Customers of distressed rural water company can't wait for state investigation to play out, lawyers say

Yahoo

31-01-2025

This story was produced by the State College regional bureau of Spotlight PA, an independent, nonpartisan newsroom dedicated to investigative and public-service journalism for Pennsylvania. Sign up for Talk of the Town, a weekly newsletter of local stories that dig deep, events, and more from north-central PA, at spotlightpa.org/newsletters/talkofthetown.
BELLEFONTE — Lawyers for a distressed rural water company have asked a Centre County judge to approve an emergency takeover, but state regulators argue they have control over the situation.
Attorneys James Bryant and Carolyn Larrabee, who were hired by Rock Spring Water Company, argued in court Thursday that the company's poor management and deteriorating infrastructure should justify handing over interim operations to neighboring State College Borough Water Authority.
'We're trying to light a fire under someone, and there won't be any water in Rock Spring to put it out,' Bryant told Spotlight PA.
A lawyer for the Pennsylvania Public Utility Commission, however, told Centre County President Judge Jonathan Grine that state regulators have the authority to appoint an interim operator or force a sale — a lengthy process already in progress and with no guaranteed outcome.
Bryant and Larrabee were hired by Rock Spring owner J. Roy Campbell last fall after the Bureau of Investigation and Enforcement, an independent division within the commission, launched a review of the business.
Despite a recent email from Rock Spring's account ending all legal services with the pair, the lawyers said in a filing that they refused to abandon their client because dismissing them would require more than a 'one-line email from an unidentified party.'
A June Spotlight PA investigation found that Rock Spring, state regulators, and elected officials have failed the roughly 1,000 customers in Ferguson Township who rely on the 20-mile system, which needs $13.5 million in repairs, according to a 2022 engineering report. Efforts to find new ownership have gone nowhere, while years of neglect have led to crumbling infrastructure, low water pressure, regular outages, and sometimes lengthy boil water advisories.
The company has also racked up dozens of regulatory violations and tens of thousands of dollars in unpaid civil penalties as part of an ongoing legal battle with the Department of Environmental Protection over excessive water loss.
Larrabee previously told Spotlight PA that she and Bryant thought asking a local court to intervene would be the quickest way to help customers who — though frustrated with the water company — have resigned themselves to working around unreliable service after years of inaction by the PUC. (The PUC even erroneously told a customer in 2018 that it doesn't regulate Rock Spring.)
The lawyers, in their initial filing, called the water system and its management by Campbell and his daughter, Elizabeth, a 'clear and present danger.'
The Campbells attended court Thursday but did not speak. Prior to the hearing, they asked for more time to find new legal counsel and said the PUC likely had jurisdiction over the case. In a filing, Campbell wrote, 'There is no imminent danger to anybody that would result from continuing the hearing to a later date.'
Customers can't wait any longer, Larrabee said in court on Thursday.
Joseph Cardinale Jr., attorney for the PUC, argued that the statewide regulatory body has jurisdiction. The case is before an administrative law judge, with a two-day hearing scheduled for late April. He noted that state regulators could appoint an interim operator, also called a receiver, in that proceeding.
Lawyers for Rock Spring argued that the PUC's power isn't absolute. They also said that regulators had ample opportunity to hold the company accountable for hemorrhaging water and failing to pay at least $40,000 in fines. Instead, the legal battle over water loss with the Department of Environmental Protection has dragged on for years, Bryant noted.
Customer issues with Rock Spring go back at least a decade.
Charles Williams, who inherited 12 shares in the company from his father, detailed in court his struggles to access information about the business. He testified that Rock Spring appears to be under 'the full control' of J. Roy Campbell.
In October, Campbell said he'd rather sell the company and avoid a lengthy process by state regulators to force an acquisition. In December — after persuasion by his attorneys, according to legal filings — he signed a letter of intent to sell the business to the State College authority for $65,000.
The letter reflects a mutual interest in negotiating, but the State College water authority has entertained buying the company in the past and been ghosted by Rock Spring.
An acquisition would ultimately require approval from the water authority's board, the company's shareholders, and state regulators. A sale has yet to be completed.
The deadline to submit briefs addressing jurisdiction and the emergency request to let the State College authority handle interim operations while lawyers attempt to reach a final sales agreement is 5 p.m. today.
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