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In a 6-1 decision, the justices rejected claims by the George Johnson and family members, owners of Johnson Utilities, that there was no constitutional authority for the regulators to appoint an interim manager as it did two years ago.

Justice Andrew Gould, writing for the majority, said the constitution specifically allows the agency to step in “to protect the health and safety of a public service corporation’s customers, employees and the public at large.�

Only Justice Clint Bolick said his colleagues were wrong.

“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,� he wrote.

Friday’s ruling upholding the power of the commission does not end the legal fight. The justices said Johnson Utilities still has an opportunity to argue that the decision itself was not reasonable.

There was no immediate response from attorneys representing Johnson.

Two years ago, following a 14-day hearing, the commission gave day-to-day control of the company to EPCOR.

Regulators concluded there were significant issues with the operation of the utility, including low water pressure and 78 incidents where raw sewage had overflowed between 2010 and 2019.

The commission’s order allows Johnson Utilities to regain control of the water and sewer company that serves about 35,000 customers in the Florence, Queen Creek and San Tan Valley area only after showing it “would not present an unreasonable risk of service.� A spokeswoman for the commission said Friday that EPCOR still remains in control.

Attorneys for Johnson Utilities sued, contending the commission exceeded its constitutional power to set rates and lacked authority from the Legislature to appoint an interim manager, arguing that only a court has the power to change control of the company.

Gould said the company is half right.

The Corporation Commission lacked the authority to impose an interim manager under its ratemaking powers, but it was entitled to do so under its broader authority to protect public health and safety, Gould wrote.

Still, Gould said, there are limits on that authority.

First, he said, is a requirement to give a utility “basic due process protections,� including proper notice and hearings with evidence and witnesses. And Gould said such orders must be “reasonable,� confined to the circumstances at issue, and limited to protecting the public.

With the constitutional question out of the way, Johnson now is free to argue that the commission action was not reasonable.