Case# 2017-07215-0 - Received at County of Bucks Prothonotary Of?ce on 11/08/2017 2:21 PM, Fee $250.25 433-? COURT OF COMMON PLEAS OF BUCKS COUNTY, AQUA INC VS. NO. 2017-07215 BUCKS COUNTY WATER AND SEWER AUTHORITY CIVIL COVER SHEET State Rule 205.5 requires this form be attached to any document commencing an action in the Bucks County Court of Common Pleas. The information provided herein is used solely as an aid in tracking cases in the court system. This form does not supplement or replace the filing and service of pleadings or other papers as required by law or rules of court. Name of Plaintiff/Appellant's Attorney: Joel Frank, Esq., ID: 46601 Self-Represented (Pro Se) Litigant Class Action Suit Yes No MDJ Appeal Yes No Money Damages Requested Commencement of Action: Amount in Controversy: Complaint More than $50,000 Case Type and Code Miscellaneous: Declaratory Judgment Other: Case# 2017-07215-0 - Received at County of Bucks Prothonotary Of?ce on 11/08/2017 2:21 PM, Fee $250.25 LAMB PC Joel L. Frank, Esquire Attorney ID. No. 46601 Vincent T. Donohue Attorney ID. No. 81311 Scot R. Withers Attorney ID. No. 84309 T. Maxwell O?Keefe Attorney ID. No. 208685 24 E. Market Street PO. Box 565 West Chester, PA 19381?0565 Attorneys for Plaintl?s AQUA INC. 762 W. Lancaster Avenue Mawr, PA 19010 And J. KEVAN BUSIK 6603 Route 202 New Hope, PA 18938 Plaintiffs v. BUCKS COUNTY WATER AND SEWER AUTHORITY 1275 Almhouse Road Warrington, PA 18976 Defendant IN THE COURT OF COMMON PLEAS BUCKS COUNTY, NO. CIVIL ACTION LAW You have been sued in court. If you wish to defend against the claims set forth in the following pages, you must take action within twenty (20) days after this complaint and notice are served, by entering a written appearance personally or by attorney and filing in writing with the court your defenses or objections to the claims set forth against you. You are warned that if you fail to do so the case may proceed without you and a judgment may be entered against you by the court without further notice for any money claimed in the complaint or for any other claim or relief requested by the plaintiff. You may lose money or property or other rights important to you. YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER OR CANNOT AFFORD ONE, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW NOTICE TO DEFEND TO FIND OUT WHERE YOU CAN GET LEGAL HELP. Case# 2017-07215-0 - Received at County of Bucks Prothonotary Of?ce on 11/08/2017 2:21 PM, Fee $250.25 BUCKS COUNTY BAR ASSOCIATION Lawyer Referral Services 135 E. State Street Doylestown, PA 18901 1-888-991-9922 Joel L. Frank Joel L. Frank Attorney for Plaimi?fs Case# 2017-07215-0 - Received at County of Bucks Prothonotary Of?ce on 11/08/2017 2:21 PM, Fee $250.25 LAMB PC Joel L. Frank, Esquire Attorney ID. No. 46601 Vincent T. Donohue Attorney ID. No. 81311 Scot R. Withers Attorney ID. No. 84309 T. Maxwell O?Keefe Attorney ID. No. 208685 24 E. Market Street PO. Box 565 West Chester, PA 19381?0565 Attorneys for AQUA INC. 762 W. Lancaster Avenue Mawr, PA 19010 And J. KEVAN BUSIK 6603 Route 202 New Hope, PA 18938 Plaintiffs v. BUCKS COUNTY WATER AND SEWER AUTHORITY 1275 Alrnhouse Road Warrington, PA 18976 Defendant IN THE COURT OF COMMON PLEAS BUCKS COUNTY, NO. CIVIL ACTION LAW COLUMN AND NOW come Plaintiffs, Aqua Inc. and J. Kevan Busik by and through their attorneys, Lamb McErlane PC, and file this Complaint as follows: A. The Parties Case# 2017-07215-0 - Received at County of Bucks Prothonotary Of?ce on 11/08/2017 2:21 PM, Fee $250.25 1. Plaintiff, Aqua Inc. (?Aqua is a corporation incorporated in the Commonwealth of with its principal office located at 762 West Lancaster Avenue, Mawr, 19010. 2. Plaintiff J. Kevan Busik (?Busik?) is an adult individual who resides in Bucks County, owning property at 6603 Route 202, New Hope, PA, and is a customer and ratepayer of BCWSA. 3. Defendant, Bucks County Water and Sewer Authority is a municipal authority organized and existing under the laws of the Commonwealth of with its principal office located at 1275 Almhouse Road, Warrington, Bucks County, 18976. B. Jurisdiction and Venue 4. This Court has jurisdiction over this matter pursuant to 42 5301(a)(2)(i) because both Aqua PA and BCWSA are incorporated under the laws of the Commonwealth of and pursuant to 42 5301(a)(1)(ii) as Busik is domiciled in 5 . Venue is proper in Bucks County because 2 103 provides that an action against a political subdivision may be brought only in the county in which the political subdivision is located. The definition of ?political subdivision?, as set forth by 76, includes municipal and local authorities. C. Factual Background 1. Applicable Regulations 6. Aqua PA is a public utility, which provides water and wastewater services to residents. Case# 2017-07215-0 - Received at County of Bucks Prothonotary Of?ce on 11/08/2017 2:21 PM, Fee $250.25 7. Aqua PA is regulated by the Utilities Commission and is bound by the provisions of the Public Utility Code in its provision and operation of services, including ratemaking. 8. Aqua PA currently provides water and sewer services to numerous customers in including residential, commercial, industrial, public and ?re accounts, and currently is pursuing a strategy of expanding its service area through the purchase and acquisition of water and wastewater systems from existing operators, including municipalities, throughout the Commonwealth of 9. In purchasing and acquiring water and wastewater systems from municipalities, Aqua PA is specifically bound by the provisions of Act 12 of 2016, which amended the Public Utility Code (66 1329, ?Act which sets forth procedural requirements for determining the fair market valuation of acquired water and wastewater systems for ratemaking purposes. 10. During the period following World War 11, certain portions of Bucks County experienced a period of rapid economic growth, a result of which a plan, designated Master Plan, Water Supply and Sewage Facilities, Bucks County, was prepared in 1960 and adopted by the Bucks County Board of Commissioners. 11. The Bucks County Board of Commissioners incorporated BCWSA on January 22, 1962, as a municipal authority pursuant to the provisions of Municipality Authorities Act of 1945, 53 5601 e_t. Lee]; (the and assigned to BCWSA the task of implementing the Master Plan. original Articles of Incorporation are hereby attached as Exhibit Case# 2017-07215-0 - Received at County of Bucks Prothonotary Of?ce on 11/08/2017 2:21 PM, Fee $250.25 12. BCWSA originally and for decades provided water and wastewater services to some residential, commercial and light industrial customers solely in portions of Bucks County, and only relatively recently expanded its service area beyond Bucks County. 13. BCWSA is not regulated by the PUC or the PUC Code in any manner, including in its provision of services, in its setting of customer rates, or its acquisition of new water or wastewater systems, and does not fall under the purview of any other legislative or regulatory body that can limit rate setting. 14. Specifically, BCWSA is not constrained by any of Act 12?s requirements otherwise applicable to the acquisition of municipal wastewater and water systems. 15. powers and authority are instead set forth, governed and controlled by the provisions of the MAA. l6. Pursuant to Section 5620 of the MAA, 53 5620, BCWSA is exempt from paying taxes or assessments upon property acquired or used by BCWSA for purposes of performing essential government services. 17. Pursuant to Section 5620 of the MAA, BCWSA is authorized to issue tax?exempt bonds to finance its acquisitions and improvements of municipal water and wastewater systems, and the income from these bonds, including any pro?ts made on the sale of these bonds, are exempt from taxation. 18. The individual members governing BCWSA are all solely appointed by Bucks County Board of Commissioners. 19. operating income comes directly from the service revenues it receives from its water and sewer customers. Case# 2017-07215-0 - Received at County of Bucks Prothonotary Of?ce on 11/08/2017 2:21 PM, Fee $250.25 11. Competitive Acquisition of Sewer Systems A. Springfield Township, Montgomery County 20. In 2015, by virtue of its status as a municipal authority, BCWSA issued two series of tax-free Sewer System Revenue Bonds, in the respective aggregate amounts of Sixty Million Dollars ($60,000,000) (the ?2015 Bonds?) and Thirty?Four Million Eight Hundred Thousand Dollars ($34,800,000) (the Bonds?). 21. Per the official statement for the 2015A Bonds, the purpose of the tax-free 2015A Bonds proceeds was to purchase and acquire the sewer system located in Springfield Township, Montgomery County, (the ?Spring?eld System?). 22. BCWSA acquired the Springfield Sewer System by paying Sixteen Million Five Hundred Thousand One Hundred Dollars to Springfield Township after competing with two privately owned public utilities, which also attempted to purchase the Springfield Sewer System: Aqua PA and American Water, Inc. 23. Upon information and belief, despite purchase price of $16,500,000 for the Spring?eld, Montgomery County System, the actual value of the Springfield System was between Nine Million Dollars ($9,000,000) and Twelve Million Dollars 24. BCWSA assumed ownership and maintenance of the Springfield, Montgomery County, Sewer System on January 1, 2016. B. Cheltenham Township, Montgomery County 25. In April of 2017, the Board of Commissioners of Cheltenham Township, located in Montgomery County, authorized a Request for Qualifications to explore alternate Case# 2017-07215-0 - Received at County of Bucks Prothonotary Of?ce on 11/08/2017 2:21 PM, Fee $250.25 management including the potential sale or lease? of the Cheltenham Township Sewer System (the ?Cheltenham System?) 26. BCWSA, Aqua PA, and PAWI responded to the Request for Quali?cations and their responses at the time of the filing hereof are being reviewed by Cheltenham Township. Upon information and belief, Cheltenham Township is likely to invite the three respondents to submit a proposal for the management, lease, or acquisition of the Cheltenham System. 27. It is believed and therefore averred that, in the event Cheltenham Township offers the Cheltenham System for sale, BCWSA once again will directly compete with Aqua PA and PAWI for the acquisition of the Cheltenham System. C. Exeter Township. Berks County 28. On March 27, 2017, the Board of Supervisors of Exeter Township, located in Berks County, voted to authorize the issuance and advertisement of a Request for Proposal for the potential sale of the Exeter Township wastewater system (the ?Exeter System?). 29. It is believed and therefore averred that BCWSA submitted an offer for the purchase and acquisition of the Exeter System, in direct competition with other privately owned entities, including Aqua PA, in an attempt to purchase and acquire the Exeter System. 111. Finances 30. BCWSA generates revenue by charging its customers a service rate for every 1,000 gallons of water consumed. Case# 2017-07215-0 - Received at County of Bucks Prothonotary Of?ce on 11/08/2017 2:21 PM, Fee $250.25 31. Unlike privately owned public utilities governed and constrained by the PUC, and further by the imposition of Act 12, there is no regulatory body having oversight of BCWSA that limits its rate setting capability under the MAA. 32. The Bond Statements contain an Independent Auditors? Report of business activities in the years 2013 and 2014, with Page 6 thereof stating that ?Revenues in excess of Expenses are held in the Revenue Trust Fund (Cash Investments)? 33. Revenues derived from its water and sewer customers account for at least 93% of total revenue earned during each of 2014, 2015 and 2016. 34. Note 2 of the Independent Auditors? Report, entitled ?Deposits and Investments,? reveals that Cash and Investments in 2014 totaled One Hundred Forty Three Million, Three Hundred Twenty Nine Thousand, Three Hundred Fifty Two Dollars 35. The amounts by which revenues exceed its expenses in any given year is reported in its ?Statement of Revenues, Expenses and Changes in Net Position? on the line item entitled, ?Increase in Net Position.? 36. BCWSA has maintained customers? service rates at such an unreasonable level that its Increase in Net Position for the past three years has been: $19,039,071 in 2014; $13,745,946 in 2015; and $17,404,899 in 2016. 37. The foregoing amounts of Increase in Net Position have represented 23.1% (2014), 18% (2015) and 21.1% (2016) of each respective year?s revenues from its customers. 38. unreasonable service rates charged to its customers have allowed it to amass retained earnings which at the end of 2016 totaled $262,057,172, which includes at least Case# 2017-07215-0 - Received at County of Bucks Prothonotary Of?ce on 11/08/2017 2:21 PM, Fee $250.25 $145,000,000 in cash, cash equivalents, liquid investments and other current assets on its balance sheet. 39. Through the payment of their water and sewer bills to BCWSA, Plaintiff Busik and other BCWSA ratepayers contributed to and enabled BCWSA to accumulate this huge financial surplus, which then permits BCWSA to finance, purchase, and acquire, or attempt to acquire, wastewater systems and water systems that constitute new projects in new service areas that are separate and distinct from, and often not even contiguous to, the projects and service areas in which current BCWSA ratepayers receive wastewater and water services from it. 40. Busik currently resides in Bucks County service area, pays for the services it receives from BCWSA, and thus contributes to revenue generated by that service area. 41. Neither Busik, nor the sewer project in Busik?s service area, received any benefit from acquisition of the Springfield System, nor would it receive any benefit from the acquisition of the Exeter System or the Cheltenham System. 42. Upon information and belief, BCWSA has expended or intends to expend revenue generated by the Busik?s service area on the acquisition of the Springfield System, the Exeter System, and the Cheltenham System, as well as other as yet unidentified water and sewer systems. COUNT I- DECLARATORY JUDGMENT 43. Plaintiffs incorporate all preceding paragraphs of this Complaint as if set forth in full herein. 44. Section 5607(b)(2) of the MAA, 53 5607(b)(2), reads in relevant part that ?[t]he purpose and intent of this chapter being to benefit the people of the Commonwealth by, Case# 2017-07215-0 - Received at County of Bucks Prothonotary Of?ce on 11/08/2017 2:21 PM, Fee $250.25 among other things, increasing their commerce, health, safety and prosperity and not to unnecessarily burden or interfere with existing business by the establishment of competitive enterprises, none of the powers granted by this chapter shall be exercised in the construction, financing, improvement, maintenance, extension, or operation of any project or projects or providing financing for insurance reserves which in whole or in part shall duplicate or compete with existing enterprises serving substantially the same purposes.? Noncompetition Clause?) 45. Section 5602 of the MAA, 53 5602, de?nes the term ?Construction? as, ?Acquisition and construction. The term ?to construct? shall mean and include to acquire and to construct, all in such manner as may be deemed desirable.? (Emphasis added) 46. Under the definition of the term ?Construction,? 53 5607(b)(2) prohibits a municipal authority from acquiring any project which duplicates or competes with existing enterprises serving the substantially same purposes. 47. The MAA prohibits direct competition between private entities and municipal authorities to eliminate ?the unfair competitive advantage that would be enjoyed by municipal authorities in light of their exemption from property taxation and ability to raise capital via the issuance of tax?free bonds, and freedom from the substantial expense associated with regulation.? Capital City Cab Serv. Inc, v. Susquehanna Area Reg?l Airport Auth. 470 F. Supp. 2d 462, 470 (MD. Pa. 2006). Case# 2017-07215-0 - Received at County of Bucks Prothonotary Of?ce on 11/08/2017 2:21 PM, Fee $250.25 48. There are other entities, including but not limited to Aqua PA, that are existing enterprises which serve the substantially same purpose as BCWSA, specifically the provision of water and wastewater services in the geographic regions in which BCWSA operates or seeks to operate, like Springfield, Exeter and Cheltenham Townships. 49. Although BCWSA and Aqua PA serve the same substantial purpose, BCWSA holds an unfair competitive advantage over Aqua PA and other privately owned enterprises due to ability to raise capital via the issuance of tax-free bonds, its exemption from property taxation, and its freedom from parameters, oversight and approvals associated with regulation by the PUC. 50. BCWSA, in fact, issued a tax-free bond in 2015 for the very purpose of acquiring the sewer system in Springfield Township Montgomery County which Aqua PA itself and other existing entities sought, unsuccessfully, to acquire. 51. In doing so, BCWSA used its inherently unfair competitive advantage to improperly directly bid against and compete with Aqua PA and other privately owned enterprises in the acquisition of the Springfield System. 52. In fact, just since 2010, in a series of financings, BCWSA has issued tax-exempt bonds totaling over $193,000,000 to fund its voracious appetite for water and wastewater systems in areas where private entities, like Aqua PA and its competitors stand ready to acquire and service those same systems. 53. Upon information and belief, BCWSA intends to submit, or has submitted, bids for the purchase and acquisition of other wastewater and water systems within the Commonwealth of including but not limited to the Exeter System and the Cheltenham System, in direct 10 Case# 2017-07215-0 - Received at County of Bucks Prothonotary Of?ce on 11/08/2017 2:21 PM, Fee $250.25 competition with Aqua PA and other privately owned public utilities which serve the same substantial purpose as BCWSA. 54. The Exeter and Cheltenham systems are not contiguous to existing system and are therefore not part of any existing ?project? as that term is used in the Noncompetition Clause at Section 5607. WHEREFORE, Plaintiffs ask this Honorable Court to enter an order in favor of Plaintiffs declaring that pursuant to Noncompetition Clause, BCWSA is prohibited from competing with Aqua PA, or any other privately owned public utility that serves the same substantial purpose, by bidding upon or acquiring any water and wastewater service provider, including but not limited to the Exeter System and the Cheltenham System. COUNT II PERMANENT INJUNCTIVE RELIEF 55. Plaintiffs incorporate all preceding paragraphs of this Complaint as if set forth in full herein. 56. party seeking a permanent injunction must establish three elements: (1) a clear right to relief; (2) that an injunction is necessary to avoid an injury that cannot be compensated by damages; (3) that a greater injury will result from refusing the injunction.? Mazin v. Bureau of Prof? and Occupational Affairs, 950 A.2d 382, 389 (Pa. melth. 2008). 57. Aqua PA possesses a clear right to relief, as past competition, present competition, and anticipated future competition with Aqua PA in the acquisition of municipal water and/or sewer systems is in direct contravention of the Noncompetition Clause. 11 Case# 2017-07215-0 - Received at County of Bucks Prothonotary Of?ce on 11/08/2017 2:21 PM, Fee $250.25 58. Aqua PA has sustained and will continue to sustain recurring injury from the unfair competitive advantage BCWSA enjoys in its direct competition with Aqua PA. This injury cannot be merely compensated by damages, as it will have a perpetually detrimental effect on Aqua ability to expand its area of operation and compete in the marketplace of water and wastewater services. 5 9. A refusal to grant the injunction will result in continued and ongoing injury to Aqua PA and every other privately owned public utility with which BCWSA competes arising from violation of the Noncompetition Clause. See Public Utility Comm?n v. Israel, 52 A2d 317, 321 (Pa. 1947) (holding that when the Legislature declares certain conduct to be unlawful, it is tantamount to calling it injurious to the public, and to continue such unlawful conduct constitutes irreparable injury for the purposes of seeking injunctive relief.) 60. Conversely, no injury will result from the granting of the injunction, as residents in Cheltenham and Exeter Townships and any other municipality in would continue to receive wastewater and water services from public utilities regulated by the PUC. WHEREFORE, Plaintiff Aqua PA requests this Honorable Court to enter an order permanently enjoining BCWSA from bidding upon and competing with Aqua PA in the acquisition of any water or wastewater provider in including but not limited to, the Cheltenham System and the Exeter System. COUNT DECLARATORY JUDGMENT 61. Plaintiffs incorporate all preceding paragraphs of this Complaint as if set forth in full herein. 12 Case# 2017-07215-0 - Received at County of Bucks Prothonotary Of?ce on 11/08/2017 2:21 PM, Fee $250.25 62. Section 5607(d)(9) of the MAA provides, in relevant part, that municipal authorities have the power ?to alter, charge, and collect rates and other charges in the area served by its facilities at reasonable and uniform rates to be determined exclusively by it for the purpose of providing for the payment of the expenses of the authority, the construction, improvement, repair, maintenance and operation of its facilities and properties. . . If the service area includes more than one municipality, the revenues from any project shall not shall not be expended directly or indirectly on any other project unless such expenditures are made for the benefit of the entire service area.? 53 Pa. C.S. 5607(d)(9) (Emphasis added) 63. service area includes more than one municipality, as currently it provides services in Bucks County and Montgomery County. 64. Busik resides in service area in Bucks County and thus contributes to the revenues of BCWSA. 65. If BCWSA acquired the Cheltenham System or the Exeter System, located in Montgomery County and Berks County respectively, neither would constitute a part of the existing project, nor would the revenues from the existing project benefit the existing service area served by BCWSA. 66. Upon information and belief, such revenues being generated from the current ratepayers in the existing service area of which Busik is a part will necessarily in part be used either directly or indirectly to acquire the Cheltenham and Exeter sewer systems. 67. acquisition of the Cheltenham System and Exeter System each one a project separate from existing project - will neither benefit Busik or other ratepayers in existing service area, nor even connect to his/her and their existing service area, yet 13 Case# 2017-07215-0 - Received at County of Bucks Prothonotary Of?ce on 11/08/2017 2:21 PM, Fee $250.25 his/her and their payments will be used by BCWSA to acquire (or to collateralize borrowings for) these non-contiguous systems. WHEREFORE, Plaintiffs ask this Honorable Court to enter an order declaring expenditure of revenue generated by the service area of Which Busik is a part to purchase and acquire any water or wastevvater provider, including but not limited to, the Cheltenham System and Exeter System, to be prohibited under the terms of Section 5607(d)(9) of the MAA. COUNT IV- DECLARATORY JUDGMENT 68. Plaintiffs incorporate all preceding paragraphs of this Complaint as if set forth in full herein. 69. BCWSA has amassed retained earnings which at the end of 2016 totaled $262,057,172. 70. Per Section 5607(d)(9) of the MAA, BCWSA may fix and collect rates solely for the purpose of providing for the payment of the expenses of the authority, the construction, improvement, repair, maintenance and operation of its facilities and properties. 7 l. accumulation of such vast financial reserves is per se evidence that the rates being paid by its existing customers grossly exceed What is required by BCWSA to make expenditures permitted under Section 5607(d)(9) for its facilities and properties. 72. Consequently, rates are not reasonable and are invalid under Section 5607(d) of the MAA. WHEREFORE Plaintiffs ask this Honorable Court to enter an order declaring rates unreasonable and inability to use any portion of the funds obtained by ratepayers l4 Case# 2017-07215-0 - Received at County of Bucks Prothonotary Of?ce on 11/08/2017 2:21 PM, Fee $250.25 to acquire any wastewater or water system in including but not limited to the Exeter System and Cheltenham System. Date: November 8, 2017 By: 15 Respectfully submitted, LAMB PC Joel L. Frank Joel L. Frank Attorney ID. No. 46601 Vincent T. Donohue Attorney ID. No. 81311 Scot R. Withers Attorney ID. No. 84309 T. Maxwell O?Keefe Attorney ID. 208685 Attorneys for Plaintz?cs 21 PM, Fee $250.25 27 Received at County of Bucks Prothonotary Of?ce on 11/08/2017 2 Case# 2017 -07215-0 - JUDGE VEREFXCATEQN if? I. Kevan B'usik-q verify and af?rm that the statements made in the fbregeing piea?ing are. true and correct the: best my imawiecige, infm?mation and} Mimi Ii umietstem?? that the. staiemeni?s are subject :9 the penaities (2f {$43534 reiating {a faisi?cazion {e similaritiesIfmug3:533mew-ti. 3? ska-Van nun-3.8, 1 5? we Case# 2017-07215-0 - Received at County of Bucks Prothonotary Of?ce on 11/08/2017 2:21 PM, Fee $250.25 VERKFECATIQN 1, Christopher P. Luning, verify that I 211111 3.111111111211311 11:1 make 11113 Veri?ea?en 1111 behalf 0f Aqua ?ne, and verify and af?rm that the statements made 111 the feregeing pleading are true and eerreet to the best of my knowledge, infezmatien and beiief. I understand that the statements are subject to the penaltiee 0f 13 Pa. SSA. ?4904 relating to 11113111113111 fa?si?eatien 10 autheritiee Date: M1eem?ee? 5; ?2&8 $1 11.111111101111111 f1 81311101" Vice P1es1dent Gen lCmmeeZ and Secretary Aqua E?emsy?vania, 1111;.