PENNSYLVANIA

PUBLIC UTILITY COMMISSION

Harrisburg, PA 17105-3265

Public Meeting held July 19, 2012

Commissioners Present:

Robert F. Powelson, Chairman

John F. Coleman, Jr., Vice Chairman

Wayne E. Gardner

James H. Cawley

Pamela A. Witmer

Joint Application of Columbia Water Company and Marietta Gravity Water Company for approval of: 1) the transfer of the rights, service obligations, water system and assets used and useful in the operation of the water system of Marietta Gravity Water Company to Columbia Water Company; 2) the abandonment of service by Marietta Gravity Water Company; and 3) all other approvals or certificates as appropriate, including the approval of Securities Certificates / A-2012-2282219
A-2012-2282221

OPINION AND ORDER

BY THE COMMISSION:

Before the Pennsylvania Public Utility Commission (Commission) for consideration and disposition are the Initial Decision (I.D.) issued on May 15, 2012, by Administrative Law Judge (ALJ) Kandace F. Melillo, the Exceptions to that Initial Decision filed on June 4, 2012, by the City of Lancaster (City), the Reply to Exceptions jointly filed by Columbia Water Company (Columbia Water) and Marietta Gravity Water Company (Marietta Gravity) (collectively, Joint Applicants) on June 14, 2012, and the Reply to Exceptions filed on June 14, 2012, by the Commission’s Bureau of Investigation and Enforcement (I&E). For the reasons discussed below, we will adopt the Initial Decision and deny the Exceptions.

History of the Proceeding

On January 5, 2012, the Joint Applicants filed a Joint Application with the Commission seeking the approval of the transfer of rights, service obligations, water system and assets used and useful in the operation of the water system of Marietta Gravity to Columbia Water; the abandonment of service by Marietta Gravity; and, all other approvals or certificates appropriate, customary, or necessary under the Public Utility Code (Code) to carry out the transactions described in the Joint Application.

Notice of the Joint Application was published in the Pennsylvania Bulletin on January 28, 2012, 42 Pa. B. 645, with a deadline for filing protests of February 7, 2012, established by the Commission.

On February 7, 2012, the City filed a Protest to the Joint Application, alleging, inter alia, that it stood ready, willing, and able to purchase the assets of Marietta Gravity, which it believed to be in its growth area, and could provide better service to the customers of Marietta Gravity and at substantially lower rates than Columbia Water.

On February 23, 2012, the Office of Consumer Advocate (OCA) filed a Notice of Intervention and Public Statement.

On February 24, 2012, the Joint Applicants filed Preliminary Objections to the City’s Protest, based primarily upon the City’s purported lack of standing to protest the Joint Application. The Joint Applicants requested an expedited litigation schedule if the City’s Protest was not preliminarily dismissed. On March 1, 2012, Marietta Gravity responded to an inquiry by the ALJ regarding individual customer notice of the Joint Application. That March 1 letter took the position that individual notice was not required and that the Joint Applicants had complied with all notice requirements.

On March 8, 2012, the City filed an Answer to Preliminary Objections, which disputed the Joint Applicants’ contentions about the City’s lack of standing. On that same date, the City also responded to Marietta Gravity’s letter of March 1, 2012, concerning customer notice, and indicated that individual notice to customers could be required by the presiding officer under the Commission’s regulations.

On March 8, 2012, the OCA also responded to Marietta Gravity’s March 1, 2012 letter concerning customer notice, and asserted that a presiding officer does not violate Commission regulations by requiring individual customer notice.

Additionally, on March 8, 2012, the Joint Applicants filed a Response to the OCA’s Notice of Intervention, filed on February 23, 2012. Therein, the Joint Applicants stated that they did not object to the OCA’s intervention and would cooperate to resolve the OCA’s issues. According to the Joint Applicants, the OCA had authorized the Joint Applicants to state that the OCA does not object to the matter being decided under the modified procedures without hearing if the City’s Protest is dismissed.

On March 14, 2012, I&E filed a Notice of Appearance.

On March 15, 2012, the Joint Applicants filed a Motion for Judgment on the Pleadings or in the Alternative, Summary Judgment (Motion for Summary Judgment).

On March 16, 2012, the ALJ received an email from I&E counsel, copied to all parties, which indicated that, like the OCA, I&E did not object to the use of the modified procedures without a hearing for the Joint Application if the City’s Protest was dismissed.

On March 21, 2012, the ALJ issued an Order Denying Preliminary Objections of the Joint Applicants to the City of Lancaster’s Protest. In this Order, the ALJ ruled that the proper course of action was to consider the issue of standing in the pending Motion for Summary Judgment, based on Commission regulations and precedent.

On March 23, 2012, the Joint Applicants filed and served a letter offering to immediately provide a map to the City, subject to proprietary protections, which identified the Marietta Gravity franchise area sought to be transferred to Columbia Water in the Joint Application. This offer was made in response to the City’s claim in its Protest that the service area described in the Joint Application could conflict with the City’s existing authorized service territory and that further scrutiny of proprietary documents then unavailable to the City was necessary to rule out this possibility. The Joint Applicants requested that the ALJ require the City to respond to the offer within two (2) working days.

On March 23, 2012, the ALJ sent an email to the parties explaining that she was declining the Joint Applicants’ request to direct the City to respond to the offer concerning the proprietary map. The ALJ indicated that this was a matter of negotiation between the parties and that it was not appropriate for her to be involved in these discussions.

On March 27, 2012, the Joint Applicants filed and served a letter, which essentially contained the same offer to provide the proprietary map as had been made in the letter dated March23, 2012, except that the letter was directed to counsel for the City rather than to the ALJ. In that letter, the Joint Applicants also clarified that the provision of the map to the City was not to be considered an offer of settlement, but was being provided to confirm that the Joint Application only sought to transfer the existing franchise territory of Marietta Gravity which had previously been granted by the Commission or by operation of law.

On March 29, 2012, the City provided a letter to the ALJ, with copies to all parties, which rejected the Joint Applicants’ offer to view the proprietary map. The City indicated that, as the Joint Applicants had refused to drop their opposition to the City’s standing, the City had no assurance that, beyond providing one map, it would be permitted to fully investigate whether the proposed franchise area was consistent with all Commission Orders and authorizations. Since its full ability to investigate as a party was not assured, the City declined the offer to view the map.

On April 4, 2012, the City filed its Answer to the Motion for Summary Judgment, and included a footnote reference (footnote #13) to its March 29, 2012 letter, referenced above.

On May 15, 2012, the Initial Decision was issued which granted the Joint Applicants’ Motion for Summary Judgment, finding that the City lacked standing to protest the Joint Application. The ALJ noted that, upon the grant of the Motion for Summary Judgment, there were no outstanding Protests to the Joint Application. Accordingly, the ALJ transferred the Joint Application to the Commission’s Bureau of Technical Utility Services for modified procedure. The ALJ also noted that the OCA and I&E had no objection to that disposition given the dismissal of the City’s Protest.

On June 4, 2012, the City filed Exceptions to the Initial Decision. On June14, 2012, Reply Exceptions were filed by the Joint Applicants and I&E.

Discussion

The Initial Decision

The ALJ issued fourteen Findings of Fact, I.D. at 7-8, and fourteen Conclusions of Law, I.D. at 27-29. We will adopt the Findings of Fact and Conclusions of Law unless they are overruled expressly or by necessary implication.

The ALJ properly outlined the criteria for granting a motion for summary Judgment. She noted that a motion for summary judgment will be granted only “if the pleadings, depositions, answers to interrogatories, admissions and affidavits, if any, show that there is no genuine issue as to a material fact and that the moving party is entitled to judgment as a matter of law.” I.D. at 9. In this instance, the ALJ determined that a review of the Joint Applicants’ affidavits would be critical to this proceeding.

In her discussion of the legal standard, the ALJ contrasted the roles of the Joint Applicants and the City in the context of the Motion for Summary Judgment. She correctly observed that:

The moving party bears the burden of showing that no genuine issue of material fact exists and that it is entitled to a judgment as a matter of law. The Commission must view the record in the light most favorable to the non-moving party, giving that party the benefit of all reasonable inferences. First Mortgage Co. of Pennsylvania v. McCall, 459 A.2d 406 (Pa. Super. 1983); Mertz v. Lakatos, 381 A.2d 497 (Pa. Cmwlth. 1978). All doubts as to the existence of a genuine issue of material fact must be resolved against the moving party. Thomson Coal Company v. Pike Coal Company, 412 A.2d 466 (Pa. 1979). Summary judgment will be granted only where the right is clear and free from doubt.

I.D. at 10.

Conversely, the party opposing a motion for summary judgment must allege facts showing that an issue for trial exists. First Mortgage Co. of Pennsylvania v. McCall, supra; Commonwealth v. Diamond Shamrock Chemical Co., 391A.2d1333 (Pa. Cmwlth. 1978); Stover v. The United Telephone Co. of Pennsylvania, Docket No. C00923833 (Order entered July 21, 1992). I.D. at 10

The ALJ also noted that, in the past, the Commission has interpreted 52 Pa. Code § 5.102(c) (relating to Motions for Summary Judgment) in conformity with Rule 1035 (now Rule 1035.1) of the Pennsylvania Rules of Civil Procedure (Pa. R.C.P.), South River Power Partners, L.P. v. West Penn Power Company, Docket No. C00935287 (Order entered November 6, 1996). In civil practice, a non-moving party may not rely solely upon denials in its pleadings, but must submit some materials to establish that a genuine issue of material fact exists. Nicastro v. Cuyler, 467A.2d1218 (Pa. Cmwlth. 1983); Pennsylvania Gas & Water Co. v. Nenna & Frain, Inc., 467A.2d330 (Pa. Super. 1983); Geriot v. Council of Borough of Darby, 457A.2d202 (Pa. Cmwlth. 1983); see also, Pa. R.C.P. 1035.3. Summary judgment may be entered against the non-moving party who does not respond. Pa. R.C.P. 1035.3(d). I.D. at 10.

The ALJ concluded that the provision at 52 Pa. Code § 5.102(c) serves judicial economy by avoiding a hearing where no factual dispute exists. If no factual issue pertinent to the resolution of a case exists, a hearing is unnecessary. 66Pa. C.S.
§ 703(a); Lehigh Valley Power Committee v. Pa. PUC, 563A.2d557 (Pa. Cmwlth. 1989); S.M.E. Bessemer Cement, Inc. v. Pa. PUC, 540A.2d1006 (Pa. Cmwlth. 1988); White Oak Borough Authority v. Pa. PUC, 103A.2d502 (Pa. Super. 1954). I.D. at 10.

The issue raised by the Joint Applicants’ Motion for Summary Judgment was whether or not the City had the requisite standing to protest the Joint Application. Noting that the issue of standing is primarily a matter within the Commission’s discretion, the ALJ discussed the standards applicable to issues of standing before the Commission. She found that the Commission has held that a person or entity has standing when the person or entity has a direct, immediate and substantial interest in the subject matter of a proceeding. Joint Application of PennsylvaniaAmerican Water Co. and Evansburg Water Co. for Approval of the transfer, by sale, of the water works property and rights of Evansburg Water Co. to Pennsylvania-American Water Co. (Joint Application of PAWC and Evansburg), 1998 Pa. PUC LEXIS 40; William Penn Parking Garage, Inc. v. City of Pittsburgh (William Penn), 464 Pa. 168, 346 A.2d 269 (1975); Landlord Service Bureau, Inc. v. Equitable Gas Co., 79 Pa. P.U.C. 342 (1993); Re Equitable Gas Co., 76 Pa. P.U.C. 23 (1992); Manufacturers’ Association of Erie v. City of Erie - Bureau of Water, 50 Pa. P.U.C. 43 (1976); Waddington v. Pa PUC, 670 A.2d 199 (Pa. Cmwlth. 1995), alloc. denied, 678 A.2d 368 (Pa. 1996). The ALJ observed that requiring a person or entity to have a direct, immediate and substantial interest in the subject matter of a proceeding helps avoid frivolous, harassing lawsuits whose costs are ultimately borne, at least in part, by utility ratepayers. See, Pa. PUC v. National Fuel Gas Distribution Corp., 73 Pa. P.U.C. 552 (1990). I.D. at 11.

The ALJ further described how the Commission determines whether an interest in a proceeding is “direct,” “immediate,” and “substantial” so as to convey standing. The ALJ stated:

A protestant’s interest in the subject matter of a proceeding is direct if the protestant’s interest is adversely affected by the actions challenged in the protest, is immediate if there is a close causal nexus between the protestant’s asserted injury and the actions challenged in the protest, and is substantial if the protestant has a discernible interest other than the general interest of all citizens in seeking compliance with the law. Ken R. ex rel. C.R. v. Arthur Z., 682 A.2d 1267 (Pa. 1996); In re El Rancho Grande, Inc., 437 A.2d 1150 (Pa. 1981); Empire Coal Mining & Development, Inc. v. Department of Environmental Resources, 623 A.2d 897 (Pa. Cmwlth. 1993). Mere conjecture about possible future harm does not confer a direct interest in the subject matter of a proceeding. Official Court Reporters of the Court of Common Pleas of Philadelphia County v. Pennsylvania Labor Relations Board 467A.2d 311 (Pa. 1983).