations, the state alleged it did not 

comply with the initiative measure. Id. at 82–83. Pacific Gas sought to 

dismiss the charges on the ground “the power and authority to regulate the 

placing, erecting, and maintaining of electric poles, wires, cables, and 

appliances was vested by section 3, article 15, of the state Constitution in 

the Corporation Commission exclusively,” and, therefore, “the initiative 

measure was unconstitutional and void.” Id. at 85. 

¶40 The Court held that “[i]n the present case both the 

Commission and the Legislature have acted covering the same ground,” 

and that both had authority to regulate in the subject area. Id. at 85. Citing 

Tucson Gas, the Court stated that the “power to fix rates to be charged for 

gas by public utilities [is] exclusively vested” in the Commission. Id. at 84. 

The Court further stated, however, that “both the Corporation Commission 

and the Legislature could lawfully and constitutionally, in the exercise of 

the police power of the state, provide for the protection and safety of the 

employees of public service corporations.” Id. at 84–85. 

¶41 Ultimately, the Court, applying a strained and confusing 

analysis, incorrectly held that the Commission regulations overrode state 

law. Specifically, it stated that the “people,” as the “principal,” had adopted 

the Constitution authorizing its “agent,” the Commission, to regulate PSCs, 

and therefore the Commission was “bound” to issue its order enacting the 

subject regulations. Id. at 85–86. Additionally, the Court reasoned that 

since Pacific Gas was operating under a valid order from the Commission

before enactment of the initiative measure, the charges should be 

dismissed. Id. at 86.

¶42 Following Pacific Gas, this Court’s jurisprudence focused 

almost exclusively on the Commission’s ratemaking authority. For 

example, in Pacific Greyhound, we determined that because a statute limiting 

the Commission’s authority to issue a CC&N was unrelated to its 

ratemaking authority, it was constitutional. 54 Ariz. at 170–71, 176–77. In 

reaching this holding, the Court recognized that the Commission has 

constitutional powers unrelated to its ratemaking authority, and that these 

powers are subject to the legislature’s “police power.” Id. at 169–70, 176–

77. At bottom, however, Greyhound’s holding is limited to the 

Commission’s ratemaking authority; the Court never addressed the 

Commission’s permissive authority under section 3. See Id. at 167–69. 

 

¶43 In Ethington, the Court examined a statute specifying the 

timing and methods the Commission used for ascertaining the fair market 
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value of PSCs. 66 Ariz. at 392–94. The Court stated that article 15, section 

14 of the Arizona Constitution requires the Commission to determine fair 

value as “a necessary step in prescribing just and reasonable classifications, 

rates, and charges.” Id. at 392, 395. Thus, the Court concluded, any statute 

that interferes with the Commission’s duty under section 14 necessarily 

interferes with its plenary, exclusive ratemaking authority under section 3. 

Id. at 392, 395. 

 

¶44 Next, in Simms, a PSC challenged the Commission’s formula 

for calculating fair value. 80 Ariz. at 147–49. The Court held, however, that 

“our constitution does not establish a formula for arriving at fair value,” 

and that the Commission has a “range of legislative discretion” regarding 

the method it uses to calculate it. Id. at 151, 154; see Ariz. Corp. Comm’n v. 

Ariz. Pub Serv. Co., 113 Ariz. 368, 370–71 (1976) (stating that Simms stands 

for the proposition that “[t]he determination of the formula to be used by 

the Commission falls within their legislative function”).

¶45 Our precedents regarding the Commission’s ratemaking 

authority remained essentially unchanged until Arizona Corporation

Commission v. State ex rel. Woods, 171 Ariz. 286 (1992). In Woods, the Court 

addressed rules promulgated by the Commission in response to PSCs 

forming holding companies. Id. at 289-90. Concerned that PSCs could use 

holding companies to weaken and bypass “its regulatory authority,” the 

Commission proposed rules requiring PSCs to “report information about, 

and obtain permission for transactions with, its parent, subsidiary, and 

other affiliated corporations.” Id. at 287, 288–90 (citation omitted). The 

attorney general, however, refused to certify the proposed rules on the 

ground they exceeded the Commission’s ratemaking authority. Id. at 288–

89. As a result, the Commission filed a special action challenging the 

attorney general’s refusal. Id. 

¶46 Woods held that the Commission, under its ratemaking 

authority, had the power to enact the proposed rules. Id. at 299. The Court 

concluded that the Commission’s ratemaking authority was not strictly 

limited to calculating fair value and setting just and reasonable rates. Id. at 

295. Rather, it held that:

[g]iven the framers’ intent, historical background, and 

precedent, we believe the Commission’s regulatory power 

permits it to require information regarding, and approval of, 

all transactions between a public service corporation and its 
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affiliates that may significantly affect economic stability and 

thus impact the rates charged by a public service corporation.

Id. 

¶47 The Court further stated that “in light of modern corporate 

practices and regulatory realism,” to fulfill its purpose of protecting the 

public from corporate abuses, the Commission “must have the power to 

obtain information about, and take action to prevent, unwise management or 

even mismanagement and to forestall its consequences in intercompany 

transactions significantly affecting a [PSC’s] structure or capitalization.” Id. 

at 296-97 (emphasis added). 

¶48 Woods’ holding is flawed because it is based on the mistaken 

view that Pacific Greyhound limited the Commission’s regulatory powers 

under section 3 to its ratemaking authority. Specifically, the Court stated 

that “we measure the Commission’s regulatory power by the doctrine 

apparently established by Pacific Greyhound and its progeny—that the 

Commission has no regulatory authority under article 15, section 3 except 

that connected to its ratemaking power.” Id. at 294. According to Woods, it 

was bound by this purported “doctrine” because it “has been precedent for 

over fifty years.” Id. at 293, 294. But, as noted above, Pacific Greyhound

never addressed the Commission’s permissive authority under section 3. 

Supra ¶42. Indeed, Woodsitself observed that Pacific Greyhound “apparently 

ignored language in [ ] Eastern Railroad that at least implied that the 

Commission and legislature have concurrent power to regulate beyond the 

scope of classifications, rates, and charges.” Id. at 293 n.6.

 

¶49 Rather than overruling Pacific Greyhound, Woods instead 

expanded the Commission’s ratemaking authority to permit promulgation

of the proposed rules by emphasizing the framers’ intent to create a strong 

Commission to protect the public from corporate abuse. Id. at 293. Thus, 

Woods concluded, “[i]t would subvert the intent of the framers to limit the 

Commission’s ratemaking powers so that it could do no more than raise 

utility rates to cure the damage from inter-company transactions.” Id. at 

296.

¶50 Woods’ analysis of the framers’ intent is inaccurate. There is 

no evidence indicating that the framers envisioned the Commission’s 

ratemaking authority as including management decisions about the 

structure or organization of a PSC. Supra ¶¶ 13–17. And the text of the 

constitution itself limits the Commission’s exclusive ratemaking powers to 
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ascertaining the “fair value” of PSCs and prescribing classifications, rates, 

and charges. Ariz. Const. art. 15, §§ 3, 13, 14; see Janson on Behalf of Janson v. 

Christensen, 167 Ariz. 470, 471 (1991) (stating that the “best and most reliable 

index of a statute's meaning is its language”); Phelps Dodge, 207 Ariz. at 109 

¶ 42 (stating that “[a]rticle 15, [s]ection 3 requires the Commission to 

‘prescribe just and reasonable . . . rates and charges,’ and that “[i]n 

interpreting this provision, our primary focus is on the intent of the framers, 

and we do not go outside the plain language of the provision unless the 

language is unclear”) (citations omitted).

¶51 Woods also selectively relied on prior caselaw to support its 

strained construction of the ratemaking clause. For example, Woods

construed Ethington as holding that any act by the Commission that is 

conducive to preserving its control over rates while also protecting 

consumers from financial mismanagement is a “reasonably necessary 

step[]” in ratemaking. Id. at 294–95. But Ethington simply held that, as a 

“necessary step” in performing its ratemaking duties, the Arizona 

Constitution requires the Commission to determine the fair value of PSCs. 

Supra ¶ 43. Likewise, Woods misconstrued Simms as holding that the 

Commission’s “legislative” power to set rates grants it broad discretion to 

regulate corporate finances and management. 171 Ariz. at 294–96. Simms,

however, was limited to holding that the Commission has “legislative” 

discretion in determining the methods it uses to calculate fair value. Supra 

¶ 44. 

¶52 Finally, Woods states that based on the framer’s intent, the 

Commission’s powers under section 3, and our prior caselaw, courts “must

give deference to the Commission’s determination of what regulation is 

reasonably necessary for effective ratemaking.” 171 Ariz. at 294 (emphasis 

added). This is incorrect. Neither the text of section 3, the records of the 

Arizona Constitutional Convention, nor our prior caselaw state that we 

must defer to the Commission’s interpretation of its own ratemaking 

authority. Although we certainly recognize the constitutional authority of 

the Commission, it is our duty to interpret the limit and extent of that 

authority, including whether the Commission’s actions are authorized 

under section 3. Marbury v. Madison, 5 U.S. 137, 177 (1803) (stating that “[i]t 

is emphatically the province and duty of the judicial department to say 

what the law is”); see Forty-Seventh Legislature v. Napolitano,

213 Ariz. 482, 485 ¶ 8 (2006) (stating that “[a]lthough each branch of 

government must apply and uphold the constitution, our courts bear 

ultimate responsibility for interpreting its provisions”).
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¶53 Woods, of course, recognized that it could not hold that the 

Commission’s ratemaking authority was limitless. Thus, relying on a 

doctrine known as the “managerial interference doctrine,” Woods held that 

the Commission could not use its ratemaking power to control the internal 

affairs of a corporation. 171 Ariz. at 297; see Miller v. Ariz. Corp. Comm’n, 

227 Ariz. 21, 26 ¶ 19, 27 ¶ 23 (App. 2007) (same). Specifically, Woods stated 

that although the Commission could enact rules and regulations attempting 

“to control rates,” it was prohibited from enacting rules and regulations 

attempting “to control the corporation.” 171 Ariz. at 297. 

 

¶54 Post-Woods, the Commission has become increasingly 

involved in corporate management decisions to ostensibly exercise its 

ratemaking authority. And, in fidelity to Woods, some courts have

incorrectly upheld that practice. Thus, for example, in US West 

Communications, Inc. v. Arizona CorporationCommission, the court of appeals, 

citing Woods, held that rules requiring telecommunications companies to 

obtain approval from the Commission before discontinuing or abandoning 

certain services emanated from the Commission’s ratemaking authority. 

197 Ariz. 16, 24–25 ¶¶ 30–36 (App. 1999). The court of appeals reasoned 

that because such a decision could affect a company’s profitability, it might 

also impact its rates. Id. Similarly, in Miller, the court, once again relying 

on Woods, held that there was “a sufficient nexus between” the 

Commission’s renewable energy rules and its ratemaking authority. 227 

Ariz. at 28–29 ¶¶ 30–31. The court stated that since the subject rules were 

designed to promote the financial stability of electrical utility companies by 

requiring them to diversify their electrical energy sources, they would also 

serve to protect consumers by restraining “upward pressure” on electricity 

rates. 227 Ariz. at 28–29 ¶¶ 29–31.

¶55 As these cases illustrate, because Woods extends the 

Commission’s ratemaking authority to virtually every management 

decision that might affect rates, courts are frequently asked to decide

whether the Commission’s actions “constitute an attempt to control the 

corporation rather than an attempt to control rates.” 171 Ariz. at 297. 

However, determining precisely when the line has been crossed between 

controlling rates and controlling the corporation itself “can be difficult to 

precisely discern.” Phelps Dodge, 207 Ariz. at 113 ¶ 64. 

 

IV.

¶56 We conclude that here, the Commission’s ratemaking power 

does not authorize the Order appointing an interim manager for Johnson. 
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The Commission purportedly appointed an interim manager to protect 

“the safety, health, comfort, and convenience of [Johnson’s] patrons, 

employees, and the public” because it deemed Johnson’s services,

equipment, and facilities to be inadequate and unsafe. Supra ¶¶ 4–5. We 

recognize that the safety and adequacy of Johnson’s services andfacilities 

may affect its financial stability, and, as a result, might impact consumer 

rates. But there must be some limit to what can be reasonably considered 

ratemaking, and that line has been crossed here.

 

¶57 We hold, however, that the Commission has the authority to 

appoint an interim manager pursuant to its permissive power under article 

15, section 3. Section 3’s permissive clause specifically addresses the 

problem the Commission’s Order seeks to redress—namely, protecting the 

public from Johnson’s alleged inadequate and unsafe services, equipment, 

and facilities. Supra ¶ 26. Additionally, the permissive clause states that 

the Commission can “make and enforce . . . reasonable orders” to protect 

public health and safety. Ariz. Const. art. 15, § 3; see also Palm Springs, 24 

Ariz. App. at 128 (stating that the Commission’s permissive authority 

under section 3 includes the power to make reasonable “orders pertaining 

to particular situations or to particular [PSCs]”). This broad grant of 

authority necessarily includes appointing an interim manager to remedy 

threats to public health and safety.

¶58 Notably, the constitution places important limits on the 

Commission’s permissive authority. As an initial matter, before the 

Commission may issue an order appointing an interim manager, it must 

provide a PSC with basic due process protections, including notice, a 

hearing, and the opportunity to present evidence and cross-examine 

witnesses. S. Pac. Co. v. Ariz. Corp. Com’n, 98 Ariz. 339, 346–48 (1965) 

(stating that orders and other “judicial determination[s]” by the 

Commission require due process). Section 3, by its terms, mandates that 

any order, including one appointing an interim manager, must be 

predicated on, and limited to, protecting and preserving the safety, health, 

comfort, and convenience of the public. Ariz. Const. art. 15, § 3. 

Additionally, section 3 expressly requires that any such order must be 

“reasonable” under the circumstances of each case. Id. 

¶59 The Commission’s permissive authority is also subject to the 

paramount authority of the legislature to regulate public health and safety. 

Supra ¶ 30. Thus, the legislature may prescribe procedures for the 

Commission to follow in appointing interim managers, as well as enact 

laws limiting the powers that such managers may exercise. Ariz. Const. art. 
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15, § 6. Additionally, because the legislature has delegated its authority to 

regulate public health and safety to certain administrative agencies, the 

Commission may not attempt to supplant or deprive such agencies of their 

delegated authority. 

¶60 For example, the legislature has delegated authority to the 

Arizona Department of Environmental Quality (“ADEQ”) to enact and 

enforce water quality and wastewater standards, as well as enforce those 

standards with civil remedies and criminal penalties. See, e.g., A.R.S. §§ 49-

104, -203, -221 (delegating broad authority to ADEQ to enact water and 

wastewater safety standards and rules); §§ 49-261, -262, -263 (describing 

ADEQ’s civil and criminal powers to enforce rules and standards regarding 

water quality); §§ 49-781, -782, -783, -791 (describing ADEQ’s civil and 

criminal enforcement powers regarding violation of wastewater health and 

safety standards). As a result, the Commission may not unilaterally 

exercise its permissive authority in a manner that divests ADEQ of its broad 

regulatory powers over water quality and wastewater. 

 

¶61 We decline, however, to extend Woods’ construction of the 

managerial interference doctrine as imposing a limit on the Commission’s 

permissive authority. Woods, 171 Ariz. at 297. At bottom, this doctrine is a 

judicial construct and, as such, cannot be used to lessen or abrogate the 

Commission’s express constitutional authority to “make and enforce 

reasonable . . . orders for the convenience, comfort, [ ] safety, 

and . . . health” of the public at-large. Additionally, the managerial 

interference doctrine has only been applied by Woods and its progeny to 

limit the Commission’s ratemaking authority; it has never been applied to 

the Commission’s permissive authority under section 3. See Woods, 171 

Ariz. at 297; Phelps Dodge, 207 Ariz. at 113 ¶ 64; Miller, 227 Ariz. at 26 ¶ 19, 

27 ¶ 23. But see Corp.Comm’n v. Consol. Stage Co., 63 Ariz. 257, 260–63 (1945)

(stating in a non-ratemaking case that the Commission lacks authority to 

interfere with management decisions regarding the ownership and 

transferal of stock).

¶62 Nevertheless, our dissenting colleague argues that the 

management interference doctrine must, as a means to limit the 

Commission’s permissive authority, be used to prohibit the Commission 

from making interim manager orders. Infra ¶ 102. We will not, however, 

weaponize this doctrine to abrogate the Commission’s authority under 

section 3. And none of the reasons the dissent provides for taking such an 

extraordinary action are justified by our prior case law. For example, the 

dissent’s reliance on Southern Pacific for the proposition that doctrine 
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applies here is misplaced. Although Southern Pacific acknowledged the

tension between “management of a corporation” and the Commission’s 

“responsibility of requiring that [PSCs] be operated in the public interest,” 

the Court ultimately concluded that the Commission may issue orders 

interfering with a PSC’s management when necessary to ensure that the 

public is provided adequate services. Southern Pac. Co. v. Ariz. Corp. 

Comm’n, 98 Ariz. 339, 342 (1965). 

¶63 Similarly, Consolidated Stage Co. has no bearing on this case. 

There, the court simply held that the Commission has no authority to 

transfer stock ownership in a PSC from one party to another. Consol. Stage 

Co., 63 Ariz. at 259–61, 263. But the Commission’s interim manager order 

does not transfer Johnson’s ownership in its company; rather, the order 

preserves it. Supra ¶ 5.

¶64 Our dissenting colleague’s other reasons for applying the 

doctrine to the Commission’s permissive authority are misplaced. His 

claim that the doctrine is “dictated by the Constitution” is nothing more 

than a circular argument that relies on his own construction of the 

Commission’s permissive authority. For example, he claims that because 

the Commission lacks the authority to appoint an interim manager, the 

doctrine is needed to prevent the Commission from making such an order. 

But since section 3 does grant the Commission authority to issue an interim 

manager order when appropriate, the doctrine serves no purpose here. 

And because orders issued under the Commission’s permissive authority 

must be reasonable and limited to protecting the public, it is unnecessary to 

apply the doctrine here—section 3 already limits the Commission’s ability 

to interfere in a PSC’s management.

¶65 Similarly, the dissent asserts that the management 

interference doctrine is necessary to prevent unconstitutional takings and 

protect private property rights. See infra ¶ 73. But given Johnson’s status 

as a PSC, there is no taking here. Finally, we disagree with the dissent’s 

claim that the doctrine is needed to preserve the authority of the courts to 

issue receivership orders. That reasoning fails because the Commission’s 

authority to make an interim manager order is separate and distinct from 

the judiciary’s authority to issue a receivership order. Infra ¶ 68.

 

¶66 To summarize, the power of the Commission to issue an order 

appointing an interim manager falls within its permissive authority under 

article 15, section 3. However, the exercise of that authority has limits. 

Section 3 expressly requires that any such order must be “reasonable” and 
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confined to circumstances predicated on, and limited to, protecting and 

preserving the safety, health, comfort, and convenience of the public. 

Judicial review is available to assess whether such an order is thereby 

“reasonable.” Furthermore, issuing such an order is subject to basic due 

process protections, including notice, a hearing, and the opportunity to 

present evidence and cross-examine witnesses.

 

V.

¶67 Johnson argues that the Order is unconstitutional because the 

legislature has expressly delegated to the courts the authority to appoint 

“receivers,” and that this legislative exercise of authority conflicts with and 

is paramount to the Commission’s permissive authority to appoint interim 

managers. See A.R.S. § 12-1241 (stating that the superior court has the 

authority to appoint a receiver); see also A.R.S. § 12-1242 (listing procedure 

for appointing and the powers of a court-appointed receiver); Ariz. R. Civ. 

P. 66 (to same effect). We disagree.

¶68 The receivership statute is irrelevant to this case. It does not

address the Commission’s constitutional authority to appoint an interim 

manager, nor does it, either expressly or impliedly, displace or override the 

Commission’s authority to make such an order. See Ariz. Const. art. 15, § 6 

(stating that in the absence of legislative action, the Commission’s rules and 

regulations govern). Rather, it simply states that the superior court “may

appoint a receiver to protect and preserve property or the rights of parties.” 

A.R.S. § 12-1241 (emphasis added). Indeed, rather than limiting the 

Commission’s authority to make interim manager orders, the legislature 

has enacted laws generally supporting and enhancing the Commission’s

exercise of such authority. See A.R.S. § 40-321(A) (stating that “[w]hen the 

[C]ommission finds that the equipment, [] facilities or service of any [PSC]” 

are “unsafe,” it “shall determine what is . . . safe . . . and shall enforce its 

determination by order or regulation”) (emphasis added). 

 

¶69 We recognize, of course, that if a court had appointed a 

receiver for Johnson, the court’s order would override the Commission’s 

Order. See generally Pac. Greyhound v. Brooks, 70 Ariz. 339, 343 (1950)

(holding that a Commission order authorizing a CC&N for a bus company 

to operate in a service area was void when a prior court judgment enjoined 

the bus company from operating in the same area). But that is not the case 

here; there is no judgment or court order that conflicts with the 

Commission’s Order.
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¶70 Finally, we are not persuaded by Johnson’s claim that 

pursuant to A.R.S. § 40-422(A), the superior court has the sole authority to 

issue an order appointing an interim manager. Id. (stating that the 

Commission “shall commence a proceeding in the name of the state” when 

a PSC is “failing” or “doing” anything that is unlawful, required, or 

“contrary to . . . any order or requirement of the [C]ommission”). 

However, § 40-422(A) does not, by its terms, divest the Commission of its 

constitutional authority to appoint an interim manager. See Lagerman v.

Ariz. State Ret. Sys., 248 Ariz. 504, 507 ¶ 13 (2020) (stating that courts have a

duty, if possible, to avoid construing statutes in a manner that renders them 

unconstitutional). Rather, the statute simply provides the Commission 

with a court enforcement procedure to obtain compliance with its orders.

VI.

¶71 Our dissenting colleague raises several additional objections

to our holding, none of which is persuasive. For example, he claims that 

the majority’s “evanescent reasonableness requirement” is an inadequate 

limitation on the Commission’s authority to make interim manager orders. 

Infra ¶ 118. But this “requirement” is not our creation; it is found in the 

Constitution itself. Ariz. Const. art 15, § 3. Indeed, “reasonableness” is the 

touchstone of many important limits on government authority, including 

search and seizure under the Fourth Amendment. U.S. Const. amend. IV. 

Confusingly, our dissenting colleague acknowledges that section 3 

“unquestionably” allows the Commission “to make reasonable orders.” 

Infra ¶ 100. Thus, it seems, he believes that reasonableness is an important 

limitation for all Commission orders except for an interim manager order.

¶72 Our colleague’s concern about the reasonableness of interim 

manager orders is, at bottom, based on his desire to reach the merits of this 

case. But the Commission’s factual conclusions, as well as the 

reasonableness of its interim manager order, are not before us. Rather, the 

issue before this Court is whether the Commission has the authority, under 

any circumstances, to issue an interim manager order. The Commission’s 

factual justifications, as well as the reasonableness of its order, are initially 

subject to review by the superior court. We will not usurp that court’s role.

 

¶73 Next, the dissent asserts that we must construe section 3 to 

exclude interim manager orders to avoid “run[ning] headways” into a 

“constitutional conflict” with the takings clause of the Fifth Amendment 

and article 2, section 17 of the Arizona Constitution. Infra ¶ 106. Of course, 

to avoid a constitutional conflict there must be one in the first place, and
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our dissenting colleague never asserts that an interim manager order 

constitutes a taking. Infra ¶ 106-107. We will not engage in such 

speculation, particularly when neither party has raised this issue in this 

case. What is clear is that Johnson, as a PSC operating under a CC&N, has

dedicated its property to public use in exchange for being granted a 

monopoly in its service area. Pacific Greyhound, 54 Ariz. at 178;see also Trico 

Elec. Co-op, Inc., v. Senner, 92 Ariz. 373, 380–81, 385 (1962). As a result, 

Johnson’s property is subject to regulation by the Commission, including 

any regulation necessary to protect public health and safety. See Nat. Gas 

Serv. Co. v. Serv–Yu Co–op., 70 Ariz. 235, 241-42 (1950) (stating that because 

public service corporations are dedicated to a public use, they must submit 

to regulation by the Commission that protects and benefits the public 

good); Sw. Transmission Co–op, Inc. v. Ariz. Corp. Comm’n, 213 Ariz. 427, 432 

¶¶ 24, 25 (App. 2006) (to the same effect). And more importantly, the 

dissent’s conjecture about whether Johnson may be entitled to damages for 

“just compensation” is simply irrelevant to whether the Commission has 

the authority under section 3 to enter an interim manager order in the first 

place.

¶74 Finally, our dissenting colleague’s lengthy discussion of the 

doctrine of enumerated powers is largely rhetorical flourish. We agree that 

the doctrine applies here, and that the Commission’s authority is limited to 

the powers expressly conferred upon it by the Constitution. See supra ¶ 11. 

And, in fidelity to that principle, we conclude that section 3 grants the 

Commission the power to make reasonable interim manager orders to 

protect public health and safety. 

¶75 Our dissenting colleague disagrees with this conclusion, but 

in doing so, he creates a strained and confusing textual construction of 

section 3. On the one hand, he claims that “nowhere” does section 3 grant 

the Commission power to make an interim manager order. But, of course, 

recognizing that the term “orders” must mean something, he claims that 

section 3 grants the Commission authority to make orders, but only certain

kinds of orders. See Morrissey v. Garner, 248 Ariz. 408, 410 ¶ 8 (2020) (stating 

that as a constitutional principle “[w]e strive “to give meaning, if possible, 

to every word and provision so that no word or provision is rendered 

superfluous”) (citation and internal quotes omitted).

¶76 These purported “enumerated” orders encompass a vast 

array of coercive and remedial orders, including: directing a PSC to “correct 

the company’s inadequacies and ensure its customers are served”; 

compelling a PSC “to do things, or refrain from doing things”; requiring a 
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Opinion of the Court

26

PSC to comply with its “legal obligations”; and “orders that mandate 

compliance with the Commission’s requirements.” Infra ¶¶ 84, 99, 100. Of 

course, these broad categories could encompass virtually any type of order. 

But, coining a phrase outside the plain language of section 3, the dissent 

claims that interim manager orders cannot be included as permissible 

orders, because section 3 prohibits orders that “effectuate structural 

change.” Infra ¶ 99. 

 

¶77 None of these orders are expressly referenced in section 3. 

And that is the primary flaw in the dissent’s analysis. Section 3 does not 

“list” any specific kinds of remedial or injunctive orders, nor does it make a 

distinction between permissible and impermissible orders. Rather, it 

simply states, in broad terms, that the Commission has the authority to 

“make and enforce reasonable orders” to protect public health and safety. 

Thus, our dissenting colleague has no basis to exclude interim manager 

orders from the broad language of section 3, while including his own 

preferred orders.

¶78 Setting aside the text of section 3, the dissent argues that 

because interim manager orders are absent from the list of orders 

enumerated under Title 40, we should read this as a limitation of the 

Commission’s authority under section 3. Infra ¶ 99; A.R.S. § 40–336. This, 

he contends, shows that if the “Commission needs specific legislation” for 

issuing minor compliance orders, such as requiring PSCs to install safety 

devices,” it “makes little sense” that it has the power to make an interim 

manager order. (Emphasis added). Infra ¶ 99. 

 

¶79 This argument ignores the Commission’s authority under 

section 3. The Commission does not “need” any legislation to exercise its 

permissive authority under section 3; its authority is self-executing. Supra 

¶ 26. Further, the Commission’s permissive authority is not delegated to it 

by the legislature but is conferred by the Constitution. Indeed, apart from 

a conflict between the legislature’s police powers and the Commission’s 

permissive authority, the legislature may only enlarge, not lessen, the 

Commission’s authority. Supra ¶¶ 31–32; Ariz. Const. art. 15, § 6. 

¶80 In essence, our dissenting colleague appears to be 

uncomfortable with the broad authority the people of Arizona conferred 

upon the Commission. But it is not the prerogative of this Court to re-write 

or ignore constitutional provisions with which we disagree. See Azar v.

Allina Health Services, __ U.S. __, 139 S.Ct. 1804, 1815 (2019) (stating that 

“courts aren't free to rewrite clear statutes under the banner of our own 
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Opinion of the Court

27

policy concerns”). Rather, it is our duty to interpret and construe the 

constitution. We leave it to the people to change it, if they wish.

Conclusion

¶81 For the foregoing reasons, we vacate the court of appeals’

opinion and hold that the Commission may appoint an interim manager 

based on its permissive authority under article 15, section 3 of the Arizona 

Constitution.
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JUSTICE BOLICK, CONCURRING IN PART, DISSENTING IN PART

28

Bolick, J., concurring in part and dissenting in part:

¶82 The majority usefully and properly corrects decades of 

decisions incorrectly holding that the Corporation Commission’s plenary 

ratemaking power encompasses not only setting rates but also substantive 

regulatory authority. See, e.g., Ariz. Corp. Comm’n v. State ex rel. Woods, 171 

Ariz. 286 (1992); Miller v. Ariz. Corp. Comm’n, 227 Ariz. 21 (App. 2011); US 

W. Commc’ns, Inc. v. Ariz. Corp. Comm’n, 197 Ariz. 16 (App. 1999). I therefore 

join the majority’s analysis of the Commission’s ratemaking powers.

¶83 But what the Court taketh away, it gives back and much more 

through an overly expansive construction of the Commission’s 

“permissive” authority. As the majority’s decision vests power in the 

Commission far beyond the circumscribed role contemplated by our 

constitution, I respectfully dissent from the remainder of the majority’s 

opinion and its disposition.

¶84 It is often remarked that bad facts make bad law, and this 

decision proves the adage. Johnson Utilities was found by the Commission 

to have failed to provide adequate service, equipment, and facilities and to 

have engaged in inadequate billing practices and financial 

mismanagement. Supra ¶ 4. The Commission is empowered to take action 

to correct the company’s inadequacies and ensure its customers are served 

but is not constitutionally authorized to unilaterally displace the owners’ 

management of the company and vest control over the company’s assets 

and management in a competitor.

¶85 The majority treats the Commission’s action as an 

unremarkable order that is justified, to the extent it needs justification at all, 

by the exigent circumstances found by the Commission. With respect, the 

removal of a company’s management, assets, and control from its owners 

is an extreme remedy in a nation that sanctifies private property rights and 

the rule of law. The Commission may exercise such power only if clearly 

authorized by the constitution or statutes.

¶86 Nor do exigencies provide such authority. The endurance of 

a constitution that confers limited and defined powers upon government is 

most seriously tested in times of crisis. A perceived emergency may require 

government action that presses the boundaries of its authority, but it cannot 

expand that authority. It is the judiciary’s job to scrupulously police those 

boundaries lest they disappear. Cf. Marbury v. Madison, 5 U.S. 137, 177 
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(1803) (“It is emphatically the province and duty of the judicial department 

to say what the law is.”).

¶87 One of the most revered U.S. Supreme Court decisions in the 

past century involved a similar action, albeit on a far greater scale, and we 

should draw upon that decision’s wisdom for its categorical rejection of 

unbounded government power even in time of crisis. In Youngstown Sheet 

& Tube Co. v. Sawyer, the Court reviewed an executive order taking 

possession of several steel companies and directing the companies’ 

presidents to serve as operating managers on behalf of the United States. 

343 U.S. 579, 583 (1952). The order was issued in response to a nationwide 

strike that threatened national defense because it jeopardized steel 

production necessary for the war effort. Id. at 582–83.

¶88 In a decision by Justice Hugo Black, the Court declared that 

the President’s power to issue such a sweeping order “must stem either 

from an act of Congress or from the Constitution itself.” Id. at 585. The 

Court held that no statute or constitutional provision expressly authorized 

such an order. Id. at 586–87. The President argued that authority “should 

be implied from the aggregate of his powers under the Constitution.” Id. at 

587. But the Court rejected that notion based on separation of powers, 

holding that “the Constitution is neither silent nor equivocal about who 

shall make laws which the President is to execute.” Id. Because Congress 

did not expressly delegate authority to the President, the Court held he did 

not possess it. Id. at 588–89. The Court concluded that “[t]he Founders of 

this Nation entrusted the law making power to the Congress alone in both 

good and bad times,” a choice that reflected their “fears of power” and 

“hopes for freedom.” Id. at 589.

¶89 The concurring opinions also contained insights we should 

heed. Justice Robert Jackson warned that judges “often suffer the infirmity 

of confusing the issue of a power’s validity with the cause it is invoked to 

promote.” Id. at 634 (Jackson, J., concurring). He rejected the doctrine of 

“nebulous, inherent powers” to “deal with a crisis or an emergency 

according to the necessities of the case, the unarticulated assumption being 

that necessity knows no law.” Id. at 646. Likewise, Justice William O. 

Douglas emphasized that “the emergency did not create power; it merely 

marked an occasion when power should be exercised.” Id. at 629 (Douglas, 

J., concurring). 

¶90 In assessing a similar action here, we should follow exactly 

the course set forth in Youngstown, determining in light of our constitutional 
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text and structure whether the powers exercised by the Commission were 

conferred upon it by the constitution or the legislature.

¶91 Under our constitution, the Corporation Commission enjoys 

a status unique among agencies, exercising powers bestowed not only by 

the legislature but also directly by the constitution itself. For that reason, it 

is sometimes referred to as a “fourth branch” of government. See, e.g., Ariz. 

Corp. Comm’n v. Superior Court, 105 Ariz. 56, 60 (1969). Whatever the 

accuracy of that depiction at the time our constitution was ratified and in 

the century-plus since, it is unquestionably sanctioned by today’s holding.

¶92 That role was not contemplated by our constitution, whose 

language and structure establish that the Commission is limited to its 

express powers. Although the Commission is created as a separate and 

distinct constitutional entity, the Arizona Constitution nonetheless creates 

a government comprised of three branches, not four. In that system, any 

powers not expressly conferred upon the Commission reside with one of 

the three branches of government, or the people.

¶93 Article 2, section 2 of our constitution provides that 

“governments derive their just powers from the consent of the governed, 

and are established to protect and maintain individual rights.” Ariz. Const. 

art. 2, § 2. This is the prism through which all government actions must be 

assessed. The constitution goes on to devote an entire article, short and 

sweetly succinct, to the separation of powers. Article 3 provides in its 

entirety: 

The powers of the government of the state of Arizona shall be 

divided into three separate departments, the legislative, the 

executive, and the judicial; and, except as provided in this 

constitution, such departments shall be separate and distinct, 

and no one of such departments shall exercise the powers 

properly belonging to either of the others.

Ariz. Const. art. 3. 

¶94 By its unequivocal terms, the separation of powers article 

makes clear that the authority assigned to each branch of government is 

inviolate. Just as none of the three branches of government may invade 

powers assigned to another, certainly the Commission may not do so.

¶95 Article 4, part 1, section 1 provides in relevant part that “[t]he 

legislative authority of the state shall be vested in the legislature.” In our 
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republic, states are the organic units of government and are invested with 

the police power—that is, the power to regulate private affairs for public 

health, safety, or welfare. Jacobson v. Massachusetts, 197 U.S. 11, 24–25 (1905); 

see also U.S. Const. amend. X; Police Power, Black’s Law Dictionary (11th ed. 

2019). Under our constitution, the police power is vested exclusively in the 

legislature, as the majority acknowledges. Supra ¶ 28. Thus, if a regulatory 

power is not expressly delegated to the Commission by either the 

constitution or legislature, it remains with the legislature. See City of 

Surprise v. Ariz. Corp. Comm’n, 246 Ariz. 206, 212 ¶ 20 (2019); Corp. Comm’n 

v. Pac. Greyhound Lines, 54 Ariz. 159, 176 (1939) (“[T]he paramount power 

to make all rules and regulations governing public service corporations not 

specifically and expressly given to the commission by some provision of the 

constitution, rests in the legislature.”).

¶96 Ironically, the majority purports to apply the exact same 

governing principle, that the Commission “’has no implied powers and its 

powers do not exceed those to be derived from a strict construction of the 

Constitution and implementing statutes.’” Supra ¶ 11 (quoting City of 

Surprise, 246 Ariz. at 212 ¶ 20 (citation omitted)). That principle, which 

inheres in our constitutional language and structure, is about as limiting as 

any I have seen applied to any governmental entity. An “implied power” 

is one “that is not enumerated but that nonetheless exists because it is 

needed to carry out an express power.” Implied Power, Black’s Law 

Dictionary (11th ed. 2019). “In addition to enumerated powers, all three 

branches possess a number of implied powers: powers that can be 

reasonably drawn from express powers.” Louis Fisher, The Law of the

Executive Branch: Presidential Power 1 (2014). But as the majority correctly

observes, the Commission possesses no implied powers; it has only express

powers, and indeed only those that appear from a strict construction of the

constitutional or statutory language.

¶97 The majority does not identify any express authority to 

remove control of a company from its owners, but instead points to the 

generic language of the Commission’s permissive authority, holding that 

“[t]his broad grant of authority necessarily includes appointing an interim 

manager.” Supra ¶ 57. That is a textbook example of implied authority, 

which the majority correctly says the Commission does not possess. 

Instead, the majority construes the authority of “making . . . orders” to 

encompass any orders pertaining to the convenience, comfort, and safety of 

a public service corporation’s patrons, no matter how invasive of the 

company’s ownership and control or its constitutional rights. Respectfully, 

that is not express authority, nor is it derived from a strict construction of 
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the applicable language. Indeed, it could not be, given that it transforms 

the Commission’s limited and defined powers into boundless authority so 

long as it is exercised in the form of an “order.” We should not attribute to 

our constitution’s framers an intent to so greatly elevate form over 

substance. 

¶98 Article 15, section 3 of the Arizona Constitution, upon which 

the majority relies, provides the Commission with authority to “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 public service corporations. Moreover, A.R.S. § 40-321 

authorizes the Commission, upon findings of inadequacy on the part of a 

public service corporation, to “determine what is just, reasonable, safe, 

proper, adequate or sufficient, and shall enforce its determination by order 

or regulation.”

¶99 A “strict construction” of those authorizations would, it 

seems to me, limit the Commission to orders that mandate compliance with 

the Commission’s requirements rather than effectuate structural corporate 

change. Indeed, this narrow construction of § 40-321’s statutory 

authorization is reinforced by subsequent statutory authorizations that are 

quite granular. See, e.g., § 40-325 (Commission may order physical 

connections between railroad lines); § 40-329 (may order connections and 

joint rates between telephone and telegraph companies), § 40-332 (may 

order joint use of facilities belonging to a public service corporation), § 40-

336 (may require safety devices). See generally §§ 40-322 to -340. The notion 

that the Commission needs specific legislative authorization to require 

safety devices, yet possesses implicit power to transfer control over a 

corporation to its competitor, makes little sense.

¶100 Unquestionably, the Commission is authorized by the 

constitutional and statutory language to make reasonable orders to 

companies within its jurisdiction to do things, or refrain from doing things, 

for the convenience, comfort, safety, or health of their patrons. But an order 

requiring that a public service corporation take some specified action is 

seismically different from an “order” removing the corporation’s 

management from the owners.

¶101 The majority repeatedly refers to the order as the 

appointment of an interim manager, suggesting the mere substitution of 

one corporate official for another, but in fact it is far more sweeping. The 

Commission’s order transfers to EPCOR, Johnson’s rival, control of the 
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company’s management and assets. Supra ¶ 6. EPCOR in turn reports 

solely to the Commission, not to Johnson. Id. Johnson is reduced to making 

suggestions and complaints to EPCOR and the Commission. The 

Commission’s counsel stated at oral argument, not very reassuringly, that 

Johnson “can sit down and talk with EPCOR. Nothing precludes Johnson 

from coming to . . . discuss with the Commission the ongoing operations of 

that utility. They are not precluded from coming to sit down with staff to 

make their case before the Commission.” Johnson may seek to terminate 

the order, but only “upon a showing that [the company’s] services ‘are in 

all respects just, reasonable, safe, proper, adequate, and sufficient.’” Id. ¶ 5. 

In other words, the company’s owners can get their business back only if 

they prove that their competitor, which is now running the company, has 

done a sufficiently splendid job. The Commission’s order dissolves any 

meaningful ownership interest into the role of a passive bystander.

¶102 The Commission’s order far exceeds its authority to require 

compliance with the company’s legal obligations, and instead insinuates 

itself deeply into Johnson’s corporate governance. Arizona courts have 

long recognized a line of demarcation, discarded by the majority today, that 

reflects constitutional boundaries and protects against actions that exceed 

the Commission’s broad yet circumscribed authority: the management 

interference doctrine.

¶103 In Southern Pacific Co. v. Arizona Corp. Commission, this Court 

struck down a Commission order requiring a railroad to maintain existing 

train schedules, declaring that “plainly it is not the purpose of regulatory 

bodies to manage the affairs of the corporation.” 98 Ariz. 339, 343 (1965). 

The Court emphasized that the state “’is not the owner of the property of 

public utility companies, and is not clothed with the general power of 

management incident to ownership.’” Id. (quoting Missouri ex rel. Sw. Bell 

Tel. Co. v. Pub. Serv. Comm’n of Mo., 262 U.S. 276, 289 (1923)). The Court also 

examined legislative authority that gave the Commission “power to do 

those things necessary and convenient in the exercise of the granted 

powers,” but held that did not “give[] the Commission the right to 

rearrange petitioner’s train service without a judicial determination that the 

service so provided is inadequate.” Id. at 348 (emphasis added). A holding that 

the Commission could unilaterally impose the order, the Court observed, 

“unconstitutionally deprives petitioner of its property without due process 

of law. It is a nullity.” Id.; see also Corp. Comm’n v. Consol. Stage Co., 63 Ariz. 

257, 261 (1945) (holding that a forced stock transfer exceeded the 

Commission’s authority by controlling the internal affairs of a corporation); 

Phelps Dodge Corp. v. Ariz. Elec. Power Co-op, Inc., 207 Ariz. 95, 113 ¶ 59 (App. 
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2004) (“[W]e will not infer the grant of authority to interfere with the 

[utilities’] management decisions beyond the ‘clear letter of the statute.’”) 

(citing S. Pac., 98 Ariz. at 343).

¶104 The majority responds that the management interference 

doctrine is a “judicial construct” and, in any event, is limited to the exercise 

of the Commission’s ratemaking powers. Supra ¶ 61. It would be odd for 

the Court to have made such repeated categorical statements about the 

absence of Commission authority to control internal corporate affairs, only 

to have that power, undiscovered until today, lurking about in the very 

same sentence of article 15, section 3 all this time. To the contrary, the Court 

made quite clear that “[n]owhere in the Constitution or in the Statutes is the 

commission given jurisdiction, directly or by implication, to control the 

internal affairs of corporations.” Consol. Stage, 63 Ariz. at 261. “Nowhere” 

is a vast place, and surely encompasses not only the Commission’s 

ratemaking power but its permissive regulatory authority as well. 

¶105 Nor was the management interference doctrine invented by 

the Court, but was dictated by the constitution, in three discrete ways. First, 

it is another way of expressing the constitutional principle we have all 

acknowledged, that the Commission possesses only those powers expressly 

conveyed by the constitution or statutes. No express power to invade core 

management functions appears in the constitution and statutes; hence such 

power does not exist. Second, interfering in management functions invades 

the corporation’s private property rights and is therefore a “nullity.” S. 

Pac., 98 Ariz. at 348. Finally, it trespasses the separation of powers because 

the Commission may seek to direct corporate governance only through 

judicial decree. Id. That the Court today dislodges those constitutional 

limits, even without urging by the Commission,1 underscores that its 

decision bestows broad and previously unrecognized power upon the 

Commission. 

¶106 In addition to strictly construing constitutional and statutory 

authorization for the Commission’s actions, we must interpret such 

language, if possible, in order to avoid constitutional conflict. See, e.g.,

Slayton v. Shumway, 166 Ariz. 87, 92 (1990) (“[W]here alternate constructions 

 1 Indeed, as the Commission acknowledged in its brief, “[t]he management 

interference doctrine serves as a check on the Commission’s power so that 

[it] will be prevented from becoming the de facto manager of public service 

corporations instead of taking actions to control rates or address public 

health and safety problems.” That vital check is removed by this decision.
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are available, we should choose that which avoids constitutional 

difficulty.”); Greyhound Parks of Ariz., Inc. v. Waitman, 105 Ariz. 374, 377 

(1970) (explaining and applying canon of constitutional avoidance); 

Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal 

Texts 247–51 (2012). Southern Pacific recognizes that an exercise of 

Commission authority that strays beyond its ratemaking or regulatory 

power to control the inner workings of a corporation necessarily raises 

concerns over constitutional protections of private property rights. See 98 

Ariz. at 348. 

¶107 The majority’s broad construction of the Commission’s power 

runs us headways into constitutional conflict. Although Johnson Utilities 

does not raise a takings claim here under the Fifth Amendment to the U.S. 

Constitution or article 2, section 17 of the Arizona Constitution, such 

concerns are necessarily implicated, given that, as the U.S. Supreme Court 

observed in Youngstown, the government’s actions in taking control of the 

steel companies “were bound to result in many present and future 

damages.” 343 U.S. at 585. Thus, the Court held in United States v. Pewee 

Coal Co. that the temporary takeover of a private mine constituted a taking 

and that the government was liable for damages sustained while in 

possession. 341 U.S. 114 (1951). These concerns are therefore highly 

pertinent to our interpretation of the Commission’s constitutional and 

statutory authority. 

¶108 Article 2, section 17 speaks directly to the allocation and 

limitations of government power with respect to private property rights. It 

provides: “No private property shall be taken or damaged for public or 

private use without just compensation having first been made, paid into 

court for the owner, secured by bond as may be fixed by the court, or paid 

into the state treasury for the owner on such terms and conditions as the 

legislature may provide . . . .” Ariz. Const. art. 2, § 17. 

¶109 In this context, article 2, section 17 establishes two important 

baseline principles. First, before the government takes or damages private 

property, it must take steps to ensure the owner will be compensated for 

losses. Second, that to ensure the owner is compensated for any losses, 

bond or payment must be made according to judicial or legislative process. 

Yet, the majority’s holding would allow the Commission not only to 

transfer management and control over the company to another private 

entity as it has here, but also to take the property altogether, without 

following these constitutional dictates, so long as it takes the form of an 

order and a court subsequently deems it was reasonable. Given their 
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manifest concern for the protection of private property rights, it seems 

inconceivable that the constitution’s framers meant to give the Corporation 

Commission, alone among governmental entities, sweeping authority to 

transfer control and operation of a private enterprise without judicial or 

legislative process. Certainly, we should search very carefully for such 

express authority and resolve all doubts against it.

¶110 Given that no express constitutional or statutory authority is 

conferred upon the Commission to manage the internal affairs of a 

company either directly or through a hand-chosen proxy, and that serious 

constitutional concerns are raised by implying such authority, does that 

mean that the Commission is powerless to instigate a change of 

management where circumstances warrant? In the Youngstown context, 

Congress “prescribed for the President specific procedures, exclusive of 

seizure, for his use in meeting the present type of emergency.” 343 U.S. at 

660 (Burton, J., concurring). So too has the legislature here provided an 

appropriate vehicle for the action sought by the Commission: an action for 

receivership.

¶111 Arizona Revised Statutes § 12-1241 provides that the 

“superior court or a judge thereof may appoint a receiver to protect and 

preserve property or the rights of parties therein, even if the action includes 

no other claim for relief.” Receiverships are an equitable remedy that may 

be sought by anyone, and may be used to operate a business while litigation 

is pending. First Phx. Realty Invs. v. Superior Court, 173 Ariz. 265, 266 (App. 

1992); 3 Ariz. Legal Forms, Debtor-Creditor Ch. 13, Introduction at 1 (2d ed. 

2019). A receivership is a “drastic remedy” and the power to appoint is 

“justly safeguarded, and reluctantly exercised, by the courts.” Tate v. Phila. 

Transp. Co., 190 A.2d 316, 321 (Pa. 1963). The court has broad discretion to 

assign duties to the receiver, Ariz. R. Civ. P. 66(c)(1), who must first post a 

bond before performing the duties, Ariz. R. Civ. P. 66(b)(2). 

¶112 The Commission is expressly authorized to file a lawsuit 

pursuant to A.R.S. § 40-422(A) to enforce its orders, and such action plainly 

would serve as an appropriate predicate for seeking a receivership if one is 

necessary. Indeed, that statute goes even further by directing that the 

Commission “shall” commence such a proceeding “[w]hen [it] is of the 

opinion that a public service corporation is failing or about to fail to do 

anything required of it by law or an order or requirement of the 

commission.” The Commission certainly was of this opinion as regards 

Johnson; thus, it was required to go to court to seek enforcement.
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¶113 Compare this prescribed and well-established judicial 

procedure with the order imposed by the Commission. A court considering 

a receivership is a neutral decisionmaker that appoints a disinterested 

person as receiver, Ariz. R. Civ. P. 66(b)(1)–(2), thus protecting the due 

process rights of the property owner. The receiver has a duty to protect and 

preserve the property and the rights of the parties. Gravel Res. of Ariz. v. 

Hills, 217 Ariz. 33, 37 ¶ 10 (App. 2007). The receiver’s obligations are 

secured by an oath and bond. Ariz. R. Civ. P. 66(b)(2). Courts in other states 

have appointed receivers, with the protections afforded by judicial process, 

under analogous circumstances. See, e.g., United States v. City of Detroit, 476 

F. Supp. 512 (E.D. Mich. 1979); Dep’t of Envtl. Prot. v. Emerson, 563 A.2d 762 

(Me. 1989); Genssler v. Harris Cnty., No. 01-10-00593-CV, 2010 WL 3928550 

(Tex. App. Oct. 7, 2010).

¶114 By contrast, the Commission asserts it is unilaterally 

empowered to impose this drastic equitable remedy without the attendant 

judicial process and its careful balancing of rights and interests. At oral 

argument, counsel was repeatedly asked why the Commission did not go 

to court to request a receivership. The response was that it did not have to. 

Why go through the burden, inconvenience, and second-guessing of 

judicial process when the end can be accomplished through agency fiat?

¶115 The majority vindicates the Commission’s view by suggesting 

that because the statute does not expressly require the Commission to use 

the receivership process, it need not do so. That states the proper inquiry 

exactly backward: if the power is not expressly conferred, the Commission 

does not possess it. See City of Surprise, 246 Ariz. at 212 ¶ 20; Comm. Life Ins. 

Co. v. Wright, 64 Ariz. 129, 139 (1946) (“The Corporation Commission has 

no implied powers and its powers do not exceed those to be derived from 

a strict construction of the Constitution and implementing statutes.”). We 

must satisfy ourselves that the constitution or statutes expressly invest the 

Commission with power to accomplish the objectives of the receivership 

statute without needing to comply with its important procedural 

requirements.2

 

2 By contrast, the legislature vested “jurisdiction over all petitions 

requesting that a school district be placed in receivership” in the state board 

of education. A.R.S. § 15-103(D). The delegation of receivership authority 

to one entity, with no such delegation to another entity, strongly implies 

that the second entity possesses no such authority. See City of Surprise, 246 
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¶116 The existence of a receivership statute from which the 

legislature has exempted a different agency but not the Commission, plus 

our own rules creating significant procedural preconditions for such a 

drastic equitable remedy, along with a statute empowering the 

Commission to seek judicial enforcement of its orders and directing it to do 

so in the circumstances presented here, establish that the Commission does 

not possess unilateral authority to coercively transfer management of a 

business to a third party, even beyond the absence of express authority to 

do so. The constitutional implications of failure to secure judicial process 

further support that conclusion. See supra ¶ 106.

¶117 My colleagues contend that I am adding limitations to the 

Commission’s authority that do not appear in the constitutional text. Supra 

¶ 76. But as both the majority and I have described our task in this case, we 

are not searching for language that limits the Commission’s authority, nor 

is it necessary to create such language. Rather, we are searching for words 

that expressly empower the Commission to take the drastic action at issue 

here. I have not found such words in the constitutional text or statutes. 

Neither have my colleagues.

¶118 The Court today recognizes sweeping implied authority on 

the part of the Commission to control public service corporations even to 

the extent of unilaterally divesting critical facets of ownership. Having 

removed any meaningful substantive limit to the Commission’s power, that 

power is now backstopped only by a post hoc judicial inquiry applying the 

evanescent requirement of reasonableness. As the Commission flexes its 

newfound authority, future courts may be hard-pressed to put the genie 

back in the bottle. I would render that task unnecessary by limiting the 

Commission’s permissive authority to the regulatory powers expressly 

conferred by the constitution and statutes. With great respect to my 

colleagues, I dissent from the disposition affirming the Commission’s order 

and its underlying reasoning. 

 

Ariz. at 211 ¶¶ 13–14 (explaining and applying expressio unius est exclusio 

alterius canon); see also Scalia & Garner, supra at 107–11.