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ASSOCIATION COMMUNITY ORGANIZATIONS FOR REFORM NOW (ACORN) v. CARMEN GUARINO (07/21/86)

decided: July 21, 1986.

ASSOCIATION OF COMMUNITY ORGANIZATIONS FOR REFORM NOW (ACORN), LAWRENCE HART AND JOSEPHINE GARCIA
v.
CARMEN GUARINO, INDIVIDUALLY AND AS COMMISSIONER OF THE PHILADELPHIA WATER DEPARTMENT, THE PHILADELPHIA WATER DEPARTMENT AND IRVIN R. DAVIS, INDIVIDUALLY AND AS DIRECTOR OF FINANCE OF THE CITY OF PHILADELPHIA, CITY OF PHILADELPHIA, WATER DEPARTMENT, APPELLANT. CITY OF PHILADELPHIA WATER DEPARTMENT, APPELLANT V. CONSUMER EDUCATION AND PROTECTIVE ASSOCIATION INTERNATIONAL, INC. (CEPA) ET AL., APPELLEES. CONSUMER EDUCATION AND PROTECTIVE ASSOCIATION (CEPA) -- ASSOCIATION OF COMMUNITY ORGANIZATIONS FOR REFORM NOW (ACORN) AND ACTION ALLIANCE OF SENIOR CITIZENS OF GREATER PHILADELPHIA V. CITY OF PHILADELPHIA, PHILADELPHIA WATER DEPARTMENT, APPELLANT. ASSOCIATION OF COMMUNITY ORGANIZATIONS FOR REFORM NOW (ACORN), LAWRENCE HART AND JOSEPHINE GARCIA, APPELLANTS V. CARMEN GUARINO, INDIVIDUALLY AND AS COMMISSIONER OF THE PHILADELPHIA WATER DEPARTMENT, THE PHILADELPHIA WATER DEPARTMENT, AND IRVIN R. DAVIS, INDIVIDUALLY AND AS DIRECTOR OF FINANCE OF THE CITY OF PHILADELPHIA, APPELLEES



Appeals from the Orders of the Court of Common Pleas of Philadelphia County in the cases of Association of Community Organizations For Reform Now (ACORN), Lawrence Hart and Josephine Garcia v. Carmen Guarino, Individually and as Commissioner of the Philadelphia Water Department, the Philadelphia Water Department and Irvin R. Davis, Individually and as Director of Finance of the City of Philadelphia, No. 1308 August Term, 1979; Consumer Education and Protective Association International, Inc. (CEPA), Association of Community Organizations for Reform Now (ACORN) and Action Alliance of Senior Citizens of Greater Philadelphia v. Philadelphia Water Department, No. 4392 June Term, 1981, and Consumers Education and Protective Association (CEPA), Association of Community Organizations For Reform Now (ACORN) and Action Alliance of Senior Citizens of Greater Philadelphia v. City of Philadelphia, Philadelphia Water Department, No. 1922 July Term, 1983.

COUNSEL

Janet Parrish, with her, John Hanger, for appellant/appellee, Association of Community Organizations For Reform Now (ACORN).

Gerald T. Clark, Assistant City Solicitor, with him, Martha W. Bush, Deputy City Solicitor, Michael S. Chuhinka, Assistant City Solicitor, Kathryn S. Lewis, Chief Deputy City Solicitor, and Barbara W. Mather, City Solicitor, for appellee/appellant, City of Philadelphia.

President Judge Crumlish, Jr., and Judges Rogers, Craig, MacPhail, Doyle, Colins and Palladino. Opinion by Judge Doyle.

Author: Doyle

[ 99 Pa. Commw. Page 95]

The matter before us involves the cross appeals of the City of Philadelphia (City) and the Association of Community Organizations For Reform Now (ACORN)

[ 99 Pa. Commw. Page 96]

    from three orders of the Philadelphia Court of Common Pleas which affirmed in part and modified in part the determinations by the Commissioner of the Philadelphia Water Department establishing sewer and water rates in the years 1979, 1982, 1983 and 1984.*fn1

In each of the three cases, a hearing was held on the Water Department's proposed sewer and water rates and thereafter the Commissioner issued findings of fact and conclusions of law in support of his determination. ACORN filed timely appeals from the Commissioner's determinations of July 23, 1979, June 19, 1981 and June 20, 1983, which had established the rates for the applicable years. By separate opinions and orders of October 31, 1984, November 16, 1984, and December 7, 1984, the court of common pleas affirmed in part and modified in part each of the Commissioner's three determinations respectively. ACORN has filed an appeal with this Court challenging only the October 31, 1984 order; the City has appealed all three orders.*fn2

[ 99 Pa. Commw. Page 97]

Where, as here, a full and complete record was developed before the local agency, the reviewing court must affirm the adjudication unless it is in violation of constitutional rights, an error of law has been committed, or a necessary finding of fact is unsupported by substantial evidence. Section 754 of the Local Agency Law, 2 Pa. C.S. § 754; Appeal of McClellan, 82 Pa. Commonwealth Ct. 75, 475 A.2d 867 (1984).

I. ACORN Appeal

In its appeal ACORN alleges that the 1979 rates established for in-city residential customers were unlawful and discriminatory in that they were increased to recover deficiencies created 1) by providing sewer service to suburban municipalities at less than their fully allocated cost; and 2) by granting discounts to charitable institutions, schools, and the Philadelphia Housing Authority.

A. Sewer Service

[ 99 Pa. Commw. Page 98]

The Water Department provides sewer service to suburban customers under long-term contracts with suburban municipalities. It is undisputed that, as of 1979, the revenue received from these municipalities under the previously negotiated contracts covered only 50% of the costs of providing such service, and that the deficiency must be recouped by increased rates to other customers. ACORN contends that the Commissioner and the trial court erred in refusing to reform the contracts to eliminate the disparity between suburban and city rates. In support of its contention ACORN notes that special contracts with customers are prohibited under Pennsylvania Public Utility Law,*fn3 citing Byer v. Page 98} Peoples Natural Gas Co., 251 Pa. Superior Ct. 75, 380 A.2d 383 (1977). In response the City notes that Section 5-802 of the City's Home Rule Charter (Charter), 351 Pa. Code § 5.5-802, specifically authorizes the Department to enter into contracts with users outside the city, and argues that this Charter provision has statutory effect and supersedes the holding in Byer, citing Action Alliance of Senior Citizens of Greater Philadelphia, Inc. v. Philadelphia Gas Commission, 45 Pa. Commonwealth Ct. 234, 406 A.2d 1155 (1979).

We do not reach the merits of this argument, however, for we find that the issue of the suburban contracts was within the exclusive jurisdiction of the Pennsylvania Public Utility Commission (Commission) and therefore was not properly before the court of common pleas. Although a municipality furnishing water service solely within its political boundaries is exempt from regulations by the Commission, once it extends its services to customers outside its boundaries the municipality becomes a public utility subject to all of the regulatory powers of the Commission. Sewickley Water Works v. Pennsylvania Public Utility Commission, 46 Pa. Commonwealth Ct. 278, 405 A.2d 1384 (1979); White Oak Borough Authority v. Pennsylvania Public Utility Commission, 175 Pa. Superior Ct. 114, 103 A.2d 502 (1954); City of Altoona v. Pennsylvania Public Utility Commission, 168 Pa. Superior Ct. 246, 77 A.2d 740 (1951). See Borough of Ridgway v. Pennsylvania Public Utility Commission, 83 Pa. Commonwealth Ct. 379, 480 A.2d 1253 (1984); Action Alliance. The Commission's authority over rate making by municipally owned utilities is currently set forth in Section 1301 of the Public Utility Code (Code), 66 Pa. C.S. § 1301, which states in pertinent part:

Only Public utility service being furnished or rendered by a municipal corporation, or by the

[ 99 Pa. Commw. Page 99]

    operating agencies of any municipal corporation, beyond its corporate limits, shall be subject to regulation and control by the commission as to rates, with the same force, and in like manner, as if such service were rendered by a public utility.

See also Sections 1102, 1501 of the code, 66 P.S. §§ 1102, 1501. It is well settled that the Commission has exclusive jurisdiction to determine in the first instance matters within its regulatory powers. Philadelphia Electric Co. v. Human Relations Commission, 5 Pa. Commonwealth Ct. 329, 290 A.2d 699 (1972).

In the present case, there is no dispute that the issue presented to the court of common pleas, and now before this Court, concerned the propriety of long-term contracts entered into with users outside Philadelphia City limits. While the court of common pleas had jurisdiction to hear the appeal insofar as it related to service within the City, City of Altoona, it clearly had no jurisdiction to hear the appeal as it ...


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