National Agency Supports SCHOA Lawsuit

Reprinted from an Independent Article by Rusty Bradshaw on June 7, 2021

Sun City Home Owners Association and Property Owners and Residents Association officials got a bit of a boost May 26 for their efforts to overturn consolidation of EPCOR Water wastewater districts with the backing of a national group.

The Arizona Corporation Commission granted a 2017 EPCOR officials’ request to consolidate five wastewater districts. The decision resulted in higher rates for Sun Cities customers, but lowered rates for customers in the other three former separate districts. SCHOA, with support from the Property Owners and Residents Association of Sun City West, the town of Youngtown and others, appealed the decision but lost in a lower court, setting up the petition to the Supreme Court.

The Supreme Court heard the case May 18, but a ruling had not been announced by press time.

“It is uncertain when we’ll get a decision from the court,” said Sun City resident Greg Eisert, former SCHOA board member and Governmental Affairs Committee chairman who attended the Supreme Court hearing. “But surely we’ll have something by the end of the year.

The newest development in the case was an amicus brief filed with the Supreme Court by the New Civil Liberties Alliance, a nonpartisan, nonprofit civil rights group.

The brief, in support of petitioners in SCHOA v. ACC, asked the Arizona Supreme Court to interpret the statutory or regulatory texts for itself rather than deferring to the interpretation of an administrative agency, according to an NCLA press release.

NCLA officials argue the Arizona Court of Appeals erred in its January 2020 ruling by giving “extreme deference” to the Arizona Corporation Commission in violation of both the state and federal constitutions. The ruling led then-Chief Judge Michael J. Brown to pen a sharp dissent calling out the majority’s error in “giving virtually absolute deference” to the ACC.

NCLA officials also stated allowing judges to provide agency deference violates the due process clauses of both the state and federal constitutions.

Mr. Eisert said the Arizona Supreme Court hearing was lively, but the fact the highest court in the state agreed to hear the arguments could be interpreted as a good sign for Sun Cities wastewater customers.

“Less than one-one hundredth of cases get heard by the state Supreme Court,” he said.

Mr. Eisert said judges grilled ACC representatives and there was no time for EPCOR officials to speak.

In its review, the Arizona Supreme Court will evaluate two issues. The first is whether the Arizona Corporation Commission caused unlawful rate discrimination by consolidating several districts served by one public service corporation into a single district, where substantial cost-of-service differences existed among the formerly separate districts.

The second is whether the commission’s constitutional status commands “extreme deference” to its decisions.

Gail Warmath, SCHOA Governmental Affairs Committee chairwoman, said the wastewater district consolidation resulted in a 72% increase in Sun City wastewater bills, while Sun City West saw a smaller percentage increase. Other districts saw dramatic rate decreases as a result, she added.

“These changes occurred despite the fact they were not based on costs produced by each district,” Ms. Warmath said. “SCHOA has always and continues to support the principle of ‘cost causation;’ individual district costs should determine each district’s rates. It makes no sense that Sun City customers, whose median income is $39,000, should subsidize other district customers like Anthem, whose medium income is approximately $99,000.”

Getting the case to the Supreme Court would not have been possible without the members of SCHOA and PORA, and those who contributed extra funds for the court cases, according to SCHOA officials.

In addition to the wastewater appeal, SCHOA and PORA officials are interveners in EPCOR’s existing water rate and district consolidation request.

EPCOR Water Co. officials filed an application for new water rates June 15, 2020, to be effective no later than Aug. 15, 2021. The application includes consolidating 11 statewide water districts, an action opposed by SCHOA and PORA of Sun City West officials.

Mr. Eisert said ACC officials completed gathering input on the water case and a decision, which was not announced by press time, was expected soon.

The current case filing includes one standalone and four consolidation scenarios, according to Rebecca Stenholm, EPCOR Water public and governmental affairs director. They include one scenario where all districts remain standalone and another where all districts would become one. Two other options have the Sun Cities as standalone districts, one as separate and another combined, while the final option has the Sun City, Sun City West, Chaparral, Paradise Valley, Havasu/Havasu (Brooke) and Willow Valley all remaining separate standalone districts.

In that option Agua Fria, Anthem and Tubac would be consolidated into one district while Mohave and North Mohave would be merged in another.

EPCOR officials filed the water rate and consolidation request in 2018 but the commission, in a Jan. 25, 2019, meeting, could not reach a resolution on the previous case, ending with a 2-2 vote with Sandra Kennedy declaring a conflict and not voting. As a result of the deadlocked vote, the commission implemented interim rates based on pre-2019 rates, plus a volumetric surcharge.

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