Southwest. Gas Corp. v. Ariz. Corp. Comm'n

In Southwest. Gas Corp. v. Ariz. Corp. Comm'n, 169 Ariz. 279, 285, 818 P.2d 714, 720 (App. 1991) the Court addressed the standard to be applied when considering whether an entity is a public service corporation. While acknowledging that the initial interpretation of the constitution by the Commission is entitled to respect, this court determined that "in the absence of an express and specific grant of power to the Commission to determine as a matter of law who is a public service corporation under the constitution, that final responsibility is vested in the courts." Sw. Gas, 169 Ariz. at 283, 818 P.2d at 718. Similarly, the court noted that, in general, an appellate court upholds a superior court ruling affirming a Commission decision if the superior court's ruling is supported by "reasonable" or "substantial" evidence. Id. at 284, 818 P.2d at 719. The Southwest Gas court observed, however, that in dealing specifically with the question of whether an entity is a public service corporation, Arizona courts have not applied the substantial or reasonable evidence standard but resolved the question as a matter of law. Id. at 284-85, 818 P.2d at 719-20. Particularly in circumstances in which the parties have stipulated to the facts as they have in this case, Southwest Gas concluded that the question of whether an entity is a public service corporation is a pure question of law and the substantial evidence standard has no application. Id. at 285, 818 P.2d at 720.In Southwest Gas, the court considered whether the El Paso Natural Gas Company (El Paso) was a public service corporation. 169 Ariz. at 280-81, 818 P.2d at 715-16. El Paso engaged in transporting natural gas in interstate commerce and selling it to nine Arizona companies and the Salt River Project Agricultural Improvement and Power District (District). Id. Those companies and the District then used the natural gas for their own consumption, transported it in interstate commerce on behalf of or for delivery to twenty-two companies and governmental entities and sold it for export to Mexico. Id. at 282, 818 P.2d at 717. The court concluded that El Paso was not a public service corporation. Id. at 288, 818 P.2d at 723. In Southwest Gas, only El Paso's sale of natural gas for direct consumption was not directly regulated by federal law. Id. at 282, 818 P.2d at 717. El Paso's transportation of natural gas and sales for resale, which SWTC asserts is most analogous to its circumstances, were subject to FERC's exclusive jurisdiction. Id. Consequently, the Commission and the court did not consider those activities in deciding El Paso's status. The Commission and the court considered only El Paso's direct sales of gas in Arizona. Id. In concluding that El Paso was not a public service corporation, the Southwest Gas court noted that El Paso had contractual relationships with only ten direct consumers of natural gas in Arizona, actually sold gas to only three and had no intention of adding any new direct sales customers in the state. Id. at 287, 818 P.2d at 722.