Chester Water Authority

For several years, I have been leading efforts in the General Assembly to halt any sale of Chester Water Authority.  This website serves to provide data and information on this effort. 

Back in 2020, I questioned Department of Environmental Protection (DEP) Secretary Patrick McDonnell in a House hearing after DEP took a position against CWA in a Delaware County court filing. You can view a video of this exchange here.

On April 22, 2020, House Speaker Bryan Cutler and I sent a letter to Department of Community and Economic Development (DCED) Secretary Dennis Davin, expressing our concern over the Wolf Administration’s assertion that Chester Water Authority is an asset of the city of Chester. You can read the letter HERE.

Here is DCED’s response where they claim that they have not “promoted a sale of the {Chester Water] Authority.

While DCED was telling me they were not “promoting a sale” of CWA, they sent this letter, dated April 1, 2020, to Governor Wolf.  The letter makes the case for Governor Wolf to declare a fiscal emergency in the City of Chester, which he did several weeks later.

Note the third page, which includes a redacted paragraph.  The sentence after the redaction, clearly referring to the redacted language, notes that Chester city issued “an RFP of which they received four responses.”  That can only refer to one thing – the Chester Water Authority.

So while telling me that they were not promoting a sale of CWA, in reality, DCED used the monetization of CWA as a basis for Chester’s fiscal emergency proclamation.
 
Here is a link to a 2022 budget hearing where I asked DCED about this apparent contradiction.  I was stonewalled in my attempt to get answers to some very basic questions.

With regard to legislation, I drafted and introduced House Bill 2597 in 2020 to require a ratepayer referendum for the sale of any publicly managed utility, including CWA. In writing this legislation, I wanted to ensure those most directly impacted had a voice in any proposed sale of a public utility. House Bill 2597 would require a publicly managed utility contemplating selling to a for-profit corporation to mail a ballot to each ratepayer of the utility asking “Do you approve the sale of (selling utility name) to (acquiring entity) for the sum of (the proposed sale price)?” Ratepayers would have a minimum of 30 days to vote via U.S. mail or through a secure internet website. In addition to mailing a ballot to each ratepayer, a selling utility would be required to publish notification of the referendum in a newspaper of general circulation in any affected municipality. The Pennsylvania Public Utility Commission (PUC) would be required to abide by the results of a customer referendum in any decision surrounding the sale of a public utility, including any proposed sale of CWA.
 
Here is a link to House Bill 2597.

I reintroduced this bill for the 2021 session as House Bill 97.

In this 2021 letter, DCED claims that they “have not taken any position on the sale of [Chester] Water Authority.”  Their now-released April 1, 2020 letter to Governor Wolf suggests otherwise.

House Bill 1936, introduced by Representative Krueger and me, would prohibit the sale of a municipally owned water or wastewater system that is not in financial or operational distress.  If enacted, it would prevent the sale of Chester Water Authority.

Representative Krueger and I held a press conference in the state Capitol on this legislation which can be viewed here.

You can read more about the press conference in this news article.

During this year’s Budget Hearings, I asked DCED about the 1973 agreement between the City of Chester and DELCORA, which states that certain assets revert from DELCORA’s ownership to the City of Chester in the event that DELCORA ceases to operate those assets.  DELCORA, a wasterwater treatment agency in Delaware County, is in the process of being sold to a private company.  While I am not necessarily in favor of a DELCORA sale, if a sale does occur, and assets revert to the City of Chester under the 1973 agreement, then the City could potentially monetize those assets and realize a significant payment – perhaps as much as $100 million.  Incredibly, DCED maintained they had no knowledge of this, despite the fact that it could result in significant revenue to the City of Chester.  In my view, this is particularly egregious for several reasons.  First, DCED and the City’s receiver are supposed to be knowledgeable about financial possibilities for the (nearly bankrupt) city of Chester.  Clearly, they were not in this case.  Second, there has been a nearly singular focus on the sale of CWA – for the claimed reason that a sale would provide badly needed cash for the City.  Why the singular focus on CWA, and the complete ignorance around this agreement with DELCORA? A few months after I leveled these accusations at a public hearing in Harrisburg, the Receiver for the City of Chester quietly sent a letter to the PA Public Utility Commission asserting the City’s claim to assets arising from any DELCORA sale – specifically noting the 1973 agreement that I highlighted.
 
Here is a link to the 1973 agreement.

Here is a link of me questioning the Secretary of DCED on this issue.

Here is a link to a Feb. 28, 2022, letter sent from the law firm of Campbell Durrant to the Receiver for the City of Chester – apparently in response to my questions during the DCED budget hearing a few weeks before.

Here is a link to the April 2022 letter that the Receiver for the City of Chester (who is directly appointed by DCED) sent to the PUC regarding the City’s position on ownership and reversion of certain assets if a sale of DELCORA proceeds.

A number of court cases have been filed on this issue.  In particular, Delaware County Courts decided that the board of CWA, not the City of Chester, had the authority to approve any sale of CWA.  On September 16, 2021, the Commonwealth Court reversed the lower court’s ruling in a 5-2 decision and remanded the case back to county court.  You can read the majority and dissenting opinions issued by the Commonwealth Court at the attached link. The dissenting opinion begins on page 32 of the 44 page pdf file.  In my view, the dissenting opinion is spot-on.

The next day, Chester Water Authority filed an allocatur petition asking the Pennsylvania Supreme Court to take up a review of the case, and the decision of the Commonwealth Court. You can read that appeal here.

In October 2021, Representative Cutler and I filed an Application for Leave to file an Amicus Curiae Brief, also called a Friend-of-the-Court Brief, in support of Chester Water Authority’s position to the Pennsylvania Supreme Court. You can review a copy of our brief here.

About a week later, the Chester County Commissioners also filed a petition asking the Pennsylvania Supreme Court to take up this issue. You can review that document here.

The City of Chester subsequently filed a response asking the Supreme Court to deny the application filed by Representative Cutler and me.  You can review that document here.

I believe the City of Chester’s legal reasoning is flawed.  With this in mind, Representative Cutler and I filed a response to Chester City’s flawed argument.  You can read our reply, again filed with the Pennsylvania Supreme Court, here. 

On April 11, 2022, the Pennsylvania Supreme Court granted the petition for allowance of appeal in In re: Chester Water Authority.  I filed an Amicus Curiae brief in favor of CWA's position which can be viewed here.  The Supreme Court is expected to hear the case in late November 2022.

After the City of Chester filed for bankruptcy in Nov. 2022, I updated the House of Representatives on the latest actions and called on Gov. Tom Wolf to take any sale of CWA off the table.   You can watch that floor speech here.

Here is a link to the Amended Recovery Plan filed in Commonwealth Court by the receiver for the City of Chester in Nov. 2022.

Here is a link to Chester City’s Nov. 2022 motion for an order finding that 11 USC § 362 does not operate as a stay of the receiver’s modification of amended recovery plan pending before the Commonwealth Court of Pennsylvania.

Here is a link to a civil action filed by the Chester Receiver, Michael Doweary, regarding the potential sale of the DELCORA waste water system.

In April 2023, the Delco Times reported that Receiver Doweary broached the subject of disincorporation of the City of Chester at a Municipal Financial Recovery advisory meeting.

A few days later, I questioned then-acting DCED Secretary Rick Siger during a House hearing regarding his position on a potential sale of CWA, also addressing a number of related items.

At a subsequent hearing, I asked the PUC to state on the record that ratepayers are the ones who bear the burden of corporate purchases of municipal utilities.

In July 2023, the Commonwealth Court issued a landmark decision in the case Cicero V Pennsylvania Public Utility Commission, overturning the PUC’s approval of the sale of East Whiteland Township’s sewer system to corporate ownership on the basis that the sale would harm consumers and result in higher utility bills.

As of Aug. 2023, after years of review, the receiver for the City of Chester has yet to determine the revenue necessary to sustain basic services in the City of Chester.  This presentation outlines where things stand, and this letter to the receiver asks for an update on this basic and important question.

In February 2024, I questioned DCED Secretary Siger on his department's latest thinking of any proposed sale of CWA.  The Secretary largely avoided my questions.

Also in February 2024, the Pennsylvania Public Utility Commission proposed revisions to the guidelines for Title 66 Section 1329 acquisitions and asked for public comment on their proposal.  I submitted a comment which you can read HERE.