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Shields: F.C. ‘Very Surprised’ by Army Prohibition of Water Privatization Sale

Reversal of Legal Opinion Delayed Bidding Meeting

Falls Church City Manager Wyatt Shields told the News-Press in an exclusive interview yesterday that he was “very surprised” by the opinion from the chief counsel of the U.S. Army delivered on the eve of the City’s planned opening of bids and auction for the sale of its water system last Friday.

The receipt of the memo forced the City to postpone its meeting. The U.S. Army Corps of Engineers provides the water that the City purchases for use in its 120,000-plus user embattled system.

The opinion, which arrived in the form of a memo from Earl H. Stockdale, the Army chief counsel, reversed an earlier opinion an Army Corps of Engineers senior counsel provided to Falls Church on March 8. The Stockdale opinion concluded that a 1947 law “provides authority for the Secretary of the Army to deliver water from the WA (Washington Aqueduct-ed.) only to government authorities.” Still, it was an implied conclusion, based solely on the statute’s lack of specific inclusion of IOUs in its language.

The Stockdale memo contradicted an earlier opinion by Susan Greenwood, senior counsel for legislation of the Army Corps, which was in response to a Feb. 29 request by Shields for a disposition on the legality of a potential sale of the Falls Church system to a private “investor owned utility” (IOU).

The Mar. 8 Greenwood memo stated explicitly, “I believe that the statute governing the provision of water from the Washington Aqueduct to the City would permit provision of water to an IOU.” Moreover, the Greenwood memo claimed to have “been coordinated with the Office of the General Counsel of the Army, as well as the Office of the Assistant Secretary of the Army (Civil Works).”

It was on the strength of the Greenwood opinion that the City opened its bidding process to IOU as well as governmental agencies, and Shields told the News-Press yesterday that a number of IOU entities were prepared to appear at Friday’s bid meeting.

Shields answered in the affirmative to a question by the News-Press whether he felt the bid meeting would have produced the desired result for the City. Bids were to be accepted only if they met a $44 million minimum.

Shields said that he’d remained in close touch with all six groups – all IOUs – that expressed an interest in acquiring the Falls Church system following a pre-bid meeting in April. He said he predicted a smaller group would actually bid at last Friday’s scheduled meeting, and said, “I believe we would have gotten what we were looking for.”

When the Stockdale memo came through late last Thursday, Shields contacted the groups planning to bid, and it was agreed “the best option would be to suspend the bidding until the matter is 100 percent fully resolved.” Shields added, “I am not sure the matter is 100 percent fully resolved yet.”

The News-Press received a call late Thursday night announcing the cancellation of the Friday morning bidding meeting. Fairfax County Board of Supervisors Chair Sharon Bulova emailed a statement to the News-Press earlier the same day citing the Stockdale memo, and reiterating her position that the City should abandon its efforts to sell its system, and work for a merger of it with the Fairfax Water Authority.

However, Shields told the News-Press yesterday that there have been no overtures from Fairfax County in the last week to pursue that option.

Shields cited the most recent U.S. Congressional action relevant to the issue, being a 1996 law that passed permitting the entire U.S. Army Corps Washington Aqueduct to be sold to either a government or a private entity.

Given that precedent, Shields said, “It is extraordinary that the Army claims now it cannot sell treated water to a private entity.”

The Falls Church City Council conferred with legal counsel for over an hour in a closed session following a brief public portion of its regular business meeting Tuesday. No decisions came from that meeting, Shields said.

The City is mulling selling its system in light of recent Fairfax County actions to deny a fair “return on investment” to the City, to prohibit an extension of the system in the county, and to regulate, as of July 1, rates the City can charge county residents for its water. Any City Council decision to sell would be subject to approval by public referendum in November.

The City of Falls Church issued the following brief statement late yesterday afternoon:

“In light of the recent reversal by the Army Corps of Engineers with respect to the ability of the Washington Aqueduct to sell water to investor owned utilities, the City Council and staff are continuing to evaluate options for the future of City water system, with the goal of providing the best possible long-term solution to its taxpayers and customers. The City remains committed to providing superior service to customers by delivering safe, dependable drinking water at a competitive price.”

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