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The Public Advocate, Action Alliance of Senior Citizens of Greater v. Bernard Brunwasser

May 4, 2011

THE PUBLIC ADVOCATE, ACTION ALLIANCE OF SENIOR CITIZENS OF GREATER PHILADELPHIA AND TENANT UNION REPRESENTATIVE NETWORK, APPELLANTS
v.
BERNARD BRUNWASSER, WATER COMMISSIONER, PHILADELPHIA WATER DEPARTMENT AND CITY OF PHILADELPHIA



The opinion of the court was delivered by: Opinion BY Judge Brobson

Argued: February 8, 2011

BEFORE: HONORABLE RENEE COHN JUBELIRER, Judge HONORABLE P. KEVIN BROBSON, Judge

HONORABLE PATRICIA A. McCULLOUGH, Judge

This matter comes to this Court on appeal from the May 12, 2010, order of the Court of Common Pleas of Philadelphia County (trial court),

dismissing on preliminary objections a complaint for declaratory and injunctive relief. The gist of the complaint is a challenge to the legality of an increase in water rates. (Reproduced Record (R.R.) at 2a-207a.) The named plaintiffs in the complaint are Appellants The Public Advocate,*fn1 Action Alliance of Senior Citizens of Greater Philadelphia, and Tenant Union Representative Network (collectively, Public Advocate). The named defendants are Appellees Philadelphia Water Commissioner Bernard Brunwasser (Commissioner), the Philadelphia Water Department (PWD), and the City of Philadelphia (City) (collectively, Appellees).

For the reasons that follow, we reverse the trial court and remand for further proceedings.

I. BACKGROUND

Section 3-100 of the Philadelphia Home Rule Charter (Charter)*fn2 established PWD as part of the Executive and Administrative Branch of the City government. The Water Commissioner is the head of PWD. (Charter § 3-101.)

The Managing Director of the City, who is appointed by the Mayor, appoints the Water Commissioner. (Id. §§ 3-204, -206.)

PWD has oversight of the water supply and sewage system and disposal within the City. Specifically, the Charter provides:

The Water Department shall have the power and its duty shall be to perform the following functions:

(a) Water. It shall operate the City's water supply system, and shall either itself, or by contract, construct, maintain, repair and improve City water supply facilities, including fire and drinking hydrants and water meters. It shall make investigations and prepare plans and estimates looking towards the acquisition by the City of new and better sources of water supply, and shall, with the approval of the Managing Director, make its recommendations to the Mayor for transmission to the Council. It shall also investigate and adopt methods for improving the quality of the water supply.

(b) Sewage and Sewage Disposal. The Department shall operate, and itself, or by contract, maintain, repair and improve the City's sewage system and sewage disposal plants. When authorized by the Council, it shall acquire, design and construct additional sewage disposal plants and sewage facilities.

(Id. § 5-800.) With respect to establishing rates and charges, the Charter provides:

In accordance with such standards as the Council may from time to time ordain, the Water Department shall fix and regulate rates and charges for supplying water, including charges to be made in connection with water meters, and for supplying sewage disposal services. The standards pursuant to which rates and charges shall be fixed by the Department shall be such as to yield to the City at least an amount equal to operating expenses and interest and sinking fund charges on any debt incurred or about to be incurred for water supply, sewage and sewage disposal purposes. In computing operating expenses, there shall be included proportionate charges for all services performed for the Department by all officers, departments, boards or commissions of the City.

(Id. § 5-801 (emphasis added).)*fn3 PWD performs its ratemaking function by regulation, promulgated pursuant to procedures set forth in Section 8-407 of the Charter. The rates and charges that PWD establishes and the procedures by which it establishes them, including provisions for hearing and public comment, are set forth in Chapter 3 (Sections 300.0 through 309.2) of PWD's Regulations.

Pursuant to the governing Charter provisions and PWD's regulations, on April 4, 2008, PWD notified Philadelphia City Council of its intent to file proposed changes in rates for water, wastewater, and storm water for the fiscal years 2009 through 2012. (Id. at 89a.) On May 5, 2008, PWD filed proposed amendments to Chapter 3 of PWD's Regulations, along with supporting documentation, with the City's Department of Records (Proposed Regulations). (Id. at 89a.) PWD requested a two-phase implementation of the Proposed Regulations--Phase One would address the stepped annual rate increases over a four-year period for fiscal years 2009 through 2012 (Rate Increases); and Phase Two would address the allocation of storm water costs to nonresidential customers. (Id. at 90a.)

Mayor Michael Nutter, City Council President Anna C. Verna, and City Controller Alan L. Butkowitz appointed a Hearing Officer to preside over rate hearings and to prepare a report for the Commissioner, summarizing the record and providing recommendations. (Id. at 90a.) In August 2008, the Hearing Officer held five (5) public hearings and three (3) days of technical hearings in connection with Phase One of the 2008 rate proceedings. (Id. at 90a-91a.) On October 7,

2008, the Hearing Officer issued a recommended decision to the Commissioner on the Rate Increases. (Id. at 124a.) He recommended approval of rate increases for fiscal years 2009 and 2010, albeit at lower levels than what PWD requested, but recommended that consideration of proposed increases for fiscal years 2011 and 2012 be delayed. Both PWD and Public Advocate filed exceptions to the Hearing Officer's recommendation.

On October 21, 2008, the Commissioner issued his Rate Determination on the Rate Increases (Rate Determination), rejecting in part the Hearing Officer's recommendation. Relevant for purposes of this appeal are the Commissioner's decisions to grant a greater rate increase for fiscal year 2010 and to also grant rate increases for fiscal years 2011 and 2012. (Id. at 118a.) On

October 21, 2008, the Commissioner issued revised regulations designed to implement the revenue requirement increases set forth in his Rate Determination (Final Regulations). (Id.)

On October 27, 2008, Public Advocate requested reconsideration of the Rate Determination with respect to each of the four (4) years included in PWD's filing. (Id. at 194a.) The Final Regulations became effective November 1, 2008, for the City's fiscal years 2009 through 2012. (Id. at 2a.) On November 3,

2008, the Commissioner denied Public Advocate's request for reconsideration. (Id. at 201a.)

Public Advocate's complaint sets forth causes of action for declaratory and injunctive relief under the trial court's original jurisdiction. In seven separate counts, Public Advocate challenges the methodology and analysis that the Commissioner employed in his Rate Determination, claiming that both violated the governing standards set by City Council and were not supported by evidence. Public Advocate seeks a court order declaring invalid the portion of the Final Regulations that authorize rate increases for fiscal years 2010, 2011, and 2012 and enjoining Appellees from implementing those portions of the Final Regulations. (Id. at 46a-47a.)

On January 22, 2010, Appellees filed preliminary objections with the trial court directed to all of the counts of Public Advocate's complaint. (R.R. at 208a.) In their first preliminary objection, Appellees claimed that Public Advocate failed to comply with rules of court (Pa. R.C.P. No. 1028(a)(2)). Specifically, they claimed that Public Advocate's action is governed by Chapter 15 of the Pennsylvania Rules of Appellate Procedure (Appellate Rules). Under those rules, Appellees claimed that Public Advocate was required to file a petition for review (and not a complaint) with the trial court within thirty (30) days of the issuance of the Rate Determination. Because Public Advocate did not file a timely petition for review under Chapter 15 of the Appellate Rules, Appellees requested that the trial court dismiss the complaint with prejudice.

In their second preliminary objection, Appellees again relied on Chapter 15 of the Appellate Rules. They claimed that Chapter 15 is the exclusive procedure to challenge governmental determinations. Because this procedure provides an adequate remedy at law, Appellees argued that the trial court lacks jurisdiction to grant Public Advocate the relief it seeks in equity. The fact that Appellees failed to timely appeal the Rate Determination under Chapter 15 does not, according to Appellees, "create a special right to equitable relief." (R.R. at 212a.)

In their third preliminary objection, Appellees appear to have raised a demurrer (Pa. R.C.P. No. 1028(a)(4)). Appellees noted that Public Advocate's suit is directed to the portion of the Rate Determination for fiscal years 2010, 2011, and 2012. The demurrer, however, was directed toward a hypothetical alternative claim: "If Plaintiffs seek, in the alternative, prospective relief applicable to future rate proceedings, they are requesting an advisory opinion, rather than an adjudication of an actual controversy." (R.R. at 212a (emphasis added).)

Appellees contended that it is inappropriate for Public Advocate to seek a declaratory judgment with respect to future rate proceedings. Thus, they urged the trial ...


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