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PA Bulletin, Doc. No. 07-331



Kilbuck Run Disposal Corporation; Formal Complaint

[37 Pa.B. 1006]
[Saturday, February 24, 2007]

Public Meeting held
February 8, 2007

Commissioners Present: Wendell F. Holland, Chairperson; James H. Cawley, Vice Chairperson; Kim Pizzingrilli; Terrance J. Fitzpatrick

Pennsylvania Public Utility Commission, Law Bureau Prosecutory Staff v. Kilbuck Run Disposal Corporation (2006.0116.); Doc. No. C-20066150, A-230203


By the Commission:

   On April 6, 2006, Law Bureau Prosecutory Staff (Prosecutory Staff) filed a Formal Complaint against Kilbuck Run Disposal Corporation (Kilbuck Run or Respondent), a wastewater treatment service provider certificated at A-230203. In the Complaint, Prosecutory Staff alleged that the Commission had notified Respondent by both first class and certified mail, return receipt requested, that Respondent had failed to file its 2004 Annual Report. The Complaint requested that the Commission issue an order imposing a $1,000 civil penalty against Respondent for its failure to file its 2004 Annual Report in violation of 66 Pa.C.S. § 504.

   Service of the Complaint was perfected on April 13, 2006. Respondent filed an answer on April 28, 2006, stating that it is no longer providing wastewater treatment service under its certificate of public convenience. Respondent further stated that this service is now being provided by the Ohio Township Sanitary Authority (Authority). Additionally, Respondent noted that all of the rights-of-way, facilities and equipment have been transferred to the Authority at no cost. Respondent requests that its certificate be cancelled as a result of the Authority providing wastewater treatment services to its former customers.

   Upon receipt of Respondent's April 28, 2006 answer, Prosecutory Staff contacted the former owner of Kilbuck Run and requested that he supply more information. In response to Prosecutory Staff's request, Respondent submitted a copy of a letter dated July 7, 2005. The letter was sent from the Authority to each of Kilbuck Run's 124 customers notifying them that effective June 1, 2005, the Authority had commenced operation of the new regional facility known as the Kilbuck Run Regional Sewage Treatment Plant. The Authority's letter also informed the customers that the Authority would be responsible for maintaining the plant as well as providing service to them. Finally, the Authority's letter advised the customers as to when they would be billed and how the bill would be calculated for sewage treatment service.

   As part of Prosecutory Staff investigation into this matter, Staff spoke with the Ohio Township's engineer regarding its takeover of service to Kilbuck Run's customers. In response to that inquiry, the Ohio Township engineer provided written confirmation to Prosecutory Staff that the Authority is indeed providing service to Kilbuck Run's former customers. The engineer's letter attached copies of two DEP permits issued to the Authority; to wit: a Water Quality Management Permit dated August 25, 2004 and an NPDES permit issued on February 12, 2004 with an effective date of March 1, 2004.

   Prosecutory Staff communicated with the former owner of Kilbuck Run, W.C. Smith, several times subsequent to the receipt of Respondent's answer. Those communications revealed that he is elderly, in poor health and unable to continue providing service pursuant to his certificate. He stated that all rights-of-way and facilities have been transferred to the Authority at no cost to the Authority.

   A review of Commission records shows that Kilbuck Run was granted its certificate on November 12, 1987. Kilbuck Run has been the subject of six formal complaints in the last five years. All of the complaints were issued for Kilbuck Run's failure to comply with the Commission's annual report filing requirements. Commission records show that Kilbuck Run has not filed any answers or annual reports in response to past complaints. However, Respondent paid the $1,000 fine in response to the complaint at C-20044092, which resulted in a Default Order, for Kilbuck Run's failure to file its 2003 Annual Report. As stated earlier, Respondent filed an answer to the instant complaint requesting cancellation of its certificate. We note that the Commission never received any informal (or formal) complaints from customers concerning the service provided by Respondent.

   Communications with the Allegheny County Health Department (Health Dept.), which enforces DEP permit conditions in Allegheny County, revealed that Kilbuck Run had a long history of violations. Those violations include: severe and chronic effluent violations, sludge discharge violations and failure to operate and maintain the plant. As a result of those violations, the Health Dept. negotiated an agreement with Mr. Smith that if he agreed to remove himself from the wastewater business, the Health Dept. would not enforce the fines associated with a related consent order judgment from the Allegheny County Court of Common Pleas. This led, in part, to a developer building a plant that the Authority is now operating.

   The Health Dept. also advised Prosecutory Staff that Kilbuck Run's former facilities have been demolished. In addition, the Health Dept. reports that the Authority is a responsible entity operating the newly built facilities in compliance with all state and federal requirements.

   A certificate of public convenience is a privilege and not a contract or property right under which the holder acquires vested rights. Western Pennsylvania Water Company v. PA PUC, 311 A.2d 370 (Pa. Cmwlth. 1973). As such, a certificate of public convenience may be revoked where the utility fails to perform its essential service functions to the public. In the instant case, Kilbuck Run is no longer performing any services for the public. The services it was permitted to perform by its certificate are now being provided by the Ohio Township Sanitary Authority. Respondent no longer has any facilities and the issue of Kilbuck's continuous duty of service to the public is effectively moot. Based upon the foregoing, we find that Mr. Smith is no longer capable of operating Kilbuck Run in a lawful manner and has failed to provide ''adequate, efficient, safe and reasonable service and facilities'' in accordance with its statutory duty under Section 1501 of the Public Utility Code, 66 Pa.C.S. § 1501.

   Given the fact that the Authority has taken over the operations previously performed by Kilbuck Run, we conclude that it is appropriate to revoke Kilbuck Run's certificate of public convenience without the necessity of filing a complaint and holding a hearing. We emphasize that Kilbuck Run's actions of allowing another entity to serve the public without first receiving Commission review and approval of an application to abandon its certificate is illegal, a violation of the Public Utility Code, and subject to fines and such other actions that the Commission may deem necessary. 66 Pa.C.S. §§ 1102(a)(2), 3301. However, in this instance, we will exercise our discretion to waive the imposition of penalties. We expressly limit our actions to the circumstances specific to this case and caution other jurisdictional utilities against pursuing similar actions.

   Based upon the foregoing, we conclude that revocation of Kilbuck Run's certificate is in the public interest. We also conclude that the takeover of service by the Authority is in the public interest. We note that pursuant to the Public Utility Code and the Municipal Authorities Act, the service provided by the Authority is not subject to Commission jurisdiction; Therefore,

It Is Ordered That:

   1.  The request of Kilbuck Run Disposal Corporation for revocation of its certificate of public convenience and the transfer of customers to the Ohio Township Authority is hereby approved as being in the public interest.

   2.  The Secretary serve a copy of this Order upon Kilbuck Run Disposal Corporation, the Department of Environmental Protection Southwest Region and the Central Office Bureau of Regulatory Counsel, the Ohio Township Sanitary Authority, the Department of Revenue, Bureau of Corporation Taxes, the Office of Consumer Advocate, and the Office of Trial Staff; and also cause a copy of this Order to be published in the Pennsylvania Bulletin.

   3.  That the certificate of public convenience held by Kilbuck Run Disposal Corporation at A-230203 shall be cancelled, and the Secretary shall strike the name of Kilbuck Run Disposal Corporation from all active-utility lists maintained by the Annual Report Section of the Secretary's Bureau and the Assessment Section of the Bureau of Administrative Services.

   4.  That this case be marked closed.


[Pa.B. Doc. No. 07-331. Filed for public inspection February 23, 2007, 9:00 a.m.]

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