Federal Judge Approves Stipulation Temporarily Prohibiting Enforcement of Proposed SRBC Regulations.

HARRISBURG, Pa. -- A federal district court has approved, pending further order of court, a stipulation that prevents the Susquehanna River Basin Commission (SRBC) from enforcing new regulations. On December 29, 2006, the stipulation and order were entered in a lawsuit filed by Saul Ewing Partner Michael A. Finio on behalf of Pennsy Supply, Inc. The suit seeks to permanently enjoin enforcement of the SRBC's proposed new regulatory scheme.

Among other things, the proposed regulations are attempting to impose a fee on entities for the "consumptive use" of water on their own private properties. In addition, water withdrawals and diversions will also be subject to far-reaching regulations, and the ability to rely on SRBC permits when businesses change hands will be put in jeopardy. The adverse economic impact of these regulations is estimated to be in the multiple millions of dollars, and will affect hundreds of businesses, communities and individuals in the Susquehanna River Basin, which geographically covers significant portions of Pennsylvania, New York and Maryland. Even users of public water sources are potentially impacted.

The lawsuit alleges that the regulations were not properly enacted, in terms of following procedures for notice, public hearings and input. It also alleges that the regulations contain constitutional defects and exceed the powers granted to the SRBC in the Susquehanna River Basin Compact, which is the law approved by Congress in the early 1970s after being signed jointly by the United States, Pennsylvania, Maryland and New York.

The lawsuit, originally filed on December 22, 2006, in U.S. District Court for the Middle District of Pennsylvania, is only the second lawsuit brought against the SRBC in its 36-year history.

"We believe the proposed regulations violate the law in a number of different ways," Mr. Finio said. "The SRBC issued these regulations without sufficient public input and the regulations themselves present serious and excessive obstacles to the legal and reasonable use of water resources owned by Pennsy and other businesses in the Basin."

On December 27, the parties met in the chambers of U.S. District Court Judge William Caldwell, where their discussions resulted in the stipulation that led to the December 29 order. The new regulations had been scheduled to take effect January 1, 2007, but their enforceability is now on hold, pending the outcome of a preliminary injunction hearing scheduled for January 17, 2007.

"These regulations impact all water users in the Susquehanna River Basin," Mr. Finio said. "This is a significant piece of litigation because it attacks both the truncated process used to develop the regulations, and the fact that their content far exceeds the SRBC's powers. Water users throughout the Basin ought to be very, very concerned about the outcome of this lawsuit."

The SRBC is a governmental entity formed to regulate water users in the Susquehanna River Basin, which feeds into the Chesapeake Bay. The SRBC is charged with coordinating the efforts of three states and the federal government to manage the use of the water and related natural resources of the Susquehanna River.

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