Marley Parish of Spotlight PA State College wrote the story.
The State College regional bureau of Spotlight PA, a nonpartisan, independent newsroom devoted to investigative and public service journalism in Pennsylvania, created this report. Visit SpotlightPA.org/newsletters/talkofthetown to subscribe to Talk of the Town, a weekly newsletter including events, in-depth local stories, and more from north-central PA.
BELLEFONTE A distressed rural water company that is being investigated by state authorities is now facing more legal action from its own attorneys, who want a municipal authority to assume control of the company.
J. Roy Campbell, the owner of Rock Spring Water Company, told a judge months ago that he would prefer to sell his company rather than have state regulators force him to buy it. His lawyers have now asked a Centre County court to transfer interim operations to the State College Borough Water Authority, which is located nearby.
Following a study of the privately held corporation by the Bureau of Investigation and Enforcement, an independent part of the Pennsylvania Public Utility Commission, Campbell retained attorneys James Bryant and Carolyn Larrabee last fall.
Years of neglect have led to deteriorating infrastructure, which results in poor water pressure, outages, and boil water advisories for the 1,000 customers who depend on the 20-mile system for service, according to a June Spotlight PA investigation.
According to a 2022 engineering analysis, repairs for the current system would cost $13.5 million.
As part of an ongoing legal dispute with the Department of Environmental Protection over excessive water loss, the corporation has also accrued regulatory infractions and underpaid civil fines totaling tens of thousands of dollars.
Larrabee told Spotlight PA, “What we have here is a water company that was formed back after World War II to serve farmers.” It was never built or planned to meet the demand that would arise from the development of the farms.
Campbell, who is overburdened by system operations and the regulatory procedure, is among those that Larrabee hopes will find relief from the recent legal action, she continued.
According to her, selling the business to a public utility that is better suited to meet that type of customer demand is currently the wisest course of action.
According to court documents, Campbell signed a letter of intent to sell the company to the State College Borough Water Authority for $65,000 in December after being convinced by his lawyers. A shared desire in bargaining is evident in the letter. The board of the water authority, the company’s shareholders, and state regulators would also need to approve an acquisition.
But there hasn’t been a sale yet.
The attorneys stated in their emergency petition, which was submitted this week, that Campbell and his daughter Elizabeth Campbell, who assists in managing Rock Spring’s activities, have cooperated with state agencies and legal counsel to the same extent, i.e., very little.
All of Rock Springs’ customers are in imminent danger due to the Campbells’ stubbornness, the state of the physical facility, and the water line, which the current management is unable to address, they said.
While they attempt to finalize a sales agreement, the lawyers have asked a judge to permit the State College water authority to take over operations.
Campbell or anybody else who objects to the motion can explain why he should maintain control during the hearing, which is set for January 24.
A request for response from the corporation was not answered. Since we all worked during the holidays, the company has extended its winter vacation through January 17, according to an automated response from its email address.
These procedures are the most recent in a series of talks over the purchase of Rock Spring by the State College Borough Water Authority.
According to public documents, the company’s owners had previously approached the water authority about a sale in 2008 but had withdrawn the offer two months later. The water authority attempted to begin discussions to purchase the system in 2023, but the talks failed.
Although the water authority had previously purchased local systems, the cost of acquiring Rock Spring raised concerns. In order to prevent putting an excessive financial strain on consumers, it would look for grants and loans to finance repairs.
In an attempt to maintain local services and prevent expensive rate increases, the Ferguson Township Board of Supervisors decided in November to support initiatives to seek for grants to finance millions of dollars in repairs should the authority be successful in acquiring the system.
Local officials are still attempting to negotiate a sales agreement with Rock Spring, according to Brian Heiser, executive director of the water authority, who spoke to Spotlight PA. He is concerned that an investor-owned business, like Pennsylvania American Water, one of the biggest privately held utilities in the state and a past target buyer, could overtake these local efforts.
In a statement, Heiser stated, “We continue to believe that we are in the best position to serve the RSWC customer base.”
Proceedings at the state level are still in progress. The division told Spotlight PA that lawyers and employees from the independent Bureau of Investigation and Enforcement will lay forth a stance in testimony and other pleadings.
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