Federal government balks at paying D.C. sewer levy

By Jonathan O'Connell
Monday, July 5, 2010

A new storm water management fee is costing commercial property holders in the District, but the city's largest property owner and the instigator of the levy -- the federal government -- has suggested it is exempt.

In May, the D.C. Water and Sewer Authority began billing city property owners based on the amount of impervious surfaces they own to raise $2.6 billion needed to build a series of underground storage tunnels that will prevent sewage from being dumped into the Potomac River, Anacostia River and Rock Creek.

D.C. Water said it expected the federal government, as the largest property owner in the city, to owe $2.1 million in fiscal 2010, the first full year of billing, and $3.2 million in 2011, about 19 percent of what the utility needs to collect that year.

D.C. Water, formerly known as WASA, is mandated to improve the system by a federal consent decree it agreed to in 2003 after being sued by the Environmental Protection Agency and environmental advocates. Usually the city's wastewater is cleaned at the utility's Blue Plains treatment plant, but because its sewers combine rainwater with raw sewage, heavy rains can send untreated waste into the city's rivers.

George S. Hawkins, general manager of D.C. Water, says there are 80 to 90 instances of combined sewer overflows annually, dumping about 3 billion gallons of untreated wastewater into the rivers per year. The new tunnels, planned for beneath the Anacostia River and Robert F. Kennedy Memorial Stadium, would store overflow storm water until it can be treated.

The federal government is legally exempt from paying taxes on its land, and in April attorneys from the Government Accountability Office wrote D.C. Water to say that the new charges "appear to be a tax on property owners" from which it is exempt.

Hawkins disagrees, pointing out that the funds it is collecting "are raised only for this project, they are not used for anything else." If the government doesn't pay, he said, other property owners will have to fill the gap to pay for the storage tunnels. "We'll still have the bills coming due, and we'll have to cover those bills," he said.

That has both commercial property owners and environmental advocates fuming. "It becomes another unfair burden on the taxpayers of the District," said Merrick T. Malone, a former D.C. deputy mayor and current president of the D.C. Building Industry Association. "I think this may really be a case of where the left hand doesn't know what the right hand is doing," said Walter Smith, executive director of D.C. Appleseed, a local think tank.

Susan A. Poling, GAO managing associate general counsel, said the letter represented a "preliminary review." Its final decision is expected before the government receives its first storm water charge in October.

"I think our concern is the constitutional issue," Poling said. "So we're looking into it right now and we're in discussion with both the D.C. Water and Sewer Authority and also the D.C. Department of the Environment."

The discussion will be academic if Congress passes a bill by Sen. Benjamin L. Cardin (D-Md.) that instructs agencies not to consider storm water charges as taxes and to pay them. In May, Cardin wrote the Council on Environmental Quality, which advises the president on environmental issues, to ask that the government share the financial burden of addressing storm water pollution. His bill, which also reauthorizes and expands federal efforts to protect the Chesapeake Bay, was approved by a committee and sent to the Senate on June 30.

"The federal government has a responsibility, as a good neighbor, to pay its fair share to clean up the very pollution that it is causing," Cardin said in a statement.

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