January 25, 2026
Nick King/Imagn Images
The Pennsylvania Supreme Court ruled that Chester cannot unilaterally sell its water authority to a private company. Such a move would require approval from all three governing municipalities instead in a 5-1 decision that blocks privatization efforts.
A long-running court battle over the cash-strapped city of Chester's water authority ended Wednesday with a state Supreme Court ruling that rejects its sale to a for-profit company, for now.
The justices blocked the city's financial guardian from unilaterally forcing a transfer of the Chester Water Authority's assets to the city government. Instead, such a transfer would require the joint action of all three of the authority's governing municipalities, the court said in the 5-1 decision.
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"The decision draws a clear line between public ownership and privatization," CWA Board Chairperson Noël Brandon said. "The court sided with everyday residents who drink CWA water and affirmed that the authority belongs to its customers — not to a receiver, politicians, or private interests. This ruling should set an important precedent for similar cases across Pennsylvania."
In the majority opinion, Justice Christine Donohue said the lower Commonwealth Court erred by determining the city could seize the water authority's assets. It did so by incorrectly relying on its own prior caselaw and overlooking a 1957 state Supreme Court decision that held a transfer would require the CWA board's approval.
Acquisition of public water and sewer companies by investor-owned companies has been a frequent subject of judicial and legislative scrutiny since 2016, when the state passed a law known as Act 12.
Signed by then-Gov. Tom Wolf, the law allows municipal water and sewer utilities to negotiate with for-profit utilities for the fair market value rather than the actual value of the system. The higher purchase prices, in turn, give new owners a basis to seek approval to charge higher rates. They usually receive them, consumer advocates testified during a 2023 hearing before a state House panel.
Critics say Act 12 has resulted in soaring water and sewer bills for hundreds of thousands of customers across the state.
Chester, once a prosperous port and shipbuilding city on the Delaware River, has suffered decades of disinvestment and decline. It entered receivership in 2020 and filed for Chapter 9 bankruptcy in 2022 to restructure its pension and retiree healthcare debt.
Court-appointed Receiver Vijay Kapoor contends that the water authority, established by the city in 1939, was "stolen without compensation." In October, he moved to amend the city's recovery plan to address issues of the authority's ownership and rate hikes.
Initially, the city drew water from the Delaware River, according to the Supreme Court's opinion. In 1945, the CWA constructed a reservoir by damming Octoraro Creek in southwest Chester County, more than 40 miles from the city.
Since the reservoir began supplying water, the CWA has expanded to supply around 200,000 people in the suburban Philadelphia counties of Delaware and Chester. The authority's board is now composed of members appointed by Chester city and Delaware and Chester counties.
In 2017, the board rejected an unsolicited $320 million bid to buy CWA's assets from publicly-traded water company Aqua. Brandon, the board's chairperson, warned in a statement after the decision that monetizing the authority remains Kapoor's only strategy to address Chester city's financial problems
Several CWA board members who opposed the transfer have terms that end in 2027, meaning that authority's future is in the hands of Chester City Council, Delaware County Council, the Chester County commissioners and the replacements they select.
Pennsylvania Capital-Star is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Pennsylvania Capital-Star maintains editorial independence. Contact Editor Tim Lambert for questions: info@penncapital-star.com.
