Pennsylvania Supreme Court Denies Utility Easement for Residential Subdivision

May a municipal authority exercise its eminent domain powers to condemn an easement over privately-owned land, where the sole purpose of the easement is to supply a private developer with land to install sewer facilities needed for a proposed private residential subdivision? The Pennsylvania Supreme Court recently addressed this issue in Reading Area Water Authority v. The Schuylkill River Greenway Association, 2014 Pa. LEXIS 2499, at *1 (Pa. 2014). The Court concluded that “[w]hatever public benefit may ensue from the drainage easement, it is being taken to be used for private enterprise and, as such, is prohibited by Section 204(a) [of the Eminent Domain Code].” Id. at *28.

By way of background, the United States Constitution provides that “private property [shall not] be taken for public use, without just compensation.” U.S. Const. Amend. V. Similarly, the Pennsylvania Constitution provides that “private property [shall not] be taken or applied to public use, without authority of law and without just compensation being first made or secured.” Pa. Const. Art I. Sec. 10. In 2005, the United States Supreme Court determined that the taking of private land was for a public use although much of the condemned land was to be used for private enterprise. Kelo v. City of New London, Connecticut, 545 U.S. 469, 473-74 (2005). The Kelo Court found that the economic development involved qualified as a public use for constitutional purposes. Id. at 483.

In direct response to Kelo, the Pennsylvania Legislature enacted Pennsylvania’s Property Rights Protection Act by adding Chapter 2, “Limitations on Use of Eminent Domain,” to the Eminent Domain Code. 26 Pa.C.S. §§ 201-207. Subject to enumerated exceptions, under the Eminent Domain Code, “the exercise by any condemnor of the power of eminent domain to take private property in order to use it for private enterprise is prohibited.” Id. at § 204(a).

In Schuylkill River Greenway Association, a developer owned 58 acres of land upon which it sought to construct a 219 unit residential subdivision. Schuylkill River Greenway Association, 2014 Pa. LEXIS 2499, at *2. In between the developer’s tract and the Schuykill River was a strip of land owned by the Schuykill River Greenway Association (the “Greenway”). Id. The Greenway intended to use its land to build a public walking/recreational trail. Id. In order to supply clean water, sanitary sewer, and stormwater sewer facilities to its proposed development, the developer sought to connect to a water main on the opposite side of the Schuylkill River, and lay conduits to discharge treated sewage and stormwater into the river. Id. For this to occur, a utility easement was required to cross the Greenway’s property. Id.

The Reading Area Water Authority (“RAWA”) supported the developer’s planned development and filed a Declaration of Taking Complaint to condemn a 50-foot wide easement across the Greenway’s property. Id. at *3-4. The Greenway filed preliminary objections alleging that the taking was invalid under Pennsylvania’s Property Rights Protection Act. Id. at *5-6. RAWA asserted “that there was a public interest in ensuring that homes have running water and access to a sewer line, and that the taking advances this interest regardless of whether [the d]eveloper will benefit from the availability of such services through its ability to build and sell fully-functioning homes.” Id. at *15.

The Court acknowledged that “RAWA is authorized, as a municipal authority, to exercise the power of eminent domain, see 53 Pa.C.S. § 5607(d)(15), and it may do so as necessary to provide the public with water via a water distribution system.” Schuylkill River Greenway Association, 2014 Pa. LEXIS 2499, at *17. At first glance, it would seem that such condemnation would be a permitted exception under Section 204(b) of the Eminent Domain Code, which provides, in part, that “Subsection (a) [relating to prohibition] does not apply if any of the following apply: The property is taken by, to the extent the party has the power of eminent domain, transferred or leased to . . . [a] public utility . . . as defined in 66 Pa.C.S. § 102.” 26 Pa.C.S. s 204(b)(i). A “public utility” is defined as:

Any person or corporations now or hereafter owning or operating in this Commonwealth equipment or facilities for:

*    *    *

(ii) Diverting, developing, pumping, impounding, distributing, or furnishing water to or for the public for compensation.

*    *    *

(vii) Sewage collection, treatment, or disposal for the public for compensation.

66 Pa.C.S. § 102.

However, the Court noted that “as a municipal authority RAWA is not a public utility under the Public Utility Code. See Chester Water Authority v. PUC, 868 A.2 384, 387 n.7 (Pa. 2005).” Schuylkill River Greenway Association, 2014 Pa. LEXIS 2499, at *17. Moreover, the record established that the developer, and not RAWA, would finance, construct, and maintain the utility easements. Id. at *19. Therefore, the Court concluded that the condemnation falls within Section 204(a)’s prohibitive scope. Id. at *28.

The acquisition of utility easements is often a critical step in the land development process. If sufficient utility services cannot be provided to a tract of land, not only may the property’s value be significantly diminished, but the overall development may be rendered fiscally unviable as well. If you are a developer confronted with legal issues related to your planned community development, please do not hesitate to contact Sebring & Associates for a consultation.


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