Opinion ID: 1903200
Heading Depth: 1
Heading Rank: 7

Heading: The Statutory Scheme Relevant to the Defendants' Activities

Text: Municipalities and other entities in the water business, especially at the retail level, unquestionably are subject to a vast array of statutes and regulations. Nevertheless, the mere pervasiveness of a regulatory scheme does not immunize an industry from antitrust liability for conduct that is voluntarily initiated. MCI Communications Corp. v. American Telephone & Telegraph Co., 708 F.2d 1081, 1103 (7th Cir.), cert. denied, 464 U.S. 891, 104 S.Ct. 234, 78 L.Ed.2d 226 (1983); id. ([a]lthough the [Federal Communications Commission] has authority to compel interconnection under [47 U.S.C. § ]201(a) of the [Federal Communications] Act, the initial decision whether to interconnect rests with the utility, and the record shows that the [Federal Communications Commission] did not control or approve of [the defendant's] actions here). Accordingly, we must review the bevy of statutes and regulations produced by the defendants in search of the specific direction or requirement that they argue exists. [29] Regulation of water companies begins at their inception. Water companies may not be formed without a special act of the General Assembly after investigation and a report by the department of environmental protection, the department of public health and the department of public utility control into, inter alia, the proposed company's financial solvency, its water supply system adequacy and potability, and the effect on water supplies of other systems. . . . General Statutes § 2-20a; see also General Statutes § 7-234 (municipalities may acquire, construct and operate a municipal water supply system where [1] there is no existing private waterworks system, [2] the owner or owners of a private waterworks system are willing to sell or transfer all or part of such system to the municipality, or [3] a public regional waterworks system within said town, city or borough or district is willing to sell or transfer all or part of the system to the municipality). [30] The extensive regulatory scheme is in furtherance of the legislative finding and general statement of policy articulated in § 25-33c, which was mentioned by the trial court, [31] and provides: The General Assembly finds that an adequate supply of potable water for domestic, commercial and industrial use is vital to the health and well-being of the people of the state. Readily available water for use in public water systems is limited and should be developed with a minimum of loss and waste. In order to maximize efficient and effective development of the state's public water supply systems and to promote public health, safety and welfare, the Department of Public Health shall administer a procedure to coordinate the planning of public water supply systems.  [32] (Emphasis added.) General Statutes § 25-33c. Indeed, the regulatory scheme envisioned by the legislature is not toothless, as General Statutes § 25-32e gives the department of public health the authority to impose civil penalties upon water companies for violations of the water supply statutes and regulations promulgated thereto, as well as any regulation in the Public Health Code relating to the purity and adequacy of water supplies or to the testing of water supplies or any report of such testing. . . . General Statutes § 25-32e (a). The defendants point out correctly that the statutes and regulations do envision a significant degree of cooperation, and indeed, regional coordination of water companies. For example, water utility coordinating committees are required to prepare a coordinated water system plan in the public water supply management area that shall promote cooperation among public water systems, and to submit that plan to the department of public health. General Statutes § 25-33h (a). [33] Indeed, part of this cooperation is avoiding duplication of service, as directed by General Statutes § 16-262m, which prescribes requirements that must be met before a water company constructs a new water supply system or expands an existing one. To obtain the requisite certificate of public convenience and necessity for [such] construction or expansion from the department of public utility control and the department of public health, the departments first must determine that (1) no feasible interconnection with an existing system is available to the applicant, (2) the applicant will complete the construction or expansion in accordance with engineering standards established by regulation by the Department of Public Utility Control for water supply systems, (3) the applicant has the financial, managerial and technical resources to operate the proposed water supply system in a reliable and efficient manner and to provide continuous adequate service to consumers served by the system, (4) the proposed construction or expansion will not result in a duplication of water service in the applicable service area and (5) the applicant meets all federal and state standards for water supply systems. . . . (Emphasis added.) General Statutes § 16-262m (b). The statutes also envision extensive planning in conjunction with that coordination. Under General Statutes § 25-32d (a), [34] water companies are required to submit a water supply plan to the department of public health for approval with the concurrence of the Commissioner of Environmental Protection. [35] A water supply plan is required to evaluate the water supply needs in the service area of the water company submitting the plan and propose a strategy to meet such needs. . . . General Statutes § 25-32d (b). The plan must include: (1) A description of existing water supply systems; (2) an analysis of future water supply demands; (3) an assessment of alternative water supply sources which may include sources receiving sewage and sources located on state land; (4) contingency procedures for public drinking water supply emergencies, including emergencies concerning the contamination of water, the failure of a water supply system or the shortage of water; (5) a recommendation for new water system development; (6) a forecast of any future land sales, an identification which includes the acreage and location of any land proposed to be sold, sources of public water supply to be abandoned and any land owned by the company which it has designated, or plans to designate, as class III land; (7) provisions for strategic groundwater monitoring; (8) an analysis of the impact of water conservation practices and a strategy for implementing supply and demand management measures; and (9) on and after January 1, 2004, an evaluation of source water protection measures for all sources of the water supply, based on the identification of critical lands to be protected and incompatible land use activities with the potential to contaminate a public drinking water source. [36] General Statutes § 25-32d (b). Similar planning occurs on the level of the water utility coordinating committees, who are required to conduct preliminary assessments, in consultation with the department of environmental protection and the department of public health, of water supply conditions and problems in their areas. See General Statutes § 25-33g (a). As part of this process, the water utility coordinating committees shall establish preliminary exclusive service area boundaries, based on the final assessment, for each public water system within the management area, and may change such boundaries.... If there is no agreement by the committee on such boundaries, or on a change to such boundaries, the committee shall consult with the Department of Public Utility Control. If there is no agreement by the committee after such consultation, the Commissioner of Public Health shall establish or may change such exclusive service area boundaries taking into consideration any water company rights established by statute, special act or administrative decisions. In establishing such boundaries the commissioner shall maintain existing service areas and consider the orderly and efficient development of public water supplies. In considering any change to exclusive service area boundaries, the commissioner shall maintain existing service areas, consider established exclusive service areas, and consider the orderly and efficient development of public water supplies. General Statutes § 25-33g (b). Indeed, [e]ach water utility coordinating committee shall prepare a coordinated water system plan in the public water supply management area. Such plan shall be submitted to the Commissioner of Public Health for his approval not more than two years after the first meeting of the committee. The plan shall promote cooperation among public water systems and include, but not be limited to, provisions for (1) integration of public water systems, consistent with the protection and enhancement of public health and well-being; (2) integration of water company plans; (3) exclusive service areas; (4) joint management or ownership of services; (5) satellite management services; (6) interconnections between public water systems; (7) integration of land use and water system plans; (8) minimum design standards; (9) water conservation; (10) the impact on other uses of water resources; and (11) acquisition of land surrounding wells proposed to be located in stratified drifts. [37] General Statutes § 25-33h (a). Moreover, the department of public health permits may only be issued in accordance with the coordinated plans adopted pursuant to § 25-33h; see General Statutes § 25-33i(a); [n]o public water supply system may be approved within a public water supply management area after the Commissioner of Public Health has convened a water utility coordinating committee unless (1) an existing public water supply system is unable to provide water service or (2) the committee recommends such approval. General Statutes § 25-33i(b).