Friday, October 03, 2008

Municipal Water Companies Exempt from HEFPA Must Still Provide Due Process and Equal Protection to Tenant Users

This week we received a call from an upstate city resident whose water service had been shut off with no notice. She is a working mother who rents a single family house and lives with her two year old daughter. Water service was included in the rent. The owner failed to pay City bills for water and sewer service, and also had not paid the mortgage on the house, which is in pre-foreclosure proceedings. In July, the City shut off service, and the tenant asked to open an account in her name, and she would pay the bills going forward. The City ordinances only provide for service to property owners, not tenants, and her application for service was refused, without notice and without an opportunity for a review. The City offered to turned the water back on only if she would pay the landlord's bill. She agreed to do so in installments, but could not keep up with the payments. Although she paid the City more than the cost of the service provided since she asked for service in her name, her payments were credited to the landlord's bill. Service was again shut off this week, on Tuesday.

The very next day, the City Code Enforcement office put a sign on the building saying it is unfit for habitation. The house is in decent condition, however, and the only reason for posting it as uninhabitable was the lack of water service, a condition created by the City. When the tenant called City Code Enforcement she was told she had 24 hours to leave. The local legal aid office could not provide assistance.

The tenant called PULP's Hotline and we are now representing her in an effort to restore service.

When the protections of the Home Energy Fair Practices Act (HEFPA) were initially adopted in 1981 to protect residential gas, electric and steam utility consumers, the law applied to both investor owned utilities and to municipally owned utilities. When HEFPA was amended to protect residential water consumers, however, opposition by the City of New York led to excluding municipal water utilities, and so it applies only to privately owned water companies above a threshold size.

One of the basic principles codified in Section 31 of HEFPA is the duty of the utility to provide service to an applicant without regard to debts of third parties who had arrears on accounts in their names. HEFPA allows tenants in a situation where the landlord has defaulted in paying bills either to open an account in the tenant's name, or, alternatively, to pay for current charges on the landlord's bill -- without being required to pay the landlord's debts for past service.

Although the state HEFPA statutes do not apply to municipal water utilities, consumers are not without some protection. The Supreme Court has held that a city, because it is a public entity, must act in accordance with the United States Constitution when it operates a utility. Memphis Light, Gas & Water Div. v. Craft. Several federal circuit court precedents hold that in circumstances such as this, denial of service by a publicly owned utility to a tenant user because of the landlord's default in payment is a violation of the Equal Protection Clause. Also, circuit court cases have held that a municipal utility's termination of service to a tenant user without timely and adequate notice which provides a fair opportunity for review of the factual and legal basis for the action violates the Due Process Clause.

PULP's demand for restoration of service and for a hearing was not honored by the City. The tenant remains without water service. The matter will shortly be in federal court. Stay tuned.

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