BELLEFONTE — A troubled rural water company under investigation by state regulators now faces additional legal action from its own lawyers, who want it to be taken over by a municipal authority.
Months after Rock Spring Water Company owner J. Roy Campbell told a judge he would rather sell his business and avoid a lengthy process by state regulators to force an acquisition, his attorneys have asked a Centre County court to hand over interim operations to the nearby State College Borough Water Authority.
Attorneys James Bryant and Carolyn Larrabee were hired by Campbell last fall after the Bureau of Investigation and Enforcement, an independent division within the Pennsylvania Public Utility Commission, launched a review of the privately owned company.
A June Spotlight PA investigation found that years of neglect have resulted in crumbling infrastructure that causes low water pressure, outages, and boil water advisories for the 1,000 customers who rely on the 20-mile system for service.
A 2022 engineering report estimated that the current system needs $13.5 million in repairs.
The company has also racked up regulatory violations and tens of thousands of dollars in unpaid civil penalties as part of an ongoing legal battle with the Department of Environmental Protection over excessive water loss.
“What we have here is a water company that was formed back post-World War II to serve farmers,” Larrabee told Spotlight PA. “It was never intended or designed to handle the demand that would result when the farmland gets developed.”
Larrabee hopes the latest legal action results in relief for those involved, including Campbell, who is overwhelmed by system operations and the regulatory process, she added.
“At this point, the best thing to be done is for the company to be sold to a public utility that is better equipped to handle that kind of consumer demand,” she said.
In December — after persuasion by his attorneys, according to legal filings — Campbell signed a letter of intent to sell the business to the State College Borough Water Authority for $65,000. The letter reflects a mutual interest in negotiating. An acquisition would also require approval from the water authority’s board, the company’s shareholders, and state regulators.
A sale, however, has yet to be completed.
In their emergency petition, filed this week, the lawyers wrote that Campbell and his daughter Elizabeth Campbell, who helps run Rock Spring’s operations, have shown the same level of cooperation to legal counsel and state agencies — “that is to say little to none.”
“The obstinacy of the Campbells and the conditions of the physical plant and water line poses a clear and present danger to all of Rock Springs’ customers which cannot be resolved by present management,” they wrote.
The attorneys have requested that a judge allow the State College water authority to take over operations while they try to formalize a sales agreement.
A hearing is scheduled for Jan. 24 so Campbell — or anyone else with objections to the request — can explain why he should retain control.
The company did not respond to a request for comment. An automatic reply from its email address said the business has extended its winter break through Jan. 17 “as we have all worked over the holidays.”
For the State College Borough Water Authority, these proceedings are the latest in a series of discussions about buying Rock Spring.
The company’s owners previously approached the water authority about a sale in 2008, but rescinded the offer two months later, per public records. In 2023, the water authority tried to start negotiations to buy the system, but talks went nowhere.
The water authority has acquired local systems in the past, but had concerns about the cost of taking over Rock Spring. It would seek grants and loans to fund repairs to avoid placing an undue financial burden on customers.
In November, the Ferguson Township Board of Supervisors agreed to sponsor efforts to apply for grants to fund millions of dollars in repairs if the authority successfully acquires the system, hoping to keep services local and avoid costly rate increases.
Brian Heiser, the water authority’s executive director, told Spotlight PA that local officials are still trying to negotiate a sales agreement with Rock Spring. However, he worries these municipal efforts will be lost to an investor-owned company, such as Pennsylvania American Water, one of the state’s largest privately owned utilities previously identified as a possible buyer.
“We still feel that we are in the best position to serve the RSWC customer base,” Heiser said in a statement.
State-level proceedings are still ongoing. Attorneys and staff within the independent Bureau of Investigation and Enforcement will outline a position in testimony and other pleadings, the division told Spotlight PA.
