Questions mount for Arizona regulator

Beth Defalco

Friday, Dec. 20, 2002 | 10:16 a.m.

PHOENIX -- The aftershocks of a $60 million jury verdict against Arizona Corporation Commissioner Jim Irvin continued Thursday as government officials raised questions about his future.

A civil court jury found Wednesday that Irvin improperly influenced a 1999 bidding war for Las Vegas-based Southwest Gas Corp. The jury slapped him with $60 million in punitive damages and $382,000 for actual losses claimed by Houston-based Southern Union Co., the company that lost its bid to acquire Southwest Gas.

Southern Union officials accused Irvin and former commission employee Jack Rose of interfering with its attempt to buy the utility that serves 550,000 customers in Nevada and 800,000 customers in Arizona.

Although Southern Union's offer was $90 million higher, the company agree to be sold to Tulsa-based ONEOK Inc. because it was given regulatory approval.

While acknowledging at trial there were back-room dealings in the bidding war, Irvin said he was unaware that he was the central figure in a plot to steer the deal to ONEOK Inc. by discrediting rival bidder Southern Union.

"I am very disappointed with the jury's verdict," Irvin said in a statement released Thursday. "I still believe that I was acting within the Constitution of the state of Arizona and the scope of my duties as corporation commissioner."

Irvin won his November re-election bid to the commission, which regulates utilities, telecommunications, securities and railroads.

He hasn't indicated what he will do next. But that's not stopping others from making suggestions.

Gov. Jane Hull urged Irvin to "do the honorable thing," her spokesman said. Commission Chairman Bill Mundell had similar advice.

Mundell suggested Irvin "think long and hard and do the right thing for the commission and Arizona, not just think of himself."

"At first blush it (the verdict) is a blemish for the commission," Mundell added. "I just hope the public looks deeper and realizes that no one but Irvin was there when those actions took place in 1998 and 1999."

Irvin can be forced out of office three ways: being impeached by the Legislature, being convicted of a felony or being recalled by voters.

The U.S. and Maricopa County Attorney's Offices are investigating Irvin's activities, said Special Assistant County Attorney Barnett Lotstein. Prosecutors waited until the civil case was done before moving forward with a criminal investigation.

No criminal charges have been filed.

Incoming Senate President Ken Bennett, R-Prescott, said he and incoming House Speaker Jake Flake, R-Snowflake, have begun looking into the impeachment process.

"We're very concerned with the decision of jury," Bennett said. "When a jury of your peers decides you've done something to warrant a $60 million fine, it's pretty serious."

Bill Meek, president of the Arizona Utility Investors Association, said he fears that because of the verdict, some utility stock holders may think the regulatory system is for sale.

"I have to believe that a verdict like this will appear to some that the regulatory climate in Arizona is worse than they thought," he said.

Former state Rep. Roberta Voss, who lost to Irvin in the primary election, said she doesn't expect the Legislature to act unless Irvin is convicted of a crime.

Should Irvin leave, the governor would appoint a replacement.

Irvin's attorney, Michael Sillyman, said the commissioner has 10 days to file an appeal and seek a lower award amount and plans to do so.

"We feel the judgment was disproportionate and should be examined," Sillyman said. "It was a nice headline, but we don't think it will stick."

Jurors said their award would have been less if they could have stipulated that Irvin resign from the commission.

Rose settled with Southern Union on the last day of the trial, agreeing to pay $75,000 and to make a statement of regret.

Sillyman argues that because Southern Union did not demonstrate Irvin's net worth, the jury can't award punitive damages that surpass his holdings.

And because Southern Union sued Irvin individually, and not his wife as well, Sillyman said their community property -- valued at $800,000 -- can't be touched.

"Punitive damages are supposed to punish, not destroy, a person," he said.