Water

The water supply industry is undergoing dramatic structural change as capital requirements increase exponentially to replace aging infrastructure, to meet evolving drinking water standards, to develop new supply sources, and to address security concerns raised by the events of September 11, 2001. The consolidation of investor-owned companies has accelerated; some municipal water systems are privatizing their operations while others are attempting to take over private companies; and cross-border investment (inbound and outbound) is substantial.

Mergers and Acquisitions
Morgan Lewis’ lawyers have worked with clients in connection with many of the largest water utility mergers and acquisitions in recent years. Examples include a $400 million purchase of water utility assets; a merger requiring the regulatory approval of 11 states; a proposed privatization of the water and wastewater systems of a major US city; and the acquisition and subsequent divestiture of the country’s largest investor-owned water provider.

Securities
Morgan Lewis has represented investor-owned companies, municipalities and financial institutions in the issuance of water utility securities and we helped two publicly traded water companies develop innovative customer stock purchase plans.

Economic Regulation
For over 50 years, firm lawyers have represented investor-owned companies in all aspects of rate application, complaint, rulemaking and certificate proceedings before state public service commissions and in related litigation before state courts. Recent cases have focused on the recovery of merger-related costs and post-September 11, 2001 security expenses; the reliability of certain equity cost rate methods under current market conditions; the reasonableness of main extension rules requiring customers to fund, in part, the investment needed to bring them service; and the permissible use of competitive rate riders to attract new industrial and sales for resale load. We also helped two companies design and obtain regulatory approval of a groundbreaking surcharge mechanism to finance infrastructure replacement projects.

As counsel to a water utility trade association, the firm has participated in numerous commission and appellate proceedings that placed at issue utilities’ rights to retain gains derived on the sale of watershed land and the proper methods of valuing utility property (including contributed plant) in municipal condemnations.

Environmental Regulation
Morgan Lewis regularly counsels water supply industry clients on environmental issues, ranging from compliance with the Safe Drinking Water Act and the Clean Water Act to the disposal of treatment plant residues. We have taken the leading role in appellate court challenges to rules adopted by the Environmental Protection Agency and various state regulatory bodies. We also represented a major municipal water system when its water rights were threatened by actions brought under the Endangered Species Act and other environmental statutes.

Labor and Employment
The firm represents numerous private and public water suppliers in a wide array of labor and employment law matters, including collective bargaining negotiations, grievances, and OSHA and EEOC compliance. We have extensive experience in the drafting and negotiation of labor relations agreements for large water supply construction projects. We also advised a major water utility in connection with union representation elections by employees of an acquired company.

International Investment
Morgan Lewis has advised foreign-based multinational corporations that have become involved in the domestic water supply industry on a variety of finance, tax, and regulatory matters. Firm lawyers have also been active in foreign markets, particularly Latin America, representing investors in water infrastructure projects and counseling clients on privatization options.