I think so based on some federal case law. State governments (and perhaps local governments within a state) can't screw around with interstate commence or some such thing.
I could be wrong though not being a lawyer and all that.
It seems to me that states/cities/individuals can CHOOSE not to do business with anyone they want . . . and I don't see how the Feds can come in and dictate that someone WILL do business with someone they don't want to. (We'll see how the mandated purchase of health insurance in Obamacare fares in court.)
The wrinkle comes in if there's a law on the books that requires government contracts and such to be awarded via a
competitive bidding process. To exclude a legal entity from bidding, or to refuse to award a bid to the lowest legitimate bidder, would appear to be unlawful.
I also suspect that L.A.'s local government would run into problems if they tried to prohibit individuals and private companies from doing business with Arizona . . . they're probably smart enough to realize that themselves.
As far as cutting off LA's power (
) as good an idea as it seems, that may be a problem since various California individuals and companies own pieces of Arizona's power utilities.