[House Report 104-635]
[From the U.S. Government Publishing Office]
104th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 104-635
_______________________________________________________________________
DISTRICT OF COLUMBIA WATER AND SEWER AUTHORITY ACT OF 1996
_______
June 25, 1996.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______________________________________________________________________
Mr. Clinger, from the Committee on Government Reform and Oversight,
submitted the following
R E P O R T
[To accompany H.R. 3663]
[Including cost estimate of the Congressional Budget Office]
The Committee on Government Reform and Oversight, to whom
was referred the bill (H.R. 3663) to amend the District of
Columbia Self-Government and Governmental Reorganization Act to
permit the Council of the District of Columbia to authorize the
issuance of revenue bonds with respect to water and sewer
facilities, and for other purposes, having considered the same,
report favorably thereon without amendment and recommend that
the bill do pass.
Background and Need for The Legislation
A. Background
History of Blue Plains Wastewater Treatment Facility
Though not one of Washington, D.C.'s tourist attractions,
the Blue Plains Wastewater Treatment Plant is the largest of
its kind in the United States and is the Washington Region's
most significant environmental facility. The facility is
responsible for treating raw sewage from Washington, DC and
neighboring jurisdictions in Maryland and Virginia. Blue Plains
provides sewer service for almost all major federal facilities
in the Washington region.
Owned, operated by, and located in the District of
Columbia, about 52% of the influent sewage flow is from the
District; about 39% from the Washington Suburban Sanitary
Commission (Montgomery County and Prince Georges County in
suburban Maryland) and approximately 9% from Virginia (the
Counties of Fairfax and Loudon, plus Dulles Airport, as well as
the Pentagon). Thus, most all federal facilities in the
Washington Region, in all 3 branches of government, plus around
2 million residential users, depend upon Blue Plains. A
collapse of Blue Plains would be an ecological catastrophe.
The Federal Water Pollution Control Act, as amended by the
Clean Water Act of 1977 and the Water Quality Act of 1987 (the
``Clean Water Act'') 33 U.S.C. 1319, governs protection of the
water quality, fish, wildlife, scenic and recreational aspects
of the Potomac River and its tributary navigable waters. While
the District owns and operates Blue Plains, it is subject to
the conditions and limitations contained in the National
Pollutant Discharges Elimination System (``NPDES'') Permit
Number DC0021199 (the ``Permit'') issued by the Environmental
Protection Agency (EPA) effective February 4, 1991, pursuant to
the Clean Water Act. In September, 1995, the EPA listed the
flow of raw sewage into the Potomac because of shortcomings at
Blue Plains as a ``very real possibility.'' The Permit expired
on February 3, 1996. Negotiations are currently underway to
extend or renew the permit.
How the Blue Plains Wastewater Treatment Facility and the
water and sewer collection and distribution systems of the
District of Columbia deteriorated is a story that reflects the
enormous growth of the Washington region beginning with World
War II and then the growing out migration to the suburbs. It is
also an all too familiar story in the Nation's Capital of
municipal shortcomings in terms of available resources, best
management skills, and allegations of serious improprieties.
Blue Plains now treats an average 325 million gallons a day
(mgd) of sewage. Consisting of 154 acres of waterfront land in
Southwest, the District calculates that Blue Plains is an asset
valued at $1.4 billion. It's annual operating and capital
budget is around $250 million.
In 1934 the original facilities provided primary treatment
only, treating 130 mgd's with a service population of around
650,000. Capital funding for construction was provided by the
Federal government, the District, Fairfax County, Virginia, and
the Washington Suburban Sanitary Commission (WSSC). The WSSC is
an entity of the state of Maryland which represents Montgomery
and Prince Georges County.
Expansion occurred in 1949, when chlorination was added,
along with secondary (biological) treatment. The plant was
expanded again in 1959. The most recent expansion and upgrade
started in 1972 and was completed in stages by 1983. The plant
now has a peak design capacity of 650 mgd, plus primary
treatment capacity for an additional 289 mgd of storm flow.
EPA funding began in 1973. Since then, EPA has given the
District over $360 million in construction grants. Maryland and
Virginia have received an additional $187 million to support
Blue Plains construction.
In 1984, a Blue Plains Feasibility Study evaluated various
assessed needs through 2010. An upgrade to 370 mgd with a peak
flow of 740 mgd was recommended, and expansion is currently
underway.
The Blue Plains collection system consists of approximately
1,275 miles of sewers, 9 wastewater pump stations, and 15 storm
water pump stations. Because Blue Plains is in the District,
EPA Region III has primary oversight for its operation. The
District's Department of Public Works' Water and Sewer Utility
Administration (WASUA) is responsible for the day-to-day
operation of the water and sewer systems and operation of the
Blue Plains facility. The District's potable water supply is
provided by the Washington Aqueduct which is owned and operated
by the US Army Corps of Engineers. The District of Columbia
owns and maintains its water distribution system.
The existing institutional arrangements for treatment and
transmission capacity allocation and for capital and operating
cost allocation are governed by a series of agreements between
the users. Prior agreements are: the 1954 Agreement between
WSSC and the District, the 1959 Agreement between Fairfax
County and the District; the Agreements executed in the 1960's
between the District and the Users of the Potomac Interceptor;
the 1970 Memorandum of Understanding; the 1971 Interim
Treatment Agreement; the 1974 Blue Plains Sewage Treatment
Plant Agreement as amended; the 1976 Agreement between the
District and WSSC; the 1984 Memorandum of Understanding on Blue
Plains; and the 1984 Sludge Memorandum of Understanding. The
current operative agreement, the Blue Plains Intermunicipal
Agreement of 1985 (IMA), was signed on September 5, 1985 by
those acting in an official capacity for the District of
Columbia, Fairfax County, Montgomery County, Prince Georges
County, and the WSSC. This latter agreement was developed with
assistance from the Metropolitan Washington Council of
Governments.
The basic rate structure consists of two tiers. Blue Plains
retail customers, that is residents of the District, have their
rates set by the City Council. The suburban users are wholesale
customers and their payments are calculated on a cost formula
basis.
Problems and status of Blue Plains
Problems, with the Blue Plains Facility have been growing
more serious since the 1970's. These underlying problems have
involved permit issues and the proper handling of sludge. The
EPA filed suit in 1984 against the District for numerous
alleged operational problems. As a result of the suit, a formal
5 year Consent Decree was entered into in 1985. Throughout the
life of the Consent Decree violations continued, and a
considerable amount of stipulated penalties was owed.
In 1990 EPA filed a second lawsuit for effluent violations,
construction delays and inadequate maintenance of treatment
equipment. In 1991 agreement was reached on a $1.5 million
penalty to settle both this and the previous case. The decree
was to be negotiated, and it was not until late 1994 that an
agreement was reached settling the litigation. The City paid a
$500,000 penalty and made other operational changes.
On August 31, 1995, EPA issued an Administrative Order to
the District to correct maintenance and operational problems.
Both short-term and long-term strategies were required to be
implemented. In November, 1995, EPA conducted another joint
inspection. The report, completed in March, 1996, reiterated
previous concerns, including financing. The report found that
the capital improvement budget for Blue Plains would be $20
million short for FY '96. As accurately summarized and reported
by R.H. Melton in The Washington Post on December 14, 1995, the
EPA report warned that ``Blue Plains is on the verge of failing
its central mission * * * (and) is now so dilapidated it poses
a serious pollution threat and will soon run out of money it
needs for long-delayed repairs.''
EPA and the Department of Justice also worked with the City
to resolve more short-term immediate problems at Blue Plains.
As stated, while the District owns and operates the Blue Plains
Wastewater Treatment Works, including the Blue Plains
Wastewater Treatment Facility, it does so subject to the
conditions and limitations contained in the Permit issued by
EPA pursuant to the Clean Water Act. EPA's National Enforcement
Investigation Center (NEIC), in reports dated July, 1995, and
January, 1996, presented findings alleging serious permit
violations from two inspections at Blue Plains. Included were
serious allegations of periodic shortages of chemicals critical
for the proper operation of the facility and effective
wastewater treatment, and failure to make timely payments to
Blue Plains contractors and chemical suppliers. At that time
the total amount awarded to the District under all EPA grants
for Blue Plains exceeded $360 Million.
Citing the IMA, and the findings of a District audit dated
August 11, 1995, EPA and the Department of Justice alleged that
the revenues in the Water and Sewer Enterprise Fund were pooled
with other revenues in the District's General Fund, and WASUA's
ending cash balance for FY '94 of some $83 million was made
unavailable by the District for the operation and maintenance
of Blue Plains in FY 95. Overall, the District is alleged to
have diverted at least $96 million in revenue from user fees.
The District government took money from the Water and Sewer
Enterprise Fund intended for Blue Plains and used it for other
purposes. Thus, while Blue Plains was in danger of falling
apart and creating an environmental catastrophe, the District
government was diverting money collected for repairs and
maintenance, leaving no funds for that vital work.
On February 7, 1996, the Commonwealth of Virginia served
the required 60 day notice on EPA and the District of its
intent to file a citizen suit under the Clean Water Act against
the District for allegedly violating its EPA operating permit
at Blue Plains. Virginia's main contention was that the lack of
proper operation and maintenance, adequate funding, and
discharge levels were caused by the District diverting rate
payer funds to other uses than funding Blue Plains, and that
the District should restore the funds. Virginia Attorney
General James S. Gilmore, in his notice letter to District
Mayor Marion Barry, said that the Blue Plains facility is in
``critical condition'' that could lead to ``major failures'' in
pollution control that would endanger the Potomac River and the
Chesapeake Bay.
On April 5, 1996, the last day of the sixty-day notice
period, the United States Government (EPA and Justice) filed a
civil action under Section 309(b) of the Clean Water Act,
seeking injunctive relief against the District for alleged
violations of the Blue Plains Permit. Under law, the EPA suit
effectively prevented Virginia from filing its litigation. Also
filed with the Complaint was an executed ``Settlement Agreement
and Order'' (``Consent Decree'') between the parties resolving
outstanding disputes. The lawsuit, referring to EPA inspections
made in 1995, asserted deterioration, inadequate maintenance
programs and other major problems at Blue Plains that could
lead to the discharge of high concentrations of chemical
pollutants and harmful micro-organisms into the Potomac. A
``significant risk to public health and the environment'' was
warned if corrective steps weren't taken promptly. The District
agreed to make significant upgrades and repairs estimated to
cost $20 million over the next two years. The settlement looked
to Congressional action to separate water and sewer revenues
from the District's General Fund (Section 154 of the District
of Columbia Appropriations for FY 1996, signed on April 26,
1996). The Stipulated Agreement and Order requires the District
to submit monthly reports to EPA on the status of the
construction projects outlined in the agreement, as well as the
status of payments owing and made to chemical suppliers and for
maintenance.
On May 9, 1996 Virginia filed a Motion to Intervene in the
federal case along with a proposed Complaint. Virginia claims
that the suit otherwise would not sufficiently protect its
interests. As this report is filed no resolution of Virginia's
request to intervene has occurred and the Stipulated Agreement
and Order has not become final.
The ``Congressional ratification'' mentioned in the Consent
Decree refers to legislation enacted by the District of
Columbia government (DC Act 11-201), approved by the Financial
Responsibility and Management Assistance Authority (the
``control board'' created by Public Law 104-8) with certain
recommended amendments, and transmitted to Congress under the
Home Rule Act and Article 1, Section 8, Clause 17 of the U.S.
Constitution. Essentially, the District's legislation was in
response to the demands made by the EPA for fundamental change
in the structure and operation of Blue Plains.
The District Government's response to continuing problems at Blue
Plains
On February 7, 1995 Bill 11-102 was introduced in the
District of Columbia Council, known as the ``District of
Columbia Water and Sewer Authority Act of 1995.'' The bill went
to hearing before the Committee on Public Works and Environment
on May 3, 1995. The Committee Mark-up occurred on October 25,
1995. Following approval by the full Council and the Mayor's
signature on February 1, 1996, the legislation, now known as
Act 11-201 (Law 11-111), ``the District of Columbia Water and
Sewer Authority Act of 1996,'' was referred to the control
board under Section 207 of Public Law 104-8. It was approved,
with some recommendations for modifications, by the control
board on February 15, 1996. The enactment was then officially
transmitted to Congress by the District government on February
22, 1996.
Throughout the legislative process District officials met
with and negotiated with officials of the suburban
jurisdictions over an acceptable structure and operating
scheme. The District was, and still is, facing a grave fiscal
and financial crisis. This led to many of the under funding
problems at Blue Plains and for the District's water and sewer
pipes. Under pressure from EPA and the suburban users of Blue
Plains the District government decided to create a new,
independent Water and Sewer Authority as a District of Columbia
agency. The Water and Sewer Authority would include all of the
``joint use'' sewer facilities (the Blue Plains plant and a
number of pipes within the system) along with the water
distribution and sewer collection systems within the District
itself.
The suburban jurisdictions strongly favored a true regional
authority such as an Interstate Compact modeled after the
Airports Authority or the Washington Metropolitan Area Transit
Authority (WMATA). A regional authority would take considerable
negotiation to set up and could only be created with the
approval of the Virginia, Maryland, and District legislatures.
Because of the fiscal distress of the District, the need to
find a means of guaranteeing repair and maintenance of the
water and sewer pipes, and the necessity to do something
quickly, the District insisted on proceeding on its own. An
offer was made to include voting representatives of the
suburban jurisdictions on the Board of the new Water and Sewer
Authority in order to give them more direct influence and to
gain their acceptance for the creation of the Authority.
The thrust of the Water and Sewer Authority proposal was to
separate water and sewer revenues from the General Fund so that
further diversion of those funds would not be possible. The
Water and Sewer Authority would set the rates it charged at
whatever level was required to make it completely self-
supporting and it would finance capital projects through
revenue bonds secured by its own revenue. Under the terms of
the home rule act (PL 93-198), the District government does not
have the power to sell revenue bonds for water and sewer
purposes, so the proposed new Authority could not be
implemented without Congressional action to grant the necessary
borrowing power.
The proposed legislation was modified considerably as it
worked its way through the District's legislative process and
negotiations intensified after the Council passed Act 11-201.
The control board held an extensive hearing on the legislation
and then forwarded it for the required 30 day Congressional
review. The Committee engaged in discussions with the District
government, the user jurisdictions, and EPA. Considerable
background and support was provided by Council of Governments
(COG) staff. The Committee reached an understanding with the
District and user jurisdictions that it would not proceed with
the vital revenue bond power for the Water and Sewer Authority
until it was satisfied with the District's legislation and that
the user jurisdictions supported the proposal.
The original District legislation finished its 30 day
review and became District law on April 18, 1996. The Committee
did not consider the legislation as complete, but was satisfied
that negotiations were proceeding on a compromise and that it
ultimately could legislate for the District on this issue if a
satisfactory resolution was not found. On June 5, 1996 the
District Council passed significant, substantive amendments to
the original proposal which were the result of the negotiation
process. These amendments were supported by the Committee, EPA,
the control board, and the user jurisdictions. At a Committee
hearing on June 12, 1996, the user jurisdictions testified that
they were willing to accept and participate on the Water and
Sewer Authority as amended by the Council on June 5, 1996. EPA
testified that the amendments significantly improved the
proposal.
The original enactment established a 10 member authority,
with 4 members designated by the suburban user jurisdictions.
It sought to facilitate the adequate delivery of water to the
District and sewer system services to the District and portions
of the Metropolitan Washington area, delegated Council
authority (if Congress granted such authority) to issue revenue
bonds to the Authority, dedicated District water and sewer
revenues to the Authority, transferred the functions of the
Water and Sewer Utility Administration (WASUA), Department of
Public Works, to the Authority, and abolished WASUA.
Amendments recommended by the Control Board included
formalizing a plan within 60 days for the repayment of the
unavailable funds, approximately $81 million, and a requirement
to maintain complete separation of the water and sewer revenues
and cash balances from those of the General Fund.
In order to lay the foundation for timely and rapid
Congressional action, the District of Columbia Subcommittee of
the Government Reform and Oversight Committee, chaired by Rep.
Tom Davis, held an Oversight Hearing on February 23, 1996 on
``Water and Sewer Systems in the District of Columbia.''
Chairman Davis, in his Opening Statement, referred to Blue
Plains as an ``enormous and growing'' crisis, and mentioned the
EPA ``boil water'' alert in the District in November, 1995 as
indicative of concurrent problems with the water distribution
system.
Following further negotiations between the user
jurisdictions, the District of Columbia Council, by emergency
legislation, amended Act 11-201 to incorporate agreed upon
amendments. Key provisions increased the new Board's size from
ten to eleven members (6 members from the District and 5 from
the suburban jurisdictions), raised the number of Board members
to be recommended by Montgomery and Prince Georges Counties
from one to two members each, and eliminated the Board of
Director's position reserved for a person recommended by the
WSSC. Eight votes are necessary to hire or fire the General
Manager. The Water and Sewer Authority is specifically named as
the permit holder for Blue Plains as requested by EPA. The
financial independence from the General Fund is strengthened
and the study of privatization or forming a regional authority
is clarified and improved. The emergency legislation was passed
by the Council on June 5, 1996.
There then remained, as contemplated by the Act, the
necessity for Congress to adopt affirmative legislation
conferring revenue bond power for water and sewer purposes on
the Council, allowing the Council to transfer such power to the
Water and Sewer Authority, and to take the Authority ``off-
budget'' (meaning that the Mayor and Council cannot affect the
self-funded budget adopted by the Board of the Authority).
Accordingly, H.R. 3663, District of Columbia Water and Sewer
Authority Act of 1996, was introduced on June 18, 1996. The
bill was referred to the Government Reform and Oversight
Committee, and a hearing was held by the District of Columbia
Subcommittee on June 12, 1996.
b. need for legislation
H.R. 3663 amends the Home Rule Act to authorize the
issuance of revenue bonds with respect to water and sewer
facilities, and for other necessarily related purposes. Bonding
and budget matters for the District are covered in the Home
Rule Act (PL 93-198) and can only be changed by Act of
Congress. Without H.R. 3663 the District of Columbia's Water
and Sewer Authority (Act 11-201, amended by Emergency Act on
June 5, 1996) is a de facto nullity.
Thus, H.R. 3663 is essential in order to allow revenue
bonds for water and sewer purposes and to permit the District
Government to delegate that power to the new Water and Sewer
Authority. Other provisions are needed to prevent the District
Government from changing the Authority's budget, and to exempt
bond proceeds and repayments from being part of the District's
appropriations process. Also, when Water and Sewer Authority
revenues are removed from the General Fund they must also be
removed from the calculation determining the District's debt
service cap and, at the same time, existing water and sewer
General Obligation bonds sold for water and sewer purposes must
be removed from that calculation.
The District Government has the power to issue General
Obligation bonds for any legitimate purpose and has used this
authority since 1984 to sell bonds for water and sewer
purposes. Section 490 of the Home Rule Act gives the District
of Columbia Council the power to sell revenue bonds only for
certain specified purposes. The Council does not currently have
the power to sell revenue bonds for water and sewer purposes,
and may not provide that revenues of the new Water and Sewer
Authority may be used to pay off revenue bonds for those
purposes. Only Congress can confer this power. When the Council
is given such power HR 3663 provides that it may (as it has
already done legislatively) delegate that power to another
District entity--in this case the new Water and Sewer
Authority.
Revenues in the District's Water and Sewer Enterprise Fund
were ``pooled'' with revenues in the District's General Fund in
recent years. The District's Department of Public Works, Water
and Sewer Utility Administration (WASUA), which is being
abolished by the District legislation, had an ending cash
balance for FY '94 of some $83 million that was made
unavailable by the District for the operation and maintenance
of the Blue Plains Wastewater Treatment Facility in FY '95
because the District had used the funds for other purposes. At
the recommendation of the control board and with the agreement
of the other interested parties, the District is required to
repay the new Water and Sewer Authority $83 million. A 4 year
plan to do that is incorporated in the District's Financial
Plan, which is a legally binding document under PL 104-8. The
Control Board has assured the Subcommittee, the participating
jurisdictions, and the State of Virginia, that it fully intends
to enforce the District's commitment to repay the funds.
Congress, of course, retains the ultimate power to enforce
repayment, and is the ultimate guarantor since it must approve
the annual District budget.
The testimony of Henri N. Gourd, Vice President of MBIA
Insurance Corporation, which was made part of the permanent
record of the hearing held on June 12, 1996, was very helpful
to the Committee. Mr. Gourd stressed the importance of making
certain that the new Water and Sewer Authority ``* * * be
independent from any government body'' and that ``Control of
the revenue stream by the issuing entity is critical to future
bondholders.'' Mr. Gourd mentioned 9 issues related to a future
sale of revenue bonds aimed at ``maximizing the attractiveness
of the securities to the capital markets.'' It is important
that these matters be provided for in the Authority legislation
or that the Authority have the power to implement them on its
own. These points and how they are addressed are as follows:
1. Fees and charges to the new Authority should be in
force and effect at least as long as any of the
Authority's bonds are outstanding.
In response to a question Mr. Gourd stated that the
June 5 Council amendment to Section 207 of the District
bill takes care of this point.
2. The bond market can not be expected to embrace a
new bond issue until the Authority becomes a free-
standing independent entity.
Mr. Gourd was assured that the Authority will not
attempt to sell revenue bonds until long after it is
fully operational, and that the Committee will work
with the District to make sure that this happens as
soon as possible.
3. The Study called for in the bill must be as
comprehensive as those done for other new authorities,
and for systems operating under EPA consent decrees.
In response to a question, Mr. Gourd acknowledged
that it is not necessary for Congress to spell out the
type and frequency of such studies, and that the
Authority is capable of doing this on its own.
4. The rates must reflect the needs of the system as
a whole, ``covering expected capital needs, operation
and maintenance expenses and debt service expenses by a
factor in excess of one.''
In response to a question, Mr. Gourd agreed that the
June 5 Council amendments are acceptable to satisfy
this concern.
5. An ``additional bonds test'' must be met. This is
a coverage test prior to the issuance of additional
parity bonds ``to protect against dilution of the
revenue stream once the initial series of bonds are
issued.''
In response to a question, Mr. Gourd agreed that the
Authority has sufficient motivation to do this and is
not precluded from doing so by any provision of the
District legislation or of HR 3663.
6. An independent, outside accounting firm ``and/or
engineering firm'' is commonly asked to certify that
``projected operating and debt service expenses will be
covered by the rates in compliance with bond
documents.''
In response to a question, Mr. Gourd agreed that the
June 5 Council amendments are specific enough, and that
the Authority Board can be relied upon to take this
step.
7. A ``closed loop'' is preferable for holders of the
revenue bonds.
In response to a question, Mr. Gourd agreed that the
June 5 Council amendments are sufficiently strong and
clear on this point.
8. Revenue bond holders ``prefer a senior claim to
the revenues.''
Mr. Gourd agreed to work with the Committee if the
current language isn't sufficient to do this.
9. A ``debt service reserve fund'' is recommended
``to provide liquidity * * * for water and sewer
revenue bonds * * * in any future financing by the
Authority.''
In response to a question, Mr. Gourd agreed that this
would be covered under generally accepted accounting
procedures and is specifically allowed under the
District legislation.
In response to other questions asked at the hearing, Mr.
Gourd agreed that the new Water and Sewer Authority is
``substantially independent'' and, all else being equal, should
get a good rating. Mr. Gourd also agreed that taking the
Authority out of the General Fund entirely and letting it
collect its own revenues and put them into its own account is
adequate to deal with the ``control of revenue'' issue.
Legislative Hearings and Committee Actions
On June 18, 1996, Mr. Davis introduced H.R. 3663. It was
cosponsored by all the members of the Subcommittee on the
District of Columbia along with Mr. Hoyer, Mrs. Morella, Mr.
Moran, and Mr. Wynn representing the suburban user
jurisdictions.
H.R. 3663 was referred to the Committee on Government
Reform and Oversight. The Subcommittee on the District of
Columbia held hearings on February 23, 1996 and June 12, 1996.
The bill was marked-up in the Subcommittee on the District of
Columbia on June 18, 1996. There were no amendments offered.
The legislation passed the Subcommittee by a voice vote.
The Government Reform and Oversight Committee met on June
20, 1996, to consider H.R. 3663. There were no amendments
offered. The bill was reported to the House unanimously by
voice vote.
Committee Hearings and Written Testimony
February 23, 1996 oversight hearing
On February 23, 1996, the Subcommittee on the District of
Columbia, of the Committee on Government Reform and Oversight,
met pursuant to notice. The hearing was devoted to oversight
issues associated with the District's water and waste water
systems. The purpose of the hearing in regard to Blue Plains
was to evaluate its over all performance, especially its day-to
day operation, maintenance, personnel policies, procurement
practices, and compliance with the Environmental Protection
Agency (EPA) permits and orders.
Subcommittee Chairman Davis began by stating that the
problem of clean and inexpensive water and wastewater treatment
affect all of the residents and businesses located in the
metropolitan region. The Chairman went on to say that a failure
in the wastewater system might threaten the health of the
Chesapeake Bay, the Potomac River, and other vital wetlands, as
well as District and suburban residents. He stated that the
newly proposed Water and Sewer Authority needed borrowing power
in order to implement any reforms. The Chairman then said that
the Subcommittee must amend the home rule act if the Water and
Sewer Authority is to have borrowing power. Ranking Member
Norton agreed that both the Aqueduct and Blue Plains are
regional problems which call for bipartisan solutions. She
expressed her support for the District's effort to establish a
new, independent Water and Sewer Authority.
The first panel of witnesses consisted of Mr. Michael
McCabe, the Director of Region III, EPA. Mr. McCabe reviewed
the development of the Washington Aqueduct and the Blue Plains
Wastewater Treatment Facility. He stated that the Aqueduct is a
complex drinking water infrastructure that is old and run by
the U.S. Army Corps of Engineers, with its customer base
concentrated in the City. The Blue Plains facility is located
in and operated by the District. The facility serves the needs
of the District and suburban jurisdictions. However, both
systems have committed recent and serious permit or federal
standards violations; both have been issued Administrative
Orders (one is a Proposed Administrative Order) by Region III
because of problems with their operations; both present
potential threats to the health and safety of their customers;
and both are hampered by financial problems.
Mr. McCabe then addressed possible solutions. For the
Aqueduct, he stated that the Corps lacks the borrowing/bonding
authority necessary to procure additional funding for reforms.
For the Blue Plains facility, Mr. McCabe emphasized the
importance of the Biological Nutrient Removal Pilot Project,
which is vital to the health of the Potomac River and the
Chesapeake Bay. He concluded by saying that the EPA has
attempted to help the Aqueduct and the Blue Plains facility
through technical assistance, administrative orders, court-
filed consent orders, unannounced inspections and audits,
substantial fines, and jaw boning, but the results have been
virtually negligible. Mr. McCabe suggested that Congress give
consideration to new financing systems for both institutions,
including the establishment of separate accounts for the
collection and disbursement of grant payments and revenues for
operation and maintenance.
The second panel of witnesses consisted of Mr. Larry King,
the Director of the District of Columbia Department of Public
Works. Mr. King reported on the quality of the drinking water
and wastewater treatment in the District of Columbia. He stated
that the City's water is safe, but that many of the water
distribution and wastewater system components predated the
Civil War, and need to be modernized and properly maintained.
Mr. King stated that the District has responded to these
problems by developing three proposals to improve the
infrastructure of the Blue Plains Wastewater Treatment Plant,
the wastewater and combined collection systems, and the water
distribution systems. Mr. King spoke in support of the D.C.
Water and Sewer Authority Establishment and DPW Reorganization
Act of 1996 (Council Act 11-201).
The third panel consisted of Mr. Tom Jacobus, the Chief of
Washington Aqueduct, United States Army Corps of Engineers. Mr.
Jacobus described the operation and history of the Washington
Aqueduct, as well as recent reforms and improvements. Mr.
Jacobus then discussed recent problems. The current pay-as-you-
go system for capital improvements will not be enough to fund
the projects under design and study for the Aqueduct. He also
described the Aqueduct's cooperation with the District to
implement the reforms in the EPA's Administrative order.
The fourth panel of witnesses consisted of Mr. Erik Olson,
the Senior Attorney of the Natural Resources Defense Council
and Dr. Peter Hawley, the Medical Director of the Whitman-
Walker Clinic. Mr. Olson's testimony focused on the need to
make substantial improvements in the District's water system.
Dr. Hawley stated that D.C. drinking water was dangerously
close to EPA limits for turbidity, and could easily cause
illness for many people, especially those who are HIV infected,
the debilitated elderly, newborns, individuals undergoing
chemotherapy treatment, and those with rheumatoid arthritis or
other immunocompromising illnesses.
June 12, 1996 Legislative Hearing
On June 12, 1996, the Subcommittee on the District of
Columbia, of the Committee on Government Reform and Oversight,
met pursuant to notice. The hearing was intended to evaluate
the progress of the Blue Plains wastewater treatment facility
since the last hearing on February 23, 1996, to examine the
District's proposal for a Water and Sewer Authority, and to
obtain testimony on draft Congressional legislation necessary
for the full implementation of the proposed Water and Sewer
Authority.
Subcommittee Chairman Davis began by commending the
District government for passing legislation establishing the
Water and Sewer Authority (District of Columbia Act 11-201), a
self-funding, independent agency and for the improvements
resulting from the June 5, 1996 amendments. The Authority is
being created to improve wastewater treatment for the District
and surrounding Virginia and Maryland jurisdictions as well as
the maintenance of the District's water distribution system.
Furthermore, the Authority is being established with voting
Board representatives from suburban jurisdictions who use the
facility. Chairman Davis emphasized that the Authority will be
prohibited from transferring money to the District's General
Fund, except for the acceptable arrangement for the Authority
to pay the debt service on outstanding General Obligation bonds
issued for water and sewer purposes. Mr. Davis acknowledged
congressional action was necessary before the newly created
Authority could issue revenue bonds. Ranking Member Norton
expressed her gratitude to Chairman Davis for allowing the
local stakeholders to work out a solution to the Water and
Sewer Authority. She also spoke in favor of amending the home
rule act to permit the Council to authorize the Water and Sewer
Authority to issue revenue bonds.
The first panel of witnesses consisted of Rep. Steny H.
Hoyer, who expressed his approval of the creation of the
Authority, which will aid the Blue Plains facility in the
protection of human and environmental health, as well as daily
operations, proper equipment, financial stability, and
sufficient staffing levels. Mr. Hoyer expressed his concern
about past transfers from the District's Water and Sewer
Enterprise Fund to the city's General Fund. He stated that the
District should return the funds removed from the Water and
Sewer Enterprise Fund, and that the new Water and Sewer
Authority should be prevented from this type of transfer. Mr.
Hoyer then expressed support for the revenue bond legislation
being considered.
The second panel of witnesses consisted of Mr. Michael
Rogers, the City Administrator of the District and Mr. Larry
King, Director, DC Department of Public Works. Mr. Rogers began
by stating that, when amending the home rule act, Congress
should deal only with provisions relating to the Authority's
bonding needs or other necessary Congressional actions, and
should leave all other issues to the discretion and control of
home rule government.
Specifically, Mr. Rogers objected to a Congressional
amendment requiring an eight vote majority on budget matters of
joint-use facilities (intended to increase suburban
participation). He felt this was unnecessary since the
District's legislation was all ready created with suburban
consultation. The District legislation was approved by the
Mayor, the Council, the control board, the suburban
jurisdictions, and allowed to become law by the Congress. Mr.
Rogers also pointed out several errors in the draft
Congressional legislation and asked the Subcommittee to work
with the District to straighten them out. Mr. King spoke in
favor of the District legislation as amended.
The third panel consisted of the Honorable Katherine
Hanley, Chairman of the Fairfax County Board of Supervisors,
Mr. Bruce Romer, Chief Administrative Officer of Montgomery
County, and Mr. Howard Stone, Chief Administrative Officer of
Prince Georges County, Maryland. Ms. Hanley expressed her
support of the revised eleven member Authority with five
members from the suburban jurisdictions. In the long term, the
Fairfax Board of Supervisors would like a separate Regional
Authority to operate Blue Plains and joint-use facilities,
without concern for the city's water and sewer system. Although
there were other improvements the Board asked for in the
District's legislation, she supports the creation of a Water
and Sewer Authority as an important first step.
Mr. Romer testified on behalf of himself and Mr. Stone. He
stated that Blue Plains handles about 94% of the wastewater
flows from Montgomery County and about 54% of the flows from
Prince George's County, as part of the Inter Municipal
Agreement of 1985 (IMA). Mr. Romer said that the two counties
have a considerable stake in the pending legislation; suburban
residents use 50% of the allocated capacity for Blue Plains,
and have paid $346 million in capital investment in the Blue
Plains facility. He also stated that suburban residents
supported a separate Regional Authority in the long term, but
supported suburban participation on the Authority's Board of
Directors in the short term. He supported Congressional
legislation to give the Water and Sewer Authority revenue bond
power.
The fourth panel consisted of Mr. Michael McCabe, the
Region III Administrator of EPA, and Mr. Henri Gourd, Vice
President/Manager of MBIA Insurance Corporation. Mr. McCabe
expressed EPA's support for this legislation and said that the
independent Water and Sewer Authority, as amended by the
Council on June 5, 1996 should significantly improve the
operation and maintenance of Blue Plains. Mr. McCabe also
stressed the importance of the particular amendment making
clear that the Water and Sewer Authority is the successor of
WASUA and is the permit holder for Blue Plains. He also
endorsed revenue bond power for the Authority. Mr. Gourd
discussed the opportunities for the Authority in the bond
market, from his perspective as a municipal bond insurer. There
are two key issues for the bond market. First, the Authority
must be an independent agency of the District's government so
that its credit rating will not be linked to the District's.
Second, the Authority must control its own revenue, so its
bondholders will be assured of its financial security. He also
listed nine important issues for the Authority to secure the
most favorable bond rating.
Written testimony was received from the District of
Columbia Financial Responsibility and Management Assistance
Authority's (control board) Executive Director, Mr. John W.
Hill, Jr. Mr. Hill's testimony supported the Council's creation
of an independent Water and Sewer Authority as it was amended
on June 5, 1996. The amended version of the District
legislation effectively addressed the previously stated
concerns of the control board in regard to the financing and
membership of the proposed Water and Sewer Authority. Mr. Hill
also expressed the control board's approval for the goal of the
congressional legislation. He did, however, express his
reservations about several details of the proposed legislation
and noted that these may have been inadvertent. Mr. Hill asked
the Subcommittee to work with the control board staff to
perfect the Congressional legislation.
Explanation of the Bill
H.R. 3663 amends the District of Columbia Governmental
Organization and Reorganization Act (PL 93-198) to permit the
District of Columbia government to issue revenue bonds for
water and sewer facilities, and for other related purposes.
This is necessary in order to implement legislation already
passed by the District of Columbia Council, as signed by the
Mayor, and approved by the Control Board under PL 104-8,
creating the District of Columbia Water and Sewer Authority
(Act 11-201, amended by Emergency Act on June 5, 1996). After
submission to Congress, the legislation was permitted to become
District law on April 18, 1996.
H.R. 3663 accomplishes the intent of Congress to allow the
issuance of revenue bonds for water and sewer purposes by the
District of Columbia and to permit the District Government to
delegate the power being vested to the new Water and Sewer
Authority. Other related provisions prevent the District
Government from altering the Authority's budget and exempts
bond proceeds and repayments from being part of the District's
appropriations process. The legislation also removes both the
revenues of the Water and Sewer Authority and outstanding
General Obligation bonds issued for water and sewer purposes
from the calculation of the District debt ceiling.
Under existing law the District government already has the
power to issue General Obligation bonds for any legitimate
purpose. Section 490 of the Home Rule Act gives the District
power to issue revenue bonds only for certain specified
purposes. But the District lacks the power to sell revenue
bonds for water and sewer purposes, and may not provide that
any revenues of the new Water and Sewer Authority be used to
pay off any revenue bonds issued for those purposes. The power
to do that can only be conferred by a statutory enactment of
Congress, as signed by the President. Should that power be
conveyed by statute, which is the purpose of H.R. 3663, then
the Council may, and by it's aforesaid enactments already has,
delegate that power to another District entity--in this
instance the new Water and Sewer Authority. Under this bill the
District government need not then further approve any bonds
lawfully sold by the Water and Sewer Authority.
Under existing law the District of Columbia has a debt
ceiling specified in the home rule act. The District is not
permitted to have outstanding debt service higher that 14% of
expected revenues. H.R. 3663 removes revenues of the new Water
and Sewer Authority from the General Fund, effectively making
them ``off budget''. What this does is to reduce the amount of
General Obligation debt the District can assume. Up to $350
million of the current General Obligation debt was for water
and sewer purposes. Under the District legislation (Council Act
11-201, as amended) the new Water and Sewer Authority must pay
the debt service on the outstanding debt for water and sewer
purposes, about $38 million each year. This means that the
existing General Obligation bonds for water and sewer purposes
will no longer be the responsibility of the General Fund, but
will be the responsibility of the new Water and Sewer
Authority. Therefore, this debt should also be removed from the
debt ceiling calculation.
The General Obligation bonds issued for water and sewer
purposes and its annual debt service will be identified in the
audit required in the District legislation. The Committee
expects this audit to be conducted by an independent consultant
well qualified to conduct such work. The Committee also expects
for the Board of the Water and Sewer Authority to be consulted
with and to accept the audit report for this matter and also
for the identification of WASUA spending over the years,
personnel, and equipment for which the Authority will be asked
to repay the District under the provisions of the District
legislation. This audit must also include the value of services
rendered to the District which were not paid for such as free
water service to the District government and any other such
items. Any disputes or disagreements between the Board and the
District government on these matters should be settled to the
satisfaction of both bodies. The Committee notes that it
retains both oversight and legislative power over the District
and the Water and Sewer Authority and that Congress must
approve the District and Water and Sewer Authority budget.
Therefore, any unresolved issues between the parties may be
subject to Congressional action.
The new Water and Sewer Authority being created is
independent, self-funded, and not in the General Fund of the
District of Columbia budget. H.R. 3663 therefore takes the
Authority out of the District's budget process. Other than
nominating and confirming Board members for the Authority, the
Mayor and Council will have no other role to play by way of
exercising influence over the Authority. While the Mayor and
Council may comment on the budget, they can not change it. It
is Congress alone that may change the Authority's budget under
H.R. 3663, and Congress alone will be authorizing and
appropriating the Authority's budget. As a necessary corollary,
the Authority will be exempt from the mid-year budget
reductions which may be ordered by the Mayor.
The Committee notes with favor that the Water and Sewer
Authority is not only allowed, but is mandated to develop its
own personnel and procurement systems. These provisions along
with taking the Authority off budget will overcome past
personnel problems caused by FTE caps and hiring freezes.
Getting the Authority out from under the District's cumbersome
and ineffective procurement system is expected to greatly
improve the efficiency and cost savings available through good
management and competitive bidding without an onerous overlay
of Council enacted set asides and special considerations. The
Committee expects the Authority to use its power in the area of
personnel and procurement to aggressively pursue the best
service at the lowest cost. The Committee included an amendment
to the District legislation (Section 5 of H.R. 3663) to clarify
that WASUA personnel transferred to the Water and Sewer
Authority will only have their compensation guaranteed until
the new personnel policy is put in place or until new labor
agreements are entered into. The Committee agrees to allow
transferred employees to maintain their compensation until the
new personnel system is implemented, but will not agree to
maintain employees compensation if their responsibilities or
classification are reduced under the new system.
In addition, the Committee supports the provisions of Act
11-201, as amended, which call for quick action on possible
contracting out of various parts of the operation and
maintenance of Blue Plains and the water and sewer pipes of the
District. The June 5 Council amendments together with consensus
language in HR 3663 allow the Authority, on its own, to
contract everything including general management of Blue
Plains. The only action which the Authority cannot take is to
sell or lease the entire Blue Plains Wastewater Facility, which
is appropriate because the District retains title to Blue
Plains and the Mayor and Council would have to approve a sale
or lease.
The question of the equity status of Blue Plains is left
unresolved. Since the Maryland and Virginia counties have
received EPA constuction grants and contributed them to Blue
Plains and have partly paid for capital projects through their
wholesale rate payments to the District there is disagreement
with the District's position that it has sole claim to an
equity interest in Blue Plains. This issue was not resolved by
the 1985 Intermunicipal Agreement (IMA) and has remained
unresolved and untested in the courts since then. The Committee
declined to resolve this complex issue legislatively at this
time. The asset equity question along with numerous other
important questions such as going to a true regional authority
and the potential inclusion of the Washington Aqueduct is to be
dealt with in a major Study. The study is to be contracted for
by the Water and Sewer Authority shortly after it is formally
set up. The suburban jurisdictions, through their
representatives on the Board, are to have substantive input in
writing the Request For Proposal, setting the parameters of the
Study, and reviewing and commenting on any draft Report before
it becomes final. The Committee expects the District government
to fulfill its committment to the other jurisdictions and to
the Congress on the Study.
Also, unspecified in the District or Congressional
legislation is an exact structure or list of issues on which
various components of the Board may vote. The Authority is
really a bi-fucated body since it is responsible for purely
District items (water and sewer pipes) and for considerable
joint use facilities; and because the Board will consist of
both District members and suburban members. The suburban Board
members may not vote on matters affecting purely District
issues, but may vote on all matters affecting the ``general
management'' of any joint use facilities. The Committee
understands that ``general management'' is a term of art in
this context and that this language has been agreed to by all
the parties. A similar question arises about bond issues since
bonds may be sold for purely District purposes and for joint
use facility purposes. Again, the Committee understands that
all the parties are aware of the issues to be dealt with by the
Water and Sewer Authority and are willing to work together to
resolve them. The Committee is aware that goodwill and comity
can easily overcome any lack of specifics in an organizational
charter while lack of those qualities can render inoperable the
best and most carefully designed structure. It is expected and
anticipated that the Board will work together, in its own self
interest, to resolve these questions in a friendly spirit of
regional cooperation. If the Authority is able to work together
to improve the operation of the area's largest environmental
facility then further efforts at this type of close regional
partnerships may become more prevalent.
The Committee is very pleased that the Council amendments
of June 5, 1996 guaranteed the complete fiscal independence of
the Water and Sewer Authority. By allowing the Authority to
collect its own revenues and deposit them directly with its own
trustee, the District government has removed itself from even a
pass through role in handling these funds and guarantees that
no District official, including the Council, may divert those
funds for other purposes. This is the most important feature in
signalling a true transformation in the District government
structure and delivery of services.
In the past the District government has acted cavalierly
towards its water and sewer system and too often has granted
unfortunate favors or special treatment to some at the expense
of the ratepayers. For instance, the Council has routinely
exempted churches and other tax-exempt organizations from
paying for water. Similarly, the District government does not
pay for water it uses in its faclilties. Large apartment
complexes cannot have their water shut off no matter how much
money they owe for water because the government does not allow
water service to be cut off for people who are not responsible
for paying the bills. Because of these and other actions of the
District government, there is currently an uncollected backlog
of more than $30 million in unpaid water bills. The Committee
takes special note of these issues and the fact that the
District legislation grants the Water and Sewer Authority power
to deal with each of them. The Committee strongly encourages
the Authority to require all users of water and sewer service
to pay their fair share, to be fair but tough about letting
individuals or businesses fall far behind in paying their
bills, and to charge the District government for its water and
sewer service or make an arrangement to offset and revenues
foregone. Only in this way will all ratepayers be able to feel
that they are asked only to pay for what they use and that they
are not subsidizing someone else who could afford to pay.
The Committee thanks Mayor Barry for his vision for
proposing such a radical transformation of the water and sewer
services of the District and for his willingness to include
voting members on the Board from other jurisdictions. This is a
major step forward in regional cooperation. City Administrator
Rogers has been both persistent and flexible in his dealings
with the other jurisdictions and with the Committee. He
deserves praise for reaching an agreement that all parties are
willing to participate in at least as an interim measure. The
Maryland and Virginia county governments on both the elected
official and staff levels have shown toughness and attention to
detail both large and small while maintaining a willingness to
keep the important objective of improving Blue Plains in mind.
The Committee hopes that this process and this legislation--
both Council Act 11-201, as amended, and H.R. 3663--are the end
of the beginning in protecting the environment, improving water
and sewer service for the Washington area, and a new spirit of
regional cooperation.
Concerns have been raised that since the Water and Sewer
Authority is only a creation of the District government, the
Council could amend the statue in the future in unfavorable
ways. The Committee observes that Congress retains ultimate
oversight and legislative power over the District and its
legislative acts by the Constitution and PL 93-198. All Council
acts must undergo Congressional review. Congress remains the
watchdog of the District. The Committee commits itself to
careful monitoring of the Water and Sewer Authority as it moves
forward. It will do anything it can to help or improve the
prospects of the Authority, and will be vigilant in looking for
problems or attempts to subvert the performance of the
Authority.
The Committee anticiaptes that when H.R. 3663 is considered
by the House there will be an amendment in the nature of a
substitute. This amendment consists solely of technical and
conforming changes and no policy changes are anticipated.
Therefore, pending unexpected amendments by the House or in the
Senate, this Report fully reflects the legislation which will
be passed and will not become irrelevant because it addresses
substantially different than that which becomes law.
Section by Section Analysis
Section 1: Short Title. The Act may be cited as the
``District of Columbia Water and Sewer Authority Act of 1996.''
Section 2: Permits the issuance of revenue bonds for
wastewater treatment activities. Currently, the District
Government does not have the power to sell revenue bonds for
water and sewer purposes, nor to provide that the revenues of
the Water and Sewer Authority may be used to pay off revenue
bonds for those purposes. Only Federal statutory law can do
this. After the District is granted this power it may (and in
this instance already has, in the form of its enacted law)
delegate that power to another District entity--in this case
the new Water and Sewer Authority. Thus, this Section amends
Section 490 of the Home Rule Act to allow revenue bonds to be
used for water and sewer purposes (Subsection (a)), allow Water
and Sewer Authority revenues to be used to pay for revenue
bonds (Subsection (b)), and permits the District to delegate
full power to sell bonds without further District Council
approval to the Water and Sewer Authority and to remove the
proceeds of bonds and funds obligated to secure or pay debt
service on bonds from the appropriation process (Subsection
(c)).
Section 3: Treatment of revenues and obligations. Removes
the revenues of the Water and Sewer Authority and the
outstanding General Obligation debt attributable to water and
sewer purposes from the calculation of the District's debt
service ceiling.
Section 4: Treatment of the budget of the new Water and
Sewer Authority. As the new Water and Sewer Authority is
independent, self-funding, and not in the General Fund, it is
thus appropriate to remove it from the regular budget process.
The Mayor and Council may comment on the Authority budget, but
can not change it. This is the same way the budget for the
courts is treated. Congress may change and must appropriate the
new Water and Sewer Authority budget. As an independent, self-
funded operation, the new Authority will be exempt from any
mid-year budget reductions ordered by the Mayor.
Section 5: Clarification of compensation of current
employees of the Department of Public Works. This is to conform
transferred employees to the new personnel system or to new
collective bargaining agreements.
Compliance With Rule XI
Pursuant to rule XI, clause 2(l)(3)(A), of the Rules of the
House of Representatives, under the authority of rule X, clause
2(b)(1) and clause 3(f), the results and findings for those
oversight activities are incorporated in the recommendations
found in the bill and in this report.
Budget Analysis and Projections
This Act provides for no new authorization or budget
authority or tax expenditures. Consequently, the provisions of
section 308(a)(1) of the Congressional Budget Act are not
applicable.
Cost Estimate of the Congressional Budget Office
The Committee was provided the following estimate of the
cost of H.R. 3663, as prepared by the Congressional Budget
Office.
U.S. Congress,
Congressional Budget Office,
Washington, DC, June 25, 1996.
Hon. William F. Clinger, Jr.,
Chairman, Committee on Government Reform and Oversight,
U.S. House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
reviewed H.R. 3663, the District of Columbia Water and Sewer
Authority Act of 1996, as ordered reported by the House
Committee on Government Reform and Oversight on June 20, 1996.
Based on information provided by the Joint Committee on
Taxation, CBO estimates that H.R. 3663 would have no direct
impact on the federal budget. Therefore, pay-as-you-go
procedures would not apply.
H.R. 3663 would:
authorize the issuance of revenue bonds, notes, or
other obligations by either the Council of the District
of Columbia, or if the Council delegates this
authority, by the District of Columbia Water and Sewer
Authority to finance water and wastewater treatment
facilities;
exclude certain estimated revenues and certain
estimated principal and interest payments from the
calculation of the amount of debt issuance available to
the District of Columbia;
require the Water and Sewer Authority to submit to
the Mayor each year its estimate of the necessary
expenditures and appropriations for the following
fiscal year; and
clarify the compensation of the current employees of
the District of Columbia's Department of Public Works.
H.R. 3663 would have no direct budgetary impact on the
federal government. The bill would remove from the District's
calculation of its available debt capacity both the estimated
revenues and the Water and Sewer Authority and the estimated
principal and interest payments on general obligation bonds
issued by the Water and Sewer Utility Administration within the
Department of Public Works prior to fiscal year 1997. Under
current law, the District cannot issue an amount of long-term
general obligation debt, other than refunding debt, at would
cause the estimated payment of principal and interest on the
District's total outstanding debt in any fiscal year to exceed
14 percent of the revenues estimated for the fiscal year in
which the debt would be issued. Thus, by excluding from this
calculation certain principal and interest payments, H.R. 3663
would likely result in the District issuing more general
obligation debt than it would under current law. The Joint
Committee on Taxation has determined that this change would
have no direct effect on federal receipts.
H.R. 3663 contains no intergovernmental or private-sector
mandates as defined in Public Law 104-4, and would impose no
direct costs on state, local or tribal governments.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is John R.
Righter.
Sincerely,
June E. O'Neill, Director.
Inflationary Impact Statement
In accordance with rule XI, clause 2(l)(4) of the Rules of
the House of Representatives, this legislation is assessed to
have no inflationary effect on prices and costs in the
operation of the national economy.
Changes in Existing Law
Clause 3 of rule XIII of the Rules of the House of
Representatives requires that any change in existing law made
by the bill, as reported, be shown with the existing law
proposed to be omitted enclosed in black brackets, new matter
printed in italic, and existing law in which no change is
proposed shown in roman type.
Committee Recommendation
On June 20, 1996, a quorum being present, the Committee
ordered the bill, as amended, favorably reported.
Committee on Government Reform and Oversight--104th
Congress Rollcall
Date: June 20, 1996.
Final Passage of H. R. 3663.
Offered By: Mr. Davis.
Voice Vote: Ayes.
Congressional Accountability Act; Public Law 104-1; Section 102(B)(3)
This provision is inapplicable to the legislative branch
because it does not relate to any terms or conditions of
employment or access to public services or accommodations.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3 of rule XIII of the Rules of the
House of Representatives, changes in existing law made by the
bill, as reported, are shown as follows (existing law proposed
to be omitted is enclosed in black brackets, new matter is
printed in italic, existing law in which no change is proposed
is shown in roman):
THE DISTRICT OF COLUMBIA SELF-GOVERNMENT AND GOVERNMENTAL
REORGANIZATION ACT
TABLE OF CONTENTS
* * * * * * *
TITLE IV--THE DISTRICT CHARTER
* * * * * * *
Part D--District Budget and Financial Management
Subpart 1--Budget and Financial Management
Sec. 441. Fiscal year.
Sec. 442. Submission of annual budget.
Sec. 443. Multiyear plan.
Sec. 444. Multiyear capital improvements plan.
Sec. 445. District of Columbia courts' budget.
Sec. 445A. Water and Sewer Authority budget.
* * * * * * *
TITLE IV--THE DISTRICT CHARTER
* * * * * * *
Part D--District Budget and Financial Management
Subpart 1--Budget and Financial Management
* * * * * * *
submission of annual budget
Sec. 442. (a) * * *
* * * * * * *
(b) The budget prepared and submitted by the Mayor shall
include, but not be limited to, recommended expenditures at a
reasonable level for the forthcoming fiscal year for the
Council, the District of Columbia Auditor, the District of
Columbia Board of Elections, the District of Columbia Judicial
Nomination Commission, the Zoning Commission of the District of
Columbia, the Public Service Commission, the Armory Board,
[and] the Commission on Judicial Disabilities and Tenure[.],
and the District of Columbia Water and Sewer Authority.
* * * * * * *
water and sewer authority budget
Sec. 445A. The District of Columbia Water and Sewer Authority
established pursuant to the Water and Sewer Authority
Establishment and Department of Public Works Reorganization Act
of 1996 shall prepare and annually submit to the Mayor, for
inclusion in the annual budget, annual estimates of the
expenditures and appropriations necessary for the operation of
the Authority for the year. All such estimates shall be
forwarded by the Mayor to the Council for its action pursuant
to sections 446 and 603(c), without revision but subject to his
recommendations. Notwithstanding any other provision of this
Act, the Council may comment or make recommendations concerning
such annual estimates, but shall have no authority under this
Act to revise such estimates.
enactment of appropriations by congress
Sec. 446. The Council, within fifty calendar days after
receipt of the budget proposal from the Mayor, and after public
hearing, shall by act adopt the annual budget for the District
of Columbia government. Any supplements thereto shall also be
adopted by act by the Council after public hearing. Such budget
so adopted shall be submitted by the Mayor to the President for
transmission by him to the Congress. Except as provided in
section 467(d), section 471(c), section 472(d)(2), section
483(d), and subsections [(f) and (g)(3)] (f), (g)(3), and
(h)(4) of section 490, no amount may be obligated or expended
by any officer or employee of the District of Columbia
government unless such amount has been approved by Act of
Congress, and then only according to such Act. Notwithstanding
any other provision of this Act, the Mayor shall not transmit
any annual budget or amendments or supplements thereto, to the
President of the United States until the completion of the
budget procedures contained in this Act. After the adoption of
the annual budget for a fiscal year (beginning with the annual
budget for fiscal year 1995), no reprogramming of amounts in
the budget may occur unless the Mayor submits to the Council a
request for such reprogramming and the Council approves the
request, but only if any additional expenditures provided under
such request for an activity are offset by reductions in
expenditures for another activity.
* * * * * * *
reductions in budgets of independent agencies
Sec. 453. (a) * * *
* * * * * * *
(c) Subsection (a) shall not apply to amounts appropriated or
otherwise made available to the District of Columbia [courts or
the Council, or to] courts, the Council, the District of
Columbia Financial Responsibility and Management Assistance
Authority established under section 101(a) of the District of
Columbia Financial Responsibility and Management Assistance Act
of 1995[.], or the District of Columbia Water and Sewer
Authority established pursuant to the Water and Sewer Authority
Establishment and Department of Public Works Reorganization Act
of 1996.
* * * * * * *
Subpart 5--Tax Exemption; Legal Investment; Water Pollution;
Reservoirs; Metro Contributions; and Revenue Bonds
* * * * * * *
revenue bonds and other obligations
Sec. 490. (a)(1) The Council may by act authorize the
issuance of revenue bonds, notes, or other obligations
(including refunding bonds, notes, or other obligations) to
borrow money to finance, to refinance, or to assist in the
financing or refinancing of, undertakings in the areas of
housing, health facilities, transit and utility facilities,
recreational facilities, college and university facilities,
college and university programs which provide loans for the
payment of educational expenses for or on behalf of students,
pollution control facilities, [and] industrial and commercial
development[.], and water and sewer facilities (as defined in
paragraph (5)). Any such financing or refinancing may be
effected by loans made directly or indirectly to any individual
or legal entity, by the purchase of any mortgage, note, or
other security, or by the purchase, lease, or sale of any
property.
* * * * * * *
(3) Any revenue bond, note, or other obligation, issued under
paragraph (1) shall be paid and secured (as to principal,
interest, and any premium) as provided by the act of the
Council authorizing the issuance of such bond, note, or other
obligation. Subject to subsection (c), any act of the Council
authorizing the issuance of such bond, note, or other
obligation may provide for (A) the payment of such bond, note,
or other obligation from any available revenues, assets, or
property (including water and sewer enterprise fund revenues,
assets, or other property in the case of bonds, notes, or
obligations issued with respect to water and sewer facilities),
and (B) the Securing of such bond, note, or other obligation by
the mortgage of real property (including water and sewer
enterprise fund revenues, assets, or other property in the case
of bonds, notes, or obligations issued with respect to water
and sewer facilities) or the creation of any security interest
in available revenues, assets, or other property (including
water and sewer enterprise fund revenues, assets, or other
property in the case of bonds, notes, or obligations issued
with respect to water and sewer facilities).
* * * * * * *
(5) In paragraph (1), the term ``water and sewer facilities''
means facilities for the obtaining, treatment, storage, and
distribution of water, the collection, storage, treatment, and
transportation of wastewater, storm drainage, and the disposal
of liquids and solids resulting from treatment.
* * * * * * *
(h)(1) The Council may delegate to the District of Columbia
Water and Sewer Authority established pursuant to the Water and
Sewer Authority Establishment and Department of Public Works
Reorganization Act of 1996 the authority of the Council under
subsection (a) to issue revenue bonds, notes, and other
obligations to borrow money to finance or assist in the
financing or refinancing of undertakings in the area of
utilities facilities, pollution control facilities, and water
and sewer facilities (as defined in subsection (a)(5)). The
Authority may exercise authority delegated to it by the Council
as described in the first sentence of this paragraph (whether
such delegation is made before or after the date of the
enactment of this subsection) only in accordance with this
subsection.
(2) Revenue bonds, notes, and other obligations issued by the
District of Columbia Water and Sewer Authority under a
delegation of authority described in paragraph (1) shall be
issued by resolution of the Authority, and any such resolution
shall not be considered to be an act of the Council.
(3) The provisions of subsections (a) through (e) shall apply
with respect to the District of Columbia Water and Sewer
Authority, the General Manager of the Authority, and to revenue
bonds, notes, and other obligations issued by the Authority
under a delegation of authority described in paragraph (1) in
the same manner as such provisions apply with respect to the
Council, to the Mayor, and to revenue bonds, notes, and other
obligations issued by the Council under subsection (a)(1)
(without regard to whether or not the Council has authorized
the application of such provisions to the Authority or the
General Manager).
(4) The fourth sentence of section 446 shall not apply to--
(A) any amount (including the amount of any accrued
interest or premium) obligated or expended from the
proceeds of the sale of any revenue bond, note, or
other obligation issued pursuant to this subsection;
(B) any amount obligated or expended for the payment
of the principal of, interest on, or any premium for
any revenue bond, note, or other obligation issued
pursuant to this subsection;
(C) any amount obligated or expended to secure any
revenue bond, note, or other obligation issued pursuant
to this subsection; or
(D) any amount obligated or expended for repair,
maintenance, and capital improvements to facilities
financed pursuant to this subsection.
* * * * * * *
TITLE VI--RESERVATION OF CONGRESSIONAL AUTHORITY
* * * * * * *
budget process; limitations on borrowing and spending
Sec. 603. (a) * * *
(b)(1) No general obligation bonds (other than bonds to
refund outstanding indebtedness) or Treasury capital project
loans shall be issued during any fiscal year in an amount which
would cause the amount of principal and interest required to be
paid both serially and into a sinking fund in any fiscal year
on the aggregate amounts of all outstanding general obligation
bonds and such Treasury loans, to exceed 14 per centum of the
District revenues (less court fees, any fees or revenues
directed to servicing revenue bonds, any revenues, charges, or
fees dedicated for the purposes of water and sewer facilities
described in section 490(a) (including fees or revenues
directed to servicing or securing revenue bonds issued for such
purposes), retirement contributions, revenues from retirement
systems, and revenues derived from such Treasury loans and the
sale or general obligation or revenue bonds) which the Mayor
estimates, and the District of Columbia Auditor certifies, will
be credited to the District during the fiscal year in which the
bonds will be issued. Treasury capital project loans include
all borrowing from the United States Treasury, except those
funds advanced to the District by the Secretary of the Treasury
under the provisions of section 2501, title 47 of the District
of Columbia Code, as amended.
(2) Obligations incurred pursuant to the authority contained
in the District of Columbia Stadium Act of 1957 (71 Stat. 619;
D.C. Code title 2, chapter 17, subchapter II), [and]
obligations incurred by the agencies transferred or established
by sections 201 and 202, whether incurred before or after such
transfer or establishment, and obligations incurred pursuant to
general obligation bonds of the District of Columbia issued
prior to October 1, 1996, for the financing of Department of
Public Works, Water and Sewer Utility Administration capital
projects, shall not be included in determining the aggregate
amount of all outstanding obligations subject to the limitation
specified in the preceding subsection.
(3) The 14 per centum limitation specified in paragraph (1)
shall be calculated in the following manner:
(A) Determine the dollar amount equivalent to 14
percent of the District revenues (less court fees, any
fees or revenues directed to servicing revenue bonds,
any revenues, charges, or fees dedicated for the
purposes of water and sewer facilities described in
section 490(a) (including fees or revenues directed to
servicing or securing revenue bonds issued for such
purposes), retirement, contributions, revenues from
retirement systems, and revenues derived from such
Treasury loans and the sale of general obligation or
revenue bonds) which the Mayor estimates, and the
District of Columbia Auditor certifies, will be
credited to the District during the fiscal year for
which the bonds will be issued.
(B) Determine the actual total amount of principal
and interest to be paid in each fiscal year for all
outstanding general obligation bonds (less the
allocable portion of principal and interest to be paid
during the year on general obligation bonds of the
District of Columbia issued prior to October 1, 1996,
for the financing of Department of Public Works, Water
and Sewer Utility Administration capital projects) and
such Treasury loans.
* * * * * * *
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SECTION 205 OF THE WATER AND SEWER AUTHORITY ESTABLISHMENT AND
DEPARTMENT OF PUBLIC WORKS REORGANIZATION ACT OF 1996
SEC. 205. DUTIES OF THE BOARD.
(a) * * *
* * * * * * *
(b)(1) * * *
(2) Department of Public Works employees whose salaries are
funded by the Water and Sewer Utility Administration shall
become employees of the Authority without impairment of civil
service status and seniority, reduction in compensation
(notwithstanding any change in job titles or [duties)] duties,
and except as may otherwise be provided under the personnel
system developed pursuant to subsection (a)(4) or a collective
bargaining agreement entered into after the date of the
enactment of this Act) or loss of accrued rights to holidays,
leave, and benefits. All employees of the Authority shall
perform their duties under the direction, control, and
supervision of the Authority; provided, however, that any
employee subject to transfer whose existing duties and
responsibilities are determined by the Authority and the
Department of Public Works to relate directly and primarily to
functions of the Department of Public Works, and for whom a
position at the Department of Public Works is funded in whole
or in part, shall remain an employee of the Department of
Public Works and shall continue to perform duties under the
direction, control, and supervision of the Department of Public
Works and not under funding arrangements thereafter derived
from the accounts of the Authority.