59

‘Subcommines on the Dlatrict of Columba
Government Reform and

November 12, 1997

Privatization Study

WASAs enabling legilation (DC 11-111) included @ provision requiring he Board
‘of Directors to assess the feasibility, including the financial benefits, of engaging © pri-
‘ate ently to lease or purchase all or any portion of the Bive Plains Wastewater Treat-
ment Faciliy, In December of 1996, the Board reviewed an RFP for the privatization
study. Althe ime, we were encountering several other cntcal issues atthe Authonty that
required our immediate attention. This included the proposed rote increase, our nego-
‘nations withthe labor unions, hiring key staf, including the search for a permanent gen-
eral manager, and the eriheal oversight of our compliance with he myriad of mandotes
with EPA and WASA’s own internal operational standards. As such, the direct focus on
the privatization study was temporarily diverted. However itis ourintention to have the
RFP reevaluated and we anticipate awarding a contract before the end of he year

Regional Authority Study

WAS enabling legislation alzo mandated a study ofthe feasibility of making WASA
‘on independent regional authorty and fo make recommendations for the ongoing relo-
tionship of user junsdictions to the Authority. This study will be undaraken upon the
completion ofthe privatization study.

Appropriations Process

‘When the plan was designed for this new Authonty, © mojor tenet of the plan was
thot WASA would be modeled as @ public uly operation, and should operate by the
revenve it generates. Further, WASA should manage ts revenue through its own internal
processes. Becouse ofthe critical nature of our service delivery ond the vitally needed
rmiources we provide, WASA should not be subjected to the Disinct’s regulations and
budgetory process that are historically unique to the Distnct government and the Federal
‘government. The Authority requires additional flex
operate as a true business entity. As such, the Board plans to croft legislate agenda
cand then draft legislation to forward to the District of Columbia Council io amend our
currentlegal encumbrances. Our future success is threatened by the current appropria~

ity to improve service delivery ond

tions process. Simply put, under the current configuration, we cannot pay our bills, pur
chase materials and chemicals and hire staf at will. In order to operate as on indepen-
dent Authority, we must change the paradigm.


25

Issues to be resolved by further legislation include changing the
manner by which the Federal Government pays for the water it
consumes, the deeding of the property which the Authority is oper-
ating at Blue Plains from the Ditrict government to the Authority,
at no cost, and to set the Authority free from budget review by the
District's “Mayor and Council, and from oversight by the Control

joart

With regard to the last item, I hope that this past year and the
coming one will enable the Congress to see that the Authority has
a responsible board and responsive employees and that the addi-
tional oversight will not continue to be necessary, particular];
iar of the participation by the suburban members of the Aut! or.

of thank you for the opportunity to be here today to comment on
the progress of the Authority, and I would be happy to answer any
questions.

[The prepared statement of Mr. Griffin follows:]


COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
DAN BURTON, Indiana, Chairman

BENJAMIN A. GILMAN, New York HENRY A. WAXMAN, California

J. DENNIS HASTERT, Illinois TOM LANTOS, California

CONSTANCE A. MORELLA, Maryland ROBERT E. WISE, Jr, West Virginia

CHRISTOPHER SHAYS, Connecticut MAJOR R. OWENS, New York

STEVEN SCHIFF, New Mexico EDOLPHUS TOWNS, New York

CHRISTOPHER COX, California PAUL E. KANJORSKI, Pennsylvania

ILEANA ROS-LEHTINEN, Florida GARY A. CONDIT, California

JOHN M. McHUGH, New York CAROLYN B. MALONEY, New York

STEPHEN HORN, California THOMAS M. BARRETT, Wisconsin

JOHN L. MICA, Florida ELEANOR HOLMES NORTON, Washington,

THOMAS M. DAVIS, Virginia DC

DAVID M. McINTOSH, Indiana CHAKA FATTAH, Pennsylvania

MARK E. SOUDER, Indiana ELIJAH E. CUMMINGS, Maryland

JOE SCARBOROUGH, Florida DENNIS J. KUCINICH, Ohio

JOHN B. SHADEGG, Arizona ROD R. BLAGOJEVICH, Illinois

STEVEN C. LaTOURETTE, Ohio DANNY K. DAVIS, Illinois

MARSHALL “MARK” SANFORD, South JOHN F. TIERNEY, Massachusetts
Carolina JIM TURNER, Texas

JOHN E. SUNUNU, New Hampshire ‘THOMAS H. ALLEN, Maine

PETE SESSIONS, Texas HAROLD E. FORD, Jr., Tennessee

MICHAEL PAPPAS, New Jersey —

VINCE SNOWBARGER, Kansas BERNARD SANDERS, Vermont

BOB BARR, Georgia (Independent)

ROB PORTMAN, Ohio
KevIN BINGER, Staff Director
Dante. R. MOLL, Deputy Staff Director
WILLIAM MoscHELLa, Deputy Counsel and Parliamentarian
JupitH McCoy, Chief Clerk
Pum ScuILino, Minority Staff Director

SUBCOMMITTEE ON THE DISTRICT OF COLUMBIA
THOMAS M. DAVIS, Virginia, Chairman

CONSTANCE A. MORELLA, Maryland ELEANOR HOLMES NORTON, District of
ILEANA ROS-LEHTINEN, Florida Columbia
STEPHEN HORN, California THOMAS H. ALLEN, Maine
Ex OFFICIO
DAN BURTON, Indiana HENRY A. WAXMAN, California

RON Hamm, Staff Director
ANNE MACK, Professional Staff Member
ELLEN BRown, Clerk
Cepric HENDRICKS, Minority Professional Staff Member

ab


68

We will spend $10 million a year to clean and line 27 miles of
mains each year through fiscal year 2000, and we will be accelerat-
ing programs for cleaning and repairing the city’s catch basins.

An added benefit of this year’s flushing program, which was con-
ducted citywide, is that all 9,500-plus fire hydrants in the city have
been tested and evaluated. Approximately 95 percent of the hy-
drants are currently in full service. The Authority, in concert with
fire officials, is going through now and systematically looking at
the timing for replacement: and repair of the balance of the hy-

rants.

In the area of wastewater treatment, we will increase the base-
line staffing levels to reduce overtime and increase productivity
and make improvements in our system and also make the system
more accountable.

The lion’s share of the $1.7 billion in the 10-year capital program
goes to wastewater treatment and sewer programs.

Combined sewer overflow projects, we have proposed to spend
$109 million to design and build facilities to address combined
sewer overflows in the Potomac and Anacostia Rivers. We also have
received a $7 million planning grant from the U.S. EPA to study
and continue to address the combined sewer overflow problem.

For all intents and purposes, WASA does not at present have an
information and technology infrastructure or the people and equip-
ment to make one work. We propose to add staff and additional
technical contractor resources over the next 2 years to design and
begin to implement an information-technology and telecommuni-
cation systems to address critical areas such as financial manage-
ment, billing procurement, meter reading, maintenance, human re-
sources, telecommunications, operations, process controls and con-
sumer services.

We have contracted out our fleet maintenance operation in order
to control and manage operating costs and perform repair and
maintenance in a more timely and efficient fashion. The mainte-
nance of these functions is being handled by our newly created fleet
management operations. WASA’s fleet of 800 vehicles and varied
equipment is an average age in excess of 10 years. Over the next
3 years, we will be updating our existing fleet with newer, more ef-
ficient vehicles while reducing the size of this fleet by over 200
pieces.

In the summer of 1997, less than 50 percent of the fleet was
operational. Today we are proud to report that we have 74 percent
of the fleet operational, and by end of the year we project having
80 percent of the fleet operational. By the end of 1998, it is our ob-
jective to have this fleet operational and everything roadworthy in
the 90 percent range.

For all utility operations, long-term planning is essential to pro-
vide orderly maintenance, service delivery, growth and progress.

We have devised an ambitious yet absolutely critical capital im-
provements program. This long-term program will enable us to pro-
tect our assets, upgrade aging equipment and infrastructure, catch
up on a substantial amount of deferred maintenance, and introduce
new technology to assist us in meeting the environmental and reg-
ulatory mandates that we face.


79

Subcommittes on the District of Cobvenbla
Gevernmant Ratorm and Oversight Commition

November 12, 1997

October 3. Also, the FRMAA approved, on October 7, our financial advisory servicer
contract with Wheat Fist Butcher Singer and Ewing Capitol, Inc. We have also released
‘our request for proposals seeking bond underwriters and expect to make that selection
by early December,

10-Year Rate Projections

‘Our comprehensive capital program is the backbone of WASA’s plan to rectify the
withering eHects of age and deferred maintenance. Paying for this 10-year $1.7 billion
package in addition to covering our ongoing operating expenses obviously will require
rate increases. However, | am pleased to report that our projections indicate that we will
not have to raise rates in 1998 if the current proposal is adopted. We anticipate annual
rate increases averaging about 5 percent beginning in 1999.

Rate-Setting Policy

The rates we've projected follow an intemal review of WASA%s rate-setting policies
by the Board. This review led us fo establish a new philosophy for setting rates for water
‘and wastewater services. is simple and straight-forward: Each customer will be charged
for thote costs necessary to provide the service and rate increases will be predictable
cand gradual

WASA will apply this rate-sething philosophy in a practical and prudent mannerbased
con the following tenets:

+ The Authority will achieve @ postive net income and cash flow each year.

+ Current rates will cover current costs and will allow the utility to meet all bond cov-

enant requirements.

+ We will atempt to establish rates and fees based on the acival cost to deliver each
service. in 1998, we will take a comprehensive look at the components that make
up the rates themselves to determine whether there are better ways to package and
sell some of our services. This review will be accomplished through @ cost-of-bi
‘ness study lor every service WASA provides.

Rates will be based on annually updated 10-year forecasts of operoting and capital
budgets.

‘Once WASA achieves its required level of cash reserves, i wll establish a rate stabi-
lization fund or find other innovative methods to avoid “rate shock” and fo ensure
gradual and predictable rate increases.

A significant additional factor that must be considered os a part of the rate-setting
process is the financing cost of routine operations and our capital program.
Following are the basic financing elements we are proposing for WASA:
Establishing financial practices and policies that will lead to @ high-quality invest-

we


15

Mr. Chairman, Congresswoman Morella, Congresswoman Norton,
and Members of the Subcommittee:

It is a pleasure to be here today representing Prince
George's County, Maryland, and as an alternate member to the
Board of Directors of the District of Columbia Water and Sewer
Authority (WASA). It is most appropriate for us to be here
today, following the one-year anniversary of WASA’s first meeting
as the entity responsible for directing the administration of one
of the Nation's largest water and sewer plants.

Prince George's County has a vested interest in ensuring a
successful future for the Water and Sewer Authority and the Blue
Plains Plant in particular. Currently, 380,000 people--or more
than 52 percent of our population--are served by the plant
through the Washington Suburban Sanitary Commission. Every day,
more than 47 million gallons of sewage is sent to the plant from
the County.

I am pleased to report that in the sewer basins within
Prince George's County, we have adequate capacity for future
growth as well. One of our goals through this process is to do
everything we can to maintain and protect our future capacity at
Blue Plains.

One year ago, as the Board sat down for its first meeting,
the future was not particularly rosy. As you are all too aware,
the Board was faced with a monumental task, encumbered by an
aging plant, disaffected staff, inadequate funding sources, and
poor revenue collections. It was also challenged to meet various
consent orders mandated by the U.S. Environmental Protection
Agency.


14

Schecomenitten on the Dltrict of Colds
Qovernanent Refer and Oversight Commnitten

November 12, 1997

inspected, o new higher speed procedure wos used fo flush the water system, ond a newer
‘and more accurate drinking water sampling plan was put into practice.

Inthe post year, we have made significant progress in eliminating what water quality
‘experts describe os “cross connections.” These are situations where there is a possibility
that untreated water from one pipe could back up into an adjoining pipe carving reated
drinking water. Additionally, we have accelerated our programs for cleaning and lining
‘water mains, replacing valves, eliminating dead-end segments of water mains, and re-
habiltating reservoirs ond storoge tanks.

During the current fiscal year we will initiate construction projects to rehabilitate the
‘Good Hope Rd. elevated tank, the Fort Reno reservoir, and several projects to eliminate
dead ends and replace valves. In all, we will complete nine projects worth $11.4 mil-
tion. We wil also begin the design phate of projects to rehabilitate the Bryant Steet Pump-
ing Station, Fort Stanton Reservoirs | & Il, and the Brentwood Reservoir.

We will spend $10 million o year to clean and line 27 miles of mains each year
through FY 2000. During the same time frame we will olso replace about 800 valves.
‘Theve defective valves were discovered as we flushed out the system and undertook other
initiatives during the past year.

We are alto accelerating our programs for cleaning and repairing the city’s catch
bosins. In fiscal year 1996, we cleaned 14,364 catch basins. That figure climbed to
15,135 in FY 1997 and we forecast cleaning 16,500 in the 1998 fiscal year. We re-
paired 183 cotch basins in FY “96 and 420 in FY “97. We project repairs to 500 basins
inFY 98.

Fire Hydrants

‘An added benefit of this year’s flushing program-which was the most systematic
and comprehensive effort of it kind in the city’s history ia that every fre hydrant wos
tested and evaluated. The Authonity is responsible for the operation and maintenance of
opproximately 9,500 hydrants, providing vital support to the Dishes frlightors. Ap-
proximately 95 percent of the hydrants are currently in full service.

The Authority, in concert with city fire officials, has prioritized the remaining hydrants,
concentrating initial repair effort on hydrants in areas with limited coverage from other
hydrants and those requiring minor repair We are also systematically upgrading hy-
drants that have the remote possibility of back washing untreated water into pipes con-
taining drinking water, and those on dead-end segments of water mains.

«|


32

Mr. Horn. And their vote is equal? Nobody has figured out you
vote by the number of people you represent or anything? It is sim-
ply one person, one entity?

Mr. Errico. Right.

Mr. DuNCAN. That’s right, but Montgomery County gets two rep-
resentatives, Prince George’s gets two, and Fairfax gets one be-
cause of the dollars we are putting in.

Mr. Horw. So it is based on the contribution you made to the Au-
thority in its construction?

Mr. DUNCAN. Yes.

Mr. GRIFFIN. The one exception to that would be if it is a vote
strictly on a water issue as compared to sewer, then it is a vote
by the District members only.

Mr. Horn. I see. Seems to me that it is very clear that Mr. Dun-
can, I’m sorry, Mr. Johnson, as the administrator, ought to be an-
swering a lot of these questions, not you. On the other hand, you,
I think, and your mentors, should have the oversight authority, not
15 other committees put together, and get on with the work, and
that is your responsibility.

Now, let me ask you about the distribution system. Has any
analysis been made at the request of the Board in terms of the
quality of the distribution system for water and/or sewer, as the
case may be, once it feeds into or out of that processing plant? And
do we know about it?

I think that is the concern the average citizen has, at least the
average citizen in southeast Washington. I don’t know how they
feel in southwest Washington, but we are all drinking water out of
bottles around here. Of course, a lot of that is the Dalecarlia. Has
anybody ever analyzed—you are relatively new counties in terms
of explosion of population over the last 30 to 50 years. Washington
is rather established, since 1789, when only Georgetown was here
as a tobacco port, and Alexandria was across the river.

So who has analyzed the distribution system and to what extent
will this authority have anything to do with it, or is it strictly the
local entities’ obligation and you either take it from them or put
it to them one way or the other on either sewage and/or water?
How do we deal with that?

Mr. GRIFFIN. There is a significant amount of data that exists al-
ready, because this Authority needs to meet the requirements of
EPA, and I think Mr. McCabe will speak to that later this after-
noon, but the requirements are being met both in terms of water
and in terms of sewage.

The $1.7 billion capital program that is proposed for the next
year has been ramped up and will be ramped up as quickly as we
can to recognize the fact that there has been a lot of deferred main-

vnance over the last few years and that there is a lot of rehabilita-
tion that needs to take place.

I think we would all hasten to assure folks that we are doing the
right kinds of things and that the water is safe to drink.

ir. HORN. Well, how would you grade your respective counties?
Here we have Montgomery, Prince George’s and Fairfax before us.
Would you say that your distribution systems, do they predate the
Water and Sewer Authority or were they in conjunction with the
Water and Sewer Authority?


103

Puts us back in the mix that we don’t want to be in in the first
place.

Ms. NorTON. I don’t know where that stands now, but that is
something we are prepared to untangle too, very quickly.

In terms of new procurement regulations, Mr. McCabe, you spoke
about ,cumbersome procurement and personnel rules. What has
been the evidence of that from one sitting in your shoes?

Mr. McCaBE. Well, we have just perceived a cumbersome mecha-
nism which doesn’t promote the kind of efficiencies that I think Mr.
Rogers and Mr. Johnson are trying to bring about at WASA. Obvi-
ously from an oversight standpoint, we do have some oversight of
the operation of the facility in terms of whether it is meeting its
obligations under the permit, and we will continue to exercise that.
But I think that without WASA being tied to the old procurement,
old Personnel rules, they would be able to operate much more effi-
ciently.

Ms. Norton. You spoke about the functions that have not made
it to the Department of Health. I don’t know if there is council re-
sistance, because I think you, Mr. Rogers, or Mr. Johnson, testified
that you had had the requisite legislation over there for some time.
Is it just the process of getting to it?

Mr. RoGERs. No, I think that—the Environmental Regulations
Administration is a part of the Department of Consumer and Regu-
latory Affairs. Consumer and Regulatory Affairs was to be reorga-
nized as a part of the business services in economic development.
It is that reorganization plan that was not approved by council at
the end of last year. I think time ran out and it has not come up
for action by council this year. But the short cut to that is to simply
do a reorganization plan, moving Environmental Regulation out,
without fooling with the rest of it.

Ms. Norton. Yes, and I would advise that, if that could be done.
Mr. Davis and I are going to have to go before the Rules Committee
probably today on the D.C. budget, so I don’t want to prolong this

cause I think your testimony has been excellent, and has fully
informed us in light of our oversight responsibilities.

I congratulate you on recouping $3 million, I would like to know
for the record how much remains. I am concerned at the cutoff of
multifamily housing, even though I understand why you are doing
it. The only reason I am concerned—I mean, the cutoff of water is
if the water has not been paid. I am wondering if you have looked
at how other jurisdictions Tave done this in order to make a crisis
into yet another crisis. I certainly understand you have to do what
you have to do, and I am only asking that you look at best prac-
tices on how that is done in other places.

I note that you talk about a 5 percent increase beginning in
1999, and you think that is what it will be from then on. I am con-
cerned about knowing that far in advance that it is going to be that
large. I would like to know if that has to do with ing up for
what you did not collect this time. I recall that you were advised
that there should be a 78 percent increase; you came forward with
only a 42 percent increase, so you may still be catching up. If so,
of course, I would understand that entirely.

In light of the fact we have been able to change the share, I want
to encourage you to go to the bond market as soon as possible. I



39

In the area of the aqueduct, the Army Corps of Engineers contin-
ues to operate the Washington Aqueduct, which prepares the
drinking water for the city and many Virginia customers. Under
current law, the Corps is to turn over the operation of the aqueduct
within 2 years.

I want to stress the Corps’ current day-to-day operation of the
aqueduct is excellent and that the Corps can now borrow Treasury
funds for vitally needed capital improvements. Until the ownership
issue is settled, however, we will continue to be concerned about
this absolutely critical link in the preparation of drinking water for
the people who live in the District, Arlington and Falls Church, as
well as countless visitors to the area.

The last area of concern involves the reorganization of the Dis-
trict Government. Some of the key functions relating to the Clean
Water Act in the city fall under the jurisdiction of the Environ-
mental Regulation Administration in the District’s Department of
Consumer and Regulatory Affairs. Eighteen months ago, the Mayor
proposed to consolidate EPA’s functions in the Department of
Health. We worked extensively with top management there to pre-
pare them for all these functions, which ranged from air pollution
to hazardous waste management, as well as water pollution control
programs. EPA funds about 80 percent of the programs, so obvi-
ously we have a strong interest in how they are managed.

We fully support the move of these operations to the Department
of Health. We are quite frankly frustrated that they remain in
limbo. The failure of the District and Control Board to provide a
home for these functions virtually assures that they will continue
to lack the kind of leadership that is necessary to revitalize them.
This failure leaves a major gap in the effective implementation of
drinking water and wastewater operations for which WASA is re-
sponsible.

In a similar vein, there is an ongoing dispute between the city
and WASA concerning which entity has responsibility for the Dis-
trict’s stormwater sewer system. As you know, stormwater carries
vast quantities of contaminants into the city’s rivers. Efforts to
clean up the Anacostia in particular will continue to be hampered
until we can sort out who is in charge here and how can we meet
the enormous financial hurdles of this ubiquitous urban problem.

The Authority, the Congress and EPA have worked collabo-
ratively to put the crises of the last year firmly behind us. We still
have a lot of hard work ahead of us. Clearly WASA is on solid foot-
ing and continued progress can be expected. The important impedi-
ments to the effective functioning of the new Authority lie just be-
yond the organizational structure of the Authority itself. The future
of the Washington Aqueduct is key, as I mentioned, in ensuring
safe and clean drinking water for both the District and residents
of Arlington and Falls Church.

Similarly, the effect of reorganization of the city’s environmental
functions is critical. We stand ready to continue working with you,
WASA and other stakeholders to address the remaining issues that
could derail the substantial progress that has been made over the
past year.



> Zz > [= = cz
SSCCCCUOOCCCOSCCOCCOCECTOSTESS:
See eee CERES ERSEKSSRKESSRSRSRRRRRRAS

wres8o1g UoR>>]UISIG
wro pasinay I

wiesBorg Surysnyg
feuonpasiprus)
-urayshg Jo oy

sé-uer

(2661 ysnBny - S66} Auenuer)
wayshg UONNGHISIG "DC BY} Ul SOANISOg-UWUO}1109 [e}OL JUadIEd AJYWUOW,

oz

+L % AlUUOW


35

Mr. DUNCAN. Whatever you say, Mr. Chairman.

Mr. Davis. You agree to that?

Mr. Duncaw. I think, as was mentioned, the District representa-
tives voted on the water rates and took a very, very courageous
ste}

Mr. Davi. Yes, they did.

Mr. DUNCAN [continuing]. In increasing them to the level they
did. But it really put WASA on real sound financial footing. It was
something that was tremendously needed.

Mr. Davis. So, basically, you are comfortable with what the
mechanism is?

Mr. DUNCAN. Very comfortable. I think the mechanism was
working. There was concern that money was being siphoned off and
spent elsewhere. That is not occurring anymore and that issue has
been resolved.

Mr. Davis. OK. I would agree with Ms. Norton to this extent, to
the extent these decisions are not final and they have to come back
before Congress in an appropriations bill, it is harder to get tough
decisions out of the city, out of everybody else. So that is a good
reason for taking it out of that. We still have oversight responsibil-
ity if something goes wrong.

But for the most part we have every confidence, and the first
year shows the people on there have the best interest of the region
at hand, and I think the degree of cooperation between WASA and
your counties has been very good, is what I am hearing in the testi-
mony here. Probably surpasses my expectations when this started.
So you deserve a lot of credit, as well as the initial board and ev-
erybody pooling together and recognizing we had an opportunity to
do.something positive for the region and everybody benefits, Mont-
gomery County, Prince George’s County, Fairfax County and the
District. So my congratulations to all of you. I appreciate your
being here today and for the leadership that all of you have shown
in your respective jurisdictions. We appreciate it.

Mr. DuNCcAN. Thank you. May I make one final comment?

Mr. Davis. Please.

Mr. DuNCAN. As Ms. Norton said, this is a good news day, and
there is a lot of good news that you will hear today. There has been
tremendous accomplishments made over the past year, and I just
want to make sure that I, and we, leave with that thought; that
some of the issues that we have raised are ones that can be worked
out cooperatively. We are committed to regional cooperation and
solving these problems together, and I think that is an important
point to be made, too.

Mr. Davis. Thank you very much. Ms. Norton, you get the final
word here.

Ms. NorTON. As you depart, I just want to say to Mr. Davis that
the last thing we want to do is to subject Maryland and Virginia
to the same kind of oversight the District has from the Congress,
so I think that——

Mr. Davis. She is always looking out for me. I appreciate that.

Ms. Norton. So I am hoping to get some allies on the question
of your oversight.

d let me just say, particularly in light of how well you have
worked together, I want to associate myself with the chairman’s re-


67

Mr. Davis. Mr. Johnson.

Mr. JOHNSON. Good afternoon, Chairman Davis, members of the
subcommittee, ladies and gentlemen of the audience. I am Jerry
Johnson, general manager of the District of Columbia Water and
Sewer Authority. I thank you for inviting us here today to testify
before the committee and welcome the opportunity to discuss man-
agement’s plans for implementing the Board's vision for the Au-

jority.

When I became general manager of WASA in June of this year,
I was fortunate to be entering a situation in which the need for
change had been recognized and the plan was in place. WASA’s
new board of directors had provided critical guidance and much
work had already been started. My assessment in June was that
WASA was on the right track, but that significant organizational
and operational changes still were needed within the organization.
These changes include taking steps to put the utility on sound fi-
nancial footing, advising and implementing a plan to take advan-
tage of technological advances, making organizational and oper-
ational changes to improve service delivery, making a comprehen-
sive assessment of major capital needs, and making a comprehen-
sive assessment and evaluation of staff capacity to deliver the serv-
ices WASA is charged with delivering.

We have begun to make these changes, but they will take some
time and WASA is cl ing its course with all deliberate speed. In
recent months we have hired some major players for our manage-
ment team. We are now focusing our efforts on several other criti-
cal positions, including general counsel, directors of human re-
sources, procurement, and information technology, an internal
auditor and permanent bureau chiefs for Water Services, Mainte-
nance Services and Sewer Services. We expect to have offers for all
of these positions made by the end of this year.

Our revised fiscal year budget for 1998, which is currently being
considered by the board, reflects an overall $41 million cost reduc-
tion from the budget as originally submitted. We project a bottom
line cash surplus that will be transferred directly to cash reserves
of $20 million. This is $21 million more than the $1.3 million defi-
cit that was originally projected for 1998. These revised budget
numbers put us on track for establishing a $90 million cash reserve
by the end of fiscal year 1999.

Our proposed fiscal year 1999 budget is similarly conservative in
its approach. The proposed staffing levels in our revised fiscal year
1998 budget is 1,344. This is a reduction from the original budget
of 164 positions. We are also conducting a comprehensive pay and
classification study for all WASA employees to bring them more in
line with the market.

With regard to contracting for services versus in-house staff, I
am committed to carefully and systematically examining each com-
ponent of the organization to determine its viability for private sec-
tor involvement through managed competition.

In order to continue the progress we have made in improving our
water distribution system during the current fiscal year, we will
initiate construction projects to rehabilitate storage tanks and res-
ervoirs within the city. We will also design several projects for con-
struction and repairs to be completed in the years 1999 and 2000.


104

am very encouraged by what yu may find there, and I want to as-
sure you that Mr. Davis and I will work to make sure that the Fed-
eral Government pays on time and not with a preference schedule
that is not available to other customers.

Thank you very much, Mr. Chairman.

Mr. McCasBeE. Ms. Norton, I didn’t realize that you were going to
move so quickly and get beyond the issue of the reorganization,
which I would like to just make one comment on. Obviously Mr.
Rogers knows much more about the intricacies of how the District
government works or doesn’t work relative to the Control Board
than I do. But my understanding is that the reorganization really
is being held up by the Control Board now, that there were compet-
ing studies conducted for different members of the Control Board,
and that they reached different conclusions. And that has been
part of the reason that the ERA functions have not transferred,
and in fact, that some functions that are proposed to not be trans-
ferred at all would be kept in the old regulatory affairs part of the
government.

Ms. Norton. Well, they now are mandated from the Congress
that has moved them forward because the city had been so slow in
management reform. We will contact the Control Board, both for
that reorganization, and it looks like the Control Board holds up
these contracts more than others, and we will also make an inquiry
and make it perfectly clear that we want that, that we want those
bottlenecks removed.

Can I say, Mr. McCabe, I appreciate your willingness to hold reg-
ular town meetings with me on water supply and on the Anacostia
and I look forward to being able to hold another one, hopefully in
early December.

Mr. McCaBE. I look forward to it.

Mr. Davis. Mr. Horn, any questions?

Mr. Horn. Thank you very much, Mr. Chairman.

I commend all three of you for your testimony, and particularly
ou, Mr. Johnson. I have read your report, it is a very thorough,
onest report. You have got a number of problems ahead of you.

The question is, how can we be helpful in this subcommittee as
well as in Congress as a whole?

What concerns me is that to get something done in the schools
here, we have to have a Federal court order, and I would hope we
don’t get to that in water and start in on where I am coming from.

I am curious about how much of your total budget is funded by
the recipients of water sewage services, and what, if anything, is
contributed beyond what the ratepayers are providing in terms of
the surrounding counties or the District of Columbia government or
the Federal money, if at all.

Mr. JOHNSON. Well, I don’t have those very specific numbers in
front of me, Mr. Horn. With respect to the wastewater treatment
plant, about 47 percent of that is funded by the surrounding juris-
dictions in terms of capital costs, and I believe there is a com-
parable number for operating that tends to parallel their utilization
of Blue Plains as a facility.

The entire water distribution and wastewater distribution and
wastewater collection system in the District of Columbia is paid b:
the District of Columbia ratepayers, with the exception of some dol-


45

“5.
- Procurement and Personnel Rules

WASA continues to operate under the cumbersome procurement and personnel
rules of the District of Columbia. New rules are in the works, but until they are fully
implemented (and any potential legal hurdles overcome), the EPA will continue to be
concerned about WASA’s ability to respond in a timely and efficient fashion to
emerging issues or unforeseen problems.

Preventive Maintenance

Much of the infrastructure that WASA operates is very old -- some of the pipes
date back to the Civil War era and even many of the major components of the Blue
Plains facility are nearing the end of their useful lives. Preventive maintenance is
especially important with these older systems, and it is an issue we have raised with
WASA on a number of occasions. While the Authority is busy with major new capital
projects, its is vital that there be a commitment from WASA's leadership to the less.
exciting, but no less important, tasks of daily and routine preventive maintenance.

Disposition of the Aqueduct

In the complicated arrangement that has developed over time, the Army Corps of
Engineers continues to operate the Washington Aqueduct, which prepares the drinking
water for the City and many Virginia customers. Under a provision of the Safe Drinking
Water Act amendments of 1996, the Corps is to turn over operation of the Aqueduct to
a non-federal entity within two years. I want to stress that the Corps’ current operation
of the Aqueduct is excellent. The Congress has granted the Corps the unique ability to.
borrow Treasury funds so that it can go ahead with vitally-needed capital
improvements. Until the ownership issue is settled and any new operator has
demonstrated an equally high level of performance, however, we will continue to be
concerned about this absolutely critical link in the preparation of drinking water for the
people who live in the District, Arlington and Falls Church as well as countless tourists
who visit annually.

Reorganization of District Government

Some of the key functions relating to the Clean Water Act in the City fall under
the jurisdiction of the Environmental Regulation Administration (ERA) in the District's
Department of Consumer and Regulatory Affairs. Eighteen months ago the Mayor
proposed to reorganize a number of City functions, and his new plan called for ERA’s
functions to be consolidated in an environmental health administration in the
Department of Health. We have worked extensively with top management in the
Department of Health to prepare them for all of these functions, which range from air
pollution to hazardous waste management as well as water pollution control programs.
We fully support the move of these operations from DCRA to the Department of Health,
but are quite frankly frustrated that the City’s remaining environmental functions remain
in limbo. The failure of the District and the Control Board to provide a home for these
functions virtually assures that they will continue to lack the kind of leadership that is,


necessary procurement regulations and intemal procedures required to implementa first.
rate procurement system,

‘We are making majorchanges to current procurement practices. Among other things,
‘wo will establish a centrolized unit fo procure materials for inventory, allowing bureaus
‘and offices to buy directly from this unit. We intend to improve and administer a com-
prohensive supply management and fixed-asset program to manage supplies, materials
‘and equipment to support the administrative and maintenance operations.

We hava made considerable progress in our efforts to conform our procurement poli-
ies to generolly accepted industry standards. For example, wa now require competitive
bidding on almost every contract. In fact, we did not award a single sole-source con-
struction contractin fiscal yeor 1997.

‘An outside firm is evaluating the regulations we have crafted. When that review is
complete, in mid-December, we will forward the regulations to the District's Corpora
tion Counsel to determine legal suficiency. Once that review is complete we will publish
the regulations in the DC Register. Following the required review and comment period,
‘we expect to present the regulations to WASA’s Board at its March 1998 meeting.

Overtime: We hove analyzed the amount of overtime being charged by WASA em
ployees and believe itto be greater than required. Pat ofthis will be reduced as we hire
staff to fill vacant positions. Part of it will be reduced by lighter procedures and better
planning. Part of it will be reduced by re-aligning certain contractor functions.

We have already pul into place the first phase ofthe procedures lo accomplish these
‘goals. | have required all overtime to be classified ax either planned or amergency

Planned overtime covers the vast majonty of the everime WASA is ineuring and in-
cludes overtime due to stafing shortages and overtime to meet known deadlines. Planned
‘overtime must be approved in advance by WASA's CFO os pat of @ monthly overtime
plan.

Actual dollars spent on overtime in 1996 was $9.5 million and in 197 it wos $8.8
rillion. Projections for 1998 are $7 million and for 1999 the estimate is $6.5 million,
which is about 10 percent of salary--a reasonable level fora utility that operotes 24 hours
0 day, seven days « week

Emergency overtime is that which cannot be anticipated and therefore cannot be
approved in advance. This type of overtime accounts fora very small percentage of the
‘overtime WASA has been incumng. Bureau chiefs have been instructed fo submit monthly
overtime plans and to report emergency overtime to the CFO within 24 hours

Inaddition to these changes, we are cutting overtime costs by adhering more closely
to provisions ofthe Foir Labor Standards Act.

Contractor Evatuations: We are entrusted with ratepayer resources ond are ex-
pected fo be responsive and perform in a responsible manner. Patt ofthis responsibilty

.


8

Both of these provisions hamper the timely action of the Author-
ity, particularly if the regional partners or Federal agencies provide
fonding to address an operating requirement. These provisions, it
is my understanding, were added without prior notice or consulta-
tion.

Mr. Davis. Let me just add, were those in the House bill, as far
as you know?

Mr. DUNCAN. That is my understanding, yes, sir.

Mr. Davis. Hopefully we have taken care of that, but we appre-
ciate your putting that on the record.

Mr. DUNCAN. The procurement and personnel regulations con-
tinue to be tied to the laws of the District of Columbia. The objec-
tive was to formulate separate personnel and procurement regula-
tions reflective of a modern, streamlined public utility. WASA, how-
ever, still is considered an agency of the District and these regula-
tions needs to comply with District law. There is concern the regu-
lations will not provide the flexibility and timely action common to
similar regulations for independent public utilities.

In summary, much has Been accomplished over the past year.
Significantly more progress is anticipated over the next years.
Building upon the strong foundation of the 1985 InterMunicipal
Agreement and the demonstrated regional cooperation and partner-
ship of the WASA Board, we see the need to move W. to the
next plateau, which is an independent regional authority.

I look forward to the cooperation of Congress and the res jive
legislatures of the District, Virginia and Maryland in establishing
an independent, interstate authority. I want to thank you again for
the opportunity to testify and to hear the testimony of the other

el members. We will be happy to answer any questions you may

ive.
[The prepared statement of Mr. Duncan follows:]


STATUS OF THE DISTRICT OF COLUMBIA
WATER AND SEWER AUTHORITY

WEDNESDAY, NOVEMBER 12, 1997

HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON THE DISTRICT OF COLUMBIA,
COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT,
Washington, DC.

The subcommittee met, pursuant to notice, at 2:05 p.m., in room
2247, Rayburn House Office Building, Hon. Thomas M. Davis
(chairman of the subcommittee) presiding.

Present: Representatives Davis, Horn, Norton, and Allen.

Staff t prggent: Ron Hamm, staff director; Howard Denis, counsel;
Anne Mack, professional staff member; Ellen Brown, clerk; and
Cedric Hendricks, minority professional staff member.

Mr. Davis. Good morning, and welcome. Let me just start by say-
ing this is not one of Washington’s tourist attractions, but the Blue
Plains Wastewater Treatment Plant is the largest of its kind in the
United States. It is the region’s most significant environmental fa-
cility.

Let me note we have eight students in the back from Ben Frank-
lin High School from New Orleans, and they are participating in
the Close-up program, and we appreciate you all being here today.

Most all Federal facilities in a three branches of governments,
plus around 2 million residential users in Virginia, Maryland and
the District depend upon Blue Plains. It treats an average 325 mil-
lion gallons a day on 154 acres in southwest Washington. A col-
lapse of Blue Plains, which seemed possible last year, would be an
ecological catastrophe.

As recently as September 1995, the EPA warned of a very real
possibility that raw sewage would flow into the Potomac because
of serious shortcomings at Blue Plains. But since the new Water
and Sewer Authority came into existence on October 1, 1996, there
have been no EPA violations, and there have been no more boil-
water alerts. We have thus taken a giant step forward in providing
the region the essential service of clean abundant water at a rea-
sonable price and the sewage treatment which must go with it.

This subcommittee can be proud that we have played a leading
role reversing many dangerous trends at Blue Plains. We did it by
working cooperatively in a bipartisan fashion with the city, the
suburban user jurisdictions and the Federal Government.

We now want to review the current situation at Blue Plains
under the new Water and Sewer Authority, evaluating existing
concerns, and looking to the future with practical solutions.

ce)


42

-2-

There are several reasons for optimism. The Environmental Protection Agency
has taken a very active, some might even say aggressive, role in addressing the
problems that have plagued these operations in recent years. We have taken a series
of legal actions, requiring major changes in the way the City conducts its drinking and
waste water operations. We put together a highly skilled team of national experts, with
able assistance from the U.S. Army Corps of Engineers’ Washington Aqueduct
Division, to work specifically on the drinking water crisis of the summer of 1996. At that
time, members of my staff took samples of the District's drinking water every day and
analyzed them at our laboratory in Annapolis. We ran a consumer hotline, updated
daily in both English and Spanish, to provide District residents with timely, accurate
information that they could trust about the quality of the drinking water coming out of
City taps.

The Congress, too, deserves credit for taking important steps to address these
issues. This Subcommittee helped bring the problems into clear focus during the
course of the hearings you held last year. Legislation you authored, Mr. Chairman, was
essential in giving the newly-established Water and Sewer Authority the ability to go to
the bond market to raise the capital funds it will need for long-term viability. The
behind-the-scenes efforts both the Chairman and Ms. Norton undertook to craft an
independent authority that could garner the political support of both the District of
Columbia and the suburban user jurisdictions was critically important, although little
recognized. In addition, the 1996 Safe Drinking Water Act Amendments established a
special grants program for the District that resulted in the critical infusion of $12.5
million last year. Another estimated $7.2 million will be available in FY98 for capital
investments. The Congress also provided a special $1 million appropriation in FY97
for an overdue program to flush the City’s drinking water distribution system. Finally,
just last month the Congress approved a measure, authored by Ms. Norton, that will
temporarily lower the local match requirements for waste water construction grants for
the Water and Sewer Authority, thus enabling them to begin work immediately on 19
major projects at Blue Plains for a total cost of about $97 milion.

While the EPA and the Congress both deserve credit for the significant
improvements that have occurred during the last year, a great deal of the credit
belongs to the Water and Sewer Authority itself. In its first year of existence, the
WASA Board of Directors has worked well: in selecting a top-notch management team,
in developing more detailed and intelligent long-term financial plans, and in making
politically difficult decisions ranging from setting rates to establishing priorities. The
Authority's operational leadership team now consists of a new General Manager, a new
Chief Financial Officer, and a new Chief Engineer. These three have provided a
refreshing degree of professionalism and, along with other staffing changes, have had
a significant positive impact. Perhaps most importantly, the Authority has done a good
job of rolling up its sleeves and getting to work on an enormous backlog of neglected
maintenance and past failures to properly invest in its infrastructure.


73

Sebcommities on the District of Columbia
‘Government Bstorm and Oversight Comustion

November 12, 1997

Staffing

The proposed staffing level for our revised FY 1998 budget is 1,344. This is a re-
duction from the original budget of 164 positions. We will accomplish this through or-
ganizational efficiencies, automation and the reallocation of staff in specified areas. For
proposed staff growth, we will take the time to seek and hire the best qualified persons
ovailable.

‘We are also going to conduct a compensation and classification study for all WASA.
employees in FY 1998. Under the current system, ther is wage compression in tome
areas; employees are overpaid in some instonces and underpaid in others. There are
also far too many individual classifications within the organization for us to maximize
‘our effectiveness. The compensation ond classification study will be the first step in ad-
dressing many of there inequities

Additionally, | have proposed that we place two percent of WASA's total salary in a
“pool” for konuses bared on performance. We will develop uidelines for this program
during 1998.

With regard to contracting for services versus use of in-house staff, ! om committed
to carefully and systematically examining each candidate component of the organiza-
fion to determine its viabiliy for private sector involvement. We mutt fist benchmark
‘ourselves to ensure that we have achieved maximum efficiency ond are conducting our
business achvities in the most cost effective manner. Once candidate functions ore iden-
Jilied, and maximum efficiency plons are established, we will then look at managed com-
petition in some areas in order to facilitate the absolute best service for the least cost
cond ik.

Drinking Water Quality

Inthe fall of 1996, the District of Columbia had just experienced three straight months
of drinking water tests that revealed coliform bacteria in excess of federally prescribed
limits. While no harmful bacteria were ever detected during this period, there was a public
perception that the city’s water quality distribution system wat in serious trouble,

Forthe past 14 month tet results for total coliform--the most closely watched ba-
rometerfor drinking waler quality-- have remained safely within federal guidelines. EPA's
‘administrator for Region It, which has oversight of WASA, proited this tumaround. While
noting much work remains to be completed, given the age and condition of the infra-
structure, Administrator W. Michael McCabe declared ot a recent press conference that
WASA had, indeed, tumed the comer.

‘The dramatic improvement in drinking water quality can be attributed, in part tothe
fact that forthe first time all city reservoirs and water storage facilities were cleaned and

.


82

Sebcommtace on the District of Cobia
Covernanend Rater and Oversight

November 12, 1997

Protecting the Environment

During WASA’s transition to relative autonomy, the Authority has managed fo com-
ply with all of its federal mandates and agreements. This stellar record of compliance
‘extends, on the distribution side, to the requirements of the Safe Drinking Water Act. On
the treatment side, it includes compliance with the Blue Plains operating permit under
the Clean Water Act, and to an EPA consent decree and an EPA stipulated agreement,

‘As | mentioned earlier, we have been in compliance with coliform limit-the most
closely watched barometer for drinking water quality--rince September of 1996. The fed-
‘rally prescribed limit for postive distribution system samples is 5 percent. Inthe sum-
mar of 1996 we averaged 10 percent. Inthe summer of 1997 we averaged } percent.

We are proud of these accomplishments. But compliance is‘only the frt step. We
‘are moving beyond mandates to taking proactive role in ensuring that we deliver clean
water to our customers and retum clean water to the Potomac River.

Acomprehensive water conservation program is a vital part of WASAs mission. Con-
‘servation benefits our customers directly by reducing the size of their bills. Operation.
ally, the effective management of water reduces the intake at Blue Plains, which reduces

costs. We will continue and ours [public education programs,
ineluding our popular plumbing clesses. We have provided do-it-yourself raining bo more
‘than 200 customers. Another 100 have signed up for classes we'll be conducting over
‘the next few months.

WASA has ongoing commitments and working ogreements with o variety of govern-
mental entities-most prominently with Congress and the EPA

But we also have relationships with the Council of Governments, the District's chief

officer the DC Financial ibility and Authority,
‘the Washington Aqueduct and our partner in the Intermunicipal Agreement /Potomac
Interceptor Group. Over the past year, we have worked tirelessly to strengthen these re-
lationships ond instill confidence in our operations ond future plane. Those efforts are
bearing fruit.

‘Our relationship with the Environmental Protection Agency is excellent. We hove

ac of trust--exemplified moet by the i we've
mode in the District's drinking water and ovr. with Plant
mandates--that serves both institutions well,

‘Asyou know, all grant money WASA applies for ond receives is money that would
otherwise have to be provided by our customen.

Because we have demonstrated our commitment and ability to cory out our federal
mandates, EPA requested, ond Congress possed, © provision increasing 10 BO percent
the portion of total project corts funded by grants, thus reducing WASA‘s burden to 20
percent. The match has varied over the years from 55 - 75 percent. [From 1988 %0 1997,



STATUS OF THE DISTRICT OF COLUMBIA WATER
AND SEWER AUTHORITY

HEARING

BEFORE THE

SUBCOMMITTEE ON THE
DISTRICT OF COLUMBIA

OF THE

COMMITTEE ON
GOVERNMENT REFORM
AND OVERSIGHT
HOUSE OF REPRESENTATIVES

ONE HUNDRED FIFTH CONGRESS
FIRST SESSION

NOVEMBER 12, 1997

Serial No. 105-124

Printed for the use of the Committee on Government Reform and Oversight

a

U.S. GOVERNMENT PRINTING OFFICE
48-958 CC WASHINGTON : 1998

For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402

ISBN 0-16-057129-4
0 He



108

of the District has shown a willingness to work with the staff at
WASA so that our procurements are not held up.

If WASA can get its own house in order with respect to develop-
ing clear statements of work, if we have the capacity to develop
statements of work and go through a procurement process, includ-
ing award, et cetera, and evaluation, within 30 to 45 days, then
certainly the continuation of the process through approval by the
Council or the chief procurement officer or the Control Board
should not take twice that, and it does currently.

Mr. Horn. Well, I would hope that the responsibility and the de-
cisionmaking here that goes with that responsibility would stop
with the Board of your Authority.

Mr. ROGERS. Yes.

Mr. Horn. And if there is something wrong with the Board of
your Authority, there are a lot of people in a lot of counties and
in this city that certainly can punch the right buttons and have us
take a look at the Board; but when you start an entity such as this,
we ought to be giving the Board and its general manager a wide
area of discretion if we are going to get the job done.

This is one of the toughest jobs in the country. You have a good
man in here as general manager, and it just seems to me he
shouldn’t be sort of like Gulliver, with little strings tying him down
every time he turns around and tries to get something done.

Mr. RoGERS. That kind of feels like my job as city administrator.

Mr. Horn. So that is certainly one of my concerns. Where are we
now in the transfer of facilities with the Army Corps of Engineers,
that have done a wonderful job since the late 1850’s of giving us
water in this fine city, and what is happening? Are we going to re-
imburse them on some positions and continue or are you going to
have complete takeover or what?

Mr. RoGers. As I indicated in my testimony, we have spent the
last 18 months working with Arlington and Falls Church and other
groups of customers working through these issues, and we have
concluded collectively that we believe it would be in the best inter-
est of the region for the Corps to continue to operate the aqueduct.

We have entered into discussions with the Corps. We are seeking
permission and support from the Secretary of the Army, and dis-
cussions are going well. So I think, with another year and a half
in the current legislation within which to decide what operating
model we are going to follow and, hopefully over the next several
months we will come to a position that the Secretary of the Army
can support, we can come back to Congress and resolve this issue.

Mr. Horn. I think you are making the right decision. When you
say the aqueduct, do you include the Dalecarlia Reservoir and
Water Development Purification Area?

Mr. RoGeErs. Yes.

Mr. Horn. Let me get back to the distribution system. As a con-
sumer of water in this city, but I notice everybody around here
seems to be drinking bottled water now, so the metal still tastes
in our mouth, or whatever is in those pipes, what is your plan
within the District of Columbia to get a decent distribution system?

The suburbs, they are late developers. This city has been going
for 150 to 200 years, 208 to be exact. What are we doing and what
does EPA think about it? Do you check our outlets on the distribu-




109

tion system and know which of us is getting poisoned sooner than
others? And have we got a priority list here of who gets—the oldest
systems ought to be first.

Mr. JOHNSON. Mr. Horn, Washington, DC, like most older cities,
suffers from aging infrastructure. The problem in the District of
Columbia has been the deferred maintenance on that aging system.
We have developed an aggressive plan, partly at the direction and
with the cooperation of U.S. EPA to, No. 1, flush every water main
and operate every valve and hydrant in the city on an annual
basis. That process wound up this week. We have completed a very
aggressive flushing program in the entire city, and we will begin
to pick that program up again in March of this coming year.

In addition, we have identified all of the dead-end portions of the
system, where water does not properly circulate and move on a reg-
ular basis. Those issues are being addressed. We are spending
some $11 million in the rehabilitation this year of several water
reservoirs and storage facilities. There is a plan in place to spend
about $20 some million over the next several years in cleaning and
lining water mains, where we basically go in, clean the mains,
rehab them and cement line them.

We have a plan that looks at the worst areas of the city, the old-
est areas where work has not been done and we get those done
first. It will require some open cutting in some areas where the
pipes are not in good enough condition to rehabilitate. We have
over the past year gone in and cleaned all of our reservoirs and
other facilities and, in the process of inspecting them, as I have in-
dicated, we have identified a number of cross-connections and other
things that will need to be corrected.

By 2000 we should have corrected all of the problems with the
storage and reservoir facilities. And the cleaning and lining pro-
gram and flushing kinds of programs are something that will con-
tinue over some period of time. We have some 1,300 miles of water
mains and services in the city, and that should be an ongoing proc-
ess in a city of this age.

Mr. Horn. Are there similar areas in the suburbs in some parts
that have also antiquated pipelines and distribution systems or is
it mostly in the city of Washington?

Mr. JOHNSON. Well, while I have not had an opportunity to do
an evaluation of the suburban communities, I can certainly speak
for Richmond, VA, where I was prior to coming here, and we had
a similar program in Richmond. We from time to time would even
uncover wooden pipes that were still in the ground and in service.

Mr. Horn. You came from a modern city because that is older
than Washington by probably 50 years.

Mr. JOHNSON. But it is not so much the age of the pipes, Mr.
Horn, as much as it is their serviceable condition and the mainte-
nance that is done on those systems over time. The pipes that we
will clean and line will probably give us another 50 years of service
out of a pipe that is already, 50, 60 maybe, years old or older.

Mr. Horn. Now, I am curious as to the EPA on this. Do you
check different points in the city?

Mr. McCaBeE. Yes, we do. In fact, in July 1996, EPA entered an
administrative consent order with the District to address the con-
cerns that we had with the violations in the drinking water system.


30

Now, the notion of subjecting the rest of the region to this is pa -
ticularly outrageous, and I am going to ask Chairman Davis to help
me with respect to that. At the same time, I am going to ask the
Financial Control Board, the Council, and the Mayor to figure out
how there can be some oversight, perhaps periodic oversight by the
Council, but not this multiple oversight.

For example, I believe that when we went through the water
scare the first time, and we had a hearing on water that there had
not been—I am talking about the aqueduct now—it became clear
it is necessary for somebody to have oversight. Now, the aqueduct
was a Federal facility, and it had not had oversight. So we decided
that once a year, at least, we should have the aqueduct come and
talk to us about it.

With a Board of Directors, I am not sure you need a whole lot
more oversight so long as you get all the documents and provide
all the documents to the Council. For example, I am not sure what
kind of oversight the other independent authorities have, and you
are one of many. I am not sure what kind of oversight of the con-
vention authority, and there are a number of authorities. But I do
know this: that those are, at least, District of Columbia entities.
Those independent authorities are at least District of Columbia en-
tities.

It does seem to me, out of a spirit of comity and trying to make
this work, by now the staff should have sat down and figured out
how to propose to the District a streamlined method of oversight,
assuring oversight, absolutely critical when taxpayers’ funds are in-
volved, here, of course, by payment for the service. But it seems to
me streamlining is absolutely necessary.

Now, you say, I guess it is you, Mr. Duncan, that WASA staffers
don’t like it because it appears that they are an adjunct of the Dis-
trict government. Well, I am not trying to do anything about that.
Over time they will get to understand who they are, but I don’t be-
lieve that that is reason enough to change the structure.

I do think your complaint is an absolutely valid complaint that
the District needs to respond to because it literally leaves people
like me in an untenable position. And I’m telling you I am not
going to defend the indefensible. I am not going to stand up here
and say this is fine, you will just have to live with it. You do not
have to live with it. The District should not have to live with it.

I have one or two more questions.

Mr. Davis. If you would yield. I understand you asked about re-
moving that part from the D.C. appropriations, and I don’t see any
problem with that at all. I think it is probably better if we can do
that, and I will work with you to see if we can. We are confident
with what you are doing right now, and when Congress oversees
these things, a lot of things can happen, and it is usually bad.

Ms. NorTON. Would you elaborate on how the Federal Govern-
ment pays? The problem you see there. How the Federal Govern-
ment pays for the service.

Mr. GRIFFIN. My understanding, and I think again Mr. Johnson
can shed more light on this, presently the arrangement is that
there is an estimation process in place, and estimates are made
and we do not actually collect on those estimates until 2 or 3 years
after the estimate is made. And that is something that I think



89

‘Subcommities on the District of Coben
‘Government Raform and Oversight Commition

November 12, 1997

Conclusion

Managing this vast and valuable District asset is no small task. A great deal of de-
ferred maintenance has occurred. Our operational systems are not yet perfect. In short,
we have a great deal of work todo. However, it is evident that WASA's Board of Direc-
tors has put into place the plan and the vision for a world.closs operation and i
‘cumbent upon me and the staff to make that plan and the vision a reality.

We alto recognize that the Board's blueprint is the beginning of a longer, continu-
‘ous improvement plan for WASA and its customers. Delivering the best possible cus-
our main objective and day by day we get closer to providing the service
‘our customers expect and deserve. Further, we believe the plans we have devised under
‘the Board's dirmction will chart a course to ensure the fiscal integrity of the Authority.

| would like fo note for the record o special thanks to Distnct agencies and this Con-
gressional Subcommittee for the support needed to make the transition from a District
government entity fo a semi-autonomous Authority. We could not have come this far
without you.

‘Our commitment is solid and underscored in our restructuring plans and proposed
budgets you will review soon. And that commitment is: to provide the best customer
service while protecting the environment.

I thank the of the Subcor for this opportunity to address you today
‘and look forward to continuing an ongoing dialogue with you and your staff.

| will be pleased to respond to any questions you may have. Thank you.

tomer servi



Subcomenitnes on the District of Cohvmide
Government Reform tnd Oversight Committee

November 12, 1997

To successfully accomplish our goals in the customer service arena and elsewhere,
we must, as I've mentioned earlier, set measurable benchmarks and standards. This is
an on-going business improvement process.

Labor Relations

significant accomplishment of the new Board of Directors has been the successful
negotiation of a single collective bargaining agreement covering all of WASA's union-
{aed employees. Prior to the ertablishment of the Authoriy, there had been three sepa-
rote contracts wth three unions having five locals

Negotiations on the fit collective bargaining agreement forall unionized workers
have produced agreement on all non-compensaton issues. We have not yet reached
‘agreement on wage issues. However, we have entered into formal mediation and ontici-
‘pate resolution in the near future

Comprehensive Performance Measures

We will have in place by the end of 1998 measurable performance standards and
benchmarks for every work unit in WASA. In orderto serve our customer wll, we need
fo be abie to quantily vitually every service we provide. How quickly do we answer the
phone and how responsive are we to the customen'? How long does take fo respond
10. billing question or leaking valve ora faulty meter? How much ime does it take to
respond fo and repair waterleaks? What is the cost of service delivery?

We must establish these standards and benchmarks against the most progressive
industry leaders and then hold ourselves accountable to goals for improving our deliv.
‘ry of those services. We will muttaneously work to make WASA the standard by which
others meosure their own performance. In addition to organizational stondards, we will
put in place standards for individual performance and a system by which to measure
that performance

These performance measures will give us an accurate read of how wall we are do-
ing our jobs and what we must do to improve upon our performance. This effort will
include a critical look ot our existing business practices: How can we do our jobs more
celfectively and efficiently?

‘Once these benchmarks ore established, we will enter into individual performance
‘agreements with our employees; the quality oftheir work willbe measured by how closely
they mestthe performance standards oftheir unit



12

Mr. Davis. Mr. Errico.

Mr. Errico. Mr. Chairman and members of the subcommittee, it
is a pleasure to be here today representing Prince George’s County,
MD, and as an alternate member of the Board of Directors of the
District of Columbia Water and Sewer Authority.

Prince George’s County has a vested interest in assuring a suc-
cessful future for the Water and Sewer Authority and the Blue
Plains plant in particular. Prince George’s County and Montgomery
County, through the Washington Suburban Sanitary Commission,
contribute 40 percent of the operating costs and 49 percent of the
capital costs for the Blue Plains plant. Currently 380,000 county
residents, or more than 52 Bereent of our population, are served by
the plant through the WSSC.

Within the sewer basins in Prince George’s County we have ade-
quate capacity for future growth. One of our goals, through this
process, is to do everything we can to maintain and protect our fu-
ture capacity at Blue Plains.

You have before you my complete testimony, which addresses in
detail our comments regarding four key issues at WASA. They re-
late to administrative and staffing concerns, budget and financial
concerns, plant maintenance and operations, and the impact on the
Blue Plains InterMunicipal Agreement of 1985, just mentioned by
County Executive Duncan. For the sake of time, I will quickly sum-
marize our thoughts on these key points.

Probably first and foremost, of the positive changes occurring
within the past year was the hiring of a new general manager.
Since June, Jerry Johnson has p-oven to be a very able and capa-
ble manager. Already he has hired expert senior staff in the areas
of financial management and plant operations, proposed a major
restructuring of the services and functions of WASA, and begun as-
sessing the various staffing, organizational, communications and
fee structure issues that are prominent.

I applaud him for his ability to clearly identify and begin re-
sponding to the multitude of immediate priorities that face us. At
the same time, he is setting in place a structure that will assist
him in addressing other less immediate but equally significant pri-
orities for the longer term.

Along with Paul Bender, WASA’s new Chief Financial Officer,
Jerry has taken a consistent and conscientious approach to all as-
pects of the budgeting process. An external review of our revenues
shows we have finally arrived at what we hope is a solid founda-
tion to move forward. After preliminary analysis, the fiscal year
1999 budget appears actical and doable from an implementation
standpoint as well as being fiscally sound.

Blue Plains was once the most advanced facility in the world in
providing sewage treatment. Unfortunately, years of neglect and
funding diversions away from the Blue Plains plant have taken a
serious toll. Again, however, the WASA Board actions and efforts
by the new general manager are moving us back into a more pro-
ductive and efficient arena and, hopefully, we will regain that place
in the industry.

Current proposals to spend more than $1.7 billion for a 10-year
capital improvement. program are now under scrutiny by the Board
of Directors. We in the counties are mindful this could potentially


Sehcomantiion on the District of Cobvmise
Governament Relorm and Oversight Commitioe

November 12, 1997

Human Resources

We have formed the nucleus of the team that we expect will lead us into the next
century. Port ofthe teom is with us today. Our general manager, Mr. Jemy Johnaon, is
Cone ofthe finest general manager's in the country. He is an experienced ond superbly
qualified manager. Mt Johnson is the former Deputy City Manoger for the City of Rich-
mond, Virginia, and has ©
wealth of experience in wa- ‘Authorized and Filled Positions :
fer and wastewater reat. ==

‘ment operations.
We also have em-

ployed an accomplished
Chief Financial Officer ond
Chief Engineer. These new
team members join existing
quolified managers ot
WASA. Currently, wo ore
recruiting for other key po-
sitions that inelude [but are
‘ot limited to] © General
Counsel, Human Re-
sources Monager, and an
Information Technology
Manager

pret:

iz

The Board has com-
pleted work on WASA’s own pertonnel regulations that were publithed October 3 of this
year in the D.C. Register and we voted on these rules at our November meeting in prepa-
ration forthe final rulemaking.

‘Arequestfor proposals (RFP) is curently being prepared for a pay, classification and
benefits study and should be completed ond ready for advertising by the end of
November

+!


ISSUE EPA RESPONSE COMPLIANCE STATUS,
Systemic EPA initiated enforcement action on | EPA approved the WASA final
inadequacies | July 12, 1996 requiring: Remediation Plan on March 6,
that could be a. Financial management | 1997 which was then
addressed in , incorporated into the Order.
the short term. b. Public notification,
to mitigate ¢. Monitoring and
future ‘sampling plan,
violations. d. Flushing and
disinfection,
e. Storage facility
rehabilitation,
f. Cross connection
control,
g. Storage tank
maintenance ,
h. Corrosion control, and
i Report progress.
Financial EPA negotiated to obtain annual The 1997 budget was
Management | submissions of budget updates, and | adequate; the proposed 1998
Program agreed upon procedures for funding | budget is due in the December
requests. 1997 Progress Report.
Public EPA directed WASA to adhere to the | WASA met the requirements
Notification —_| regulations, including more in their plan and improved
Program comprehensive notices. public notifications were
Published for the violations
which occurred during the
‘summer of 1996.
ISSUE PA RESPONSE COMPLIANCE STATUS
Sampling EPA ordered a more formal program | WASA is four (4) months
Program to be developed, since bacteria behind on the installation of

monitoring is critical to maintaining
water quality.

new samplers. EPA approved
the sampling plan on June 2,
1997.



%

Subcommites on the Dletrit of Cotembte
Government Reform and Oversight Committon

November 12, 1997

Wastewater Treatment

Inthe orea of wastewater treatment, WASA must protect and make constant improve-
‘ments to the nation’s “flagship facility” at Blue Plains -- the largest advanced wastewa-
ter treatment facility in the word. Therefore, we will increase bas staffing levels to
reduce overtime, increase productivity and make improvements to our system of account-
ability. Chemical costs for the Denitrification Demonstration Facility are included, as are
costs for comprehensive management of our biosolids disposal operations. Funding
for maintenance provided by WASA employees as well as contractors is also included at
current spending levels.

The majority of our $1.7 billion 10-year capital budget goes to wastewater treat-
mort and sewer programs.

Combined Sewer Overflow Projects

‘We have budgeted $109 million to design and build facilities to address combined
sewer ovartiows to the Potomac and Anacostia and fo minimize the frequency and vol-
‘ume of combined sewor overflows into the Potomac and Anacostia rivers. We also hove
© $7 million planning grant from EPA o study and continue fo address the combined
sewer overfiow problem.

We will maintain our programs to improve water quality on the Anacosha River
through interception and collection af floatable materials carved by storms through the
combined sewer systems

Rehabilitation of Reservoirs and Tanks
{nthe course of cleaning and inspecting reservoirs and water storage tanks this yeor,

‘workers sdentied needed repair. Those repoirs are scheduled for January 1999 through
‘March 2000 ler For Stanton Reservoirs 1 and 2, ond the Brentwood ond Soldiers Home
reservoin. The schedule for rehabilitation ofthe two Anacostia elevated tanks is expected
to begin in April 198 ond be completed in January 1999. Rehabilitation of the city’s
reservoirs will includ

‘+ Repairing and sealing cracks 1o make the reservoirs water fight to prevent the infitro-
tion of ground water ond rainwater and to prevent drinking water from leaking out.
Improving water circulation to prevent water from stagnating.
Reducing the potential cross connections between the reservoir droins and overflow
pipes
Tank rehabilitation will include reducing the potential for untreated woter to leech
Inte treated drinking water, closing all openings, providing safety ladders and ensur.
ing proper ventilation.



36

marks just now. But just let me ask you to give us the opportunity
to work on the personnel procurement and oversight problems be-
fore we kind of try to break the deal.

I think you have a very legitimate complaint. I congratulate you
for what you have done in spite of these problems, and I think it
is our obligation in the Congress and the obligation of the District
of Columbia now to rapidly break through those problems and see
just how smoothly we can make the present arrangement work.
Then, perhaps if that does not work, it would be ripe to consider
some changes, but please give us the opportunity to try to work on
some of these impediments.

Thank you very much, Mr. Chairman.

Mr. Davis. Thank you very much for your statements, which will
be included in the record.

I want to call our next two panels together. W. Michael McCabe,
the Regional Administrator of the U.S. Environmental Protection
Agency, Region III; Michael Rogers needs no introduction to this.
He has been a staple of many of our hearings and has taken a key
role in bringing this together. He is the chairman of the Water and
Sewer Authority. And Mr. Jerry Johnson, the general manager of
the Water and Sewer Authority.

If all of you will come forward. Mr. McCabe we will give you the
middle ground, or wherever you are comfortable. That is fine. We
will start with Mr. McCabe, but if you will stand for a second while
I swear everybody in.

[Witnesses sworn.]

Mr. Davis. Your full written statements will be part of the
record. Hearing no objection, so ordered.

Mr. McCabe, we will start with you and then move to Mr. Rogers
and then Mr. Johnson, and then we can do one round of questions
for everyone, which will move this along and get you back to your

luties.

Mr. McCabe, I want to thank you and the EPA for the high de-
gree of cooperation that we have had for the past several years.
You have been working to alleviate the problems at Blue Plains.
You testified candidly before us twice last year and followed up
with significant action. I appreciate your being here for a third
time, and I can’t thank you enough, you have been a real help.

STATEMENTS OF MICHAEL McCABE, REGION III ADMINIS-
TRATOR, EPA; MICHAEL ROGERS, CHAIRMAN, D.C. WATER
AND SEWER AUTHORITY [WASA]; AND JERRY N. JOHNSON,
GENERAL MANAGER, D.C. WATER AND SEWER AUTHORITY
[WASA]

Mr. McCabe. Thank you, Mr. Chairman, Congresswoman Nor-
ton, and other members of the subcommittee.

I appreciate the opportunity to be able to appear before you
again today, certainly with much better news and t reviews than I
had the last two times that I came up here.

Let me begin with a clear and unequivocal statement. There
have been no violations of drinking water standards and no signifi-
cant violations of the wastewater permit since the Water and
Sewer Authority officially opened its doors in October 1996.


48

alytical and deliberative policymaking body that is open to public
scrutiny and responsive to public concerns.

We adopted bylaws that guide our operation as a board. We es-
tablished standing committees, including budget and finance, oper-
ations committee, human resources, labor relations, and retail
rates committee. We established several ad hoc committees to fa-
cilitate board handling of policy matters that required our special
handling.

As chairman of the board, I have endeavored to ensure that all
members of the board, including alternate Board members, have
had an opportunity to contribute to the fullest extent of their inter-
est and time.

In 1 year, we have held 16 public board meetings, a numerous
number of committee meetings, all open to the public and each well
attended. Several meetings where we made decisions about water
rates in the District were carried on the D.C. public access channel.

I am pleased to say that we have developed a board that con-
ducts its business in the most collegial manner, but always getting
to the heart of the issue before it. The Mayor appoints very promi-
nent residents to represent the District, and appointments by the
governing bodies of our partner jurisdictions also are outstanding
members. We together see it as our mission to protect the interest
of the region’s wastewater treatment facilities and the District’s
water system in assuring that our waterways are not contaminated
by our facilities, and that the region’s drinking water is clean.

We have improved WASA’s finances and laid a solid foundation
for the future. We discontinued the practice of free and discounted
water to nonprofit entities and churches. We are implementing the
District law that requires metering for groundwater pumping.

We have increased water rates for the first time in 10 years, a
42 percent increase. We have an established aggressive plan for the
collection of delinquent accounts, including publishing delinquent
customers in local newspapers, placing liens on the property of de-
linquent customers. And soon we will securitize our delinquent ac-
counts so that WASA gets more of its money up front, and the non-
responsive, delinquent customers will have to deal with someone
even more aggressive than WASA.

We have worked with the District on a financing plan for repay-
ment of the $83 million of Water and Sewer Utility enterprise
funds used by the District in fiscal year 1994. Each fiscal year
since the creation of WASA, we have received payment at the be-
ginning of the fiscal year.

We have selected a first-rate financial adviser to guide us in re-
structuring our financing and to guide our entrance into the finan-
cial markets. We have also established a $25 million line of credit
to facilitate management of our cash-flow challenges.

In short, WASA finances are in better shape than they were a
year ago. We are charging all of our customers for service, we are
aggressively collecting from all of our customers, we have laid the
foundation for a strong financial entity that we hope will receive
favorable consideration in the financial markets.

The WASA board is committed to building a world-class oper-
ation. To achieve that objective, we must have outstanding staff.
We employed a national search firm to help us with this objective.


117

LEGISLATION. THE PEOPLE OF
PRINCE GEORGE’S COUNTY ARE VERY
MUCH INTERESTED IN SEEING WASA
EVOLVE INTO A TRUE REGIONAL
AUTHORITY, WITH LESS DEPENDENCE
UPON THE DISTRICT GOVERNMENT.

AGAIN, I THANK YOU CHAIRMAN
DAVIS, CONGRESSWOMAN MORELLA
AND CONGRESSWOMAN NORTON FOR
HOLDING THIS IMPORTANT HEARING
AND FOR GRANTING ME THE
OPPORTUNITY TO MAKE A
STATEMENT.


Subcommittee on the District of Columba:
Government Reform and Oversight Committee

November 12, 1997

In s0 doing, the Board, in accordance with WASA's enabling legislation, has identi-
fied the elements of his plan that included:

A Rate Increase

‘Attor months of careful and conservative deliberation, we adopted a vitally needed
‘and long-overdue rate increase that enabled us to continue to meet our federally man-
dated requirements, and to begin to address diraly needed maintenance, repair and
upgrades. This was the fit increate in more than a decade. H will not be the last. Un-
doing the withering effects of age and neglect is an absolute necessity, but it wll be ax-
Pansive and fime consuming. Nevertheless, this wll ensure quality service dolivary to
‘our customers

This rate increase was also critically needed to complete the transition from a gov-
‘emmental entity fo @ semi-independent Authority. All support functions that were his-
{orically supplied by he District must now be undertaken by WASA.

The Board consulted wit the highly regarded firm of Block & Veatch, which special-
izes in rate studies and engineering design for public water systems. was originally
recor to usthat rate i of 78 percent was to adequately begin
the structure of new authority and have some cath reserves to attract the bond market.
With much deliberation, the Board knew is customers simply could not bear the burden
cof on increase that expensive and all a once. However, inaction or further delay on the
recommended rate increase would have resulted in he Awthoriy’s inability to adequately
‘operate and maintain its exental_ public health and safely mission, or meet critical
federal mandates, particularly in the areas such asthe Safe Drinking Water Actand com-
pliance issues with the EPA.

‘As such, we reevaluated what was urgently needed financially during our fi! year
‘and planned the course for subsequent years. With the advice of Black & Veotch and the
WASA management, it was determined that « 42 percent rate inerwate was the mini-
‘num increase that would afford WASA the direly needed improvements that Board had
envisioned.



49

We attracted top-notch candidates for our general manager position
and we believe we hired one of the best in the business when we
appointed Jerry Johnson general manager of WASA. He is already
demonstrating his expertise with the manner in which he is tack-
ling issues facing our organization.

Mr. Johnson has taken the charge even further and attracted a
top-flight CFO and chief engineer, and we are recruiting to fill
many other management positions with people of similar quality
and professional credentials.

It is our objective to quickly stabilize our relations with employee
unions. We set an objective to have one labor contract covering all
employees. We have achieved that. We have reached agreement
with all of the unions on noneconomic issues. We are in arbitration
with the unions on the remaining economic issues.

For the first time we are requiring our engineers to receive pro-
fessional certification and we will implement performance meas-
ures for all employee groups.

We have adopted the WASA personnel rules, and we can talk
during questions about the prior discussion about those rules, and
we are well on our way to establishing WASA as an organizational
culture based on excellence and customer service and responsive-
ness.

We have improved the WASA contracting operation. The board
is committed to competitive contracting and has directed staff to
assure that all contracts, particularly construction contracts, are
awarded on the most competitive basis. Today I can say that we
have achieved that objective. With our new procurement rules,
which are going through the final stages of review and are expected
to be implemented early next year, WASA will become an organiza-
tion against which others in the industry can be benchmarked.

Our 10-year capital plan, the $1.7 billion capital improvement
plan will allow the ‘Authority to make repairs, perform the mainte-
nance and schedule upgrades needed to make WASA preeminent in
its field.

The plan is in three main categories: wastewater, stormwater
and water projects. The lion’s share of this total, $1.1 billion, goes
to wastewater programs. The portion of the water treatment stor-
age and distribution project is $484 million, and for stormwater
projects the total is $47 million.

You have heard from Mr. McCabe about the improvement in the
water quality in the District. I can repeat that over the last 14
months since WASA has been in operation, there have been no vio-
lations of Federal drinking water standards for coliform. In my
written testimony, you have a chart that shows just how dramatic
an impact that has been.

In my role as the District city administrator, I have spent the
last year and a half working with the chief administrative officers
of Arlington and Falls Church, VA, discussing issues concerning
ownership and operation of the Washington Aqueduct, which is
currently operated by the Army Corps of Engineers. We formed a
collegial working committee, which I chaired, to flush out issues to
determine what future arrangement would be in the best interest
of all customers.


78

Sebrcomantioee on the District of Cobaioa
Government Reform nd Oversight Committee

November 12, 1997

_mertand infrastructure, catch up on a substantial amount of deferred maintenance, ond
infroduce new technology to ossist usin meeting our environmental and regulatory man-
dates. To put it succinctly, all of these initiatives have, as their ukimate goal, improved
customer service. Aft conducting @ thorough intemal review of staf capacity 0 deci-
sion has been made to employ outside project management capability within the Office
‘of Engineering Services. We are doing this to assure that the capital improvement pro-
‘gram is developed and implemented within projected time and budget limitations.

‘Over the next 10 years we propose fo spend $1.7 billion to repair and upgrode this
‘aging distribution system, to rehobiltate wastewater treatment and sewer facilities, and
to address the city’s combined sewer overflow problems.

Westewater treatment and sewer programs account for $1.1 billion ofthis amount;
the portion for water reatment, storage and distribution projects is about $484 million;
and for stormwater programs, the totals about $47 milion Included in the water distri-
bution total it $1.46 million.-WASA’s share--for Woshington Aqueduct capital costs.

Bond Market

Ineorly 1998 we will goto the bond market, os we are authorized to do under WASAs
‘enabling legislation, to borrow money to fund these capital improvement projects. We
will seek money for restructuring part or all of existing debt ranging from $80 milion to
$277 million. We will also seek new money, in o range of $50 million to $100 million,
depending on its cost ot he time of sole.

This is © two-stage process First, we will
get the bond morketto issue debt

‘There ore very specific and demanding requirements that must be mat in order fo
secure and maintain a good bond rating. Among the required elements ore a strong
cond credible financial plan; a stable rate bose; 0 strong and stable management with o
proven track record; a comprehensive, achievable capital program that addresses oll
copital needs; and, fourto six months of operating expenses in cash reserves. Our plan
contemplates achieving the requisite mount of operating expenses in cosh reserves by
the end of 1999 to cover operating needs and meet various bond markel expanses.

‘Wa have responded to all management letier comments received from ouside au-
<ditors, We are addressing their concems by adopting business procedures that conform
{0 generally accepted accounting and business practices. We anticipate receiving an
‘audit without qualification this year. We are also hiring an intemal auditor to monitor
‘our practices ond procedures on an on-going basis

Jam pleosed to report fo the subcommittee that the D.C. Financial Responsibility
‘and Management Assistance Authority has approved WASAs bond counsel services con-
tract to Hunton and Williams & Smallwood and Wells. The contract was awarded on

cure a bond rating, and second, we will



Satecommitioe on te District of Coleman
Governssent Reform and Oversight Committon

November 12, 1997

includes insisting that we get what we ore paying for from contractors and others doing
business with WASA.

In ordarto do this, one activity to be undertaken is a “mid-streom’ evaluation ofall
of our contractors, vendors, consultants and suppliers-that is, an immediate evaluative
review followed by an evaluation at the and of the contract period. Ifthe service or prod-
uct does not meet the established standards then we will seek redress and/or discon-
tinve doing business with the individual or firm.

‘Safety: We olao have on obligation to provide a safe and secure environment in
‘which WASA employees can perform their jobs. Tha extends to delivering our producto
‘our customers in a manner that does not endanger the public orthe environment. Em-
ployees will be provided with the equipment and the tools to perform their work safely
cond efficiently.

WASA has issued an RFP seeking azsistance inthe development of an Authority wide
solely program that covers the needs of our worken and our customen.

‘Securlty: We will upgrade WASAs secuniy systems. WASA is one of the region's
‘most valuable assets and service providers. We must protect all of our assets, which
includes our employees, facilities, work and personel property. To address these issues
We will hire « securty speciolist who will review our current security systems. This special-
ist will propose and implement system enhancements, manage our security contractors
and investigate thefts ond other incidents affecting security. Our security needs are poro-
‘mount in creating @ safe, secure and productive working environment for WASA em-
ployeos.

Fadiities and Grounds: With regard o our facilites, we have undervilized build-
ings and grounds and some of our existing facilities are not configured well forthe uses
‘we are making of them.

Wa will address these sues in 1998, Additionally, we have embarked on a mojor
‘campaign to clean up and maintain our faciliies and grounds and to take pride in the
resources we have been entrusted to maintain.



43

-3-

In one important instance, in fact, WASA has reestablished Blue Plains as an
innovative world leader in environmental protection. For a year now WASA has been
operating a pilot Biological Nutrient Removal, or BNR, program at Blue Plains. The
BNR project is designed to limit harmful excess nitrogen from being discharged into the
Chesapeake Bay, and it is working significantly better than we had hoped. Treating
just half the flow through the plant, the BNR pilot is designed to remove 3 million of the
13 million pounds of excess nitrogen discharged into the Potomac on an annual basis.
But the project is about 50% more effective than we thought it would be. Because of
these excellent results, we are already having serious discussions with WASA about
expanding this innovative process to treat the entire flow through the plant. The result
would be that WASA will have slashed excess nitrogen discharges to the Potomac by
over half, demonstrating both that the process can work on a large scale and that the
Authority can be a leader in Chesapeake Bay protection and restoration

When | appeared before your Committee last year, | said, “An independent
authority can be focused on its mission,” and that has indeed been the result

Let me quickly up-date the Subcommittee on the status of the various
enforcement actions we undertook in 1996.

DRINKING WATER

Citing a series of violation of drinking water standards going back to 1993, the
EPA proposed an Administrative Order against the city in November of 1995 Because
of the government shut-downs that occurred that winter, we were unable to hold a
public hearing on the proposed order until April of last year. We continued to negotiate
with the city on the final order in an effort to get them to agree to its provisions. (These
types of administrative orders make compliance easier to achieve because the
offending party agreed to the provisions of the order from the beginning.) Quite frankly
I had nearly run out of patience with the City and was ready to impose the conditions of
the order unilaterally when the City again violated the Safe Drinking Water Act in June,
1996, by having excessive total coliform bacteria in its distribution system. Against
that backdrop, on July 12, 1996, the City agreed to the terms of the order. The
problem with total coliform bacteria, or biofilm or regrowth in the distribution system,
continued throughout the summer, causing additional violations in July and August of
1996.

The conditions of the drinking water order are very extensive. They include:
setting up a new public notification system when violations occur;
developing a new monitoring and sampling plan;

flushing and disinfection programs for all storage facilities;

a cross connection control program;

a storage tank rehab and maintenance program;

a corrosion contro! treatment and monitoring program;


113

A YEAR AFTER THE ENACTMENT OF
LEGISLATION CREATING THE NEW
AUTHORITY, IT IS APPROPRIATE TO
ASSESS THE STATUS OF WASA AND ITS
PROGRESS IN ADDRESSING THE VERY
SERIOUS ISSUES WHICH HAVE
PLAGUED WATER AND SEWER
OPERATIONS AT BLUE PLAINS IN
RECENT YEARS.

THE SAFE AND EFFICIENT OPERATION
OF THE BLUE PLAINS SYSTEM IS, OF
COURSE, OF GREAT IMPORTANCE TO
MY CONSTITUENTS WHO RESIDE IN

-2-


CONTENTS

Hearing held on November 12, 1997 ....
Statement of:
Duncan, Douglas, county executive, Montgomery County, MD; Michael
Errico, deputy chief administrator officer, Prince George's Count: ty, Mt
and ‘Anthony H. Griffin, alternate member (WASA), Fairfax Bad

Mccabe; ‘Michael, Region Ill Administrator, EPA; Michael rs, chair-
man, D.C. Water and Sewer Authority [WASAI; and Hee |. Johnson,
general manager, D.C. Water and Sewer Authority [W. .
Letters, statements, etc., submitted for the record by:
Davis, Hon. Thomas M., a Representative in Congress from the State

of Virginia, prepared statement of ..
Duncan, Douglas, county executive, Montgomery County, MD, prepared
statement of .
Errico, Michael, deputy chief administrator officer, Prince George’s Coun-
ty, MD, prepared statement of ..
Griffin, Anthony H., alternate member (WASA), Fairfax County, VA,
prepared statement of ..
Hoyer, Hon. Steny H., a Representative in Congress from the State
of Maryland, prepared statement of
Johnson, Jerry N., general manager, D.C. Water and Sewer Authority

ASA]:

Information concerning sources of funding
Prepared statement of
McCabe, Michael, Region
List of projects
Prepared statem
Rogers, Michael, chairmat
prepared statement of ...

dip


‘east Wmccala
(OTHER OPERATING CASH PROVIDED
‘Qrer Counties Rai. fr Capit

One Revere
‘ences Earnings

(Va. Water Dutt Service Recovery
Teta Oner Operating Cosh

corr. pecan,
howe

Lengo aott

04%

om
aes,
29%

555

mm

om

Svcun  tcatrrs be uy waa
Cilmot te tei a ton comuary ch ng

10% faa operating budget ncn 6 rceted rom BAA
petcpares furacestre. The detson of con it
ota on cert Sows of pt

‘Reisturemert or indirect cost kom EPA and surouning
‘eenus from cates of water and somes eerdes io oer OC art
‘ecmsl govareerts and pede eraaen.

‘Raimbcrserert rom fue Washington Aqueduct rom fa share of
‘cont eerdon payers.



TRI SOT ‘uanboong sad) wy pure ” vevM 4
oe
Coes 3
: Hi
ors
oss.

2661 Ad
JOVBMOLEM 1881 | OL SOD



52

Subcommites on the District of Columbia
Government Reform and Oversight! Committee

November 12, 1997

Introduction

Good Aftemoon Chairman Davis, members of the Subcommittee, and ladies and
gentlemen. |.am Michael C. Rogers, Chairman of the Board of Directors of the District
of Columbia Water and Sewer Authority. | thank you for the opportunity to come before
you today and share with you the Board's accomplishments, business plan and vision
that was set well over a year ago for WASA.

This is indeed an opportune time to have this discussion, for WASA celebrated its
firs! anniversary last month. The Board, management and employees have reason tobe
proud of the Authority’s accomplishments during the past year.

The Board met for the first time on September 26, 1996, three months after oppear-
ing before this Subcommittee. The Board faced many challenges at the time. The pri-
mary challenge was to transform the District goverment’s Water and Sewer Utility Ad-
ministrotion--" WASUA‘--into a semi-independent Authority. This was o formidable task,
a8 this entity isthe District's most valuable asset.

‘There were other daunting challenges fo confront. At that time, there was a deep
and pervasive sense of skepticism about whether it was safe to drink the water in the
Nation's Capital.

Throughout last summer, tests reveled levels of coliform bacteria that consistently
‘exceeded federal limits. Although harmful bacteria were never detected during this pe-
rnod, there wos a public perception that the city’s water distribution system was on the
verge of collapse.

‘Additionally, the Utility was fied to a cash-strapped city mired in its own fiscal woes.
Thus, in what might be descnbed as a harmonic convergence of the political and the
practical -- WASA wos bom.

‘When the Board met in September of 1996, we set an agenda -- a comprehensive
business plan -- that first included a critical scrutiny of the operations at WASA. We know
that in order to renew the confidence of our customers, it would be our obligation to
devise a responsible, comprehensive business plan to make the successful transition from
“WASUA to WASA’ ond provide Quolity services to our ratepayers.

‘Over the pas! year, the Board of Directors has been putting into place the elements
of a long-term plan to position WASA as a world-class operation and leader in its
industy.



101

And if I may say so, Mr. McCabe, your oversight of the District
has been always productive and honest, and I think it has helped
to move the city forward.

Mr. McCase. Thank you.

Ms. Norton. I tend to get exercised over bureaucracy. I think
that those of us who believe in sound regulation have been chal-
lenged quite successfully by people who don’t believe in regulation
in the first place because of the way in which regulation is carried
out. So if you really believe that environmental regulation, for ex-
ample, is necessary, then you better do it well or else you will get
the kind of challenges that we got in the 104th Congress, many of
which were turned back, but very frankly would simply have over-
turned much environmental regulation that had produced great
good for the American people.

We had a similar situation, I know, and Mr. Rogers will remem-
ber, when I got a waiver of highway money. We were about to lose
almost $200 million in highway money, and we were able to get
that money. Federal highways became involved, and one of the
things they worked out, and it was certainly partially successful,
was a way to get the money on the street during the spring and
summer season when, in fact, you needed to do so in order to build.
And in order to do that, we had to streamline the processes. For
the first time, I got to understand what those processes are like,
and it was a daunting thing to see, and yet we got on paper and
I think indeed for the most part, this was carried out, although we
didn’t bring it down as many days as we want to, the District did
in fact bring it down considerably. We found, though, even after the
agreement, people were sending things over to the corporation
counsel and the poor corporation counsel's office was so backed up,
they would just put the things on the side and that would hold up
things from going out into the street.

Nevertheless, Mr. Rogers, you were there, and you cooperated
very strongly with that effort. And I wonder if that effort or some
other effort can assist you, the three of you, perhaps, in thinking
through a way to streamline the oversight bodies to which you
have—who have to punch your ticket before you can do anything.

You have heard the chairman say that we are going to try to dis-
connect the congressional process in your budget from that, and I
don’t think we have any other regular oversight, but the notion of
having to go to the Control Board, the council, the Mayor, the cor-
poration counsel and the rest of it is simply outrageous.

What it leads to is people really turning over the tables and they
say, well, one way not to do this is simply to set up an entirely
independent mechanism, and then everybody would be running
over to me saying, keep them from doing that.

What I am asking you is have you considered a plan yourself,
drawing a plan yourself, that would offer satisfactory oversight
while eliminating the barriers through which you must now go in
order to get things done?

Mr. Rocers. If I may, Ms. Norton, let me say that the oversight
by the Council of the District of Columbia over the past year has
not been a problem. We are required to go to Council, submit our
budget to Council for discussion. That is the one requirement in
the legislation.


26

Mr. Chairman and Honorable Members of the House of
Representatives.

My name is Anthony Griffin and I am Deputy County Executive for
Fairfax County, Virginia. I am also an appointee by the Board of
Supervisors as an Alternate to the Board of Directors of the
District of Columbia Water and Sewer Authority. Previously in my
capacity as Acting County Executive I was the Board of
Supervisor's appointee to the Water and Sewer Authority Board of
Directors for ten months. I am pleased to be here today to
provide testimony on the progress that has been made by the
Authority during the past year.

Slightly more than a year has passed since the Authority had its
first meeting, and since then a total of sixteen meetings have
been convened with many subcommittees meetings interspersed
between. In that time the Authority Board has charted a path
toward the independent operation of the water and sewer utilities
previously operated as an agency of the District of Columbia.

A new management team has been put in place, and already very
positive improvements in financial tracking and reporting have
been observed. The new budget process and the associated
documents have tremendously improved the quality of information
about the operation of the Authority’s utilities.

Significant improvement has occurred in the maintenance of the
City’s water lines which the previous year had attracted so much
publicity. Progress is being made on the rolling stock of the
Authority so that its employees can get out to field to make
repairs, do maintenance or read meters. The Authority continues
to operate the Blue Plains Plant meeting the requirements of its
National Pollutant Discharge Elimination Permit, and protecting
the region’s water quality.

The Authority is in the process of finalizing personnel and
procurement regulations, all of which will move the Authority
towarda becoming an independent entity and which are crucial to
the effective operation of the Authority. I believe the word is
getting out that the Authority is aggressive in wanting to
establish a very positive reputation in terms of how it does
business and that it is intent on becoming a model agency for its
peer equivalent worldwide.


22

As we move into the thorny issues of ownership-- including
assessing privatization and regionalization, however, it may not
be as easy to resolve these issues and conflicts may arise.

We in Prince George's County are committed to working with
the District and our other partners to ensure that the
Regionalization Study be given utmost priority during the coming
months.

The Impact on the Blue Plains Intermunicipal Agreement of 1985

The Blue Plains Regional Committee was identified by the
Intermunicipal Agreement of 1985 as "the sole coordinating body
among the Parties for Blue Plains issues." During the past year,
it has continued to monitor regional water and sewer issues and
provide technical guidance and assistance. The Bio-Solids
report, which I alluded to earlier in my testimony, is one
outcome of its work.

Relationships between the Blue Plains Regional Committee and
the WASA Board remain murky, however, and need to be addressed
further in the coming year by both parties. The Blue Plains
Regional Committee offers a solid base of technical experience as
well as policy guidance on wastewater and sewage issues.
Therefore, some mechanism may need to be developed to affect best
use of these assets and insure effective coordination and
communication among all parties. This issue may, in fact, be
addressed during the Regionalization study. I should note that
early indications from WASA's general manager indicate his
wholehearted support for the continuation of this input and
guidance from the Blue Plains Regional Committee.


105

lars that come in from the Federal Government to assist in support
of certain capital programs that are undertaken at Blue Plains and
in the water and wastewater distribution system. The formula is
such that about 1 percent of the moneys that are utilized nation-
ally from the State revolving loan fund are allocated to the District
of Columbia as a Grant, and that is the money that Congress re-

cently approved to be moved to an 80 percent grant status.
I woud be glad to get those very specific numbers for you if you
wou. ce,

Mr. Horn. That is fine. We will put them in the record at this
point, Mr. Chairman.

Mr. Davis. Without objection.

(The information referred to follows:]


34

ting input and feedback back and forth with their members of the
Board. So you really have a good tie-in to the four major jurisdic-
tions in this region.

Mr. Horn. Mr. Chairman, that is all I wanted to question them
on.

Mr. Davis. Let me recognize the gentleman from Maine, if he has
any questions, a former mayor of the city of Portland.

ir. ALLEN. Thank you. I do have 6 years of experience on a city
council in Portland, ME, but I am new to this city and have a lot
to learn.

I am interested in the structure of your board and the fact that
you have six votes from the District and five from the counties col-
lectively, but you also have a super-majority requirement for, I
guess it is the firing of the administrator and the budget; is that
right?

[All three witnesses nod in affirmative.]

Mr. ALLEN. How is that system working as suburban representa-
tives? How do you feel that structure, I guess, is working?

Mr. DUNCAN. All the reports I have gotten is it is working very
well. What has happened, there was a fear when we entered into
the negotiations to decide what the makeup of the Board would be
and where the representatives would come from, there was a fear
it would be the District against the suburbs, or vice versa, or peo-
ple would start to form alliances.

What has happened is there has been tremendous cooperation
across all borders. People are not acting as if they are a District
representative or a suburban representative, they are acting as if
they are WASA representatives and looking after WASA, and they
are voting that way. And it has worked very well and has been a
hallmark over the past year.

Mr. GRIFFIN. I would support Mr. Duncan’s comments from Fair-
fax County’s point of view.

Mr. ERRICO. I see no parochialism at all. It seems to be a truly
united body. Initial fears were there would be some, but to date it
hast been that whatever is best for WASA, everyone has gone along
with. .

Mr. ALLEN. As you move forward into dealing at some point with
the combined sewer overflow issue, will it keep working? Can you
talk a little bit about how to deal with the combined storm water
and sewer overflow issue?

Every municipality in the country is worried about that issue,
trying to figure out how to deal with it. In your case, I gather, cor-
rect me if I’m wrong, you don’t have title to Blue Plains or to some
of the water mains, but you do have control and now bonding au-
thority. I just wonder what are your plans for dealing with that
particular problem?

Mr. Duncan. I think General Manager Johnson would be the one
to address the specifics of that question. I think he can give you
all the details of that.

Mr. ALLEN. OK. I will hold it, then. Thank you, Mr. Chairman.

Mr. Davis. Thank you very much. You just asked a couple of im-
portant questions. Do you all think that the rate setting mecha-
nism your counties agreed to in the IMA is still in effect, and you
are not subsidizing District customers?


115

FROM ALL PARTIES; WASA HAS BEEN
FREE OF EPA CITATIONS DURING THE
PAST YEAR; AND A MUCH-NEEDED
FLUSHING OF THE PIPES HAS BEEN
ACCOMPLISHED. I AM ESPECIALLY
PLEASED BY THE ACHIEVEMENT OF
GREATER REGIONAL INPUT
ENVISIONED BY THE 1996
LEGISLATION. THE PARTICIPATION
IN TODAY’S HEARING OF MR.
MICHAEL ERRICO, DEPUTY CHIEF
ADMINISTRATIVE OPFFICER FOR
PRINCE GEORGE’S COUNTY, IS
EVIDENCE OF THIS COOPERATION.

-4-


Schcomminee on the District of Colveble
Covernanant Raformn and Oversight Comaition

November 12, 1997

Washington Aqueduct

tn my rola as the District's City Administrator, | have spent the last year and a half
working with the Chiof Administrative Officers (CAO's) of Adington ond Falls Church,
Virginio, discussing issues concerning the ownership and operation of the Washington
‘Aqueduct, which is curently oparated by the Amy Corps of Engineers. We formed a
collegial working committee, which | chaired, to flesh out the issues and to determine
“what future arrangement would be in the best interest of al customer.

‘The Metropolitan Washington Council of Govemments facilitated the strtegic think-
ing process of various aspects wih respect tothe future operational and ownership struc-
ture ofthe Aqueduct. Mr. Chairman, as you know, the Committee had initially proposed
four options for consideration that included: (1) Creating @ non-federol, private entity
10 operate the Aqueduct that involved the sale, lease or management of the Aqueduct;
{2) The transfer of operation to the Fairax County Water Authority; (3) The transfer of
‘operation to the District of Columbia Water and Sewer Authority; and, (4) The creation
of a new, muli-jurisdictional, inter-state entity.

‘Abtor sorting through these options, the Committee then drafted another recommen.
dation for consideration. This would entail the continued operation by the Army Corps
cof Engineers which is more logical by our thinking and we have forwarded this opinion
to the Secretary of the Amy for reconsideration.

i expected that once these discussions about the operational future of the Aque-
duct are concluded, we will return to the Congress with the Secretary of the Army and
‘Aqueduct officials with « formal proposal. We look forward fo your support, Mr. Chair-
‘man, on this ertcal issue to ensure the quality of our drinking water for the region.

Currently, we are engaged with the Corps regarding the design of an improved op-
‘erating model that involves greater customer participation. This will luo enaure the Wash-
ington Aqueduct meets benchmarked performance standards. We olso have begun the
financing improvements so that the Aqueduct’ customers can borrow from the U.S. Trea-
sury for capital needs. Working together, the CAO’s have completed the first round of
borrowing forthe customer.



12

STATEMENT OF CONGRESSMAN
STENY H. HOYER BEFORE THE
GOVERNMENT REFORM AND
OVERSIGHT SUBCOMMITTEE ON THE
DISTRICT OF COLUMBIA’S HEARING
ON THE STATUS OF THE D.C. WATER
AND SEWER AUTHORITY (WASA)

NOVEMBER 12, 1997

CHAIRMAN DAVIS, LET ME
CONGRATULATE YOU,
CONGRESSWOMAN MORELLA AND
CONGRESSWOMAN NORTON FOR
HOLDING THIS HEARING ON THE
STATUS OF THE D.C. WATER AND
SEWER AUTHORITY.

-1-


16

Subcommittee on the District of Cofvenble
‘Governasent Reform and Oversight Committon

November 12, 1997

Biosolids

A valuable byproduct of wastewater treatment is what industry professionals call
“biosolids.” In its simplest terms, biosolid is sewage translormed into a semi-solid stole.
These residual biosolids ore treated and processed so there are fewer disease-cousing
organisms. They greatly ennch soil ured to grow feed crops and EPA studies indicate
that biosolids reduce the amount of chemical fertilizer: needed to produce comparable
crop yields,

Blue Plains produces approximately 1,100 tons of biosolids each day. About 70 per-
cent i land-applied o farms for fertilization. The Washington Suburban Sanitary Com-
‘mission in Montgomery County composts approximately 15 percent ofthe biosolids and
sells the productto dstibutors ond retailers who then sell individual consumers. More
than 10 percent of the biosolids are sent io « waste-to-energy plant locoted in Fairlax
‘County Less than 5 percent ie dispoted of in londiills. This means that 95 percent of our
biosolids are bonelicilly reured.

This progrom isa winnerfor WASA, for farmers, for our customers and for the envi-
ronment

Information and Technology

The linchpin of our medemization efforts is our information and technology initio-
tive. For all intents and purposes, WASA does not at present have an information and
technology infrastructure orthe people and equipment to make one work. We propose
to.add 23 positions and additional technical contractor rexources over the next wo years
to design and begin to implement an information-technology and telecommunications
system that rivals that of any uly in the country. We will implement erical systems for
financial management, billing, procurement, meter reading, maintenance, human re
sources, felecommunications, operations, process control and consumer services.

These systems will enable us to dramatically increase productivity while we reduce
the rote of increase in our workforce. We will realize efficiencies in areas such as cus-
tomer service and operations, purchasing and personnel tasks, meter reading, avtoma-
tion of pumping stations, opening valves, preventive maintenance, dispatching and up-
grader.

Having the ability to share date across work units will dramatically shorten tumaround
time and enable us to respond to our customers’ needs much more quickly.



28

Mr. Davis. Thank you very much, Tony. I know that, Doug, you
had introduced Bruce Romer. Sid Kramer is here, too, I don’t know
if you introduced him, from the WASA Board, who is a former
county executive, and I am glad to see him here and his participa-
tion.

Mr. DUNCAN. Yes.

Mr. Davis. I will start the questioning with Ms. Norton and then
go to Mr. Horn.

Ms. Norton. First, may I congratulate all three of you and
thank all three of you for, first, the way you have worked with the
District, under very trying circumstances, to relieve problems that
were entirely the District’s making in the way it had formerly man-
aged the facility. And may I thank you as well for what I regard
as a very good and rapid start on improving the management of
this vital facility.

You heard me indicate strongly how protective I am of the right-
ful jurisdiction of the District nd Columbia. Let me say something
that I feel equally strong about. I have zero tolerance for the Dis-
trict’s regulatory scheme. I would not submit my worst enemy, and
I choose my words carefully, to the regulatory regime of the Dis-
trict of Columbia. It is a disgrace, and it has been responsible for
chasing people out of the District, for rage among residents, so that
I can imagine the rage to somebody who is not a resident and has
to submit himself to that.

So I want to be clear on that. There is a quid pro quo on this.
I am not going to be able to protect the District’s legitimate rights
if the District subjects people, other jurisdictions, much less its own
people, to the procurement outrage and the other regulatory out-
rage in the District. I just want to be clear on that.

It is very hard to protect the District when I hear that, for exam-
ple, you are operating under the same 50 some layers of oversight,
and that nobody has sat down and said, OK, we want to keep con-
trol and this is what we are going to do to streamline the oversight.

So I just want the District to understand that I do regard these
things as quid pro quo, and I do think it is wrong, now that we
are a part of an authority, to say now you are subject to the out-
rageous regulatory scheme in the District of Columbia, which still
remains largely, as far as I am concerned, unstreamlined, even
though they have moved. You should have seen what it was like
before, is all I can say to you.

I want to ask specifically, I mean you have, one or the other of
you, testified that there are not any new procurement regulations,
and I would like to ask you to elaborate on that, because I don’t
see how you could have done anything by now under the existing
procurement system.

Other agencies have had to borrow the procurement of the GSA
or some other Federal agencies. I don’t see how you are able to be
in business if your business is being done through the procurement
regulations of the District of Columbia. How are you doing procure-
ment?

Mr. GRIFFIN. You may want to talk to and ask this question fur-
ther of Mr. Johnson, but we have been working previously through
the regulations of the District and working with the contractual ad-
ministration to put contracts in place. We anticipate that when we


94

In your testimony you mention “19 projects at Blue Plains totaling
$97 million.” Would you provide the Subcommittee with a list of those
projects?

The 19 projects at Blue Plains that WASA intends to initiate during the next year include
14. Expansion Joint and Pipe Support Replacement for the Process Air System
.. Nitrification Main Power Feed Cables

|. Dewatered Sludge Loading Facility Odor Control System

Filtration and Disinfection Facility Filter Backwash System Phase I!

Fitter Diversion Conduits and Dropshafts

}. Primary Effluenv/Excess Flow Control - Short Term

. Chlorination of Nitrification Retum Sludge

. Plant Wide Main Power Feed Cables

|. Primary and Secondary Interim Metal Salt Systems

10. Primary Sedimentation Tanks 1 & 2 and Associated Work

41. Filtration Facility Pumping Systems Upgrade

12. Area Substation # 5

13. Additional Chemical Systems

14. Electrical Power System Additions - 69 kv Modifications

15. Electrical Power System Additions - Switchgear Replacement

16. Electrical Power System Additions - Electrical Power Supervisory System
17. Electrical Power System Additions - Miscellaneous Plant Modifications

18. Nitrification Lime Facilities - Short Term

19. Flotation Thickener Rehabilitation

OCONAARWN


OFFICES OF THE COUNTY EXECUTIVE

Douglas M. Duncan
County Executive

Testimony of County Executive Douglas M. Duncan
Montgomery County, Maryland
November 12, 1997
District of Columbia Subcommittee, Government Reform and Oversight Committee

Good afternoon, Chairman Davis and members of the District of Columbia
Subcommittee, I am Douglas Duncan, County Executive of Montgomery County,
Maryland. I am joined today by Bruce Romer, our Chief Administrative Officer who also
serves as the Vice Chair of the WASA Board of Directors and the Honorable Sidney
Kramer, former County Executive and Maryland State Senator. Mr. Romer and Mr.
Kramer are the County's appointed Board members to the Water and Sewer Authority.

Our presence today is to convey our strong support for the activities being
undertaken by WASA and to demonstrate our commitment for continued regional
cooperation in the provision of water and sewer services through joint use facilities.

also want to recognize the effective and persistent leadership of Chairman
Rogers as well as the diligence, dedication, and determination of the five other District
representatives and our five suburban representatives. Through their work, a path has
been set to establish WASA as a world class system. These directors have all worked
conscientiously and cooperatively to set forth an aggressive agenda to restore public
confidence in the operation of our region’s water and wastewater system.

Much progress has been achieved by WASA over its first year as outlined by
Chairman Rogers, and acknowledged by Regional Administrator McCabe. Drinking
water quality has remained within federal standards, wastewater operations have all
remained within permit levels and WASA has complied with all of its federal mandates,
consent decrees, and stipulated agreements.

Water rates were increased 42% by the District Board members. This was the
first rate increase in more than a decade. Policies have also been established to meter
groundwater flows into the wastewater system and an aggressive plan has been adopted
for collections and delinquent accounts. Fleet maintenance is also improving for field
operations to perform repairs, read meters, monitor water usage and perform
maintenance. Throughout this transition, the WASA employees have remained dedicated
and committed to improving services. Their enthusiasm and hard work must also be
acknowledged. The challenge will be to provide them with the appropriate training,
equipment, technology, and resources to perform their jobs effectively and efficiently.

You've just had the opportunity to meet Mr. Jerry Johnson, the new WASA.
General Manager. Mr. Johnson’s first order of business was to assemble a strong
management team. The team has already made many positive improvements in the

101 Monroe Street, Rockville, Maryland 20850
301/217-2500, TTY 217-6594, FAX 217-2517 1

e


77

Schcommnities on the District of Colvenkia
‘Government Reform and Oversight Committee

November 12, 1997

Fleet Managemert

The District no longer provides WASA with fleet services, s0 we have contracted out
fleet maintenance operations in order to control and manage operating costs and to
perform repair and maintenance in a more hmely and efficient foshion. Tha manoge-
ment of thexe functions 1s being handled by our newly-created fleet management op-
‘rction

WASA%s fleet of 800 vehicles and varied equipment includes o large number that
have exceeded their useful life. The average age of this faa isin axcors of 10 years. We
will systematically replace most of those vehicles while increasing maintenance on the
rst of the older ones. Over the next three years we will be updating our existing flee!
with newer and more efficient vehicles and equipment, while reducing ts size by over
200 pieces. Inthe summer of 1997 lass than SO percent ofthe feet was operational.

That number has climbed to 74 percent and by year end it wil be close to 80 per-
cont, By the end of 1998, we expec! the percentage of road-worthy vehicles to be in the
tmid-ninehes.

10-Year Capital Program

For all uilty operations, long-term planing is essential to provide for orderly main-
tenance, service delivery, growth and progress. Capital projects in our business have a
lead-time of three fo five years or more and built into the cost of thore project are rigid
‘ond expensive regulatory requirements over which we have litle or no control. Thie is
‘why a change in WASA's direction cannot be achiaved overnight.

‘Additionally, our utility operations are relied upon 24 hour a doy. The wastewater
plant is a major advanced production fa-

cility. Qurwater distribution system, withal- [ FY 1998 Revised and FY 1999 Proposed Combined

‘most 1,300 miles of pipe, 9 storage focili-
ties and 4 pumping stations is relied upon
forconstant uninterrupted delivery of qual
ity water fo hospitals, restourants, hotels
‘and homes. These facilities cannot wait
nil crises sinke; they must be constanily
‘maintained and improved upon inorderto
deliver the quality services our customers
expect and deserve.

We have devised an ambitious, yetab-
solutely ential, capital improvement plan.
This long-term program will enable us to
protect our assets, upgrade aging equip-

($000)

PROJECTS.
376791

———

Mandated and WASA Initiated Capital Projects



83

Subcommittee on the District of Columba
Government Reform and Oversight Committes

November 12, 1997

we recewved $73 million, with a federal share of 55 percent. This grant match adjust-
iment does nol change the total number of grant dollars to be received by WASA but
smokes them available sooner

‘We have clio spent considerable time and effort going over old grants, closing out
cones where the work was finished but the paper work never had been completed. How-
‘over, WASA still needs to close grants more quickly and improve its record-keeping and
monitoring procedures fo ensure that we do not lose grants because we are unprepared.
We are addressing this issue through the dedication of specific, full time resources for
monitonng and supporting these important grant programs.

Similory, our relationship with the Washington Aqueduct, which treats the drinking
water WASA distributes, is also excellent, We have partnered on various projects in the
past year, including devising and instituting @ new water sompling systern for analyzing
drinking water. We have also negotiated a new financing plan with the Aqueduct, which
wall cary us through 1999, as we move nearer to agreeing on a more permanent mecha-
nism for financing improvements at the Aqueduct.

We are alto working with the U.S. Army Corps of Engineers, which operates the Aq-
veduct, to establish a new framework that will provide for a greater degree of involve-

-ment in their ongoing operation and capital planning process.

Customer Service

ltts important to note that our Board of Directors, in assessing WASA's operations,
‘quickly recognized the intrinsic strengths brought tothe table by many of our employees.
Many of the initiatives we undertook in the past year reflect the recommendations our
employees made in task force studies that crticaly examined avery aspect of our orga-
nization.

But, while recognizing those strengths, iis essential to note that we cannot become
‘2 world-class vilty without a radical change in WASA%s corporate culture. We have made
progress. But the fark of WASA’s new management feam isto intl in every employee
‘an understanding that we area business whose primary purpose is to provide top-qual-
ity service to ts customen.

The importance of WASAs customer service delivery must be falt throughout evary
‘work unit because every function of the Authority has an impact on its customers.

Inonderto design and implement a fint-rate customer service operation, we are un-
dertaking a comprehensive top-to-bottom review of our current strengths and weok-
nesses. Our goals are fo streamline the customer inquiry process; to facilitate quicker
tumaround fime in tervice delivery; to cut down on overtime; to seek opportunities for
managed competihon, and to cross-train employees in the customer conflict resolution
process



5

Mr. Davis. I see Ms. Norton is not here yet. We will allow her
to make a statement when she comes in.

Mr. Horn, do you care to make an opening statement?

Mr. Horn. No, I just wish you well as a resident of Washington;
fifth generation in the family.
fi Mr. Davis. Thank you. We have agreed to call our third panel
irst.

We have the county executive of Montgomery County, Douglas
Duncan; Michael Errico, the deputy chief administrator officer of
Prince George’s County is here, and you can come up as well; and,
of course, Tony Griffin, who is an alternate member from Fairfax

ounty.

I have to swear you in first. That is the rule of the committee.
If you will stand please.

[Witnesses sworn.]

Mr. Davis. Mr. Duncan, we will let you begin. We are glad to
have you here, and we appreciate your cooperative leadership in
bringing this about.

Mr. Duncan. Thank you very much, Mr. Chairman.

Mr. Davis. Give me 1 second. Ms. Norton has walked in, and she
may want to make an opening comment.

I yield now to the Representative from the District of Columbia,
Ms. Norton.

Ms. Norton. Thank you, Mr. Chairman.

Mr. Davis. I know, Doug, you wanted to have the benefit of her
input before you started today anyway.

Mr. Duncan. Absolutely. I always defer to Ms. Norton.
not Davis. And, Mr. Allen, if you want to say anything after Ms.

orton.

Mr. ALLEN. Thank you, I will pass.

Ms. Norton. Sorry, Mr. Chairman, I went to our usual meeting
place.

Mr. Davis. Our regular hearing room. I see.

Ms. Norton. Mr. Chairman, I expect today’s hearing on the Dis-
trict of Columbia Water and Sewer Authority to be a good news
hearing for the District and the region. The new Authority has
quickly proceeded on strategies that are solving many of the prob-
lems that led to its creation.

Perhaps the best news is the news that affects the health of the
residents of the region. The funds that were added to last year’s
appropriation by Representative Julian Dixon, who was then the
ranking member of the D.C. Appropriations Subcommittee, have
been used productively in a flushing program. This critical funding,
as well as other activities by WASA, have resulted in the elimi-
nation of violations this year. The environmentalists with whom I
worked so closely on water clean-up legislation and activities in the
EPA are also glad to see this progress.

Iam particularly pleased that we have been able to get the State
funding match for the wastewater treatment plant construction
funds changed from 55-45 to 80-20 in favor of WASA. In effect,
this change relieves the District of another State function it cannot
afford, and Virginia and Maryland get a benefit they did not antici-
pate.


111

of things being dumped around there, would be a real target. So
you feel they are really willing to do something about it?

Mr. McCaBE. We feel that they have cooperated with us up to
this point, and we still have some issues to work out, but they have
been supportive, and I think that you are going to see a very strong
schedule come forward.

Mr. Horn. I am delighted to hear it. Thank you all, appreciate
your testimony.

Mr. Davis. Mr. Horn, thank you very much.

Without objection, the record will remain open for 10 days; and.
without objection, I ask that any written statements submitted by
the Control Board and any other written statements from wit-
nesses or Members of Congress be made a part of the permanent
record.

{The prepared statement of Hon. Steny Hoyer follows:]


81

‘Subcomnuition on the Distt of Colsmmbas
Qevernment Bator and Oversight Comnitton

November 12, 1997

rz who do not pay their bills.

+ Late Fees: We are going to begin adding a 1 percent late payment charge, com-
pounded monthly, for any water bill that remains unpoid for more than 60 days. This
is in addition to the one-time 10 percent charge we curratly employ.

+ Receivership: We will immediately ask for cour-appointed receivers to collect
rents from landlords and apply those rents to unpaid bills,

+ Property Liens will be placed against properties with delinquent accounts.

+ Publishing the Names of Delinquent Customers in local newspapers.

+ Negotiating Payment Agreements

+ Installment Agreements

+ Incentive Program: We will offer 2 $50 payment to WASA employees who
report situations where a customer has bypassed a meter and where water i being
used but not being metered or billed.

+ Enforcement of Legal Provisions for Theft of Service: In FY 1998, we will
propose adding o Utility Investigator who will be responsible for investigating and
‘enforcing oll legal provisions relating to theft of water
Additionally, we are reviewing the applicable provisions and the penalties, some of

which were adopted many years ago, and may propose tougher penalties more in line
with today's water and sewer rates

+ Monthly Billing: We are developing o plon to move all customers to monthly
billing, beginning with our commercial customers. We know that many customers
want this service and we will continue to bring on these customers based on re-
quests, and all others within a targeted fime frame.

+ Delivery of Accurate Bills: We have also begun to make intemal improvements
0 our own procedures to perform at the level our cusiomen expect and deserve.
ur goal is to read 100 percent of all accessible meters with an accuracy rate of
99.9 percent.

Inoddition, we will accelerate the large-metertesiing program and replace all small
meters at fifteen year intervals.

We will also accelerate our collection afors in the sary stages of non-payment be-
‘caure this isthe time we ore most likaly 18 be successful.

‘Also, the Board of Directors has instructed us to bagin charging building owners for
the costs of treating groundwater that &+ pumped info our sewer system. We have in-
formed the owners oftheir need to install meters and we will begin to bill for this servic,



107

Mr. Horn. Overall, what is your estimate as to the amount of
funds which you get from all these sources in the surrounding
areas, as well as other governmental entities, as well as rate-
payers? Is it 90 percent of your budget or is it even higher?

Mr. JOHNSON. I would say it is at least 90 percent, sir.

Mr. Horn. I guess, Mr. Chairman, where I feel very strongly is
they shouldn’t have to follow the procurement regulations of the
District of Columbia, and we ought to stick it in the budget, if we
have to, that entities that are self-funding ought to be free of some
of these regulations, because it is simply delaying in time solving
the problem. And I noted here that apparently suburban Board
members may vote on all issues affecting the general management
of joint-use facilities. Obviously I wonder to what degree is the sta-
tus of the personnel system—are we following the District of Co-
lumbia on that too? I would certainly not recommend anything I
can think of in this city to be followed, and I would think that you
would want the most modern personnel system you can have. And
where are we on that?

Mr. RoGers. Mr. Horn, at the current time, there is a memoran-
dum of understanding between the District and the Water and
Sewer Authority for processing personnel actions, payroll, et cetera.
That was a matter of convenience for the new Authority until we
established our new personnel rules.

New personnel rules were developed by a committee of the
Board, on which there was representation from all jurisdictions on
the Board. Those regulations have now been adopted by the Board
and will be published in the D.C. Register. I do not concur with the
prior assessment that those new personnel regulations totally fol-
low the District regulations. There was opportunity for the Board
members, all participating Board members, to put on the record
and include in the debate, you know, those changes that they felt
incumbent to include.

If there remain some outstanding issues that we should address,
then we as a Board will address those issues to make us even more
independent. But in this first year, as we were trying to build this
new Authority, we found that as a matter of convenience, consider-
ing the capacity of the staff that we found, to continue to rely on
the District process, and we have—we negotiated through that, we
treat them like any other contractor, we pay a fee, but we expect
a service, and the District has been responsive. It was part of my
job to see that they were.

Mr. Horn. Is the procurement system in the same situation in
terms of your use of the procurement system? The testimony is the
chief procurement officer feels you should be going through him.

Mr. RoGErs. Yes. As I pointed out, it was clearly our intent to
separate ourselves from the District procurement system, and we
felt we had done that in the WASA legislation. But a subsequent
piece of legislation for procurement reform came back and included
all independent agencies, you know, under the District’s procure-
ment system. And the chief procurement officer perceives that as
including—and so does corporation counsel—including WASA. So
clearly we need some additional clarity with respect to that, but I
think we will work through it. The new chief procurement officer


92

zec'ests
s10aroud
G3LVLLINI VSVA

bezels
ei1oaroud
GaLVaNV

(000s)
syoofoid [e11d8D peyeniU] YSVM PUB PEYBPUBW PeU|qUIOD
pesodod 666} Ad PUB pesjAey] S66} Ad



‘Subcommittee on the District of Cohvmbia
Government Reform snd Oversight Committee

November 12, 1997

WASA’s Board

My colleagues on the Board and | can proudly and assuredly say that WASA is wall
‘on its was to completing the first phase of our vision. There were many outcomes ex-
pected during the transition. Among them: Increased customer satisfaction, increased
revenue, increosed quality of services and improved productivity. We set out with an
‘ombitious business plon. During our ver fist mestings, the Boord instituted and adopted
the by-laws and established standing committees that included oll Boord members and
caherate members. This way, we were able to take full advantage ofthe expertise brought
tothe table by all.

Budget and Finance Committee

This committee, chaired by Mr. Ron Linton, has met numerous times and has de-
voted on abundant number of hours reviewing WASA's financial structure ond budgets.
The commitiee members thorough analysis of WASA's finances with staff har enabled
ts to have o comprehensive understanding of our financial situation.

Operations Committee

This committee, chaired by Mr Charles C. Johnson, has undertaken a critical re-
view of the operational functions of the Authority. In consultation with staff and consult
‘ons, we are in a much better position in determining and implementing our operational
requirements for the multi-year capital improvement projects

Human Resources and Labor Relations Committee

This committee, chaired by Ms. Lucy Murray, has tumed around a new paradigm in
employee organizations. The committee, in consultation with staff, has achieved the cre-
ation of WASA’s own personnel rules that were recently published in the District of Co-
lumbia Register and the Board passed a resolution for final rulemaking this month. Ad-
ditionally, forthe first time ever, the committee and the Board have negotiated a single
collective bargaining agreement covering all of WASA’s unionized employees, instead
‘of the multiple contracts heretofore. Currently, all non-compensation issues have been
‘agreed upon. We are in arbitration over compensation issues,


‘Subcommiiee on the District of Cotumbte
Government Reform and Oversight

November 12, 1997

Training

This area hos long been neglected, and in addressing the issue, we are guiding the
systematic design of an authortty-wide plan for upgrading the skills of all WASA employ-
‘ees. Remarkably, this Utility is the only plant in the United States or Canada, that does
not certify its operators. We will give up that dubious distinction ot the end of this year
when the Associated Boards of Certification administers the first certification exam at
WASA.

Capital Improvements

Ourten-year, 1.7 billion-dollar Capit! improvement plan wil allow the Authority
to make the repoirs, perform the maintenance ond schedule the upgrades needed to
make WASA pre-eminent in its field. The plan isin three main categories: Wastewater,
stormwater and water projects

The lion's share ofthis total -- $1.1 billion -- goes to wostewater programs; the por-
tion for water treatment, storage and distribution projects is $484 million; and for
stormwater projects the total is $47 million.

Cost to Treat Wastewater FY 1997



18

Budget and financial concerns

As you are clearly aware, the finances of WASA were in
almost total disarray when the Board took over. Several
challenging months ensued, with budgets continually being revised
as new information was developed and discovered. Again, we
applaud Jerry Johnson for his hiring of Paul Bender as chief
financial officer and together for their consistent and
conscientious approach to all aspects of the budgeting process.
We have undertaken an external review of our revenues and have
finally arrived at what we hope is a solid foundation on which to
move forward. After a preliminary analysis, the FY1999 budget
appears practical and do-able from an implementation standpoint,
as well as being fiscally sound.

The County remains concerned, however, that WASA must
continue to operate within the framework of the District of
Columbia's budget. In brief, this process as we understand it is:

. The Authority must review and approve a budget and
Capital Improvement Program (CIP).

. Although they cannot revise it, the Mayor and Council
must still review and transmit the budget.

. The District's Chief Financial Officer and the
Financial Control Board maintain review and approval
authority.

. The U.S. Congress must adopt the WASA budget as part of

the District of Columbia budget.

In addition, there is another wrinkle for those of us in
Montgomery and Prince George's Counties, which contribute 40
percent of operating costs and 49 percent of capital costs for


AT

Mr. Davis. Mr. McCabe, thank you, and thank you for all the
work you have done.

Before we hear from Mr. Rogers, I would like to say that this is
the first time, Michael, that you will be testifying before Congress
before retiring, as city administrator and Deputy Mayor. We have
always enjoyed working with you and I thank you for your years
of service to our community. I am delighted you are continuing to
serve in the important capacity as chairman of the Water and
Sewer Authority, an entity that you did so much to create, both be-
hind the scenes and publicly, and we are seeing the results of that
today. Thank you.

Mr. RoGERS. Thank you, Mr. Chairman. Good afternoon, Mr.
Chairman, Ms. Norton, other members of the subcommittee. I am
Michael C. Rogers, chairman of the District of Columbia Board of
Directors of the District of Columbia Water and Sewer Authority.
I thank you for the opportunity to come before you today and share
with you the Board’s accomplishments, business plan and vision
that was set well over a year ago.

This is indeed an opportune time to have this discussion, for
WASA celebrated its first anniversary last month. The Board, man-
agement and employees have reason to be proud of the Authority’s
accomplishments during the past year.

The Board met for the first time on September 26, 1996, 3
months after appearing before this subcommittee. The Board faced
many challenges at the time. The primary challenge was to trans-
form the District government’s Water and Sewer Utility Adminis-
tration, WASUA, into a semi-independent Authority. This was a
formidable task, as this entity is the District’s—one of the District’s
most valuable assets.

There were other daunting challenges to confront. At that time,
there was a deep and pervasive sense of skepticism about whether
it was safe to drink the water in the Nation’s Capital.

Throughout last summer, tests revealed levels of coliform bac-
teria that consistently exceeded Federal limits. Although harmful
bacteria were never detected during this period, there was a public
perception that the city’s water distribution system was on the
verge of collapse.

Additionally, the utility was tied to a cash-strapped city, mired
in its own financial woes. Thus, in what might be described as the
parmonic convergence of the political and the practical, WASA was

orn.

When the Board met in September 1996, we set an agenda, a
comprehensive business plan that first included critical scrutiny of
the operations at WASA. We knew then that in order to renew the
confidence of our customers, it would be our obligation to devise a
responsible, comprehensive business plan to make the successful
transition from WASUA to WASA and provide quality services to
our ratepayers.

Over the past year, the Board of Directors has been putting into
place the elements of a long-term plan to position WASA as a
world-class operation and leader in its industry.

In the past year, the WASA Board of Directors has developed as
a functional business entity that has demonstrated that it is an an-


51

It was believed that WASA was outside the scope of the respon-
sibilities of the chief financial officer of the District, with the board
of Directors having fiduciary responsibility. We believe WASA
should direct its own financial operations and not be subject to the
same level, of oversight of other District agencies. The CFO did not
agree. For the time being, we have resolved the matter by agreeing
to a memorandum of understanding with the CFO to delegate his
responsibility to the Board of WASA and we to the general man-
ager and the WASA CFO.

We still believe that the WASA legislation should be changed to
make clear that the Board is responsible for the finances at WASA.
Oversight by the District of Columbia Financial Responsibility and
Management Assistance Authority has occasionally taken far
longer than we believe is acceptable. We hope we can look at
DCFRA’s role with respect to WASA, particularly with respect to
budget oversight and contract review, with an eye toward recogniz-
ing WASA as the independent multijurisdictional entity that it is.

As chairman I have enjoyed the full participation of the entire
board. We have conducted our business in a collegial, intense and
analytical manner. The District has benefited from the participa-
tion of our suburban customers and partners, and I appreciate the
manner in which we have come together to protect WASA’s valu-
able assets and service delivery.

I have truly been fortunate as WASA’s chair during its transi-
tion, and look forward to the next phase. It has been gratifying to
orchestrate WASA’s interest with that of the government practices
and business community, who all want to do the right thing, be
they in the District or surrounding jurisdictions.

We have a very bright future with this Authority. Certainly as
we discuss some of the issues that were raised by other board
members, there may be some difficult discussions as we sort out
the interest between the District and the suburban jurisdiction.
But I have no doubt, Mr. Chairman, that we can work through
those issues in the same collegial and deliberative manner that we
have conducted our business over the last year.

I want to thank you and Mrs. Norton and all the members of the
subcommittee for the support you have given this new Authority
and we look forward to your continued support and cooperation.
Thank you.

Mr. Davis. Mr. Rogers, thank you very much.

[The prepared statement of Mr. Rogers follows:]



Mubscomnmntten on the District of Colombia
(Qovernanent Reform and Oversight Commitioe

November 12, 1997

sment.grade bond rating. The objective isto enaure the lowest practical cost of debt

racossary to finance our long-term capital program.

Establishing strong levels of cash reserves, equivalent to approximately six months of

‘operating costs. Since our cash receipts from routine curtomer sales should exceed

rovtine operating costs, we would expect any one-time cath receipts to go directly

into cash reserves until they are at the appropriate level.

Establishing strong debt service coverage requirements, consistent with our bond-

roting objectives.

Using a prudent amount of operating cath, generated at a result of our debt service

coverage requirements, for capital financing-ater we have established adequate

cosh reserves.

+ Atemphing to ute the leost costly type of financing for capital projects, based on a
coreful evaluation of WASA%s capital and operating requirements and financial po-
sition each yoar

Collections Policy

‘Over the past year, atthe direction of the WASA Board of Directors, we have aggres-
sively gone alter delinquent account holders and have recouped neatly $3 million in
‘outstanding debi. The Board alto established more equitable billing procedures and
‘a are now billing vtually everyone who utes our services. We alto intend this year to
put the Bureau of Water Management and Billing under the office of the chief financial
‘officer Previously it had been a stand-alone department reporting to the ganeral man-
‘ager. We will make it more efficient and place a greater emphasis on customer rela-
tions.

Despite these effort, we stil have o substantial portfolio of long-term uncollected
delinquencies. Among other strategies, we arw exploring the possibilty of selling those
delinquent accounts . However, we do not want o find ourclves with a mounting pila of
pew delinquencies at some future date. Therefore, we hove performed a careful analysis
of our collection policies.

This analysis culminoted in a decision to revamp ourcollactions procedures and the
resul ison 11-point Collections Plan:

+ Termination of Service: Our policy has been to terminate service for non-pay-
rect for all customers except those providing muli.family housing. Although we
have the legal authority to do £0, we have not cutoff service to apartments with four
‘or more units. This will no longer be 0 protected class. As toon as we provide the
necessary lagal notice fo our customer, we will begin to cut off services to al own-



13

triple WSSC’s financial contribution from the current $100 million
over 6 years to almost $300 plus million.

These are important accomplishments and have set us on a posi-
tive track. Prince George’s County continues, however, to have con-
cerns in several areas. One of the major reasons behind the cre-
ation of WASA as an independent agency was to allow for jor
changes to the organization’s personnel and procurement regula-
tions, which were hopelessly caught up in the District’s procedures.
Unfortunately, at this time, it is necessary that the District con-
tinue to handle WASA’s payroll and personnel matters under a
contract.

In addition, WASA’s recently adopted personnel regulations still
parallel too closely those used by the District of Columbia. Al-
though they begin to move away from the business as usual per-
sonnel format, they are still far removed from the kind of flexible
and goal-oriented regulations envisioned for the new authority.
There has also been no formal action on the adoption of new pro-
curement regulations at this point.

And although we are pleased with the new budget process, the
county remains concerned that WASA must continue to operate
within the framework of the District of Columbia’s budget.

A related issue involves WASA’s approaching bond issue. Again,
the District Government retains legal responsibilities, and any
bond action must go through the Control Board. The WASA Board
and the suburban jurisdictions, in particular, are working hard to
create a new climate of change and pro-activity within the WASA
organization. However, actions such as those I have just mentioned
only perpetuate the feeling among many WASA staffers that the:
are still an adjunct of the District government, a view with whieh
we do not agree.

Turning to the Blue Plains InterMunicipal Agreement of 1985,
the agreement clearly states the Blue Plains Regional Committee
is the sole coordinating body among the parties for Blue Plains
issues. The WASA Board and local jurisdictions have not yet begun
to address the relationship between these two entities. The Blue
Plains Regional Committee offers a solid base of technical expertise
as well as policy guidance on wastewater and Sewage issues. Dis-
cussions must begin soon to establish a coordinated effort to use
these attributes in the WASA process. I should note WASA’s Gen-
eral Manager, Mr. Johnson, indicates his wholehearted support for
the continuation of guidance from the Blue Plains Regional Com-
mittee.

Last, I want to touch on two requirements of the authorizing leg-
islation: The feasibility of establishing the Authority as an inde-
pendent regional authority; and, second, the feasibility of
privatizing or leasing the Blue Plains plant. A committee has been
actively engaged in addressing the privatization study. However,
the study will not begin until March.

Discussions are also underway regarding the direction and scope
of the regional authority study, the next priority of the committee.
We are somewhat disappointed it has taken this long to address
these important aspects of the authorizing legislation. We recognize
that the Board has been making a concerted effort to achieve con-
sensus positions on the issues addressed to date. Although our ob-


Subcommitten on the District of Cofvmbbla
Government Reform and Oversight Commition

November 12, 1997

Procurement

We have made significant progress in our campaign fo conform our femal busi-
‘ness practices to generally accepted industry standards. These new standards mandate,
‘among other things, competitive bidding on falmost] every contract. Additionally, we
hove hired the consultant, Systemsflow, Inc. fo assist in the drafting of the procurement
regulations and internal procedures. Once completed, this wll unio us from the eum-
bbersome District procurement process that generally impedes our purchasing require-
ments and ultimately, our service dalivery.

Fleet Maintenance

In July ofthis year, we executed a new maintenance contrac that will boost the per:
centage of vehicles on the street from less that 50 percent this past summer, fo 80 per-
cent by the end ofthe year: We have already brought that number upto 74 percent.

Billing and Collections

We ore now charging a fee to [vrtvally] everyone who uses our services. Addition-
ally, we guided the staff fo devised o comprehensive collections plan that has been
drofted. Mr Johnson will have more details about this in his testimony.

Also, since adopting © more aggressive posture with delinquent account holder
‘we have thus far collected almost $3 million by moditying intemal procedures. Wa have
published @ partial list of delinquent account holders to assist in this effort and to dem-
‘onstrate that this Board will not folerate such delinquencies any longer. Further, we want
to demonstrate to our customers who do pay ther bills, that hey should not and will not

‘any longer subsidize our collection efforts when delinquent customers do not pay their
bills

We alto are looking at the sale or secuntization of thore accounts we cannot rea-
sonably expect fo collect through our own efforts. Our focus is, and must be, on re-
vamping our billing ond collection procedures 10 that we wll nevar ogain find ourselves
holding milions of dotiars in long-overdue and largely uncollectable debt.


2

The new law, in place for 13 months now, stabilized an 11-mem-
ber authority with five suburban representatives and a super-ma-
jority required for significant actions. Blue Plains was transferred
to the Authority.

When Congress approved and the President signed our sub-
committee legislation conferring borrowing power of the new au-
thority, we consciously deferred some outstanding issues. These in-
cluded privatization, and the ultimate creation of a'true regional
authority. I look forward to hearing appropriate witnesses today
address those issues. It is the clear intent of Congress these mat-
ters be implemented as soon as possible.

The District’s financial plan provides for an orderly payback of
$83 million to the new Authority. The Control Board has assured
the subcommittee and the participating jurisdictions that it fully
intends to enforce the District’s commitment to repay those funds.
Congress, of course, retains both the ultimate power to force repay-
ment and the ultimate guarantor.

Many thanks to all of the local, State and Federal officials who
have made it possible to achieve so much progress in this impor-
tant area.

[The prepared statement of Hon. Thomas M. Davis follows:]


12

‘Sebrcomumltve on he District of Coven
Goverment Retore and Oversight Commision

November 12, 1997

We have begun to make these changes but they will take ime. WASA operates the
Blue Plains Advanced Wastewater Treatment Plant, one of the largest advanced waste-
‘water treatment facilities in the world. We aluo have responsibilty fora water disibution
system serving the residents ofthe District of Columbia and other outying areas. Putting
insitution on @ new course is akin to changing the direction of an sircraft carrier
Neither can be tumed ona dime. But WASAis changing course with all deliberate speed.

In recent months we have hired some of the major player: for our management feam.
Poul Bender is our new chief financial officer and Michael Marcotte hos joined us ot
chief engineat. Both have excellent credentials and already have begun to put their im-
print on this utility

We are focusing our efforts on several other critical positions, including @ general
counsel, directors of human resources, procuremert, and information technology, an
intemol auditor, ond permanent Bureau Chiefs for Water Services, Maintenance Services,
‘and Sewer Services. We have cost « broad net for these critical positions. In fact, we
have conducted a national recruitment effort and the responses we've received thus for
indicate thot people ore keenly interested in what we are trying fo accomplish here and
‘wort to be par of ourteam. We have clearly caught the attention of the leaders in our
industry. We expect io have made offers on all of these positions by the end of the year.

Fiscal Year 1998 Budget

(Our revised fiscol year 1998 budget, which will be submitted to The District of Co-
lumbia Council, the DC Financial Responsibility and Management Assistance Authority
‘and Congress shortly, reflects an overall $41 million cost reduction from the budget ax
originally submitted. We
project a bottom line cash

WASA Projected Cash Reserves

surplus--that will be trans-
ferred directly to cash re-
serves--of $20 million; this i
$21 million more than the
$1.3 milion defied that was
originally projected for
1998. These revised budget
numbers put us on track to
‘establishing $90 million in
‘cash reserves by the end of
FY 1999. Thiais an essential
step in our efforts to position
‘ourtelves fo enter the bond
morket successfully.



27

I must credit my colleagues on the Authority's Board of Directors
for their diligence and commitment to make the Authority the best
it can be. There is the recognition that the fundamentals exist
to make Blue Plains once again the model for the nation, both in
terms of operation and advanced technology. I also acknowledge
the courage of the District of Columbia members of the Authority
Board who made the unpopular decision to raise water rates by
almost half in order to stabilize the fiscal foundation of the
Authority.

The next critical test of the Authority is when it goes to the
financial markets to sell revenue bonds in support of its capital
improvement program. Even though the Authority has a large and
ambitious program for the next several years, I am anticipating a
positive response from the markets because of the progress that
has been made by the Authority in the past year. It should be
noted that the Authority needs to move quickly to catch up on a
backlog of repair and rehabilitation of the water and sewer
system,

In the coming year I expect the Authority to finish the
privatization study. and begin the study related to the Authority
potentially becoming a regional authority. I expect that the
administrative changes related to personnel, procurement, and
information technology underway will be finalized and any
remaining ties to the District government will be by choice and
contract.

Issues to be resolved by further legislation include changing the
manner by which the Federal Government pays for the water it
consumes; the deeding of the property which the Authority is
operating at Blue Plains from the District Government to the
Authority at no cost, and to set the Authority free from budget
review by the District’s Mayor and Council, and oversight by the
Control Board. With regard to the last item, I hope that this
past year and the coming one will enable the Congress to see that
the Authority has a responsible Board and responsive employees
and that the additional oversight will not continue to be
necessary, particularly in light of the participation by the
suburban members of the Authority.

I thank you for the opportunity to be here today to comment on
the progress of the Authority. I would be happy to answer any
questions.


70

We will also enforce legal provisions for theft of services and
move to monthly billing, beginning with our commercial customers.
We will also begin the delivery of accurate bills by internal adjust-
ments, and our goal is to read 100 percent of meters that are acces-
sible, with an accuracy rate of 99.9 percent. There are several other
detailed provisions of that policy that are included in my written
testimony.

Because we have demonstrated our commitment and ability to
carry out Federal mandates, EPA has requested and Congress has
passed a provision increasing to 80 percent the portion of total
project costs funded by grants. We have also spent considerable
time and effort undergoing and looking over old grants and closing
out the ones where work is finished but the paperwork has not
been completed. However, there still needs to be a significant
amount of work done, and to address that we have brought on full-
time assistants to complete those grants.

We are also looking at comprehensive performance measures, not
only for each work unit within the organization at WASA, but also
on an individual basis in establishing performance goals and objec-
tives.

There are several of the organizational initiatives that I would
be pleased to discuss with you. However, at this time, given the
time of day, sir, I would be glad to answer any questions you might

lave.

[The prepared statement of Mr. Johnson follows:]


‘Scbcommiien on te District of Cobra
(Gevernament Reform snd Oversight Committee

Newember 12, 1997

Attachments


20

This is just another example of the continuing influence of
the District over WASA's operations that are of concern to the
Counties in general, and Prince George's County in particular.

Plant Maintenance and Operations

Blue Plains was once the most advanced facility in the world
in providing sewage treatment. Unfortunately, years of neglect
and funding diversions away from the Blue Plains Plant have taken
a serious toll. Again, however, WASA Board actions and the
efforts by the new general manager are moving us back into a more
productive and efficient arena.

Current proposals to spend more than $1.7 billion for a ten-
year capital improvement program to repair and upgrade the
distribution system, rehabilitate wastewater treatment and sewer
facilities, and upgrade the City’s stormwater infrastructure are
now under scrutiny by the Board. We in the Counties are mindful
that this could potentially triple WSSC's financial obligations
from the current $100 million over six years to $300+ million.

Among the most important projects for us is the fulfillment
of recommendations contained in the Blue Plains Biosolids study
performed under the auspices of the Council of Governments.

The biosolids problem at WASA directly affects our contracts
to haul sludge to various land application sites. WASA staff is
currently developing an implementation strategy that will discuss
staging, costs and magnitude of the project. Nevertheless, the
study recommended capital improvements to the Blue Plains
facility totaling approximately $350 million over five years.


37

I think that that bears repeating. There have been no violations
of drinking water standards and no significant violations of the
wastewater permits. That fact alone stands in stark contrast to the
District’s troubled history over the last decade with its drinking
water and wastewater programs, and it is something that I have
focused on specifically since my tenure as Regional Administrator.

I think that last year, when I came before the subcommittee, I
testified both times that the drinking water and wastewater sys-
tems in Washington are in serious trouble. While I still have con-
cerns about the long-term health of the drinking water and waste-
water operations, which I will detail in a minute, I am pleased to
offer a much more positive assessment today. There are several
reasons for optimism and a number of factors which deserve credit
for getting us to this point.

First, the EPA has taken an active role, some would say a very
aggressive role, in addressing these problems. We have taken legal
actions, requiring major changes in the way that the city conducts
its drinking water and wastewater operations. We have put to-
gether a team of national experts to work specifically on the drink-
ing water crisis in 1996. Members of my staff took samples vir-
tually every day of the District’s water that summer, and we ana-
lyzed those samples in our laboratory in Annapolis. We ran a con-
sumer hotline that was updated daily. And with the strong support
of EPA Administrator Carol Browner and Deputy Administrator
Fred Hansen, today one of the agency’s most senior experienced
and talented employees, Rebecca Hanmer, is on special assignment,
serving as my liaison to the District, and she is here today. Ms.
Hanmer served as headquarter’s Director of EPA’s water programs
in the past and, in fact, has also served as Regional Administrator.
Today she is working directly with the top leadership of WASA,
city government and the Control Board.

Obviously, the Congress and your committee deserves credit, too.
The behind the scenes efforts the chairman and Ms. Norton under-
took to build political support for the new Authority was critically
important, although little recognized. Legislation you authored, Mr.
Chairman, was essential for WASA to go to the bond market. The
1996 Safe Drinking Water Act amendments established a special

ants program for the District that will bring an infusion of nearly
$0 million by the end of fiscal year 1998.

And just last month Congress approved Ms. Norton’s measure
that temporarily lowers the match requirements, enabling WASA
to begin work immediately on 19 projects at Blue Plains, totaling
$97 million.

While the EPA and Congress both deserve some of the credit, a
great deal of it also belongs to the Water and Sewer Authority
itself. WASA has selected a top notch management team, developed
detailed and intelligent long-term financial plans and has made po-
litically difficult decisions ranging from setting rates to establish-
ing priorities. The Authority’s operational leadership team has pro-
vided a refreshing degree of professionalism. Perhaps most impor-
tantly, the Authority has done a good job of rolling up its sleeves
and getting to work on an enormous backlog of neglected mainte-
nance and past failures to invest properly in its infrastructures.


57

‘Subscormition om the District of Cahora
(Gevernavent Retorm snd Oversight Committee

November 12, 1997

Water Quality

The District of Columbia's water quality has never been beter. Lost summer, forthree
months in a row, we exceeded the limit for coliform bacteria. This summer, we proudly
reported quite a different story.

Test results for coliform bacteria --the most closely watched barometer for drinking
‘water quality -- have been, without axception, well within federal guidelines. The feder-
ally mandated limit is 5 percent. During the summer of 1996, the average was twice
that about 10 percent. This summer the average wos about ONE (1) PERCENT.

Several facton have contibuied to the improvement in drinking water quality, in-
cluding @ better drinking water sampling program; an updated disinfection, cleaning,
lining and pipe repair program: a more effective valve flushing program and, the clean-
ing, mepecting and disinlecting of all reservoirs and storage tanks. During the coune of,
this fiscal year, and as part of our multi-year capital improvement plan, we will begin
various construction and rehabiliation project that involve our water storage tanks and
the reservoirs. Mr. Johnson will address these specific projects in his testimony.

‘Another significant factor isthe close ond effectiva working partnership WASA hos
developed withthe Washington Aqueduct, which treats the water before i enters our dis-
tribution system.

We shared the news about this dramatic tumaround with the public ato joint press
‘conference with the EPA in September this year Few would have envisioned that stand-
ing atthe some podium with WASA officals, and praising he state ofthe Distrit’s drink-
ing water, would be one of WASA's most cnicol voices. However, Michael McCabe,
the EPA Region Ill Administrator, was there acknowledging that while much work remains
tobe done, WASA has passed a critical fet

During this transition period and to date, WASA has managed fo comply with its
myriad of federal mandates. This stellar record of compliance extends to the require-
‘ments of the Safe Drinking Water Act, WASA’s operating Permit under the Cleon Water
‘Act, a Consent Decree, and a Stipulated Agreement with EPA.

But while safe drinking water and compliance with federal orders are the most im-
‘pressive visible signs of our progress, a deeper look reveals other signs of significant
change. These ore the changes that will enable WASA to continue the vital tasks of up-
‘grading an aging infrastructure while simultaneously taking advantage of new fechnol-
‘ogy and modern business practices.

The overall blueprint the Boord has designed and is implementing with stff i cit
cal fo WASA's future. But its success hinges on a decision by the bond market fo -- quite
literally -- buy into our vision for the Authoniy. We believe the steps we have token, and
those we have planned for he next few years, will provide our potential financial part-
‘ners withthe assurances they need to invest in WASA's future.


23

In conclusion, the District of Columbia Water and Sewer
Authority is well on its way toward establishing a track record
of significant accomplishment on which to address future issues.

Thank you for this opportunity to testify before you today.
We in Prince George's County sincerely appreciate the efforts and
commitment presented by Chairman Davis, Congresswoman Morella and
Congresswoman Norton to ensure that the Water and Sewer Authority
works for ALL of its customers.


Sebcemmntnee om the District of Cubvenble
(Covermment Before: and Oversight Conumitee

November 12, 1997



44

<4.
+  adetailed financial management plan;
+ avalve repair and replacement program; and

+ regular reports on progress.
The key component of the order was the development of the detailed Remediation
Plan, including the financing plan to support the outlined work. The final Plan was
approved by EPA on March 6 of this year and is automatically incorporated into the
Administrative Order.

WASA has done a very significant amount of work to meet the conditions of this
Order. For example, reservoirs have been cleaned and disinfected in a timely fashion.
The Authority has a good flushing program underway and has initiated improved
training for its operations staff regarding cross connections and disinfection programs.
‘While we have been impressed with the breadth and quality of the work done so far,
not every facet of the Administrative Order is being fully implemented. For example,
WASA submitted, and EPA has approved, a significantly improved bacteria sampling
plan on June 2, 1997. WASA is several months behind, however, on the installation of
new samplers. We do not view these deficiencies as critical at this time, but we are
carefully monitoring and working with the Authority to insure compliance with ail the
elements of the Order.

WASTE WATER

Because of numerous permit violations at the Blue Plains plant, EPA went to
federal court on April 4, 1996, taking the City to task for violations of the Clean Water
Act. At the same time, we proposed a series of steps that the District would have to
take in order to resolve the case. We required the City, and subsequently WASA when
it assumed control of the facility, to meet very specific operational performance
standards and to undertake eight specific projects, ranging from rehabilitation of the
nitrification settling basin to installation of primary sludge screens. The Commonwealth
of Virginia challenged that settlement in court in May, and | expressed my concern at
your June 12, 1996 hearing that such a challenge could delay progress at the plant.
Fortunately, we were able to reach an informal agreement with the District for them to
go ahead with the provisions of the Order even before the Court formally ruled on the
issue. After hearing (and dismissing) the Commonwealth's arguments, the Order was
finally entered in August of 1996. Today, I can report that WASA has met every one of
the performance measures we established and, as of last month, had completed all
eight projects. And the Authority did so both ahead of schedule and under budget
estimates. Clearly, a new day is upon us.

REMAINING ISSUES.

While extraordinary progress has been made by the new Authority, | would be
remiss if | were to suggest to the Subcommittee that ail is well with the drinking and
waste water operations in the District and surrounding jurisdictions. There are four
issues that I would like to call to your attention.


85

Subcommattes on the District of Cohumiba
Government Retorm and Oversight Committes

November 12, 1997

Emergency Response

We are making internal changes to facilitate better coordination of emergency situ-
ations such as water main breaks, valve and hydrant replacements.

As. port of these efforts, we are adding key positions to allow us to respond more:
‘quickly and efficiently to emergencies twenty-four hours a day, seven days a week. These
initiatives and others will help to keep WASA in compliance with federal drinking water
requirements and meet the needs of our customers.

ORGANIZATIONAL INITIATIVES

We intend to make additional structural and procedural changes. In many cases,
this will mean @ reallocation of existing penonnel and resources fo refocus on certain
critical areas rather han adding staff. We do not have to establish a costly new bureau-
‘racy fo accomplish our goals.

For example, we ore reorganizing our procurement unit, Where we originally pro-
jected « need for 27 employees, we now expect fo accomplish our goals with « stat of
14. This unit, as with some of the other urits we will create, will be geared toward moni
‘toring and reviewing tasks that have been transferred to the requesting units. Forexomple,
we believe thal units requiring RFPs can and should prepare those documents using their
own stafs; the role ofthe procurement unit will be to provide oversight and advice.

(Our stoff projechons have shrunk as we've looked more closely and eritically ot
\WASA's budget and organizational structure. We have concluded that we can work more
efficiently ond increase productivity with a laan, decentralized organization and better
trained employees who are held accountable to higher standards.

Itisalso important o siress that most of the positions in these new units will be com-
prised of existing staf, Among our planned initiatives:

ARevenve Enhancement Effort: We will explore, ina methodical and purpose-
ful way, wide-ranging opportunites to increase WASA's revenuas. For example, there
‘may be opportunities fo lease currently underutilized space in some of our facilities. Or
there may be opportunites to break out fees or charges for services that are now wrapped
into the overall rates and bill. This efor will produce better revenve projections and
tenable us to quantify areas in which current business practices are costing us money. For
‘exomple, we sill generate an unacceptable number of estimated meter readings. We
will eliminate this practice.

ALarge-Accounts Management Effort: The needs of some of ourlargestcus-
tomer are offen specialized or unique. We will recognize this and provide the custom-
ined services they require


62

Subcomenitiee on the District ef Color
Government Reform and Oversight Committon

November 12, 1997

Conclusion

The Board hos pit into place the tenets to successfully deliver quality customer ser
vice, and the management and stall are executing them. Our work i sil ints genesis;
‘Wwe are now moving fo the next phase of maturiy.

‘As Chairman, have enjoyed the fll participation of the entire Board. We have con-
ducted our business in collegial, tense and analytical manner. The Districthas ben-
<elited from the portcipation of our suburban customers and | appreciate the manne in
‘which we have come together to protect WASA's valuable assets and service delivery. |
have truly been fortunate to Chair WASA’s Board during its transition and look forward
tothe next phase. Ithos been grtiying o orchestrate WASAS intrest with that of gow
femment proctices and the business community, who all want fo do the right thing, be
they in the District orsunounding jurisdictions

‘Our management team is nearly all in place, The hard working ond valuable em-
ployees at WASA are rising tothe challenge and, our customers are beginning to, once
‘gain, have confidence in our ability to deliver a quality product.

WASA enjoys solid and productive working relationships with our Intermunicipal
‘Agreement partners, The Council of Govemments, The District's Chief Financial Officer
‘ond the Control Boord

‘As always, itis the mandate ofthe Authonty to provide the highest quay of waste-
water treatment and water distibution services to our customers, while protecting the
‘environment ond maintaining cost a the most cost-efficient level.

| thank you Me Chairman and members of the Subcommitie fo this opportunity to
report on the progress made by the one-year-old Water nd Sewer Authority, And, would
like fo assure you tha, this Board is resolved in its commitment fo provide the best cur-
tomer service delivary to District consumers and our wholesale customers in Maryland
and Nothern Virginia,

| welcome the opportunity fo answer any questions you may have. Thank you.


Subcommittee on the District of Calurelse
Government Reform and Oversight Comenition

Nowembar 12, 1997

A Business Analysis and Productivity Unit: This group will greatly enhance
the organization's ably to conduct ongoing self-evaluation and continuous improve-
‘ment of our business practices.

A General Counsel's Office: The General Counsel for WASA ond supporting
legal staff wll work interdependently with the Board and all WASA bureaus in evaluating
‘and tracking legal, regulatory and environmental requiremerts, at well as claims, debt
collection, and managing other complex egal issues.

A Risk Management Unit: This group will address all insurance end liability
issues for WASA ond a will work closaly wih the General Counsel's offica

An Office of Human Resources: WASH enabling legislation mandates that
the Authority develop and establish o personnel system and publish rules and regula-
tions for minimum stondards for all employees, including pay, contract ferms, leave, ra-
tirement, heath and life insurance, disability and death benefits. WASA's personnel rules
‘ware published on October 3 in the D.C. Register. The final rules ware adopted by the
Board of Director on November 6,

The rules will signlicortly streamline curent procedures and processes ond allow
‘greater flexibility in managing personnel and personnel issuer.

There are numerous services that traditionally were provided by the District that we
‘are now responsible for os an independent Authority, including HR functions. We will
hire a top-flight manager to direct the activities ofthis ofce and we will devise policies
‘and procedures for providing our employees with these services which include perton-
nel and payroll functions,

Within this deportmert will be @ labor relations function responaible for labor con-
tract administrtion and quick resolution of employee issues.

Regulatory and Legislative Affairs: We have assigned intemol staff to review
coll federal and District laws affecting WASA. Where appropriate, we will respond to and/
Co initiote regulatory or legislative initiatives ond monitor and comment on EPA and other
‘ogency requirements that may affect WASA’s operations.

Training: This is one of our most acute needs. itis not possible fo become o world-
class organization without having a well-rained and skilled worktoree,

Clearly, we need training in order to be qualified to do our jobs and we need it in
‘order to stay on top of the lates! technological advances. We also need this training ax
individuals who want fo set coreer goals. In acknowledgment of these needs we are
instituting @ comprehensive training program as directed by the Board, to address cert-
fication, skills ond coreer development.

Office of Procurement: WASA‘s enabling legislation mandates the establishment
‘of procurement system consistent wth the principles of competitive procurement and
to publish accompanying rules and regulations. We are in the process of drating the

ww


31

needs to be clarified so that the Federal Government is put on a
“pay as they use the water” basis just like every other customer.

Ms. NorTON. Why should the Federal Government, of all enti-
ties, get a preference here? I’m sure Mr. Davis would help in that
regard as well, a pay-as-you-go basis for proceeding.

Finally, let me ask you about the bond market. When do you an-
ticipate—or perhaps this also is for the managers. Each of your ju-
risdictions have a very good bond rating. How do you anticipate
that the District’s bond rating, which is not very good, what effect
do you anticipate it will have now that there is an independent au-
thority when you go to the bond market?

Mr. DUNCAN. Mr. Johnson is probably the more appropriate one
to speak to that, but my expectation is that because of the inde-
pendent authority being established and the changes that have
taken place and the new management team that has been put in
place, they will look very favorably upon that as revenue bonds,
and separate that from the District of Columbia’s bond situation in
general. I expect that will be a very positive response to what has
happened over the past year.

Ms. NorTON. Thank you very much. And thank you, Mr. Chair-
man.

Mr. Davis. Thank you very much. Mr. Horn.

Mr. Horn. Let me start with the basics. The basics would be that
you are members of the Board; is that correct, of this Authority?

Mr. DuNcAN. I am not a member of the Board. We have our two
county representatives in the audience here.

Mr. Horn. They are what, now, county officials or county elected
officials?

Mr. DUNCAN. One is a county appointed official, the chief admin-
istrative officer, the top manager in the county government, and
the other is a former county executive, a former elected official.

Mr. Horn. Is that the same for the other counties?

Mr. GRIFFIN. I am an alternate, and I am an appointed official
of the county.

Mr. Errico. I am an alternate and an appointed official of the
county.

Mr. Horn. It seems to me the oversight authority is the Board.
You can hire and fire; right, the administrator?

Mr. DUNCAN. Yes.

Mr. ErRIcO. Yes.

Mr. GRIFFIN. Yes.

Mr. Horn. How far down the line can you go with your author-
ity?

Mr. GRIFFIN. Essentially, the administrator, and then the admin-
istrator has authority over the other appointees.

Mr. Horn. You review the budget, you approve the budget; I
take it?

Mr. GRIFFIN. Yes.

Mr. Horn. What is the voting difference, if any, between the
counties and the government of the District of Columbia represen-
tation?

Mr. Duncan. Six District representatives, five total suburban
representatives.


7

We support the activities being undertaken by WASA and are
committed to regional cooperation in the provision of water and
sewer service also through joint use facilities.

I also want to recognize the leadership of Chairman Michael Rog-
ers as well as the diligence and determination of the five other Dis-
trict representatives and our five suburban representatives.
Through their work a path has been set to establish WASA as a
world class system. They have all worked consciously and coopera-
tively to improve the situation at WASA.

Chairman Rogers is going to outline the progress that has been
achieved by WASA over its first year, and I expect that EPA Re-
gional Administrator Michael McCabe will acknowledge that
progress.

I think the progress has been extremely significant, and I want
to acknowledge the WASA employees, who have remained dedi-
cated and committed to improving services. Their actions are to be
commended very highly.

Mr. Jerry Johnson, the new WASA General Manager, is going to
make a presentation to you later today. His first order of business
was to assemble a strong management team. This team has al-
ready made many positive improvements in the financial manage-
ment and reporting systems. WASA staff has also been in frequent
contact with WSSC, which is a Maryland bi-county agency, to co-
ordinate their budget processes. WSSC pays about $40 million an-
nually to handle 94 percent of the wastewater flows from Mont-
gomery County and about 54 percent of the flows from Prince

orge’s County.

WASA is preparing to approach the bond market. A financial ad-
viser, bond counsel, and an independent engineering firm have all
been put in place and the critical test wil] be the response of that
market, and I expect that the market will look favorably upon
WASA’s sound financial management practices.

WASA recently adopted its own personnel regulations and is pre-
paring to finalize its own procurement regulations. The enabling
legislation also required studies regarding privatization and an
independent authority. I understand that the selection of a consult-
ant to perform the study on privatization is reaching its final
stages, and the study on the feasibility of establishing an independ-
ent, regional authority is to be initiated soon.

With regard to the future, the Montgomery County Council and
I see the need to establish an independent, interstate authority for
WASA, similar to the Washington Metropolitan Transit Authority.

There is extensive oversight exercised over WASA by the D.C.
Council, the Mayor, Chief Financial Officer, Financial Control
Board and the U.S. Congress. Responding to these levels of over-
sight distracts the WASA staff away from their focus upon the crit-
ical operation of the water and sewer system. This oversight and
reviews of procurements and budgets diminishes the role of the re-
gionally representative policymaking body, the Board of Directors.

Another concern I have is that the most recent versions of the
District’s appropriations bill had provisions inserted which poten-
tially affect WASA’s ability to utilize sole source procurements and
rescinds WASA’s authority to expend revenues not budgeted.


46

-6-

necessary to revitalize them. And, as they play an important role in some of the
permitting requirements for WASA, the failure to institute these changes in a timely
fashion leaves a major gap in the effective and efficient implementation of the drinking
water and waste water operations for which WASA is responsible.

In a similar vein, there is an on-going dispute between the City and WASA about
which entity has responsibility for the Districts storm water sewer system. As you
know, storm water carries vast quantities of contaminants into the City's rivers. Efforts
to clean up the Anacostia in particular will continue to be hampered until we can sort
out who is in charge and how we can meet the enormous financial hurdles of this
ubiquitous urban problem.

THE FUTURE

We have all worked well collaboratively —- the Authority, the Congress and the
EPA — to put the crises of last year firmly behind us. We all recognize that we still
have a lot of hard work ahead of us to continue the improvements that will better
protect human health and the environment. A number of chronic problems have not
yet been fully addressed, but clearly the new authority is on a solid footing and
continued progress can be expected.

The most important impediments to the effective functioning of the new Authority
may lie just beyond the organizational structure of the Authority itself. The future of the
Washington Aqueduct is key to the future of safe and clean drinking water for both the
District and for residents of Arlington and Falls Church. Similarly, the effective
reorganization of City government functions will play a key role in establishing the kind
of local regulatory control that will help assure the protection of human health and the
environment for the entire Washington Metropolitan area.

In short, EPA has taken aggressive steps to protect the health and safety of the
residents of Washington and the surrounding communities and to protect the aquatic
environment of the Potomac and Anacostia rivers and the Chesapeake Bay. We will
continue to do so. In the meantime we urge the Subcommittee to continue the effective
leadership that you have provided in recent years, We stand ready to continue
working with you to address any of the remaining issues that could derail the
substantial progress that has been made over the past year.

Thank you again, Mr. Chairman, for giving me the chance to appear before the
Subcommittee, and | would be happy to answer any questions you might have.

Sad


6

The matching formula change makes it possible for WASA to use
funds for renovation projects that it might otherwise not be able to
pursue until much later, and the new funding formula helps the
District to comply with a U.S. District Court-approved agreement
with the EPA to institute a 2-year $20 million capital improvement
program.

I want to thank Chairman Jerry Lewis and Ranking Member
Lou Stokes of the VA-HUD Appropriations Subcommittee, with
whom I worked closely on changing the matching formula. It is un-
fortunate that WASA had to raise rates a whopping 42 percent and
to end free service to churches, hospitals and other nonprofit orga-
nizations. However, I am informed that generally cities charge non-
profits for water service and that D.C. was unusual in not doing
So.

The 42 percent rate increase is a good example of how not to run
an enterprise. Had the District conducted business in an appro-
priate manner, there would have been periodic incremental in-
creases that even people with modest incomes expect and absorb.
The failure to make these necessary increases also contributed to
the deterioration of the facility.

Our investigation indicates that the three jurisdictions that are
partners in the Authority have worked amicably and skillfully.
They have done so pursuant to a compromise which left ownership
of the facilities with the District. There is no reason to change that
ownership structure, and I would fight strenuously against any at-
tempt to overturn that compromise. A deal is a deal. It would be
counterproductive to replay and reargue an issue that was settled
by the agreement that set up the present authority.

This region is in no position to complain. Compared to other re-
gions, this region has the best deal in the country, beginning with
no commuter tax. We are not about to give up ownership of this
asset. The emphasis now must be on bonding the partners, setting
goals and timeframes, meeting them, and demonstrating that this
region can work together to provide first class service of a vital re-
source for all our residents.

Thank you very much, Mr. Chairman.

Mr. Davis. Thank you very much. Mr. Duncan, we will let you
lead, followed by Mr. Errico then Mr. Griffin.

STATEMENTS OF DOUGLAS DUNCAN, COUNTY EXECUTIVE,
MONTGOMERY COUNTY, MD; MICHAEL ERRICO, DEPUTY
CHIEF ADMINISTRATOR OFFICER, PRINCE GEORGE’S COUN-
TY, MD; AND ANTHONY H. GRIFFIN, ALTERNATE MEMBER
(WASA), FAIRFAX COUNTY, VA

Mr. DUNCAN. Thank you, Chairman Davis, and members of the
subcommittee. Very pleased to be here today. I am joined in the au-
dience by Bruce Romer, who is the Montgomery County chief ad-
ministrative officer, and also the vice chair of the WASA Board of
Directors, and the Honorable Sidney Kramer, who is a former coun-
ty executive and Maryland State Senator. Mr. Romer and Mr. Kra-
mer are the Montgomery County appointed board members to the
Water and Sewer Authority.


40

Again, thank you, Mr. Chairman, Congresswoman Norton, other
members of the subcommittee, for giving me the chance to appear
before you and for working so hard to bring us to this point today.
I would be glad to answer any questions r my colleagues finish
their testimony.

(The prepared statement of Mr. McCabe follows:]


19

the WASA's budget through the Washington Suburban Sanitary
Commission's capital and operating budgets.

Currently, the staffs of WASA and WSSC as well as the two
Counties are working together to adjust and account for different
scheduling and approval processes. Congress may not be aware,
however, of the process now being used by the Prince George's and
Montgomery County Councils to set spending control limits for
WSSC. These spending limits may ultimately affect the WASA CIP,
given the dramatic increases proposed for FY2000 and beyond.
Therefore, the relationships and actions taken by the WASA Board
in the future must be carefully coordinated to take into account
these issues.

Bonding Authority

Under Federal legislation, WASA was specifically provided
with the ability to issue bonds separately from the District of
Columbia (D.C.) Government. This was an important provision of
the enabling legislation intended to ensure that WASA would not
be constrained by the same rules or subject to the same rating as
the troubled D.C. government. In this way, WASA could be more
responsive to the capital improvement needs of the Blue Plains
Facility, rather than having to compete with other bond issues
within the District of Columbia.

As WASA develops its first bond issue, we remain concerned
that the District Government retains legal responsibility.
Although the Chief Financial Officer (CFO) of the District is
very cooperative in our effort, any bond action must go through
the Control Board.


14

jectives as Board members may be different, we have agreed our
first priority was to increase the operation and efficiency of the
plant and to satisfy EPA permits and other health requirements.

As we move into the thorny issues of assessing privatization and
regionalization, it may not be as easy to resolve these issues, and
conflicts’ may arise. We in Prince George’s County are committed
to working with the District and our other partners to ensure the
regionalization study be given utmost priority during the coming
months.

I want to thank you for the opportunity to testify before you
today. We sincerely appreciate the outstanding efforts and commit-
ments presented by Chairman Davis and Congresswoman Norton
to ensure the Water and Sewer Authority works for all of its cus-
tomers.

(The prepared statement of Mr. Errico follows:]


pO
|

eases sen Wassanoron, OC 20518-6143

wn
iN

scree Congress of the United States

(ne HUNDRED AFT COMORES

Bouse of Representatives
‘COMMITTEE ON GOVERNMENT REFORM AN OVERSIGHT
2187 Ravourn House Orrcz Buono

REP. TOM DAVIS
CHAIRMAN, D.C. SUBCOMMITTEE
NOVEMBER 12, 1997
OPENING STATEMENT

Though not one of Washington’s tourist attractions, the Blue Plains
Wastewater Treatment Plant is the largest of its kind in the United States.
It is the Region’s most significant environmental facility.

Most all Federal facilities, in all 3 branches of government, plus around 2
million residential users in Virginia, Maryland, and the District, depend
upon Blue Plains. It treats an average 325 million gallons a day on 154
acres in Southwest Washington. A collapse of Blue Plains, which seemed
possible last year, would be an ecological catastrophe.

As recently as September, 1995, the EPA wamed of a “very real
possibility” that raw sewage would flow into the Potomac because of
serious shortcomings at Blue Plains. But since the new Water and Sewer
Authority came into existence, on October 1, 1996, there have been no EPA
violations. And there have been no more “boil-water alerts”. We have thus
taken a giant step forward in providing to the region the essential service
of clean, abundant water at a reasonable price, and the sewage treatment


110

And I can provide you with a summary of the compliance with that
order.

The order required a Plan which set schedules and a budget for
making improvements. The improvements include public informa-
tion, water monitoring, operation and maintenance procedures, res-
ervoir rehabilitation, distribution system flushing, cross-connection
control, and disinfection. It is a whole range of really rehabilitating
the system. I can provide you with that status report on that.

Mr. Horn. I would appreciate that. Do we have a map anywhere
where we have charted the areas that need the most help?

If your board is going to prioritize things, seems to me that is
a basic tool, to use the scientific analysis of EPA, the Army Corps
of Engineers, everybody else you can get your hands on.

Mr. JOHNSON. That does exist, sir.

Mr. Horn. I would like to see that, if I could. If you could have
somebody come over, we will talk about it.

With EPA, is there any problem when they are dredging canal
areas or water channels in terms of any problem with EPA and
worrying about what is in that channel?

Because in some parts of the United States there have been
problems such as that, where they could not clean the channels be-
cause of one reason or another. What is the story around here?

Mr. McCaBE. We do have concerns in other parts of the United
States with sediments that perhaps are contaminated. In the Ana-
costia River we are working to address some of the problems there,
but there is no dredging anticipated there, so it would not stir up
those sediments, those contaminants at this time.

So really, within the District, it is not a concern as long as we
are not engaging in any big dredging project.

Mr. Horn. I was interested in your views on the Anacostia situa-
tion. Ts there a Superfund site anywhere in that area or is this just
runoff?

Mr. McCaBE. We are currently working with the Navy on a cor-
rective order under the Resource Conservation and Recovery Act,
where they have to do an assessment and provide us with a sched-
ule of how they plan to clean up the Navy Yard. We will probably,
later, list portions of the Navy Yard as a Superfund site.

But because we wanted to address that issue head on and do it
quickly, we decided to go the regular route rather than wait for the
long process that it takes to put a site on the national priority list
of Superfunds. So we are addressing that issue now and are getting
quite a bit of cooperation from the Navy.

Mr. Horn. Good, I am glad to hear it. One of my other sub-
committees is the Subcommittee on Water Resources and Environ-
ment of the Committee on Transportation and Infrastructure, and
Ms. Browner appeared before us the other day and I raised that
very question. Not on that site, because I didn’t know about it until
just now, but on her role in getting in the same room the people
from Energy, the people from Defense and saying, look, folks, we
have a problem here, and trying to push it through their bureauc-
racy.

Because my sort of layman’s look at the Pentagon is they have
been a little slow on cleanin; up a lot of bases around the country,
and certainly the Navy Yard, I am sure, with 200 years probably


69

After conducting a thorough internal review of staff capacity, a
decision has been made to augment our staff by employing outside
project management capability within the fice of Engineering

rvices to ensure that the capital program we are undertaking
will be completed.

Over the next 10 years, as indicated earlier, we propose spending
$1.7 billion to repair and upgrade this aging distribution system,
rehabilitate the wastewater treatment plant and sewer facilities
and to address the city’s combined overflow problem.

In early 1998, we will go to the bond market, as we were author-
ized to do under WASA’s enabling legislation, to borrow money to
fund these capital improvement projects. We will seek money for
restructuring of part or all of the existing debt, ranging from $80
to $277 million. We will also seek new money in the range of $50
to $100 million, depending on the cost of debt.

We have released our request for proposals and are seeking bond
underwriters and expect to make that selection in early December.
This will be the first in a two-stage process. First, we will secure
a bond rating, and second, we'll be able to go to the bond market
and do the financing that we need todo. .

We have responded to all management letter comments received
from the outside auditors. We are addressing their concerns by
adopting business procedures that conform to generally accepted
accounting and business practices. We anticipate receiving an audit
without qualification this year. We are also hiring an internal audi-
tor to monitor our practices and procedures on an ongoing basis.

Our comprehensive capital program is the backbone of WASA’s
plan to rectify the withering effects of age and deferred mainte-
nance. Paying for this 10-year $1.7 billion package in addition to
covering ongoing operating expenses will obviously require rate in-
creases. However, I am pleased to report that our projections indi-
cate we will not have to raise rates in 1998, and if the current pro-
posal is adopted, we anticipate annual rate increases averaging
about 5 percent beginning in 1999.

The rates we have projected and looked at follow a review of the
internal rate-setting policies. This review has led us to propose a
philosophy for setting rates for water and wastewater services that
is very simple and straightforward. Each customer will be charged
for those costs necess: to provide the services and the rates will
be predictable and gradual. Some of those steps have been put in
place now and we will await final approval by the Board.

A significant additional factor that we must consider as part of
the rate-setting process is the financing cost for routine operations
in our capital program.

We have also, as Mr. Rogers has indicated, adopted a very ag-
gressive collections policy that includes termination of services. Our
previous policy indicated we would not turn off water for multifam-
ily dwellings. This is no longer a protected class.

We are also implementing late fees, we are establishing receiver-
ships, property liens, publishing names in newspapers, negotiating
payment agreements, installment agreements, and we have estab-
ished an incentive program to pay WASA employees $50 for each
account that they can find where people are not metering and prop-
erly utilizing and paying for services.


24

Mr. Davis. Thank you very much. Mr. Griffin.

Mr. GRIFFIN. Mr. Chairman, thank you, and honorable members
of the subcommittee.

Slightly more than a year has passed since the Authority had its
first meeting, and since then a total of 16 meetings have been con-
vened, with many subcommittee meetings dispersed in between. In
that time the Board has chartered a path toward the independent
operation of the water and sewer utilities previously operated as an
agency of the District of Columbia.

A new management team has been put in place and already very

sitive improvements and financial tracking and reporting have
Been observed. The new budget process and the associated docu-
ments have tremendously improved the quality of information
about the operation of the Authority’s utilities.

Significant improvement has occurred in the maintenance of the
city’s water lines, which the previous year had attracted so much
publicity. Progress is being made on the rolling stock of the Author-
ity so that its employees can get out to the field to make repairs,
do maintenance or read meters. The Authority continues to operate
the Blue Plains plant, meeting the requirements of its national pol-
lutant discharge elimination permit and protecting the region’s
water quality.

The Authority is in the process of finalizing personnel and pro-
curement regulations; in fact, the personnel regulations were ap-
proved at our last board meeting, all of which will move the Au-
thority toward becoming an independent entity and which are cru-
cial to the effective operation of the Authority. I believe the word
is getting out that the Authority is aggressive in wanting to estab-
lish a very positive reputation in terms of how it does business and
that it is intent on becoming a model agency for its peer equivalent
worldwide.

I must credit my colleagues on the Authority's Board of Directors
for their diligence and commitment to making the Authority the
best it can be. There is the recognition that the fundamentals exist
to make Blue Plains once again the model for the Nation, both in
terms of operation and advanced technology. I also acknowledge
the courage of the District of Columbia members of the Authorit;
Board who made the unpopular decision to raise water rates by al-
most half in order to stabilize the fiscal foundation of the Author-
ity.

The next critical test of the Authority is when it goes to the fi-
nancial markets to sell revenue bonds in support of its capital im-
provement program. Even though the Authority has a large and
ambitious program for the next several years, 7 anticipate a posi-
tive response from the markets because of the progress that has
been made by the Authority in the past year.

It should be noted that the Authority needs to move quickly to
catch up on a backlog of repair and rehabilitation of the water and
sewer system. In the coming year I expect the Authority to finish
the privatization study and to begin the study related to the Au-
thority potentially becoming a regional authority. I expect that the
administrative changes related to personnel procurement and infor-
mation technology underway will be finalized and any remaining
ties to the District Government will be by choice and contract.


10

financial management and reporting systems. The information flow and financial
analysis has improved accountability as well as providing essential information required
for policy decisions. This team recently discussed with our County Council the status of
WASA activities and its FY99 capital and operating budget. Our payments to WASA are
made through the bi-County agency, WSSC, which amount to about $40 million annually
to handle 94% of the wastewater flows from Montgomery County and about 54% of the
flows from Prince George’s County.

WASA staff and the Board are preparing to approach the bond market to refinance
existing debt and to finance its capital projects. A financial advisor, bond counsel, and an
independent engineering firm have all been put into place. The critical test will be the
response of the bond market to WASA's prospectus for revenue bond financing which is
expected in early 1998. We anticipate that the markets will look favorably upon
WASA's sound financial management practices.

WASA recently adopted its own personnel regulations and is preparing to finalize
its own procurement regulations, The enabling legislation also required studies regarding
privatization and an independent authority. I understand that the selection of a consultant
to perform a study on privatization of all or portions of WASA operations is reaching its
final stages. The study on the feasibility of establishing an independent, regional
authority is to be initiated soon.

With regard to the future, the County Council and I continue to see the need to.
establish an independent, interstate authority for WASA, similar to the Washington
Metropolitan Area Transit Authority. We remain concemed about the extensive
oversight required of WASA, as an agency of the District of Columbia, by the DC
Council, Mayor, Chief Financial Officer, Financial Control Board and United States -
Congress on procurements, financial management and budgeting matters.

Meeting these levels of oversight are distracting our management staff away from
their focus upon the critical issues of the daily operation of the water and sewer system.
The continuous oversight and reviews of procurements and budgets diminishes the role of
the regionally representative policy making body, the Board of Directors.

‘The need to develop plans in the event of a continuing resolution or failure of
Congress to appropriate the District expenditures is inconsistent with the critical public
health and safety demands of operating regional water and sewer facilities.

Another concern is miscellaneous provisions often inserted in the District's
appropriations bill, which have an impact on WASA. For example, the most recent
versions of the District’s appropriations bill had two provisions inserted which
potentially affect WASA’s ability to utilize sole source procurements and rescinds
WASA authority's to expend revenues not budgeted. Both of these provisions hamper
the timely action of the Authority, particularly if the regional partners or federal agencies
provide funding to address an emerging need or unanticipated operating requirement.
Furthermore, these provisions were added without prior notice or consultation with
WASA Board or staff.

Procurement and personnel regulations also continue to be tied to laws of the
District of Columbia. While the objectives have been to formulate separate procurement
and personnel regulations reflective of a modem, streamlined public utility, WASA is
still considered an agency of the District. Therefore, the regulations need to comply with


29

have the new procurement process for WASA itself, that we will be
able to significantly streamline and reduce the time required.

But we have been making it work and our staff has been very
aggressive in trying to make it work as quickly as possible.

is. NORTON. The extra man-hours it takes to make a broken
procurement system work are precisely what needs to be avoided
in a facility that we have to make work in the first place. I will
question the managers when their time comes up. I recognize that
is not your province.

Let me ask you about oversight. Now, assume that the District
had worked out an arrangement whereby you didn’t have to go
through all these layers that we have to go through but you had
a streamlined relationship. And here I am talking short of struc-
tural change, which gets us into an ownership argument and a
home rule argument. But what kind of oversight within the present
arrangement would you find satisfactory?

Obviously, there has to be some oversight. Now, assume for the
moment, because the regionalism study has not been done, assume
for the moment the present arrangement. What kind of oversight
should the Authority have?

Mr. DuNCAN, I think a lot of that would depend on the streamlin-
ing that takes place, as you mentioned, the need to do that with
the District’s rules and regulations. If a lot of that occurs, then you
could have some oversight by some of the bodies that do that now.
But they are not getting down to the level that hinder the work ef-
fort and hinder the productivity gains.

Ms. Norton. You indicate that the District, the Council——

Mr. DUNCAN. The Council, the Mayor, the Control Board, the Fi-
nancial Officer, the Congress, and there is another one in there,
too.

Ms. NorTON. They cannot change what you do? The Council can-
not change what you do?

Of course, the Council is being admonished to do more oversight
rather than less oversight. The District might not be in the condi-
tion it is if they cannot change. What could you do, then? In what
form does the oversight take? What kind of feedback do you get
rom it.

Mr. DuNCAN. Part of the argument is the Board of Directors is
an oversight group that is pushing progress and making this agen-
cy be much more responsive and get the gains that are needed
through here. So there has to be recognition that we have the
Board of Directors and is anyone willing to relinquish oversight or
take a lesser role there.

But, again, with the personnel and procurement regulations, you
can set up your own system, but it has to be in full compliance
with District law. That does create all kinds of problems for us and
leads to further problems.

Ms. Norton. I am going to ask the chairman to see if he can
help me with respect to the fact that the WASA budget is a part
of the District of Columbia budget. We are sitting up here 6 weeks
into the year with the District of Columbia having to borrow money
at considerable cost to it, I hope you are not having to do so, and
they are having to borrow money only because the Congress has
failed to pass their budget 6 weeks into the year.


98

ISSUE EPA RESPONSE COMPLIANCE STATUS
Storage Tank | The Order required individual O &M manuals have been
Maintenance | maintenance programs for each of developed for each reservoir
Program the storage facilities. and the program appears to
be on schedule.

Corrosion EPA required WASA to develop and | There has been no progress in
Control implement a monitoring program to _| this activity.
Monitoring determine the effect corrosion control
Program might have on secondary growth in

the system.
Reporting EPA directed WASA to report 'WASA is in compliance with
Progress progress on a 90 day basis. this directive.



91

SONIESEY YSbD pe}sefOld YSYM

cols



i

District law. We are concemed that these regulations will not provide the flexibility and
timely action common to similar regulations for independent public utilities.

In summary, much has been accomplished over the past year. With the
commitment of its Board members and the dedication of the professional staff,
significantly more progress is anticipated. Building upon the strong foundation of the
1985 InterMunicipal Agreement and the demonstrated regional cooperation and
partnership of the WASA Board, we see the need to move WASA to the next plateau -
an independent, regional authority . We believe that will help achieve even further
progress in the effective delivery of WASA services. We look forward to the cooperation
of Congress and our respective legislatures of the District, Virginia and Maryland to
establishing an independent, interstate authority.

‘Thank you very much for the opportunity to testify before the subcommittee. We
will be happy to answer any questions you may have.


97

Flushing The Order directed more than routine | WASA is in compliance with
Program flushing by adding two additional the routine flushing directives,
levels of flushing: emergency and but EPA has not been
nonroutine. Emergency flushing is | advised about emergency and
for acute violations; non-routine non-routine flushing
flushing is for non-acute violations, _| procedures.
customer complaints, research and
taste/odor control.
Disinfection | An upgrade to the procedures and | WASA is meeting its
Program improved training was ordered. commitments in the
disinfection program.
Storage EPA insisted that all contamination | WASA adequately cleaned
Facility pathways in the nine (9) old storage | and disinfected the reservoirs.
Rehabilitation | facilities be sealed, and that these They also sealed them in a
Program facilities be cleaned, disinfected, and | timely fashion. One storage
completely overhauled. reservoir has been
abandoned, and they are
‘about two(2) months behind in
the start of the rehabilitation of
four (4) of the remaining eight
(8) reservoirs.
Cross There may be over 4100 connections | Adequate progress is being
Connection between a source of contamination | made. The closing of the
Control and drinking water in the District's cross connections are to be
Program distribution system, not counting handled by seven (7)
those which may be on private contracts.

property. EPA ordered these
connections to be sealed.



102

Ms. NorTON. Do you have to go to counsel—one of the things you
had to do on highway was for $1 million and over.

Mr. RocErs. $1 million and over, and I do believe that we had
requested to be exempted from that single request.

Ms. Norton. But are you exempted from it?

Mr. RoGEnrs. Yes.

Ms. Norton. You do not have to go for $1 million and over con-
tract?

Mr. RoGers. Unless it was put back in the legislation.

Mr. JOHNSON. It was originally acted on, supposed to be acted on
by the council, by the city council this month, because it got de-
ferred and held over during the summer. There was also [ think
some conflict in the congressional legislation, and that particular
exclusion that was being enacted by city council, and quite honestly
as this point, Ms. Norton, I am not really clear where it stands, but
I think one of the two actions will exempt us from the D.C. Pro-
curement Act.

Mr. Rocers. Because in our original legislation, you know we
sought to be exempted and we worked with you and Mr. Davis for
a specific exemption from the requirement of approval by the coun-
cil of $1 million and above. But as I recall now, that never got to
the floor because there were some other issues, you know, tied up
with it. So we do—

Ms. Norton. Although, let me say, I am prepared to do whatever
it takes to exempt you from those regulations and have you operate
under your own. Are you saying that is the problem now?

Mr. Kocers. No, I do not find, having sat there as the protector
of WASA, as chair and city administrator, we were able to remove
a lot of the obstacles, and everyone knew when it came to WASA
that I just did not want to hear standing in the way of those things
that we could change.

Ms. Norton. There is a lot that could be done administratively.
The school Board went and said to GSA, and it didn’t take any leg-
islation to do that, the police department, after not being able to
spend the $15 million we got for the police department, went to
GSA and used their procurement.

Mr. RoceErs. Let me draw your attention to my statement. In
that statement I said that oversight by the financial authority with
respect to contracts takes far longer than is acceptable. I believe
that to be true. That can be documented. I think that, certainly
having worked on the inside, I am not saying necessarily that we
should be totally exempted from all oversight, but surely those who
have oversight can confine themselves and commit themselves to
oversight within some reasonable time like 5 to 7 days.

Ms. Norton. So the Control Board is the only entity that looks
closely at your procurement process.

Mr. RoGErs. Well, there was another issue. We were exempted
from—WASA was exempted from the District’s procurement, but
then when the new procurement act was passed by the District,
there were amendments to that act that included all independent
entities. So it is the position of the chief procurement officer of the
District that WASA is included.

So we go back and forth. We win a victory here for WASA in one
legislative body and then another legislative body comes back and


118

Mr. Davis. The subcommittee will continue to work with all in-
terested parties in the ongoing efforts to continue the progress that
has been made of the Water and Sewer Authority. I appreciate all
of you staying and testifying and the efforts you have brought to

ite.

These proceedings are closed.
[Whereupon, at 4:16 p.m., the subcommittee was adjourned.]

oO


eae Ad = rotment Ad = Suwa Ad neh A neh Ad S001 As eek Ad nek Ad

SUORISOd Peil|y pue pezLoUNNY



1

‘Setocommnitee on the District of Cabvenba
‘Governssant Reform and Oversight Commition

November 12, 1997

Introduction

‘Good altemoon Chairman Davis, member of the subcommittee, and ladies and
‘gentlemen. | am Jeny N. Johnson, General Manager ofthe District of Columbia Water
‘ond Sewer Authorty. | thank you for inviting us to testify before the Subcommittee and
‘welcome the opportunity to discus the management's plan for implementing the Board's
vision forthe Authority.

‘When | became general monager af WASA in June of this year, | was fortunate fo be
‘entering a stvation in which the need for change had been recognized and a plan wos
in place. WASX new Board of Directors had provided ertical guidance and much work
‘already had been started by former interim general Manager Larry King and WASA’ dedi-
cated worklorce.

But this is, nonetheless, on institution that has suffered from serious systemic prob-
ema. From i inception in 1938 to. litle more than one year ago, what is now the DC
‘Water and Sewer Authority was a part of the District's government structure. Over pe-
‘od of year, the utility's needs had to compete with the needs of other agencies and
programs. As o consequence, maintenance, repairs and upgrades were deferred. Ad-
lonely, rotes ware frozen in place for a decade, from 1987 to 1997, which futher
limited our ability to maintain the momentum expected ofthis organization.

WASKs Board of Director, which just calebrated its fint anniversary, responded to
‘serious problams with drinking water and wastewater violations with a new course thot
‘would restore public confidence, bring us into regulatory compliance ond shore up our

. Wein moths, the Board hod by }0.42-parcert rae in-
crease and developed a plan to address the utility's short-term drinking water crisis os it
formulated the pieces of a long-term plon to address it aging infrastructure.

‘My assessment in June was that WASA was on the right track but that significant or

jand. changes sill were needed. These which will dia
‘cuss in greater detail, included:

+ Taking steps to put the utility on © 2ound financial footing to enable t to borrow the

copital fo make 10 it oging ture.

+ Devising and implementing @ plan t tke advantage of echnologcal odvancee,
most notably in basic system veture and cations, that would
‘greatly increase productivity.

‘Making organizational and operational changes to improve service delivery and all
‘oxpacts of customer relations.

Mang compte mama of ee cpel ee

. of staff to deliver services provided by
ane



16

Since that time, the Board has been meeting on a regular
basis, with several standing and ad hoc committees currently at
work, chipping away at the key problems facing the operations at
Blue Plains. These issues can be grouped in four general

categories:
1) Administrative and staffing concerns;
2) Budget and financial concerns;
3) Plant maintenance and operations; and
4) The impact on the Blue Plains Intermunicipal Agreement
of 1985.

As a result of much hard work by many people, I can report
significant movement on several of these fronts, and, in my view,
the prospects for further achievement are bright for them all.

New General Manager and administrative and staff procedures

Probably first and foremost in the positive changes that
occurred during the past year was the hiring of a new general
manager. Since June, Jerry Johnson has proven to be a very able
and capable manager in what arguably could be described as one of
the most difficult jobs in Washington. Since his arrival, he has
hired expert senior staff in the areas of financial management
and plant operations, proposed a major restructuring of the
services and functions of WASA, and began assessing the various
staffing, organizational, communications and fee structure issue:
that are prominent.

I applaud him for his ability to clearly identify and begin
responding to the multitude of immediate priorities while setting
in place the structure that will assist him in addressing other,

less immediate but equally significant priorities for the longer-
term.


99

Mr. Davis. Two weeks ago at the Chesapeake Bay Program Exec-
utive Council Meeting, Governor Allen of Virginia announced that
the Commonwealth of Virginia would be budgeting tens of millions
of dollars to help produce excess nitrogen pollution from entering
the bay. Will any of that money be used for the biological nutrient
removal project at Blue Plains that you mentioned in your written
testimony.

Mr. McCaBE. My understanding is that the Governor’s proposal,
which is significant, would be aimed at helping clean up the Chesa-
peake Bay and a portion of that, could be used for nutrient reduc-
tion, that part of that could be used at Blue Plains. As I believe
you know, there is already a nutrient reduction pilot project at
Blue Plains which has been very successful. It has already reduced
50 percent of nutrients at the plant, and is operating much more
efficiently than we had anticipated when we first put in the pilot
project. there is further to go and I believe the Governor’s pro-

sal is aimed at contributing some Virginia funds to help meet a

igher standard.

Mr. Davis. You noted that the District and WASA are in a dis-
pute over who has responsibilities for the city’s storm sewers. Let
me hear everybody’s kind of opinion on where that sets right now.
Let me start with you Mr. McCabe, and then move on to Mr. Rog-
ers and Mr. Johnson.

Mr. McCaBEe. Do you want me to go ahead?

Mr. Davis. Sure.

Mr. McCaBE. Obviously I think that with stormwater runoff, it
contains many contaminants which are harmful to public health.
WASA is responsible for the sewer system. Storm sewers are a lit-
tle bit different because it doesn’t—it is not necessarily captured by
the sewage system, and you don’t have a rate base on which to
charge for improvements in the system or for building up the sys-
tem.

I think that obviously you need to bring the Department of Pub-
lic Works in, you need to bring in the other departments that have
involvement in this important issue. I think it is important not
only for the people of Washington, particularly in Anacostia, but
also for the downstream residents in Maryland and Virginia, and
I would just encourage WASA and the appropriate levels of city
government to work together toward a quick resolution of this
issue, because it is one that needs resolution.

Mr. Davis. They have today in the paper a letter you sent to Dr.
Brimmer at the Control Board, asking that the District’s environ-
mental regulation and administration be transferred from the city’s
Department of Consumer and Regulatory Affairs to the Depart-
ment of Health.

Mr. McCasEe. Yes, that had been proposed.

Mr. Davis. What is the rationale for that request? Is it already
on the recommendations regarding sewer water management?

Mr. McCaBE. Well, the functions that are in ERA are environ-
mental regulatory functions; they involve the health of District
residents. It seemed like an appropriate transfer to be made. And
in fact, since that was first announced 18 months ago, we have
been working very closely with the Department of Health individ-
uals to help with the transfer. We heard that that transfer might


21

Given the District's past extensive deferral of needed
capital investment in the plant, some catch-up investment is to
be expected. However, with spending affordability controls over
WSSC's budget, requests for spending for the Blue Plains facility
will have to be balanced with other capital investment needs in
other WSSC service areas.

In a related issue, the authorizing legislation approved
last year included provisions requiring two studies: 1) the
feasibility of establishing the Authority as an independent
regional authority and to make recommendations for the ongoing
and 2) the
feasibility of privatizing or leasing the Blue Plains Plant.

relationship of user jurisdictions to the Authorit:

A committee headed by Bruce Romer, Chief Administrative
Officer for Montgomery County, has been reviewing Requests for
Proposals (RFP) for the privatization study. At its most recent
meeting, Mr. Romer indicated that a modified scope of work will
be issued to responders to an earlier RFP, and that this study
should be on track by March.

Discussions are also under way regarding the direction and
scope of the regional authority study, the next priority of the
committee. We are somewhat disappointed that it has taken this
long to address these aspects of the authorizing legislation. we
recognize that the Board has been making a concerted effort to
achieve consensus positions on the issues it has addressed to
date. Although our objectives as Board members may be different,
we have agreed that our first priority was to increase the
operation and efficiency of the plant and to satisfy EPA permits
and other health requirements.


50

The Metropolitan Washington Council of Government facilitated
the strategic thinking process of various aspects with respect to the
future operational and ownership structure of the aqueduct.

Mr. Chairman, as you know, the committee had initially pro-
posed four options for consideration that included creating a non-
Federal private entity to operate the aqueduct that involved the
sale, lease or management of the aqueduct; No. 2, the transfer of
the operation to the Fairfax County Water Authority; No. 3, the
transfer of the operation to the District of Columbia Water and
Sewer Authority; and No. 4, the creation of a new multijuris-
dictional interstate entity.

After sorting through these options, the committee then drafted
another recommendation for consideration. This would entail the
continued operation of the aqueduct by the Army Corps of Engi-
neers, which is more logical by our thinking, and we have for-
warded this opinion to the Secretary of the Army for his consider-
ation.

It is expected that once these discussions about the operational
future of the aqueduct are concluded, we will return to Congress
with the Secretary of the Army and the aqueduct officials, with the
former proposal.

We look forward to your support on this critical issue to ensure
the quality of our drinking water as the region continues to im-
prove.

You know that we were committed to conduct a privatization
study; you have heard from other board members that the study
is underway and we expect to award a contract on that shortly.

With respect to the regional authority study, the authorities—
WASA’s legislation was mandated to conduct a feasibility study
and we are about to begin that process. We know that because
WASA is a part of the District of Columbia budget and that we
don’t have an approved budget today, yet. That is an issue that
was not only highlighted by Mr. Duncan and other board members
but it is one, as chair, I highlight as well.

The fact that WASA does not have a budget means that we have
to juggle and we have to postpone and delay critical decisions about
the financing of our operations and projects that we have commit-
ted to EPA that we would move forward on.

The board has put in place the tenets to successfully deliver
quality customer service, and the management and staff are exe-
cuting them.

Our work is still in its genesis. We are now moving to the next
phase of maturity. As we move to the next phase of maturity, there
are several changes to WASA legislation that I believe would fur-
ther facilitate our transition to the world-class operation we desire.

First, the original WASA legislation recognized WASA as a pub-
lic entity financed by ratepayers only and, as such, was designed
to give the new entity maximum flexibility to operate as similar fa-
cilities and utilities. We were granted the right to use excess reve-
nue in the course of the year, and to support our capital improve-
ment program. Subsequent Congressional legislation again limits
the use of excess revenue by the authority without an appropria-
tion. The flexibility originally given, we believe is important, and
we will come to you for further discussion on this issue.


95

Please update the Subcommittee on the overall status of
compliance with EPA’s Administrative Order.

‘A more detailed report on the compliance with the Drinking Water Administrative Order
can be found in my written testimony on pages 5 and 6. In addition, | can provide the
‘Subcommittee with a table summarizing compliance with the Order.

ISSUE: COMPLIANCE STATUS OF THE DRINKING WATER CONSENT
ORDER WITH THE DISTRICT OF COLUMBIA'S WATER AND SEWER AUTHORITY

The following table summarizes the compliance siatus since we
signed the ‘Adminisuatve Covsent Order on July 12, 1996, to
address bacterial violations which occurred in ‘J0n6, October and
November, 1995. The Order directed WASA to develop a
co! ns: jation_PI EPA approved WASA's

mediation Plan in March 1997. The plan sets schedules and a
budget for making improvements including: public notification, water
monitoring, operation and maintenance procedures, reservoir
rehabilitation, distribution system flushing, cross connection control,
and disinfection. There have been many accomplishments since the

Order, but much remains done in the next five (5) years. There
may be over 4100 crgss cor figns that need to be closed, and
there are major capitol improvements needed on the eight (8) storage

reservoirs.


33

Mr. GriFFIN. In Fairfax County, some of our distribution system
is obviously fairly new, but some of it dates back 40 and 50 years,
and there is an ongoing effort in terms of our capital program to
make sure that the older parts of the system are well-maintained
and that we meet the standards that we are required to meet.

Mr. Horn. How about Montgomery County?

Mr. DUNCAN. Montgomery and Prince George’s Counties have the
Washington Suburban Sanitary Commission, which provides water
for both counties, and that dates back a long time, years and years.

Mr. Errico. We have a similar situation with old and new sys-
tem both, but being maintained by WSSC and updated regularly.

Mr. Horn. And that is an authority also that brings in several
governmental entities, I take it.

Do you put up, out of your own budget or bond issues within that
county, the funding for the distribution or connection system, what-
ever you want to call it? How does that work?

Mr. DuNcaN. We do the funding through the WSSC bill to the
water and sewer users in Montgomery County and in Prince
George’s County. All the bonding is done through that. They have
their own bonding capability. Payments to Blue Plains are done
through—to WASA, are done through the water and sewer bills
that go to individual people.

Mr. Horn. Let us take Montgomery County as an example. How
many different sources of funding are there to build the infrastruc-
ture that is needed to either supply material into this authority
and its plant or out to distribute it?

Mr. Duncan. It would be really the ratepayer who uses the sys-
tem and is assigned their share according to their usage and ac-
cording to whatever bills we get from WASA, and if there are any
Federal grants that would come in or any State grants that would
come in. That is primarily where the dollars come in.

We have, in limited cases, county government or, for example,
our solid waste fund would pay money if we asked WSSC to do cer-
tain things for us in certain parts of the county.

Mr. Horn. OK. There is a board. Does it have a priority system
of projects and infrastructure that is to be built, and is it a reason-
able plan that everybody is satisfied with; that, yes, this is the old-
est here and they ought to get first treatment?

Mr. DUNCAN. There is a 6-year capital improvements program
that WSSC has and there is agreement on that. There is a lot of
discussion and debate as to what gets into that program, and again
that program changes every year.

But there is a process set up that some say is too cumbersome.
I have my own concerns about that. But that process has worked
for a number of years.

Mr. Horn. So you are satisfied with the process. Seems to me
that is the other major function of a board, the administrator gives
them a recommendation and, based on the needs they see and the
areas they represent, they can build coalitions or whatever to get
the job done. But that is where the oversight should be coming
from. Is that agreeable?

Mr. DuNcAN. In terms of oversight by the Board of Directors for
WASA, that is clearly the appropriate place for it. And then you
have each government sort of overseeing their members and get-


17

Prince George's County has and will continue to raise
concerns, however, about changes we see that need to be made with
personnel and procurement issues. One of the major reasons
behind the creation of WASA as an independent agency was to allow
for major changes to the organization's personnel and procurement
regulations, which were hopelessly caught up in the District's
procedures.

To date, WASA has adopted personnel regulations which, in
our view, still parallel too closely those used by the District
of Columbia. Although they begin to move away from the “business
as usual" personnel format, they are still far removed from the
kind of flexible and goal-oriented regulations envisioned for the
new Authority.

The Board recently entered into a contract with the District
to fulfill its personnel obligations as well as its payroll
services. We are concerned that it is still necessary that these
functions be handled by the District government. We are trying
to create a new climate of change and pro-activity within the
WASA organization. Actions such as these only perpetuate the
feeling among WASA staffers that they are an adjunct of the
District government, a view with which we do not agree.

In addition, we are concerned that there has been no formal
action on the adoption of new procurement regulations, though
temporary regulations that also parallel the District's were
adopted and have been extended at least once.


61

Schcomenittes on the Disict of Cohvedsbe
‘Government Reform and Oversight Commits

November 12, 1997

The Retail Rates Committee

This committee, which | chair, has spent many hour deliberating over the initial rate
structure and increase that was effective in April of this year. It was a laborious process.
The staf, inancial and engineering consultants contributed a host of analyses. As dis-
we wore strongly advised to adopt a 78 percent rate increase in ordarto
successfully address the planned repoin, upgrades, meet our requirements with EPA man-
dates, and still have adequate cash reserves. My colleagues and | simply could not in
good conscience impose such a massive increase on our ratepayers all at once, although
the justfiction was certainly staring us in the face.

Instead, we looked at WASA's immediate needs and determined that a 42 percent
increase was the minimum increase that would adequately begin fo oddress out opera-
tional requirements.

During the process, we held a public hearing in January of this yeor. Eighty-two wit
nesses -- individuals and organizations -- signed up to offer oral testimony. Over half
(45) of he witnesses actually testified. A comment period followed the hearing whereby
‘we gamered additional input from our ratepayers. Their opinions were thoughtfully and
fully cor yred by the committee and shared with the entire Board.

As | mentioned earlier, this will not be the last increase. However, any subsequent
‘tate increase will be much less -- approximately five percent in FY 1999 -- and the pub-
lic will have full benefit of learning why rate increases are drely needed for our aging
systems

cussed ear

Ad-Hoc Committees

‘As Choirman of the Board, ! have periodically assigned ad-hoc committees to ad-
dress ond provide recommendations on such areas as liability insurance and the
privatization study. Once again, our abla Board members took on the task and pro-
‘vided the requisite information in order for WASA to accomplish the mandates set forth
inthe enabling legislation and to execute the Board's overall vision.



114

PRINCE GEORGE’S COUNTY.

TO WASA’S GREAT CREDIT,
IMPORTANT PROGRESS HAS BEEN
MADE AND THERE IS REASON FOR
RESIDENTS THROUGHOUT THE
WASHINGTON METROPOLITAN AREA
TO HAVE GREATER CONFIDENCE IN
THE INTEGRITY OF THEIR WATER
AND SEWER SYSTEM.

WASA HAS A NEW GENERAL
MANAGER, JERRY JOHNSON, WHO
HAS RECEIVED FAVORABLE REVIEWS

-3-


116

1 AM VERY PLEASED TO SEE MR.
ERRICO HERE TODAY, ANDI
ENCOURAGE THE SUBCOMMITTEE
AND WASA TO GIVE FULL AND
APPROPRIATE CONSIDERATION TO
THE CONCERNS OF PRINCE GEORGE’S
COUNTY WHICH MR. ERRICO WILL
DESCRIBE IN DETAIL. IN
PARTICULAR, I WOULD HOPE THAT
WASA, HAVING MADE STRIDES IN
OTHER AREAS, WILL MAKE A
CONCERTED EFFORT TO PROCEED
WITH THE REGIONALIZATION STUDY
AUTHORIZED BY THE 1996

-5-


which must go with it.

This Subcommittee can be proud to have played a leading role in reversing
many dangerous trends at Blue Plains. We did it by working cooperatively
and in a bi-partisan fashion with the city, the suburban user jurisdictions,
and the Federal government.

We now want to review the current situation at Blue Plains under the new
Water and Sewer Authority, evaluate existing concerns, and look to the
future with practical solutions.

The new law, in place for 13 months now, established an 11 member
Authority, with 5 suburban representatives and a super-majority required
for significant actions. Blue Plains was transferred to the Authori ty.

When Congress approved and the President signed our Subcommittee
legislation conferring borrowing power on the new Authority, we
consciously deferred some outstanding issues. These included privatization,
and the ultimate creation of a true regional authority. I look forward to
hearing appropriate witnesses today address those issues. It is the clear
intent of Congress that these matters be implemented as soon as possible.

The District’s Financial Plan provides for an orderly payback of $83
million to the new Authority. The control board has assured the
Subcommittee and the participating jurisdictions that it fully intends to
enforce the District’s commitment to repay those funds. Congress, of
course, retains ultimate power to enforce repayment, and is the ultimate
guarantor.

Many thanks to all local, state, and federal officials who have made it
possible to achieve so much progress in this important area.

2


93

Mr. Davis. Thank you very much. Let me start, if I can, briefly.

Mr. McCabe, you testified that there had been no significant, vio-
lations of the water permit for a year. Have there been any viola-
tions at all, even minor ones?

Mr. McCabe. There was a violation, I believe it was June 5, of
the dissolved oxygen standard. It was immediately addressed, and
I believe new equipment was brought in the next day. So for 2 days
the dissolved oxygen standard was violated, but we did not feel
that that was a particularly harmful violation and it was remedied
very quickly.

Mr. Davis. In your testimony, you mentioned 19 projects at Blue
Plains totaling $97 million. Could you provide the subcommittee a
list of those projects?

Mr. McCaBeE. I would be glad to. The 19 projects range from the
expansion joint and pipe support replacement for process air sys-
tem, to No. 19, flotation thickener rehabilitation. If you ask me
what that is, I don’t have a clue.

Mr. Davis. We both have staff people to figure that out.

Mr. McCasE. It is important.

[The information referred to follows:]


38

When I appeared before your subcommittee last year, I said an
independent authority can be focused on its mission, and that, in
fact, is what has happened. Let me quickly update the subcommit-
tee on the status of the various enforcement actions we took in
1996.

Citing drinking water violations going back to 1993, the EPA
proposed an administrative order against the city, which was
agreed to by the city on July 12, 1996. The conditions of the drink-
ing water order are very extensive, ranging from flushing and dis-
infection programs for all storage facilities to a valve repair and re-
placement program. While we have been impressed with the
breadth and quality of work done so far, not every facet of the ad-
ministrative order has been implemented.

For example, EPA approved a significantly improved bacteria
sampling plan on June 2, 1997, but WASA is several months be-
hind on the installation of the new samplers. We don’t view these
deficiencies as critical at this time, but we are carefully monitoring
and working with the Authority to ensure compliance with all the
elements of the order.

In the area of wastewater, because of numerous permit violations
at the Blue Plains plant, EPA took the city to court on April 4,
1996. At the same time, we proposed a series of steps that the Dis-
trict would have to take in order to resolve these violations of the
Clean Water Act. We required the city, and subsequently WASA,
to meet very specific operational performance standards and under-
take eight improvement projects. The Commonwealth of Virginia
challenged these terms in court in May, and I expressed concern
at your June 12, 1996, hearing that such a challenge could delay
progress at the plant.

Fortunately, the District agreed to go ahead with the provisions
of the order during the appeal. After hearing and dismissing the
Commonwealth’s arguments, the order was finally entered in Au-
gust 1996. Today I can report that WASA has met every one of the
performance measures we established and as of last month had
completed all eight projects. And the Authority did so both ahead
of schedule and under budget estimates, and that is very good
news.

While extraordinary progress has been made by the new Author-
ity, I cannot say that all is well, and I would like to raise four
issues, some of which were raised by the panel before me.

In the area of procurement and personnel rules, WASA continues
to operate under the cumbersome procurement and personnel rules
of the District of Columbia. That has been mentioned by the folks
before me. New rules are in the works, but until they are imple-
mented I remain concerned about WASA’s ability to respond in a
fimely and efficient fashion to emerging issues or unforeseen prob-
lems.

In the area of preventive maintenance, much of the infrastruc-
ture that WASA operates is very old. Some of the pipes date back
to the Civil War era. While the Authority is busy with major new
capital projects, it is vital that there be a commitment from
WASA’s leadership to the less exciting, but no less important task
of daily and routine preventive maintenance.


100

not go through, and since we had had no communication with peo-
ple in the other departments, we felt that it would be inappropriate
to make that move without at least some discussion about what the
purpose was of not making the move. It just seems to make a lot
of sense and we have been preparing for that.

Mr. Rocers. Mr. Chairman, if I may add to that. The transfer
of the Environmental Regulation Administration from DCRA to the
Department of Health was contemplated as a part of the Mayor’s
transformation plan. DCRA was one of the agencies included in the
business services and economic development business. That reorga-
nization plan was submitted to Council and was not acted upon at
the end of last year, and has not been acted on yet, so that is one
organizational stumbling block.

Second, the Department of Health is going through its establish-
ment as a new separate agency, and perhaps there has not been
the focus on that, but I think that in that it was contemplated as
a part of the transformation plan, the Control Board and the city
should be focusing on that move and could do a separate re-
organizational plan—submit a separate reorganization plan to the
council, moving environmental regulation from DCRA to the De-
partment of Health.

Mr. Davis. Mr. Rogers, and Mr. Johnson, as you know, the sub-
urban members may vote on all issues affecting general manage-
ment or the joint use of facilities. So far, have we had any difficul-
ties in interpreting what those words mean?

Mr. Rocers. No.

Mr. Davis. Do you concur with that, Mr. Johnson?

Mr. JOHNSON. Absolutely, Mr. Chairman.

Mr. Davis. Can you tell us what the status of the $83 million
that the District government agreed to repay was?

Mr. Rocers. As I indicated in my testimony, the District has
made two payments to WASA at the beginning of fiscal year 1997
and fiscal year 1998. It was agreed to as a part of the District’s fi-
nancial plan and budget, that the District would repay WASA over
a 4-year period, and so far, there is no indication of the District
wanting to do anything other than meet that obligation.

Mr. Davis. Thank you.

Ms. Norton.

Ms. Norton. Thank you, Mr. Chairman. First I would like to en-
gage all three of you, since all have mentioned in one form or the
other the procurement and personnel rules. Let me begin by con-
gratulating you directly, as I did the prior panel. I say to you di-
rectly, because you are the team that is responsible for the
changes. I want to congratulate Mr. Rogers as he leaves the gov-
ernment on what he can truly regard as a feather in his own cap,
because I know how hard you have worked not only on other Dis-
trict matters but certainly on this matter, and it probably has
shown the greatest progress and you should be very proud of that.

Mr. Rocers. Thank you.

Ms. Norton. I want to congratulate Mr. Johnson because we ob-
viously see very good management here, and I know that that
could not have happened without the kind of attention that your
testimony reveals you have given to this matter.


41

TESTIMONY OF
W. MICHAEL McCABE
REGIONAL ADMINISTRATOR
U.S. ENVIRONMENTAL PROTECTION AGENCY, REGION 3
BEFORE THE
SUBCOMMITTEE ON THE DISTRICT OF COLUMBIA
OF THE
COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
U.S. HOUSE OF REPRESENTATIVES

November 12, 1997

Thank you Mr. Chairman, Congresswoman Norton and Members of the
Subcommittee. appreciate having the opportunity to address the issue of the District
of Columbia's Water and Sewer Authority (WASA) with you again today.

My name is W. Michael McCabe, and | am the Regional Administrator for the
United States Environmental Protection Agency (EPA), Region 3.

Let me begin with a clear and unequivocal statement:

There have been NO violations of drinking water standards and no
significant violations of the waste water permit since the Water and
Sewer Authority officially opened its doors on October 1, 1996.

Let me repeat — There have been no violations of drinking water standards and
no significant violations of the waste water permit since the new Authority took control a
year ago. That fact alone stands in stark contrast to the troubled history of drinking
water and waste water operations in Washington, dating back for more than a decade.

Last year I had the privilege of appearing before this Subcommittee on two
occasions -- on February 23 and again on June 12. As you will recall, | expressed
serious concerns at those hearings, saying that, “the drinking water and waste water
systems in [Washington] are in serious trouble.” | went into considerable detail,
enumerating numerous violations of the Clean Water Act and the Safe Drinking Water
Act that raised real questions about potential threats to human health and the focal
environment, including the Potomac and Anacostia rivers as well as the Chesapeake
Bay.

While | still have concerns about the long-term health of the drinking water and
waste water operations, which | will detail later in my testimony, | am pleased to offer a
much more positive assessment of those operations today