Wednesday, March 16, 2011

Judge: Utility Line Security LLC is PWSA *

Once he threw out some ratepayers' complaints that the Pittsburgh Water & Sewer Authority's new water line insurance program is illegal because of negative option or "opt-out" billing, the Honorable R. Stanton Wettick, Jr. then affirmed some companies' complaints that the program constitutes unfair competition and is therefore impermissible under state law.

The real bombshell lies slightly deeper...

PWSA and ULS contend that [the Municipal Authorities Act] does not apply because ULS is the competitive enterprise. It was not created by PWSA. I disagree. Enterprise -- as defined in Black's Law Dictionary (9th Ed. 2009) -- is "an organization or venture". In this case, the venture is a program established and administered by PWSA ... This venture, established by PWSA, interferes with existing warranty programs and competes with existing plumbing companies that make water and sewer line repairs. (Wettick, Dominion et al v. PWSA)

Emphasis mine -- but also his, seeing as how he repeated that assertion in several contexts throughout the opinion. The revelation that PWSA created ULS conflicts with both of their own assertions and with all of the reporting to date (e.g.:)

A month later, water industry veteran Christopher H. Kerr created Wilkinsburg-based Utility Line Security LLC, which since January has received the $5 charge added to city water and sewer bills. (P-G, Rich Lord, 3/15/10)

So as the court would have us conceive of things, previous allegations about conflicts of interest between a public official and a private company which resulted in a resignation were imprecise. ULS does not constitute a purely "private" venture at all, despite the protestations of the public authority for whom this organization contracts.

Judge Wettick also insisted that the line insurance program is otherwise good for water customers and a cost-saver. It is unclear whether the legal impasse will result in a settlement award to Dominion, Dominion and Manchester and then business as usual, or the complete termination of the program, or something entirely in between. The fact that the judge went on at length about how good is the insurance program suggests he would prefer to steer things towards a more legal continuation of the service provision.

*-UPDATE: Looks like "complete termination of the program" (Trib, Bill Vidonic).


But this would be a great moment to pause -- maybe for the whole nation to pause -- and to consider the phenomenon that has manifested.

Government determined to offer a public service, and evidently decided the best way to accomplish that would be to assemble some folks from the community with germane business experience and prevail upon them to start up a new company which would offer custom-tailored services to the government which created it (and to forgo widely soliciting bids for that work).

A judge goes so far as to opine that it is unlikely that any (other) private (?) enterprise could possibly offer such cost savings for the public anyway.

Cynics might argue, "Who is the government to pick and choose who gets to run my things and profit from them? I want competitive processes!"

The establishment might argue back, "This was the only way to provide a needed public benefit at such a low cost, and we all would have gotten away with it profitably if it weren't for state government over-regulation and a few haters with magnifying glasses."

The cynics might then retort, "Yes, but you may as well have just assembled the line insurance program in-house, where there is transparency, oversight and accountability -- and where any profit from the initiative could be forwarded to the City of Pittsburgh or else used to pay down Authority debt and/or make sorely needed capital improvements."

The establishment might well then roar, "The kinds of people who design and execute such innovations aren't public bureaucrats, and aren't about to become public bureaucrats so as to have the honor of slaving away under your incessant public cynicism -- and good luck finding public bureaucrats with the knowledge, talents and capital (yes, we have better access to credit than PWSA) to pull something like this off.

"Son, we live in a city that has bill collectors. And those bill collectors have to be satisfied by men with connections. Who's gonna do it? You? You, Lt. Weinberg? I have a greater responsibility than you can possibly fathom. You weep for the Sunshine Act and you curse the Network. You have that luxury. You have the luxury of not knowing what I know: that public oversight's death, while tragic, probably can save billions. And my existence, while grotesque and incomprehensible to you, saves pensions, police cars, lives... You don't want the truth. Because deep down, in places you don't talk about at parties, you want me in that network. You need me in that network.

"We use words like List, Vibrant, No Comment..." Okay I'm probably getting a little beside the point. I don't know what the long-term takeaway from this all should be. I know that at the end of the movie, they threw Jack Nicholson in the brig. I also know Hollywood loves happy endings and Tom Cruise as a protagonist.

I think Pittsburgh should be more diligent about following the letter and the plainly visible spirit of the law, because no one knows which of our clever innovations will get unpacked and how badly that could gum up the works.