On Monday, the Pennsylvania Supreme Court granted leave to appeal the case involving whether the City of Chester owns the assets of the Chester Water Authority.
A date has not yet been set for the call.
The case is just one of many to emerge from a 2017 unsolicited bid by then-Aqua, now Essential Utilities, to buy the Chester Water Authority for $320 million, which the authority rejected.
The question is who really owns the Chester Water Authority’s assets – the more than 673 miles of water mains in its service territory, its water storage reservoirs, the Octoraro treatment plant and its accessories, its workforce and its taxpayers.
The Chester Water Authority was originally established by the City of Chester in 1939 to provide water services to 67 customers. That number grew to more than 43,000 customers, serving 200,000 residents in 33 municipalities in western Delaware County, the city of Chester, and parts of Chester County.
About 20% of customers stay in the city, another 20% are in Chester County, and the remaining 60% are in western Delaware County.
Until 2012, Chester City officials appointed the five members of the board. In August 2012, Chester nominated three members, and Delaware and Chester counties each nominated three more to the expanded nine-member council.
Two years after the authority rejected the $320 million offer in May 2017, they filed a petition to create a trust with the intention of transferring the water system assets into that trust. In March 2019, the CWA filed a motion with the Delaware County Court of Common Pleas to approve the trust.
Aqua and the city filed separate motions asking the court to dismiss the claim, as they argued that only the city of Chester had the power to transfer those assets.
In April 2020, the Delaware County Court accepted the CWA’s interpretation. The case then went to the Commonwealth Court.
On September 16, 2021, Commonwealth Court Judge Patricia A. McCullough delivered the majority opinion in the appeal of the City of Chester and Aqua Pennsylvania Inc. against the Chester Water Authority determining that the law allows a municipality to obtain the assets. of the authority of the water that it creates.
In the decision, McCullough wrote that the court “establishes conclusively that section 5622(a) of the (City Authorities Act) vests in it (the city) absolute power to unilaterally transfer the Authority and all its assets, on its free will and its terms without any input from the Authority itself.”
A day later, the Chester Water Authority asked the Pennsylvania Supreme Court to hear the case. In that application, the CWA wrote, “The Commonwealth Court has taken an ‘impermissible’ step to vitiate over (80) years of the autonomy and existence of the Chester Water Authority, ostensibly allowing a municipality which does not own does not or does not operate the Authority, has not contributed the money paid to it, and which is only a super minority both within its board and in its service area , to steal assets funded by the Authority’s 200,000 taxpayers in southeastern Pennsylvania for the city of Chester’s own purposes unrelated to the Authority’s mission to provide clean and affordable services the water.”
Now, the state Supreme Court says it will consider two issues.
First, can the city of Chester seize the assets of the CWA and sell those assets to remedy its own unrelated financial distress, while rescinding the representational rights of Delaware and Chester counties as granted by Law 73 of 2012 – the legislation which expanded the Board of Directors to nine members from various geographic regions.
And, secondly, did the Commonwealth Court err in not following the case law that says only one authority to authorize a transfer. The case in point was Burke v. N. Huntingdon Twp. Mun. Auth. from 1957.
Some of the parties responded to the court’s grant of appeal.
“We are very pleased that they have decided to hear the case,” said Francis Catania, solicitor for the Chester Water Authority. “It will give us a clear direction and that’s what we need here.”
He said the authority always believed the legislative intent was clear, although the city’s revenue collector held the opposite position. Thanks to this call, Catania said it would be resolved.
“It will clarify that question,” Catania said.
Vijay Kapoor, Chief of Staff at the Chester Collector’s Office, released a statement regarding the order.
“Given the importance of this case, we still expected the litigation to continue,” he said. “We are confident that the Pennsylvania Supreme Court will uphold the Commonwealth Court’s decision. As we’ve said many times, for Chester to solve his pension problems, he needs to both monetize the Water Authority and cut pensioner benefit costs. The fact that the Supreme Court of the Palestinian Authority is taking up this case does not change this reality.
Chester’s attorney, Kenneth Schuster, did not respond to requests for comment.