Delco leaders mull an appeal after judge upholds $276.5 million DELCORA deal

With a late December ruling, Delaware County Common Pleas Judge Barry Dozor thwarted the county government’s attempt to block the $276.5 million sale of the regional wastewater system known as DELCORA to Aqua Pennsylvania — theoretically bringing an end to one of Delco’s long-running, will-they-won’t-they political feuds.

“The whims of politics or changing county administrations do not waive away legally enforceable binding contracts. The reliance and predictability of valid legal contracts is paramountly important and serves public policy,” Dozor wrote in the order.

The pending deal will go before the Pennsylvania Public Utility Commission for a vote unless the county appeals. If it is approved, the deal would result in the largest privatization of a public water system in the state.

But the county may not go down quietly. It has 30 days from the date of Dozor’s order to continue the fight.

“The county will determine in advance of the Jan. 27, 2021, deadline whether to pursue an appeal to Commonwealth Court. Pending that decision, the county continues to press our objections to the transaction before the PUC,” Adrienne Marofsky, the county’s public relations director, said in a statement to WHYY News.

The purchase agreement between DELCORA (short for Delaware County Regional Water Quality Control Authority) and Bryn Mawr-based Aqua Pennsylvania, which provides water and sewer service to much of suburban Philadelphia, has been contested since the deal was announced in September 2019.

DELCORA serves about 165,000 people in 42 towns across Delaware and Chester counties, and it has been under Republican control for the entirety of its more than 150-year existence. At the time the deal was announced, Delaware County Democrats accused Delaware County Republicans of playing a politically motivated game of keep away.

Last June, the all-Democratic County Council — it won control of the government in November 2019, just two months after the sale was announced — tried to stop the deal by dissolving DELCORA through an ordinance and taking control of wastewater operations, which would in turn void the contract. Judge Dozor’s recent order essentially put an end to that.

“This court finds that the asset purchase agreement between DELCORA and Aqua is a legal and enforceable contract, not in violation of the Municipality Authorities Act, public policy, or any other applicable law,” Dozor said.

DELCORA’s legal counsel said in an interview that the authority’s officials were “delighted” but not “surprised” by the judge’s order.

“Anyone who reads the order from Delaware County Court, whether you’re a lawyer or not, simply must conclude that the order is a complete repudiation of the county’s baseless claims and a complete victory for DELCORA customers,” said lawyer Tom Wyatt, of Obermayer Rebmann Maxwell & Hippel LLP, who is representing DELCORA.

Wyatt said the deal was not motivated by politics, but rather by the potential for future rising costs.

“And they saw great uncertainty and dramatic risk of increases in costs to their customers. And so they began to think about options,” Wyatt said. “Ultimately, they decided to join with a familiar, but also well-run organization, for the betterment of both organizations’ customers.”

DELCORA’s leadership believes that the deal was done with complete transparency under the previous Republican County Council, Wyatt said, adding that the current council’s claims about his client are “baseless” and “highly politicized.”

“The County Council has been blinded by rage, and it’s unfortunately totally obscured reality for them. And this lawsuit has cost Delaware County taxpayers a huge amount of money in the middle of a pandemic. And DELCORA strongly encourages the county to look at reality and end this frivolous misadventure so that we stop wasting taxpayer dollars and DELCORA customer dollars,” Wyatt said. “And I urge the county to focus [its] time and energy and money on providing lifesaving vaccines to its residents.”

DELCORA officials view the deal as more of a merger, Wyatt said, because all 160 authority employees will be moving over to Aqua.

In the fall, the Public Utility Commission conducted public hearings at which some Delco residents voiced their support for the deal.

As the county determines its next moves, DELCORA and Aqua Pennsylvania also await a recommendation from an administrative law judge on their application to the PUC. That decision could come within the next few weeks.

The commission itself is expected to vote on the deal in March.