{"id":119456,"date":"2026-02-20T23:13:12","date_gmt":"2026-02-20T23:13:12","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-pa\/119456\/"},"modified":"2026-02-20T23:13:12","modified_gmt":"2026-02-20T23:13:12","slug":"judge-recommends-sale-of-troubled-rural-water-company-to-one-of-pa-s-largest-private-utilities-business","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-pa\/119456\/","title":{"rendered":"Judge recommends sale of troubled rural water company to one of Pa.\u2019s largest private utilities | Business"},"content":{"rendered":"

This story was produced by the State College regional bureau of Spotlight PA<\/a>, an independent, nonpartisan newsroom dedicated to investigative and public-service journalism for Pennsylvania. Sign up for Talk of the Town, a newsletter of local stories that dig deep, events, and more from north-central PA, at spotlightpa.org\/newsletters\/talkofthetown<\/a>.<\/p>\n

FERGUSON TOWNSHIP \u2014 Nearly two years after a Spotlight PA investigation found that customers served by Rock Spring Water Company were failed by the private utility, state regulators, and elected officials, a judge has recommended a forced sale.<\/p>\n

Rock Spring \u201ccannot reasonably be expected to furnish and maintain adequate, efficient, safe, and reasonable service and facilities in the future,\u201d Administrative Law Judge John Coogan wrote in a 190-page recommendation<\/a> issued Wednesday.<\/p>\n

Coogan is advocating for Pennsylvania American Water \u2014 one of the state\u2019s largest investor-owned utilities \u2014 to formally buy Rock Spring Water Company. Pennsylvania American was tapped by regulators<\/a> last year to take over Rock Spring\u2019s operations on an emergency basis to stabilize services for the company\u2019s roughly 500 properties.<\/p>\n

His proposed decision is the latest step in a seldom-used and lengthy regulatory process, known as a Section 529 investigation. The Pennsylvania Public Utility Commission\u2019s Bureau of Investigation and Enforcement launched the review in September 2024 to determine whether a forced acquisition of Rock Spring Water Company was warranted.<\/p>\n

The recommendation is not entirely unexpected<\/a> and still needs approval from the commission.<\/p>\n

However, it\u2019s a blow for the State College Borough Water Authority \u2014 which operates just eight miles from the center of Rock Spring\u2019s system and has tried numerous times to buy the private utility \u2014 and for customers who likely will face higher bills.<\/p>\n

Several told Spotlight PA in 2024 they were conflicted over whether it was worth paying more for reliable water.<\/p>\n

The company\u2019s rates haven\u2019t increased since 2013, and estimates to update the system range from $13.5 million to $16 million. Public input and testimony shared throughout the process show a divide among customers, who wonder what new ownership could mean for their bills.<\/p>\n

In his recommendation, Coogan acknowledged those fears but cited testimony that an acquisition wouldn\u2019t unreasonably impact rates. For Pennsylvania American, the PUC approves rates. So the cost of updating Rock Spring\u2019s systems would likely be spread out across the company\u2019s entire 2.4 million customer base.<\/p>\n

The recommendation also reaffirms the PUC\u2019s stance that it can only order a sale to a provider under its jurisdiction, which largely includes investor-owned companies, not municipal entities like the State College water authority.<\/p>\n

State law leaves \u201cno ambiguity\u201d on that issue, Coogan wrote.<\/p>\n

Representatives for Pennsylvania American and the State College authority told Spotlight PA they\u2019d provide comments on the matter after having time to review the judge\u2019s recommendation.<\/p>\n

Rock Spring and its lawyer did not respond to a request for comment at the time of publication.<\/p>\n

Rock Spring has racked up dozens of regulatory violations \u2014 including for failing to protect the system\u2019s water source, shutting off service without proper notice, and letting a leak go unfixed for six months \u2014 and tens of thousands of dollars in unpaid civil penalties as part of a yearslong legal battle with the Department of Environmental Protection over excessive water loss.<\/p>\n

For over a decade, Rock Spring\u2019s management resisted state directives to fix the system and find a new owner, while years of neglect led to crumbling infrastructure, low water pressure, regular outages, and sometimes lengthy boil water advisories. The Public Utility Commission even erroneously told a customer in 2018 that it didn\u2019t regulate Rock Spring, according to Spotlight PA\u2019s investigation published in June 2024<\/a>.<\/p>\n

Issues with the company were referred to the PUC\u2019s investigative division in May 2024 and a formal review launched in September that year.<\/p>\n

In March 2025<\/a>, Pennsylvania American became the interim operator of Rock Spring, after the Pennsylvania Office of Consumer Advocate requested an emergency takeover of the company to prevent \u201cirreparable\u201d injury.<\/p>\n

\u201cWithout water service, the public health and safety of Rock Spring customers will be compromised,\u201d Melanie Joy El Atieh, deputy consumer advocate, wrote in the filing<\/a>.<\/p>\n

Meanwhile, state officials urged Rock Spring\u2019s owner J. Roy Campbell to negotiate a sale to State College while under temporary management. Those talks were unsuccessful, with the company\u2019s lawyer rejecting<\/a> a $65,000 purchase offer last summer.<\/p>\n

Lawyers for Rock Spring, its emergency receiver, and state regulators proposed a range of ideas for the system\u2019s future<\/a> last year: Give Rock Spring more time to raise rates and reorganize; allow Pennsylvania American to file for bankruptcy to enable a municipal sale; or let the State College authority buy the system.<\/p>\n

Coogan shot down those proposals, citing Rock Spring\u2019s repeated failure to comply with state directives and regulations. He said the bankruptcy idea wasn\u2019t \u201cthoroughly vetted,\u201d as it was only first suggested in final legal briefs, and could cause delays. And although the State College authority appears to be the most logical choice, a public sale could only happen voluntarily.<\/p>\n

\u201cUnfortunately, however ideal a candidate SCBWA may be to operate RSWC, it does not change the fact that negotiations between SCBWA and RSWC are not advancing,\u201d he wrote.<\/p>\n

Coogan declined to set a \u201crange of reasonableness\u201d for the purchase price of Rock Spring, saying Pennsylvania American and the company must negotiate. If the PUC adopts his proposed order, the parties would have three months to reach an agreement. By the end of that period, Pennsylvania American could ask for more time or for regulators to approve the sale.<\/p>\n

If Pennsylvania American and Rock Spring can\u2019t reach an agreement, the investor-owned utility could seek control through eminent domain. Pennsylvania American would also submit a plan for improvements to the PUC, and all parties in the case would have time to submit comments before approval.<\/p>\n

Additionally, Coogan\u2019s recommended order says \u201call reasonable and necessary\u201d costs related to Pennsylvania American\u2019s receivership shall be paid for by sale proceeds. If an acquisition doesn\u2019t cover expenses, the investor-owned utility may make a claim in a future base rate case.<\/p>\n

Participants in the case have until March 10<\/a> to file any disagreements with the recommendation.<\/p>\n

This story may be updated.<\/p>\n

SUPPORT THIS JOURNALISM and help us reinvigorate local news in north-central Pennsylvania at spotlightpa.org\/donate<\/a>. Spotlight PA is funded by foundations and readers like you<\/a> who are committed to accountability and public-service journalism that gets results.<\/p>\n","protected":false},"excerpt":{"rendered":"This story was produced by the State College regional bureau of Spotlight PA, an independent, nonpartisan newsroom dedicated…\n","protected":false},"author":2,"featured_media":119457,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[5298,4771,56451,2860,56622,5629,28,4102,30,29,56624,46173,9918,56450,56627,13189,56625,56623,56626,56621],"class_list":{"0":"post-119456","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-pennsylvania","8":"tag-central-pennsylvania","9":"tag-department-of-environmental-protection","10":"tag-ferguson-township","11":"tag-hydrology","12":"tag-john-coogan","13":"tag-northcentralpa-news","14":"tag-pennsylvania","15":"tag-pennsylvania-american-water","16":"tag-pennsylvania-headlines","17":"tag-pennsylvania-news","18":"tag-pennsylvania-public-utility-commissions-bureau-of-investigation-and-enforcement","19":"tag-public-utility","20":"tag-public-utility-commission","21":"tag-rock-spring-water-company","22":"tag-spotlightpa-news","23":"tag-state-college","24":"tag-state-college-borough-water-authority","25":"tag-state-college-water-authority","26":"tag-water-authorities","27":"tag-water-industry"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/posts\/119456","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/comments?post=119456"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/posts\/119456\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/media\/119457"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/media?parent=119456"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/categories?post=119456"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/tags?post=119456"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}