American Water purchase comes amid suit over undisclosed sewer lines

Would you accept it?

That, essentially, is the question facing roughly 600 people who discovered they had sewer lines running under their properties in Scranton, said Patrick Howard, an attorney representing several homeowners in a proposed class-action suit.

Dauphin County-based Pennsylvania American Water last week finalized its $195 million purchase of those lines and others owned by the Scranton Sewer Authority.

The company, however, is not named as a party in the suit and will not be on the hook for any costs that come out of it. Those will instead fall to the authority and the city of Scranton.

The Scranton authority agreed in March to sell its assets to Pennsylvania American Water, the state’s largest water utility. During the sales process, the authority discovered it had decades-old lines under roughly 600 properties for which it had never obtained easements, Howard said.

The affected property owners received an offer in August: accept $100 to grant the city the right to access the line if it ever needs maintenance, or wait for the authority to seize it through eminent domain.

Howard and several other attorneys with Philadelphia-based Saltz, Mongeluzzi, Barrett and Bendesky filed a proposed class-action suit against the authority in November. The suit seeks more compensation for six named property owners and anyone similarly situated.

Some of the sewer lines, Howard said, run directly under people’s homes, meaning the utility company – Pennsylvania American Water as of last week – could theoretically dig up someone’s basement or porch to repair a line.

“I don’t think the unsuspecting homeowner gets these documents in the mail and understands what they’re giving up for $100,” Howard said.

The decades-old lines could also affect the value of the properties if owners decide to sell because the easement limits what a person can do with the property, he added.

The authority asserted in its letter to property owners that it had no intention of performing construction on the lines and was simply obtaining the easement as part of its sale to Pennsylvania American Water.

The authority has asked to have the suit dismissed. It cites, among other issues, the fact that the lines were installed more than 21 years ago, meaning too much time had passed to file a claim under eminent domain law.

Howard called that objection “silly,” noting the homeowners had no way of knowing until August that the lines even existed.

It also noted in court documents that it believes Pennsylvania American Water should have been named as a party in the suit because it has an interest in the affected properties. 

Howard disagreed, saying the company had nothing to do with placing the lines and therefore wasn’t at fault for not obtaining the easements.

Attempts to reach the authority’s attorneys Tuesday were not successful, and a spokesperson for Pennsylvania American Water declined to comment on the suit.

The complaint could affect how big of a chunk the city of Scranton sees from the purchase, which was initially expected to net $95 million after costs associated with the sale’s closing.

That number dropped to $83 million as several factors changed over the course of the sale, Scranton’s The Times-Tribune reported. The authority has only seen about $66.5 million so far, in part because it has set aside $12 million to address the suit over the missing easements.

Howard balked at that amount, saying the easements are likely worth much more than $12 million.

A hearing for the case is scheduled for Jan. 30, he said.