18138_Authority_Feb

municipalauthorities.org | 19 P otential S ea C hange in P ublic U tility L aw : M unicipal A uthorities A re S ubject to P ublic U tility C ommission J urisdiction (S ort of ) By Dan Clearfield and Carl Shultz, Eckert Seamans A recent Commonwealth Court decision has found that municipal authorities – long thought to be completely exempt from regulation by the Pennsylvania Public Utility Commission (“Commission” or “PUC”) – must in fact obtain prior approval from the Commission in order to extend service beyond the boundaries of the municipal entities that created the authority. (The lone exception to this rule had been the water/wastewater authority that serves Pittsburgh – as to which the Legislature specifically extended PUC jurisdiction in 2018.) The Commonwealth Court’s October 2024 decision, as written (Conyngham Twp. v. PA PUC, 113 C.D. 2024), holds that the Commission has jurisdiction to approve extensions of service by municipal authorities while affirming that the Commission does not have authority to regulate the rates or service of an authority. Nevertheless, the decision creates substantial issues and uncertainty for scores of authorities across the Commonwealth that provide service to residents and businesses that are beyond the corporate limits of the municipalities that created them. The Sanitary Sewer Authority of the Borough of Shickshinny (“SSABS”) 1 is a municipal authority created by the Borough of Shickshinny that collects and treats wastewater from customers located within the Borough as well from other neighboring townships via contractual arrangements. One such entity is Conyngham Township. Again, as is typical, the Township billed its residents for SSABS’s wastewater collection fees and paid its contractual obligations by passing on those collected fees to SSABS. The Township and SSABS became embroiled in a dispute about the Township’s responsibility to correct inflow and infiltration on the Township’s lines. When no resolution was to be had, SSABS declared that the existing contract was cancelled (despite the contractual language preventing unilateral termination). That declaration, nevertheless, prompted the Township to stop paying for sewage treatment service (even though it continued to send its wastewater to SSABS for treatment). In an effort to get paid, SSABS then took the unusual step of billing the Township residents directly for the wastewater treatment fees to which it was entitled for treating the wastewater. The Township thereupon filed a complaint with the Commission (PUC Docket No. C-2021-3023624) alleging that the Commission has jurisdiction over the wastewater treatment “services” being provided by SSABS to the Township’s residents, that the Authority should have obtained the Commission’s approval before it started to “directly serve” customers in the Township and that SSABS was required to cease billing Township residents and refund any charges it had collected. Before the Commission, an administrative law judge agreed with the Township. But the Commission reversed the ALJ, concluding that under the Municipality Authorities Act (“MAA”), 53 Pa.C.S. § 5601, et seq. the Commission lacked subject matter jurisdiction over questions regarding the rates, services and service area of municipal authorities — like SSABS. 1 The SSABS is a client of Eckert Seamans and the Authority consulted with Eckert on aspects of the appeal. Continued on page 38.