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Jubilee Housing, Inc. v. District of Columbia Water and Sewer Authority

June 07, 2001


Before Schwelb, Ruiz and Reid, Associates Judges.

The opinion of the court was delivered by: Per Curiam

Appeal from the Superior Court of the District of Columbia (Hon. Stephen E. Eilperin, Trial Judge)

Argued October 7, 1999

Per Curiam Opinion for the court.

Concurring opinion by Associate Judge Schwelb, at p. 5.

Dissenting opinion by Associate Judge Reid, at p. 9.

This petition for review challenges the District of Columbia Water and Sewer Authority's (WASA's) adoption of interim water and sewer rates in December 1996, shortly after it was formed to take over the duties of the Water and Sewer Utility Administration (WASUA). The events leading up to creation of the new entity and the course of agency proceedings that resulted in adoption of the interim rates are set out in Part I ("Factual Summary") of the dissent, which we incorporate by reference. We agree as well with the analysis, discussed in Part II of the dissent, that the Council of the District of Columbia by legislative enactment terminated the preferential water rates previously established for charitable organizations and churches, see former D.C. Code § 43-1545 (1990), and the preferential water and sewer rates for certain nonprofit housing organizations (such as appellant, Jubilee Housing , Inc.), see former D.C. Code § 43-1522. (b), 43-1522.5 and 43-1605 (a) (1990), and gave to WASA the authority to "collect and abate fees," D.C. Code § 43-1686 (a) (1998 Repl.), and, "following notice and public hearing" to "establish and adjust retail water and sewer rates," D.C. Code § 43-1686 (b) (1998 Repl.). *fn1 As discussed in Part III of the dissent, we conclude that the manner in which WASA adopted the interim rates complied with the emergency rule making procedures of the District of Columbia Administrative Procedures Act, D.C. Code § 1-1506 (c) (1999 Repl.). We conclude, however, that those procedures were not in conformity with the express statutory provisions in the WASA Act that require "notice and public hearing" before establishing rates. D.C. Code § 43-1686 (b). We therefore hold that the 1996 interim water and sewer rates were invalid and remand the case to WASA for further proceedings consistent with this opinion.

Did WASA establish and adopt rates in 1996?

It is undisputed that although WASA provided some notice on December 13, 1996 to the prior beneficiaries of preferential water and sewer rates of its intention to eliminate those preferential rates, it did not hold a public hearing prior to adopting the interim rates on December 19, 1996, to become effective December 27, 1996. Therefore, the remaining question is whether WASA's adoption of the interim rates on December 19, 1996 constituted the "establishment of rates" for purposes of D.C. Code § 43-1686 (b). We consider that the only answer is affirmative. Because the Council abolished the preferential rates to nonprofit housing organizations by legislation (indeed abolished all rates), effective 90 days after the initial meeting of the Board of WASA, see D.C. Law 11-111, § § 306, 601, there would be no rates in existence - for any consumers - as of December 27, 1996 unless WASA took action. That WASA did when, after it decided not to continue the policy of preferential rates for certain consumers on December 5, 1996, and thus established that appellants' future rates would not be preferential but on the same basis as those of other consumers, it adopted interim rates for all consumers on December 19, 1996. Particularly with respect to consumers such as appellants, which previously paid no or reduced fees for water and sewer services, the interim rates imposed a new obligation. That the rates were temporary in nature and were at the same level as those previously charged to paying consumers does not, in our view, exempt them from the statutory requirement that they be preceded by notice and public hearing. Unlike the Administrative Procedures Act, which expressly provides for emergency rule making, see D.C. Code § 1-1506 (c) (permitting emergency rule making, without the usually required prior notice and publication, if "necessary for the immediate preservation of the public peace, health, safety, welfare, or morals"), nothing in the legislation creating WASA and giving it the authority to "establish" rates "following notice and public hearing" similarly excuses these requirements in exigent situations. *fn2 Although we sympathize with the practical difficulties faced by a new entity busy with the task of organizing itself and adjusting to a new statutory framework, we cannot, in the face of express and unqualified statutory language, relax what the legislature has mandated. Any relief must come from that body.

Reversed and remanded.

Schwelb, Associate Judge, concurring:

I concur in the judgment and opinion of the court, but write separately to elaborate why, in my view, the decision of the trial court cannot be sustained.

WASA's governing statute provides that WASA may "establish" or "adjust" water and sewer rates following notice and a public hearing. See D.C. Code § 43-1686 (b) (1998). In my opinion, it was WASA, and not the Council of the District of Columbia, that "established" the current rates for non-profit organizations, including Jubilee Housing, and it did so, in violation of the statute, without the required notice or hearing.

In this case, as the trial judge found, WASA's Board of Directors met on December 5, 1996, and

decided that financial and policy considerations to accomplish the goal of delivering quality and efficient water and sewer services precluded the Board from offering discounted water and sewer services to the plaintiff organizations. (Emphasis added.)

It is undisputed that this decision was made without prior notice to Jubilee Housing, and without a public hearing. Nevertheless, WASA claims that its action did not "establish" or "adjust" rates for non-profit organizations, and therefore did not violate the requirements of § 43-1686 (b). In my view, WASA's position cannot be reconciled with the literal and common-sense meaning of the phrase "establish . . . rates."

Our dissenting colleague describes WASA's action as a decision "not to reinstate the legislatively repealed exemptions" for charitable organizations. Dissenting opinion, post, at [9]. Indeed, her defense of WASA's position is predicated upon the foregoing characterization of what the legislature did. But in 1996, the Council did not, in any meaningful sense, repeal the favored treatment which had been provided for charitable organizations. Rather, the Council prospectively abolished its own authority over water and sewer rates, and it then went on to repeal all existing water and sewer rates, both for "regular" customers and for "non-profit" entities such as Jubilee Housing; this repeal was to become effective ninety days after the first meeting of WASA's Board of Directors. *fn3 See Act, §§ 301-06, 601. *fn4

The Council further directed that "[t]he Authority shall . . . establish and adjust retail water and sewer rates." D.C. Code § 43-1686 (b). In connection with this directive, the Council provided, as I have previously noted, that rates were to be established and adjusted "following notice and public hearing." Id. Finally, the Council expressly transferred to WASA the power "[t]o determine whether . . . charitable organizations" should be "furnished with water and sewer service without charge." D.C. Code § 43-1673 (31). The legislature thus left to WASA the determination whether non-profit organizations, such as Jubilee Housing, should continue to receive more favorable treatment than other customers do with regard to water and sewer rates.

As contemplated by the Act, WASA undertook to establish rates for users, both for regular customers and for charitable organizations, before the existing rates expired on December 26, 1996. The minutes of WASA's Board of Directors during the autumn of 1996 reveal that the "elimination of exemptions or reductions in water/sewer bills for non-profit organizations and churches" was one of the "action items" at the Board's initial meeting on September 26, 1996. The issue was further addressed at subsequent Board meetings, and the Board's "Retail Rates Committee" was charged with the task of developing a position paper and a recommendation. Finally, on December 5, 1996, in conformity with a recommendation of the "Retail Rate Committee," the Board of Directors decided that effective December 26, 1996, non-profit organizations "will be billed the full rate for water and sewer services."

On December 13, 1996, WASA's General Manager, Larry King, sent a letter to Jubilee Housing in which he explained WASA's authority to make this decision and its reasons for having done so. Mr. King wrote that WASA's Board of Directors had "considered the matter of continuing allowances for water and sewer services for Non-Profit Housing Developments at [its] meeting on Thursday, December 5, 1996," that the Act "gave the Board of Directors the responsibility for determining whether free and discounted water allowances should continue," and that

after balancing the important financial and policy considerations surrounding the delivery of quality and efficient water and sewer services, the Board of Directors had no other alternative except to discontinue the free water allowance currently provided to you effective December 26, 1996.

In other words, as WASA's General Manager explained in his letter, the Authority had weighed the pros and cons of continuing to provide more favorable treatment for non-profit organizations, had decided against retaining such favored treatment, and had set, or established, Jubilee Housing's rates at the same level as "regular" customers would be required to pay. On December 19, 1996, WASA adopted interim rates for all consumers, and, in conformity with its decision of December 5, provided no exemption or preferential treatment for Jubilee Housing.

"Courts deal with the substance rather than the form of transactions." E.D.M. Assocs. v. C.G.M. Cellular, et al., 597 A.2d 384, 387-88 (D.C. 1998) (citations omitted). The focus is, or should be, on the "practical consequences of the existing situation," so that "important legislative policies" will not be thwarted on the basis of considerations not pertinent to the substance of the issue. Id. In this case, the substance of the roles played by the Council and WASA in establishing the rates applicable to Jubilee Housing is not difficult to fathom. The Council effectively washed its hands of the setting of water and sewer rates and conferred on WASA the responsibility for doing so. The Council specifically directed WASA to determine the appropriate rates for non-profit organizations. By transferring its authority on this issue to WASA without providing any ...

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