Affirmation of PSC’s Continuing Jurisdiction and Criteria for Acquisition Under the Distressed and Failing Utilities Act

1. Introduction

In Huntington Sanitary Board v. Public Service Commission of West Virginia and Hubbard Heights Subdivision Association, the Supreme Court of Appeals of West Virginia confronted two central questions: (1) whether the Public Service Commission (PSC) retained jurisdiction over a sewer utility whose customer base had fallen below the statutory threshold, and (2) whether the PSC properly applied the Distressed and Failing Utilities Act when designating the Huntington Sanitary Board (HSB) as the most suitable capable proximate utility (CPU) to acquire the failing Hubbard Heights sewer system.

Parties:
• Petitioner: Huntington Sanitary Board (HSB)
• Respondents: Public Service Commission of West Virginia; Hubbard Heights Subdivision Association and related entities
• Amici Curiae: City of Elkins; Town of Harman; West Virginia Municipal Water Quality Association

Procedural History: Following PSC staff investigations and evidentiary hearings under the Distressed and Failing Utilities Act (W. Va. Code §§ 24-2H-1 to ‑9), the PSC ordered HSB to acquire the Hubbard Heights sewer system. HSB appealed, arguing lack of jurisdiction and improper statutory analysis. The Supreme Court of Appeals affirmed.

2. Summary of the Judgment

The Court held that once the PSC validly exercises jurisdiction over a public utility, that jurisdiction continues indefinitely unless clearly and unequivocally relinquished. Thus, the PSC retained authority over the Hubbard Heights sewer system despite a drop in customer count below twenty-five.
The PSC’s order designating HSB as the most suitable CPU under the Distressed and Failing Utilities Act was affirmed. The Court found adequate evidence that HSB was financially, technically and managerially best equipped to acquire and rehabilitate the failing system.
The PSC had complied with statutory mandates, including consideration of feasible alternatives to acquisition, and had given reasoned analysis to all relevant factors listed in W. Va. Code § 24-2H-5(b).

3. Analysis

3.1 Precedents Cited

The Court relied heavily on its decisions in:

Boggs v. Public Service Commission (154 W. Va. 146, 174 S.E.2d 331 (1970)): Established that jurisdiction over a public utility persists absent clear Commission intent to relinquish it; and that passive inaction by either party does not terminate jurisdiction.
Wilhite v. Public Service Commission (150 W. Va. 747, 149 S.E.2d 273 (1966)): Confirmed that the PSC has only such authority as granted by statute.
Monongahela Power Co. v. PSC and Central W. Va. Refuse, Inc. v. PSC: Provided the tripartite standard of review for PSC orders—jurisdiction, evidentiary support, and propriety of result.
Equitrans, L.P. v. PSC (247 W. Va. 646, 885 S.E.2d 584 (2022)): Applied Boggs’s continuing jurisdiction principle to an interstate pipeline scenario.

These decisions guided the Court to reaffirm that initial regulatory jurisdiction over a utility carries forward, and that statutory customer-count thresholds do not require re-examination at each new proceeding unless the PSC expressly abandons its control.

3.2 Legal Reasoning

The Court’s reasoning proceeded in two main steps:

Continuing Jurisdiction: • Under Syl. Pt. 3 of Boggs, a public utility remains subject to PSC regulation unless permission is granted to terminate that status.
• A decline in customer numbers, or long periods of PSC inactivity, does not by itself divest the PSC of jurisdiction (Syl. Pt. 4, Boggs).
Compliance with the Distressed and Failing Utilities Act: • The PSC properly considered statutory alternatives to acquisition (§ 24-2H-7(b)): reorganization, contract operations, receivership, merger, arm’s-length sale, and other viable options. It concluded acquisition was the only feasible remedy given the system’s derelict condition.
• In designating HSB the most suitable capable proximate utility, the PSC evaluated factors in § 24-2H-5(b): financial, managerial, technical capacity; ability to expand service area; rate and operational impact; eligibility for grants; and any other relevant matter. The Commission found HSB best positioned to bear the costs and logistical challenges of acquiring and rehabilitating the Hubbard Heights system.

3.3 Impact

This decision reinforces and clarifies two key principles:

Continuing Jurisdiction Doctrine: Utilities once brought within PSC regulation remain so until an express relinquishment occurs. This certainty protects consumers and ensures regulatory “safety nets” remain available.
Statutory Framework for Distressed Utilities: The Distressed and Failing Utilities Act affords broad PSC authority to remediate failing systems. This case confirms that the PSC may compel acquisition by suitable neighboring utilities, subject to reasoned application of enumerated criteria.

Future cases will look to this decision when assessing the PSC’s power to step in where utilities collapse, to interpret “most suitable” designation, and to insure the Commission fulfills its statutory duties without undue second-guessing by courts.

4. Complex Concepts Simplified

Continuing Jurisdiction: Once the PSC validly asserts authority over a utility, it retains that authority unless it clearly says otherwise. A drop in customers does not automatically remove the utility from PSC oversight.
Capable Proximate Utility (CPU): A neighboring utility that is financially, technically and managerially able to acquire and operate a failing system. The PSC must compare potential CPUs on factors spelled out in the statute.
Alternatives to Acquisition: Statutorily mandated options—like restructuring or contracting out operations—that the PSC must consider before forcing one utility to absorb another.

5. Conclusion

The Supreme Court of Appeals of West Virginia affirmed the PSC’s order in Huntington Sanitary Board v. PSC, underscoring (a) the permanence of PSC jurisdiction once invoked, and (b) the robust remedial toolkit Congress and the West Virginia Legislature have given the PSC to rescue failing utilities. This ruling will guide regulators, utilities, and communities in navigating the rehabilitation of critical water and wastewater infrastructure, ensuring that public health and environmental standards are maintained even when small utilities falter.