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decided: August 5, 1971.


Action in Equity in the Court of Common Pleas of Dauphin County, No. 2823 Equity Docket, No. 367 Commonwealth Docket, 1967, in case of Pennsylvania Public Utility Commission v. Borough of Akron. Case transferred December 4, 1970, to the Commonwealth Court of Pennsylvania, Appeal No. 262A, Tr. Dkt. 1970.


W. Russel Hoerner, with him C. Edward S. Mitchell, Shearer, Mette & Hoerner, and K. L. Shirk, Jr., Shirk & Reist, for plaintiff.

Ronald Ziegler, Assistant Counsel, with him Edward Munce, Acting Counsel, for defendant.

President Judge Bowman, and Judges Crumlish, Jr., Kramer, Wilkinson, Jr., Manderino, Mencer and Rogers. Opinion by Judge Kramer. Dissenting Opinion by Judge Manderino.

Author: Kramer

[2 Pa. Commw. 625 Page 627]

This case comes within the original jurisdiction of this Court. It involves two Complaints in Equity which in effect question the jurisdiction of the Pennsylvania Public Utility Commission. It comes via a long and varied route.

By an Order dated May 12, 1958, and reported at 36 Pa. P.U.C. 100 (1958), the defendant, the Pennsylvania Public Utility Commission (Commission) granted a certificate of public convenience to the plaintiff, Borough of Akron (Akron), authorizing it to furnish water service within a portion of the Township of West Earl, Lancaster County, Pennsylvania. This authorization included, inter alia, a metes and bounds description of the extra-territorial area (i.e., territory outside Akron's municipal boundaries) to be served. The application of Akron for the certification of service explicitly requested that the certification be restricted to the metes and bounds area described in it.

Under Section 2407 of the Borough Code, Act of February 1, 1966, P.L. (1965), No. 581, 53 P.S. 47407, a borough maintaining a "waterworks" has authority to supply water outside of its political boundaries, subject to the jurisdiction of the Commission (66 P.S.

[2 Pa. Commw. 625 Page 6281102]

, 1122, 1141 and 1171. See State College Borough Authority v. Pennsylvania P.U.C., 152 Pa. Super. 363, 31 A.2d 557 (1943).

On May 4, 1967, Mahlon N. Zimmerman,*fn1 intervening defendant (Zimmerman), a real estate developer, filed a complaint No. 18356 with the Commission, requesting an order requiring Akron to furnish water service within a tract owned by him. Zimmerman's tract of land is located within the Township of West Earl, but outside of the 1958 certificated service area of Akron. Akron requested the Commission to dismiss the aforementioned complaint, and the Commission refused. On August 21, 1967, Akron filed a complaint in equity with the Court of Common Pleas of Dauphin County (Commonwealth Docket), praying, inter alia, that the Commission be enjoined and restrained from the conduct of any proceedings or the issuance of any orders relating to complaint No. 18356, on the basis that the Commission lacked jurisdiction to order an extension of water service to areas outside the certificated area. On September 8, 1967, the Commission filed preliminary objections to Akron's complaint. These preliminary objections included a demurrer and a petition raising a jurisdictional question. An order was issued by the Court of Common Pleas of Dauphin County on January 2, 1970, dismissing the preliminary objections of the Commission and granting the Commission and Zimmerman thirty days during which to answer Akron's complaint. The Commission appealed to the Supreme Court of Pennsylvania on January 13, 1970, from the order of court. The Supreme Court, on October 9, 1970, affirmed the order of the lower court, at 441 Pa. 9,

[2 Pa. Commw. 625 Page 629270]

A.2d 393, holding that a substantial question as to the jurisdiction of the Commission had been raised under Section 1111*fn2 of the Public Utility Law, Act of May 28, 1937, P.L. 1053, 66 P.S. 1441. Thereafter the case was transferred to the Commonwealth Court on December 4, 1970. The Commission filed an answer to the complaint of Akron on December 8, 1970, admitting all of the allegations of Akron. On December 10, 1970, Akron filed a motion for judgment on the pleadings. Judgment by default was entered against Zimmerman on December 22, 1970. On December 1, 1970, the Commission notified Akron that a hearing had been set by the Commission for January 14, 1971, on Commission complaint No. 18356, in spite of this pending case. On December 22, 1970, Akron filed a petition for a preliminary injunction to enjoin the Commission from holding hearings on complaint No. 18356 during the pendency of the present proceedings. The prayed for injunction was granted by President Judge Bowman on January 8, 1971. This Court is now faced with (1) Akron's motion for judgment on the pleadings, and (2) Akron's complaint for a final and permanent injunction against the Commission holding further hearings on complaint No. 18356.

We first point out that the Commission's persistence in setting down a hearing on complaint No. 18356, in the face of the Pennsylvania Supreme Court's October 9, 1970, ruling at P.U.C. v. Akron Borough, supra, indicates a lack of acknowledgement of the higher authority

[2 Pa. Commw. 625 Page 630]

    of the appellate courts of this State by the Commission. While the very question of the jurisdiction of the Commission to hold hearings on the subject matter of this case was before this Court, the Commission should not have ordered a hearing. As the final order accompanying this opinion indicates, the Commission will not be permitted to hold hearings on complaint No. 18356.

We now move on to the real issue before this Court, i.e., whether the Commission, unilaterally (upon the complaint of a third person) may order a municipality supplying utility services to its citizens and to customers within a certificated extraterritorial area to extend its lines and service to customers beyond such certificated area.

A regulatory agency, such as the Commission in this case, is a creature of the legislative body which created it. It has only those powers, duties, responsibilities, and jurisdiction given to it by the Legislature. There are many instances when a regulatory agency may do things not specifically provided for in the enabling statute, but always these kinds of acts must come within the legislative intent. Always the regulatory agency is subject to (1) the Constitution, (2) its limited powers set forth in the enabling statute or other applicable legislation, and (3) review of its acts or adjudications by the appellate courts.

A municipality rendering certain utility services likewise is controlled by the statutes creating and empowering it. It is clear that a municipality furnishing water service solely within its political boundaries is not subject to regulation by the Commission. The Legislature specifically excluded from the Public Utility Law, supra, the regulation of such municipal utilities by the Commission. See 66 P.S. 1102(9), (15) and (17). It is equally clear that the Commission is vested with the authority to regulate a municipal utility when

[2 Pa. Commw. 625 Page 631]

    the municipality extends its service to customers outside of its political boundaries. Public Utility Law, supra, 66 P.S. 1171. An analysis of that same Act at 66 P.S. 1102, 1122, 1141 and 1171 brings one to the conclusion that a municipality rendering a utility service outside of its boundaries becomes a public utility subject to all of the regulatory powers of the Commission, the same as the Commission has over privately-owned public utilities. The instant case calls upon us to delineate the perimeter of that mandated regulatory power.

The jurisdiction of the Commonwealth Court in the matter at hand is predicated upon Section 1111 (66 P.S. 1441) of the Public Utility Law, supra, as amended by Section 14(a)(55) of the Commonwealth Court Act, Act No. 185 of 1970, Act of January 6, 1970, P.L. , 17 P.S. 211.14(a)(55) and upon Section 508(a)(55) of the Appellate Court Jurisdiction Act, Act of July 31, 1970 P.L. (Act No. 223) 17 P.S. 211.508(a)(55). The Supreme Court of Pennsylvania held in Pennsylvania P.U.C. v. Akron Borough, supra, that the Court of Common Pleas of Dauphin County sitting as Commonwealth Court could properly entertain the instant case under Section 1111 of the Public Utility Law. Subsequent amendment of the statutes as aforementioned transfers jurisdiction to the newly created Commonwealth Court of Pennsylvania.

As stated before, the crux of the issue in this case relates to the regulatory power and jurisdiction of the Commission over a municipal water utility operating outside of its political boundaries, yet within its previously certificated service area. Specifically, we are concerned with the presence or absence of jurisdiction in the Commission to order a municipally owned water utility to extend service to customers outside of its previously certificated service area.

[2 Pa. Commw. 625 Page 632]

Our research indicates that prior to 1966, the Commission pursued a course of conduct whereby it allowed municipal utilities to apply for and be granted certification of their respective service areas, and based upon opinions of the Commission predating 1966, such a utility could thereby limit its area of service. This procedure was accepted as a manifest declaration that the utility undertook to service only a defined area and could not be subjected to extensions outside of that certificated area. In effect, the ...

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