B-140857, OCTOBER 12, 1959, 39 COMP. GEN. 285

B-140857: Oct 12, 1959

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STATE AND LOCAL GOVERNMENT - SEWER CHARGES - ADVANCE PAYMENTS SEWER SERVICE CHARGES WHICH ARE ESTABLISHED BY A LOCAL GOVERNMENT AND REQUIRED TO BE PAID QUARTERLY IN ADVANCE. ARE NOT TAXES OR ASSESSMENTS SO THAT FEDERAL AGENCIES COULD INVOKE THEIR CONSTITUTIONAL IMMUNITY. RATHER ARE CHARGES FOR A SERVICE WHICH FEDERAL AGENCIES MAY NOT REFUSE TO PAY. THE PENALTY CHARGE WHICH IS AN INTEGRAL PART OF THE RATE STRUCTURE APPLICABLE TO ALL USERS IS FOR PAYMENT WHEN THE QUARTERLY SEWER CHARGE IS NOT PAID IN ADVANCE. A SEWER SERVICE CHARGE WHICH IS ESTABLISHED BY A LOCAL GOVERNMENT AND REQUIRED TO BE PAID IN ADVANCE. THERE BEING LITTLE POSSIBILITY THAT THE LOCAL GOVERNMENT WILL FAIL TO FURNISH THE SERVICES AFTER PAYMENT IS MADE AND IN VIEW OF THE SAVINGS TO THE FEDERAL GOVERNMENT BY ADVANCE PAYMENT OF THE CHARGE.

B-140857, OCTOBER 12, 1959, 39 COMP. GEN. 285

STATE AND LOCAL GOVERNMENT - SEWER CHARGES - ADVANCE PAYMENTS SEWER SERVICE CHARGES WHICH ARE ESTABLISHED BY A LOCAL GOVERNMENT AND REQUIRED TO BE PAID QUARTERLY IN ADVANCE, WITH A PENALTY IF NOT PAID WHEN DUE, ARE NOT TAXES OR ASSESSMENTS SO THAT FEDERAL AGENCIES COULD INVOKE THEIR CONSTITUTIONAL IMMUNITY, BUT RATHER ARE CHARGES FOR A SERVICE WHICH FEDERAL AGENCIES MAY NOT REFUSE TO PAY, AND THE PENALTY CHARGE WHICH IS AN INTEGRAL PART OF THE RATE STRUCTURE APPLICABLE TO ALL USERS IS FOR PAYMENT WHEN THE QUARTERLY SEWER CHARGE IS NOT PAID IN ADVANCE. A SEWER SERVICE CHARGE WHICH IS ESTABLISHED BY A LOCAL GOVERNMENT AND REQUIRED TO BE PAID IN ADVANCE, WITH A PENALTY IF NOT PAID WHEN DUE, MAY BE PAID BY A FEDERAL AGENCY IN ADVANCE, NOTWITHSTANDING THE ADVANCE PAYMENT PROHIBITION IN 31 U.S.C. 529, THERE BEING LITTLE POSSIBILITY THAT THE LOCAL GOVERNMENT WILL FAIL TO FURNISH THE SERVICES AFTER PAYMENT IS MADE AND IN VIEW OF THE SAVINGS TO THE FEDERAL GOVERNMENT BY ADVANCE PAYMENT OF THE CHARGE.

TO THE POSTMASTER GENERAL, OCTOBER 12, 1959:

BY LETTER OF SEPTEMBER 23, 1959, THE DEPUTY POSTMASTER GENERAL ASKED OUR OPINION ON SEVERAL QUESTIONS RELATING TO SEWER SERVICE FURNISHED THE POST OFFICE AT AMHERST, OHIO.

ORDINANCE NO. B 513, PASSED BY THE VILLAGE OF AMHERST, EFFECTIVE JULY 1, 1956, ESTABLISHED REVISED QUARTERLY RATES FOR SEWER SERVICES BASED ON THE TYPE OF PROPERTY SERVED AND ON THE NUMBER OF CONNECTIONS SUCH PROPERTY HAS WITH THE SEWER SYSTEM. THE CHARGES ARE PAYABLE QUARTERLY IN ADVANCE AND IF NOT PAID WHEN DUE THE ORDINANCE PROVIDES THAT "A PENALTY OF 10 PERCENT OF THE CHARGE SHALL BE ADDED TO SUCH BILL.'

IT IS EXPLAINED THAT IN VIEW OF THE PROVISIONS OF 31 U.S.C. 529 PROHIBITING PAYMENTS IN ADVANCE OF SERVICES RENDERED THE BILLS HAVE NOT BEEN PAID UNTIL AFTER THE END OF THE QUARTER AND THE PENALTY CHARGES HAVE BEEN DISREGARDED. THE VILLAGE OF AMHERST CONTENDS THAT IT IS ENTITLED EITHER TO PAYMENT IN ADVANCE OR, IF NOT PAID IN ADVANCE, TO THE PAYMENT OF SUCH ADDITIONAL PENALTY CHARGES.

IN VIEW OF THE FOREGOING THE DEPUTY POSTMASTER GENERAL ASKS "WHETHER BOTH THE SEWER CHARGE AND THE PENALTY ARE A TAX FROM WHICH THE POST OFFICE IS IMMUNE OR A SERVICE CHARGE FOR WHICH IT IS LIABLE.'

THE ORDINANCE HERE INVOLVED IS SIMILAR TO THAT CONSIDERED IN 29 COMP. GEN. 120 WHEREIN IT WAS HELD THAT CHARGES BASED ON THE NUMBER OF SEWER CONNECTIONS WERE NEITHER TAXES NOR ASSESSMENTS BUT RATHER WERE CHARGES FOR THE PRIVILEGE AFFORDED TO THE GOVERNMENT OF EMPTYING THE SEWAGE FROM ITS PROPERTY INTO THE MUNICIPAL SEWAGE DISPOSAL SYSTEM. CONSEQUENTLY, AND SINCE THE ORDINANCE APPARENTLY HAS NOT BEEN CHALLENGED AS PRESCRIBING EXCESSIVE RATES, WE SEE NO BASIS, IN THE ABSENCE OF A CONTRACT SO PRECLUDING, WHEREBY THE UNITED STATES PROPERLY MAY REFUSE TO PAY SUCH CHARGES INCLUDING THE ADDED AMOUNT WHERE PAYMENT IS NOT MADE IN ADVANCE, SUCH ADDED AMOUNTS BEING AN INTEGRAL PART OF THE RATE STRUCTURE AND APPLICABLE TO ALL USERS ALIKE. CF. 3 COMP. GEN. 427.

WHILE UTILITY BILLS GENERALLY DO NOT BECOME DUE UNTIL AFTER THE SERVICE HAS BEEN FURNISHED, WE RECOGNIZE THAT MANY PUBLIC UTILITIES ASSESS ADDITIONAL CHARGES IF PAYMENT IS NOT MADE THEREAFTER WITHIN A STIPULATED PERIOD. SUCH PAYMENT CONDITIONS ARE SIMILAR TO THE GRANTING OF DISCOUNTS FOR PROMPT PAYMENT AND PROVISION THEREFOR IS CONTAINED IN MANY GOVERNMENT CONTRACTS. IN THE PRESENT CASE THERE WOULD APPEAR NO QUESTION BUT THAT THE UNITED STATES WOULD BE LIABLE FOR THE FULL AMOUNT IF THE VILLAGE OF AMHERST RAISED ITS RATES PROPORTIONALLY AND MADE THEM PAYABLE AT THE END OF THE QUARTER WITH THE PROVISION THAT USERS MAKING PAYMENT IN ADVANCE WOULD BE GIVEN A CORRESPONDING DISCOUNT FOR SUCH ADVANCE PAYMENTS. ACCORDINGLY, WHERE PAYMENT IS NOT MADE IN ADVANCE, WE SEE NO VALID BASIS WHEREBY THE UNITED STATES MIGHT AVOID SUCH ADDITIONAL CHARGES.

CONCERNING THE PROHIBITION AGAINST ADVANCE PAYMENTS CONTAINED IN 31 U.S.C. 529, WE HAVE STATED THAT THE PRIMARY PURPOSE OF SUCH PROHIBITION IS TO PRECLUDE THE POSSIBILITY OF LOSS IN THE EVENT A CONTRACTOR, AFTER RECEIPT OF PAYMENT, SHOULD FAIL TO PERFORM HIS CONTRACT AND REFUSE OR FAIL TO REFUND THE MONEY TO THE GOVERNMENT. CONSEQUENTLY, HAVING REGARD FOR THE ESTABLISHED RESPONSIBILITY OF STATE AND LOCAL GOVERNMENTS AND SINCE DANGER OF LOSS IS MINIMIZED WHEN A STATE OR AGENCY THEREOF IS THE CONTRACTOR, WE HAVE, UNDER CERTAIN CIRCUMSTANCES, AUTHORIZED ADVANCE PAYMENTS TO STATE OR LOCAL GOVERNMENTS. SEE 25 COMP. GEN. 834; B-35670, JULY 19, 1943; B-36099, AUGUST 14, 1943; B 65821, MAY 29, 1947; B-109485, JULY 22, 1952; AND B-118846, MARCH 29, 1954. ADVANCE PAYMENTS IN THE PRESENT CASE WOULD RESULT PERCENTAGE WISE IN CONSIDERABLE SAVINGS TO THE GOVERNMENT AND, IN VIEW OF THE NATURE OF THE SERVICES FURNISHED, THE POSSIBILITY OF THE CITY'S FAILURE TO PERFORM APPEARS TO BE VERY REMOTE.

ACCORDINGLY, YOU ARE ADVISED THAT WE WOULD MAKE NO OBJECTION IF THE SERVICES HERE INVOLVED ARE HEREAFTER PAID FOR QUARTERLY IN ADVANCE.