[J-13-2014] IN THE SUPREME COURT OF PENNSYLVANIA

MIDDLE DISTRICT CASTILLE, C.J., SAYLOR, EAKIN, BAER, TODD, MCCAFFER Y, STEVENS, JJ.

READING AREA WATER AUTHORITY

v.

THE SCHUYLKILL RIVER GREENWAY ASSOCIATION

BERN TOWNSHIP, INTERVENOR

APPEAL OF: THE SCHUYLKILL RIVER GREENWAY ASSOCIATION AND BERN TOWNSHIP : : : : : : : : : : : : : No. 62 MAP 2013 Appeal from the Order of the Commonwealth Court dated 7/30/12, reconsideration denied 9/18/12 at No. 1423 CD 2011 which reversed/remanded the order of Berks County Court of Common Pleas, Civil Division, dated 6/30/11 at No. 10-8544

ARGUED: March 12, 2014

OPINION

MR. JUSTICE SAYLOR DECIDED: September 24, 2014 The primary question raised is whether a municipal authority may exercise its eminent domain powers to condemn an easement over p rivately-owned land, where the sole purpose of the easement is to supply a private developer with land to install sewer drainage facilities needed for a proposed private r esidential subdivision. The Schuylkill River Greenway Association (the Gree nway), a non-profit corporation, owns a strip of land along the west ba nk of the Schuylkill River in Bern Township, several miles north of the City of Readin g. The Greenway and the Township intend to build a public walking/recreational trail on this property as a segment of the larger Schuylkill River Trail. Situated immediatel y to the west of the Greenway Property is a 58-acre tract owned by Fortune Development, L. P. (Developer), a private[J-13-2014] - 2

developer. Developer seeks to construct a 219-unit adult residential subdivision, known as Water’s Edge Village, on this tract. Water’s Edge Village would require access to a clea n water supply as well as sanitary sewer and stormwater sewer facilities. As for clean water, a water main passing through Ontelaunee (a municipality on the e ast side of the Schuylkill River) can potentially connect, underneath the Schuylkill Rive r, with a proposed water main on the west side of the river, and then continue west to W ater’s Edge Village. For this to occur, however, the west-side main would have to run throu gh the Greenway’s property. A similar situation exists with regard to sanitary se wer and stormwater sewer outfall, albeit the water would flow in the opposite direction. In particular, treated sewage would

combine with stormwater runoff and flow eastward th rough the Greenway’s property, ultimately discharging into the Schuylkill River. The conduits for the clean water and the sewer outfall could be laid side-by-side within a 5 0-foot-wide underground space on the Greenway’s property, connecting the Schuylkill Rive r and Developer’s land. The Reading Area Water Authority (RAWA), a municipa l authority created by the City of Reading, supported Developer’s planned deve lopment and, to that end, tried to purchase an easement across the Greenway Property s o that it could supply water to the proposed development. After negotiations with the Greenway failed to produce an agreement, RAWA adopted a resolution in February 20 09, authorizing the use of its eminent-domain powers to condemn a utility easement across the Greenway Property connecting Developer’s land with the Schuylkill Riv er. The resolution reflected that the easement was to be condemned at Developer’s request and that it would be used for water, sewer, and stormwater purposes specifically to enable Developer to build Water’s Edge Village. The resolution also stated t hat Developer would be responsible for initiating eminent domain proceedings in conjun ction with RAWA’s solicitor, and[J-13-2014] - 3

would be required to pay all costs associated with such proceedings, including just compensation to the Greenway. The City of Reading then passed a resolution approving the RAWA resolution. 1 In light of the City’s approval, in May 2010 RAWA f iled a Declaration of Taking Complaint in the Berks County common pleas court, n aming the Greenway as the sole defendant and attaching an appraisal, a bond, and a description of the property to be taken. The Complaint requested a decree condemning a 50-foot-wide easement across the Greenway Property, “to construct, maintain, [an d] operate utility lines and appurtenance of a water main to be placed under the Schuylkill River for water, sewer and stormwater purposes,” Complaint at ¶6, reprinte d in R.R. 11a, and asked that the court value the easement at $3,500 based on the app raisal. 2 According to the attached exhibits, the water main would travel west from Ont elaunee under the Schuylkill River and continue west through the Greenway Property to Developer’s property. The sewer main would travel south from a sewage treatment pla nt on Developer’s property and intersect with a pipe which would drain a stormwate r retention basin (also on Developer’s property). The sewer main and the stor mwater pipe would then combine into a single conduit which would travel east under Developer’s property, and then continue east through the Greenway Property, within the same 50-foot-wide strip of

1 The City observed that such approval was necessary because RAWA must obtain the City’s permission before it undertakes projects unre lated to waterworks, water supply works, or water distribution systems. See generall y 53 Pa.C.S. §5607(c). In this respect, the City indicated that the proposed sanit ary sewer and stormwater sewer facilities “may be viewed as a project not related to waterworks, water supply works, or water distribution systems[.]” City of Reading Res olution No. 91-2009, at 1.

2 Although the parties disagree over the adequacy of the compensation figure, see R.R. 23a, that issue is not presently before this Court.[J-13-2014] - 4

land, ultimately emerging through a concrete headwa ll and discharging the effluent onto a six-foot downward slope covered by riprap. 3 The Greenway filed preliminary objections, alleging that: the taking was invalid under Pennsylvania’s Property Rights Protection Act (PRPA), 4 because it was being accomplished solely for the benefit of private ente rprise, see 26 Pa.C.S. §204(a) (generally prohibiting the use of eminent-domain po wers to take private property “to use it for private enterprise”); and the proposed easem ent was wider than necessary to accommodate RAWA’s water supply line, which the Gre enway viewed as the only service legitimately within RAWA’s function. RAWA answered, asserting that it had statutory authority under the Municipality Authorit ies Act to condemn the easement, see 53 Pa.C.S. §5607(d)(15), it had legitimate authorit y to accommodate sewer and stormwater facilities pursuant to the permission gr anted by the City, and the width of the easement was necessary to accommodate all of these facilities to serve the public. Thereafter, the Township was permitted to intervene by agreement of the parties. 5

3 Although the 50-foot-wide strip of land is subsume d within a single utility easement, approximately half of that width would be for water supply and is referred to by the parties as the “water easement,” with the other hal f – the “drainage easement” – being used for sewer outflow. For convenience, we will u se this same terminology. Notably, only the drainage easement is at issue in this case , as developed more fully below.

4 PRPA added Chapter 2, “Limitations on Use of Emine nt Domain,” to the Eminent Domain Code. See Acts of May 4, 2006, P.L. 112 & 1 48, Nos. 34 & 35 (as amended, 26 Pa.C.S. §§201-207).

5 Shortly before the Complaint was filed, the Greenw ay and the Township had executed an agreement of sale reflecting a conveyance of the Greenway Property to the Township, with settlement to occur by December 31, 2015. The agreement specified that the purpose of the conveyance was to enable th e Township to construct recreational trails and related facilities for use by the public as part of the Schuylkill River Trail. On this basis, the Township alleged t hat it had become an equitable owner of the property, a circumstance that RAWA has never disputed.[J-13-2014] - 5

In August 2010, the common pleas court, per Preside nt Judge Schmehl, held an evidentiary hearing at which the only witness was t he Township’s manager. According to his testimony, although all of the conduits – wh ether for water, sanitary sewer, or stormwater – would lie underground, the overall eas ement subsumed the surface ground as well. He observed that the development p lans, and in particular the drainage portion of the easement, could interfere with the p roposed trail in several ways. He testified, for example, that swales and other facil ities might be created at the surface for stormwater management, and pipes would have to be e xcavated from time to time for repairs or replacement. Also, vegetation would nee d to be removed to install the headwall, grading, and riprap for the sewer dischar ge pipe, and especially in the summer months odors from the sewage treatment plant and sewer discharge operations would likely persist along parts of the recreational trail. Furthermore, safety fencing around the headwall could interfere with th e path of the trail. See N.T., Aug. 31, 2010, at 8, 15, 19-26. 6 The common pleas court sustained the preliminary ob jections and dismissed the Complaint. In its opinion, the court explained tha t the condemnation was effectuated solely to benefit a private commercial developer wh o had been unable to acquire an easement through private measures and, as such, vio lated the prohibition on using eminent domain for private purposes. See RAWA v. S chuylkill River Greenway Ass’n, No. 10-8544, slip op. at 6 (C.P. Berks, Oct. 27, 20 11) (“Under the guise of expanding

6 The witness also expressed that there was no indic ation that RAWA would maintain any stormwater and/or sanitary sewer facilities loc ated within the easement. See id. at 22. In this regard, the record is not entirely cle ar as to who would own title to the easement. The description and map of the easement, attached to the RAWA resolution and the Complaint, and incorporated into the latter by reference, see R.R. 11a, both state that the property is to be acquired jointly b y RAWA and Developer, see R.R. 18a, 21a, whereas the request for relief only mentions a transfer of title to RAWA, R.R. 12a.[J-13-2014] - 6

their customer base and providing water to the publ ic, RAWA is attempting to achieve its true goal and take land from one private owner and give it to another.”). The court observed that the sewage and stormwater management facilities would be privately owned, and that the primary beneficiary of the cond emnation would be Developer, and not the general public. See id. at 4. The court o pined that the scope of the easement exceeded that which was necessary to serve any publ ic purpose since, according to the evidence, approximately half of the fifty-foot widt h of the easement would be used to accommodate Developer’s privately owned drainage fa cilities. See id. at 4-5, 8. Finally, the court expressed that the taking would not only primarily benefit a private party, it would also interfere with a portion of the Greenway ’s land that the Township had earmarked for a walking trail for the public to enj oy. See id. at 8. The Commonwealth Court reversed in a published deci sion, focusing on RAWA’s stated purpose – the installation of a water main a nd utility lines – for which it may exercise eminent domain. See 53 Pa.C.S. §§5607(d)( 15), 5615(a)(1). The court also noted that RAWA had obtained permission, as require d by its articles of incorporation, to engage in a project whose scope exceeds water su pply works to include sewer services. As for the public-versus-private purpose of the taking, the court summarized PRPA and the constitutional framework together as d ictating that private property may only be taken for public use. In application, the court reasoned that, although the availability of the utilities would make Developer’ s homes more valuable, this alone would not negate the project’s public purpose of pr oviding water, sewer, and stormwater

services to citizens in RAWA’s service area. Furth er, the court stated there was no indication whether such facilities will eventually be dedicated to RAWA. Thus, the court[J-13-2014] - 7

concluded that RAWA properly exercised eminent doma in. See Reading Area Water Auth. v. Schuylkill River Greenway Ass’n, 50 A.3d 2 55, 258-60 (Pa. Cmwlth. 2012). 7 We allowed appeal to consider whether RAWA’s action s were legally permissible, particularly in light of recent legisl ative restrictions on the use of eminent domain to benefit private enterprise. Our review “ in an eminent domain case is limited

to a determination of whether the trial court abuse d its discretion or committed an error of law, and whether the findings of fact are suppor ted by substantial evidence.” Denes v. Pa. Tpk. Comm’n, 547 Pa. 152, 156, 689 A.2d 219, 222 (1997). Thus, we consider factual findings deferentially and resolve legal is sues de novo. See Pocono Manor Investors v. Gaming Control Bd., 592 Pa. 625, 637, 927 A.2d 209, 216 (2007). Appellants (the Greenway and the Township) argue ge nerally that the power of eminent domain may only be exercised for a public p urpose. They do not challenge the water easement, opting to focus their advocacy on t he drainage easement. Appellants observe that this portion of the condemned land exc eeds that which is necessary for RAWA’s proposed water-supply line. In this respect , they note that RAWA only operates a water-supply system, whereas it condemne d an easement large enough to

include extensive wastewater outflow facilities – i ncluding a pipe, a headwall, grading, and riprap – connected to a private sewage treatmen t plant and stormwater retention basin on Developer’s land. They contend, more part icularly, that RAWA may not condemn more land than it needs for water supply so lely to enable a private developer to discharge its private sewage and stormwater runo ff through a privately built and maintained facility over the land of another. Thus Appellants adopt the position that the drainage easement is being taken for the private us e of Developer and, as such, it is not

7 Senior Judge Colins noted his dissent but did not file an opinion.[J-13-2014] - 8

authorized by the Pennsylvania Constitution or the Eminent Domain Code, and is affirmatively prohibited by PRPA. See Brief for Ap pellants at 12. Appellants acknowledge that a “taking does not lose its public character merely because there may exist in the operation some featu re of private gain.” Appeal of Washington Park, Inc., 425 Pa. 349, 353, 229 A.2d 1 , 3 (1967). They proffer, however, that, for the taking to be valid, the public must b e the primary and paramount beneficiary, and the public entity involved must as sume ownership and maintenance of the condemned lands and any improvements installed thereon. See Ormsby Land Co. v. City of Pittsburgh, 276 Pa. 68, 70, 119 A. 730, 730 (Pa. 1923) (holding that land dedicated for a public street may not be leased to a private entity for private use). Appellants assert that RAWA will not assume ownersh ip and maintenance of the drainage easement or its improvements because any s uch dedication of these facilities to RAWA would exceed RAWA’s articles of incorporati on and the City’s authorizing resolution. Appellants argue, therefore, that that Developer will own and operate the sewer facilities, and state that this conclusion is supported by: (a) the limited nature of the City’s resolution, in which the City authorized RAWA to condemn an easement large enough merely to “accommodate” sewage and stormwate r facilities owned by others (in addition to RAWA-owned water lines), City Resolutio n at 1, reprinted in R.R. 35a, but not to construct, operate, or maintain such facilit ies; (b) RAWA’s own resolution, which expresses an intention “to provide a utility easeme nt to [Developer],” RAWA Resolution at 1, reprinted in R.R. 15a; (c) RAWA’s failure to present any evidence to the contrary before the common pleas court; and (d) the fact tha t under Pennsylvania’s Storm Water Management Act, 32 P.S. §§680.1-680.17 (SWMA), as w ell as the associated Department of Environmental Protection regulations, Developer is alone responsible to design, construct, and operate stormwater maintenan ce facilities, see 32 P.S. §680.13[J-13-2014] - 9

(assigning such responsibility to the person who al ters or develops the land); 25 Pa. Code §102.5(a) (same, in relevant part). Thus, App ellants argue the Commonwealth

Court misconstrued the record when it held there wa s no evidence concerning whether the drainage facilities will ultimately be owned by RAWA. For its part, RAWA also references the principle, r ecited in Washington Park and elsewhere, that an incidental benefit to a private party does not in itself undermine the public character of a taking. RAWA observes that, in Washington Park, the government condemned land for a highway exit ramp which would benefit a shopping center and that such private benefit was not deemed to have un dermined the validity of the taking. RAWA additionally references Appeal of Heim, 151 Pa . Cmwlth. 438, 617 A.2d 74 (1992), in which the intermediate court held that, even where a developer pays for the condemnation, including associated legal fees, the ancillary benefit realized by the developer does not vitiate the public nature of the condemnation so long as the condemnation is accomplished for a public purpose ( in Heim, the construction of a road to a subdivision). To the contrary, RAWA emphasize s, this arrangement was expressly approved in Heim because it saved taxpayer money by shifting costs onto the developer. See id. at 447, 617 A.2d at 79. RAWA s tates that, as in Washington Park and Heim, the benefit conferred upon Developer in t his case is ancillary and cannot taint the inherently public nature of the proposed projec t and corresponding condemnation – and that, as in Heim, any payment by Developer of t he costs of the taking, including legal fees as well as compensation to the landowner , does not alter this conclusion since, again, it simply saves taxpayer funds. More generally, RAWA proffers that there is a publi c interest in ensuring that homes have running water and access to a sewer line , and that the taking advances this interest regardless of whether Developer will benefit from the availability of such[J-13-2014] - 10

services through its ability to build and sell full y-functioning homes. So long as there is no evidence of corruption, fraud, or malfeasance by the condemnor, RAWA argues, a condemnation for a public purpose should be upheld. Further, anticipating the counterpoint that there is no present need for water and s ewer services because the homes do not yet exist (and indeed, may never exist if the t aking does not occur), RAWA points out that a similar circumstance arose in Washington Park and that this Court answered what it termed the “chicken and egg” problem by rec ognizing that government officials must look to the future and anticipate the communit y’s needs. See Washington Park, 425 Pa. at 354-55, 229 A.2d at 4. 8 Eminent domain is a power vested in the Commonwealt h to take private property for public use upon payment of just compensation. See Phila. Clay Co. v. York Clay Co., 241 Pa. 305, 310, 88 A. 487, 488 (1913). See generally Lance’s Appeal, 55 Pa. (5 Smith) 16, 25, 1867 WL 7489, *7 (1867) (“[A] public interest must lie at the basis of the exercise, or it would be confiscation and usurpatio n to exercise it.”). Land may be taken only to the extent reasonably required by the publi c purpose for which the power is exercised, else it will be overturned as excessive. See Belovsky v. Redev. Auth. of City of Phila., 357 Pa. 329, 341, 54 A.2d 277, 283 (1947 ); Middletown Twp. v. Lands of Stone, 595 Pa. 607, 618, 939 A.2d 331, 338 (2007); Winger v. Aires, 371 Pa. 242, 247- 48, 89 A.2d 521, 523-24 (1952) (invalidating a taki ng of land for a public school where the number of acres condemned substantially exceede d what was needed). Although

8 RAWA does not offer any argument addressing PRPA o r the provisions of SWMA and the DEP regulations referred to by Appellants. As to PRPA in particular, RAWA also did not discuss the statute in its brief to the Commonw ealth Court, see Brief for Appellant in Reading Area Water Auth. v. Schuylkill River Greenw ay Ass’n, 50 A.3d 255 (Pa. Cmwlth. 2012), 2012 WL 10028724, notwithstanding th at the preliminary objections and the common pleas court’s opinion both referenced it . See RAWA, No. 10-8544, slip op. at 4, 9; Greenway’s Preliminary Objections at 3, re printed in R.R. 32a.[J-13-2014] - 11

the power is an inherent attribute of sovereignty, see Phila. Clay, 241 Pa. at 309, 88 A. at 487, it is regulated by constitutional and statu tory law, see Keys v. Uniontown Radial St. Ry. Co., 236 Pa. 611, 615, 84 A. 1109, 1110 (19 12); Jacobs v. Clearview Water Supply Co., 220 Pa. 388, 393, 69 A. 870, 871 (1908); Appeal of Interstate Cemetery Co., 422 Pa. 594, 596, 222 A.2d 906, 908 (1966), 9 and thus, it can only be exercised within the limitations established by law. See Nw. Lehigh Sch. Dist. v. Agric. Lands Condemnation Approval Bd., 126 Pa. Cmwlth. 325, 329 , 559 A.2d 978, 980 (1989) (citing, inter alia, Interstate Cemetery, 422 Pa. a t 596, 222 A.2d at 908). The Commonwealth may exercise the power of eminent doma in directly or indirectly by delegating it. See generally Commonwealth v. Susqu ehanna Area Regional Airport Auth., 423 F. Supp. 2d 472, 483 (M.D. Pa. 2006); 6 S UMM

. P A

. J UR

. 2 D Property §11:8. Because eminent domain is in derogation of private rights, any legislative authority for its use must be strictly construed in favor of the landowner. See 1 Pa.C.S. §1928(b)(4); In re Pittsburgh Sch. Dist., 430 Pa. 566, 570, 244 A.2d 42, 44 (1968); Lazarus v. Morris, 212 Pa. 128, 131, 61 A. 815, 816 (1905); see also L ands of Stone, 595 Pa. at 616, 939 A.2d at 337 (quoting Winger, 371 Pa. at 247, 89 A.2 d at 523). RAWA is authorized, as a municipal authority, to ex ercise the power of eminent domain, see 53 Pa.C.S. §§5615(a)(1), 5607(d)(15), a nd it may do so as necessary to provide the public with water via a water distribut ion system. See id. §5607(a)(10). Although municipal authorities may also be created for purposes relating to sewer systems and stormwater management systems, see id. §5607(a)(5), (18), it is less clear

9 See P A

. C ONST . art. I, §10 (“[N]or shall private property be tak en or applied to public use, without authority of law and without just comp ensation being first made or secured.”); U.S. C ONST . amend. V (“[N]or shall private property be taken for public use, without just compensation.”). The Fifth Amendment’ s Takings Clause applies to the states through the Fourteenth Amendment. See Phill ips v. Wash. Legal Found., 524 U.S. 156, 163-64, 118 S. Ct. 1925, 1930 (1998).[J-13-2014] - 12

that a water authority such as RAWA may extend its operations to engage in such activities or provide these services to the public. Regardless, and as emphasized by Appellants, RAWA did not purport to condemn the dra inage easement so that it could, itself, undertake those activities. Rather, the re cord vindicates Appellants’ core assertion that RAWA only sought to provide a utilit y easement to Developer, see RAWA Resolution at 1, reprinted in R.R. 15a, and the Cit y only authorized RAWA to condemn

an easement of “sufficient size to accommodate” Dev eloper’s drainage facilities. City Resolution at 1, reprinted in R.R. 35a. As explain ed, however, any such exercise is subject to the limitations imposed by the Constitut ion and by statutory law – such as the Eminent Domain Code, which sets forth the law and p rocedure governing the condemnation of property in Pennsylvania, see 26 Pa .C.S. §102(a), 10 and includes PRPA. See supra note 4. Our resolution of this appeal will ultimately be ba sed on PRPA. See Wertz v. Chapman Twp., 559 Pa. 630, 633, 741 A.2d 1272, 1274 (1999) (observing it is preferable to resolve disputes on a non-constitutio nal basis if reasonably possible). However, a review of salient constitutional princip les as they apply here is helpful to provide context, particularly in terms of whether t he taking is for a public use. The public-use issue is especially relevant because it dovetails to some extent with whether the taking is being accomplished for private enterp rise as prohibited by PRPA – although, as will be seen, the correspondence is no t exact. Under the Constitution, land may only be taken with out the owner’s consent if it is taken for a public use. The question of what const itutes a public use is highly fact-

10 The current Eminent Domain Code constitutes a repl acement and codification of the former Eminent Code of 1964. See Act of May 4, 200 6, P.L. 112, No. 34, §1 (as amended, 26 Pa.C.S. §§101-1106) (repealing and repl acing the Act of June 22, 1964, Special Sess., P.L. 84 (as amended 26 P.S. §§1-101– 1-903)).[J-13-2014] - 13

dependent. See Dornan v. Phila. Hous. Auth., 331 P a. 209, 221, 200 A. 834, 840 (1938); Phila. Clay Co., 241 Pa. at 311, 88 A. at 4 88. Although RAWA relies heavily on Washington Park, we do not find that decision to be particularly helpful to its position. In Washington Park, a private shopping center known as Southgate stood to benefit from the proposed highway exit ramp, and thus, was willi ng to pay the costs of condemnation. Still, there was no suggestion that the ramp was intended to be owned, co-owned, occupied, or maintained by Southgate, or that its sole purpose was to provide access to Southgate. See Washington Park, 425 Pa. at 354 n.6, 229 A.2d at 4 n.6 (reciting other public benefits of the exit ram p, including enhanced roadway safety). Here, the record reflects that Developer would not only finance the project, but would acquire exclusive use of the drainage easement to i nstall, operate, and maintain private stormwater and sewage discharge facilities so as to enable it to build a private residential development. Accord RAWA, No. 10-8544, slip op. at 5 (finding that “this is a [Developer] financed project to enable [Developer ] to acquire land that it could not acquire directly from the Greenway by condemnation” ); cf. Lands of Stone, 595 Pa. at 619, 939 A.2d at 339 (“To condemn the land so that Mr. Stone could commercially farm it, thereby reaping a profit from land owned and ma intained by the Township, serves a purely private, and thus, unconstitutional interest .”). Nevertheless, the present case has added complexion because the drainage easement is to be located side-by-side with the wat er easement, giving the appearance

that the two work in tandem. There is also a natur al tendency to regard the two functions as intertwined, at least insofar as the s anitary sewer outfall is concerned,

since most of the water that enters a residence ult imately leaves the home through its sewer connection. This lends a certain appeal to t he concept that the drainage easement is for a public use – particularly as muni cipal sewer and drainage systems[J-13-2014] - 14

generally constitute a public use. Furthermore, th e drainage easement would, according to Developer’s plans, ultimately serve 21 9 homes in an adult-community residential development. This factor also tends to support the view that the drainage easement is intended for at least a limited public use vis-à-vis the prospective purchasers of the residences, regardless of the ide ntity of the party that constructs, owns, and operates the sewer discharge facilities. The main difficulty, however, is that there is also a significant private overlay to the taking of the drainage easement: it is, as not ed, to be acquired at Developer’s behest for the sole use of Developer, and at Develo per’s sole cost. As well, there is no suggestion that the drainage easement is meant to b e used for any purpose broader than servicing the subdivision to be built by Devel oper. Overall, then, the case involves a mix of public and private purposes working in con junction with one another. With this in mind, a brief discussion of Kelo v. City of New London, Connecticut, 545 U.S. 469, 125 S. Ct. 2655 (2005), its present application, an d its legislative aftermath, will be helpful. At issue in Kelo was the taking of private property for economic development and use, inter alia, by private commercial interests. The controversy dealt with a city’s wideranging development project intended “to revitalize the local economy by creating temporary and permanent jobs, generating a signific ant increase in tax revenue, encouraging spin-off economic activities and maximi zing public access to the waterfront[.]” Id. at 478 n.6, 125 S. Ct. at 2661 n.6 (internal quotation marks and citation omitted). Kelo was a 5-4 decision in which the maj ority found that economic development can qualify as a public use for Fifth A mendment purposes even where private enterprise is the engine of such developmen t, and accorded deference to the city’s governing body’s determination that, althoug h the properties to be taken were not[J-13-2014] - 15

blighted, they were sufficiently distressed that ec onomic rejuvenation of the overall area was in the public interest. See Kelo, 545 U.S. at 483, 125 S. Ct. at 2664-65. In dissent, Justice O’Connor criticized this level of deference and admonished that, “were the political branches the sole arbiter s of the public-private distinction, the

Public Use Clause would amount to little more than hortatory fluff.” Id. at 497, 125 S. Ct. at 2673 (O’Connor, J., dissenting). She also e xpressed that the decision would have a disproportionate impact on the poor, as its beneficiaries would be citizens with substantial influence in the political process, inc luding large corporations and development firms. See id. at 505, 125 S. Ct. at 2 677. 11 The present case is distinguishable from Kelo in se veral respects. First, consistent with the trial court’s findings, the tak ing here has as at least one of its purposes the conferral of a private benefit on a pa rticular, identifiable private party (Developer). Cf. id. at 477, 125 S. Ct. at 2661 (“ [T]he City would no doubt be forbidden from taking petitioners’ land for the purpose of co nferring a private benefit on a particular private party.”); Washington Park, 425 P a. at 353, 229 A.2d at 3 (clarifying that “the power of eminent domain may not be employ ed ‘for the mere purpose of

11 The Kelo decision generated earnest commentary in many quarters. Compare, e.g., Ashley J. Fuhrmeister, Note, In the Name of Economi c Development: Reviving “Public Use” as a Limitation on the Eminent Domain Power in the Wake of Kelo v. City of New London, 54 D RAKE L. R EV . 171, 231 (2005) (contending that Kelo stretched t he concept of public use beyond its intended meaning), with Jo hn H. Brechin, In Defense of Kelo: One Lawyer’s Take on Takings, 93 I LL

. B.J. 524, 525 (2005) (warning against overreactions which would unnecessarily limit the g overnment’s ability to act in situations where advancement of the public good wou ld significantly outweigh any private harm). See generally Eric Rutkow, Kelo v. City of New London, 30 H ARV

. E NVTL

. L. R EV . 261, 279 (2006) (“By shying away from . . . craft ing a higher standard of review for economic development takings that could balance the competing needs of interested parties, the Supreme Court has left homeowners in a state of uncertainty as legislatures and state courts consider the proper meaning of ‘pu blic use.’”). Kelo also led to legislative responses in jurisdictions across the n ation. See infra note 14.[J-13-2014] - 16

devoting it to the private use of another, even tho ugh there be involved in the transaction an incidental benefit to the public’” ( quoting Belovsky, 357 Pa. at 340, 54 A.2d at 282)). Relatedly, there is no evidence of an overall economic development or urban revitalization plan into which this taking fi ts – above and beyond Developer’s own plan for its 58-acre tract. On the other hand, the scope of the challenged taki ng is comparatively narrow and, as noted, involves sewer services, which is a more traditional category of public use than the multifaceted, large-scale economic dev elopment project at issue in Kelo. See Matter of Twp. of Upper St. Clair, 138 Pa. Cmwl th. 321, 323-24, 587 A.2d 907, 908- 09 (1991) (observing that sewer service is generall y a public use); Town of Steilacoom v. Thompson, 419 P.2d 989, 992 (Wash. 1966) (same). See generally Washington Park, 425 Pa. at 353, 229 A.2d at 3 (noting that a taking does not lose its public character merely because of an incidental private b enefit, so long as the public good is enhanced). It can reasonably be argued, then, that whether the taking presently in issue is “primarily” for a public use or a private benefit is a matter of perspective. Cf. City of Knoxville v. Heth, 210 S.W.2d 326, 329 (Ten n. 1948) (indicating that when public and private benefits “are thus so blended,” it is “ difficult . . . to observe the line of demarcation” between the two (quoting Nichols. v. C ent. Va. Power Co., 130 S.E. 764, 767 (Va. 1926))). Ultimately, however, we need not decide the constit utional issue because, even if we assume the condemnation can pass Fifth-Amendment scrutiny, 12 to be valid it must also be statutorily permissible. In this regard, i t may be observed that, in the wake of Kelo, the General Assembly enacted PRPA, which cont ains a salient, affirmative

12 No separate analysis has been advanced in this cas e to argue that Article I, Section 10 is more restrictive than the federal Takings Cla use as interpreted in Kelo.[J-13-2014] - 17

prohibition on the taking of private property “in o rder to use it for private enterprise.” 26 Pa.C.S. §204(a). 13 See generally Anthony B. Seitz, Comment, The Prop erty Rights Protection Act: An Overview of Pennsylvania’s Resp onse to Kelo v. City of New London, 18 W IDENER L.J. 205 (2008). 14 It is possible that a condemnation which satisfies the Constitution’s Public Use Clause may also be accomplished so that the propert y can be used for private enterprise. Kelo provides a ready example, as in t hat case the Supreme Court determined that the taking was for a public use alt hough much of the condemned land was to be used for private enterprise. See Kelo, 5 45 U.S. at 473-74, 125 S. Ct. at 2659 (describing uses for the condemned property under t he city’s plan, including conference hotel space, retail shopping, a commercial-use mari na, and a research and development facility for a pharmaceutical company). Here, the Commonwealth Court conflated the public use prerequisite with the scop e of Section 204(a)’s prohibition, see RAWA, 50 A.3d at 259, and then compounded the error by concentrating solely on the

13 PRPA contains several exceptions to this prohibiti on, such as where the property is transferred to a common carrier, is used for incide ntal commercial activities such as a gift shop in a government building, or where the co ndemnation is necessary to eliminate “blight” as narrowly defined by PRPA. See 26 Pa.C. S. §§204(b), 205. One of these exceptions pertains to condemnations by a public ut ility, which is discussed below.

14 Besides Pennsylvania, numerous other jurisdictions reacted to Kelo by passing similar legislation with the result that the decisi on may have led to an overall diminution in takings authority nationwide. See Gregory J. Ro binson, Kelo v. City of New London: Its Ironic Impact on Takings Authority, 44 U RB

. L AW . 865, 906 (2012) (concluding that “Kelo has had the ironic effect of setting in motio n an overall policy response that, by now, has reduced economic development takings autho rity below its pre-Kelo level”); Amanda W. Goodin, Rejecting the Return to Blight in Post-Kelo State Legislation, 82 N.Y.U. L. R EV . 177, 193-94 (2007) (observing that Kelo “provoked fierce public opposition” and that dozens of states reacted by am ending their eminent domain laws).[J-13-2014] - 18

constitutional question of public use without asses sing whether Section 204(a) provides additional protections. Notably, PRPA was passed as a direct reaction to Ke lo to curb what legislators perceived as eminent domain abuse, and with the goa l of striking a reasonable balance between (a) the need to defend private property rig hts from takings accomplished for economic development purposes, and (b) the legitima te needs of urban centers to rehabilitate blighted areas imposing substantial, c oncrete harm upon the public. See, e.g., House Legislative Journal, Nov. 1, 2005, at 2 169-72; Senate Legislative Journal, April 25, 2006, at 1552. Whether or not the Consti tution viewed as merely “ancillary” the benefits to private enterprise ensuing from a p lan to use eminent domain to assist in economic development, in the wake of Kelo the Legis lature began to view such benefits as central and wanted to curtail the ability of con demnors to take others’ property for such purposes. Against this backdrop, the legislat ive body elected to phrase the central prohibition broadly in terms of whether the subject property is being condemned “to use it for private enterprise,” 26 Pa.C.S. §204(a), rat her than “to use it solely for private enterprise” – the latter of which, in any event, wo uld have had little effect on the status quo since any condemnation accomplished solely for private purposes would likely have failed the constitutional public-use standard. This observation has particular relevance to the pr esent matter because, in spite of the drainage easement’s colorable public-use fac et as outlined above, RAWA condemned it, in effect, to allow Developer to occu py and use it for private enterprise – namely, to develop a residential subdivision. See RAWA, No. 10-8544, slip op. at 6 (finding that RAWA’s condemnation of the drainage e asement is designed to enable installation of private utilities to enable private development of Water’s Edge Village).

We therefore conclude that the condemnation of the drainage easement falls within[J-13-2014] - 19

Section 204(a)’s prohibitive scope. Whatever publi c 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). 15 While this determination may seem to interfere with the ability of municipal water and/or sewer authorities to expand their operations under circumstances where, as here, there is an overarching nexus between the tak ing and private development, it is

not this Court’s function to ameliorate such diffic ulties by departing from the statutory text. In fact, it appears that the Legislature was well aware of such a possible outcome because it expressly carved out from Section 204(a) ’s ambit an exception for takings by regulated public utilities as defined in the Public Utility Code, see 66 Pa.C.S. §102, including water and sewer companies. See 26 Pa.C.S . §204(b)(2)(i). Notably, however, as a municipal authority RAWA is not a pub lic utility under the Public Utility Code. See Chester Water Auth. v. PUC, 581 Pa. 640, 645 n.7, 868 A.2d 384, 387 n.7 (2005); accord In re Condemnation of Springboro Are a Water Auth., 898 A.2d 6, 11 (Pa. Cmwlth. 2006). Therefore, the Section 204(b)(2)(i) exception does not presently apply. The Legislature’s decision to exempt regulated publ ic utilities, but not municipal authorities, from the preclusive rule set forth in Section 204(a) demonstrates that it

intended to allow – within constitutional limitatio ns – the continued use of eminent domain for the provision of public services such as water and sewer access in tandem with private development for a limited, defined cla ss of condemnors. As RAWA is not within that class, its condemnation of the drainage easement is in violation of PRPA. Accordingly, the order of the Commonwealth Court is reversed, and the matter is remanded to the common pleas court for reinstatemen t of its order sustaining the

15 The presence of a public benefit, even a significa nt one, cannot save what is otherwise an improper condemnation. See Pa. Mut. L ife Ins. Co. v. City of Phila., 242 Pa. 47, 53, 88 A. 904, 906-07 (1913).[J-13-2014] - 20

preliminary objections and dismissing the Complaint . Although the water easement has not been challenged, the size of the condemned prop erty – the overall utility easement

– is in excess of that which is needed for water su pply. Hence, RAWA is not entitled to the relief sought in its Complaint. See Winger, 37 1 Pa. at 248, 89 A.2d at 524 (enjoining a condemnation accomplished for a public use where the size of the condemned property exceeded what was reasonably nec essary for such use).

Mr. Chief Justice Castille, Messrs. Justice Eakin a nd Baer, Madame Justice Todd and Messrs. Justice McCaffery and Stevens join the opinion.