Judge Rules to Keep Opinion Out of Fairfax’s Case

The attorney representing the City of Falls Church in its titanic face-off with the Fairfax County Water Authority pulled no punches in his opening arguments Monday, charging that Fairfax’s goal is nothing short of “putting Falls Church out of the water business.”

The case before Judge R. Terrence Nye in the Fairfax Circuit Court has far-ranging implications along just these lines. The City has run its water system, which serves 120,000 customers in Northern Virginia, including over 100,000 in Fairfax County, since the 1930s. Should the City be stripped of its ability to operate the system profitably, it will cripple the City’s finances and could call its very existence as an independent jurisdiction into question.

The City is engaged in an expensive defense against Fairfax Water’s attempt to do just that, and to win $21 million in damages against the City, as well, for allegedly “interfering” with the County’s ability to compete for new water customers.

While no Fairfax County officials not directly connected to the case were present during the first three days of the trial this week, Falls Church Mayor Robin Gardner returned for a second day yesterday, and Vice Mayor Hal Lippman also attended.

In the current stage of what will be drawn-out litigation, the issue of the constitutionality of the City’s practice to take a reasonable “return on investment” (ROI) from its system to help relieve pressure on residential real estate and other taxes to cover the annual operating costs of the City and its school system.

In its “bench brief” presented to Judge Nye at the start of the trial, the City, whose legal representative is Alexander “Sandy” Thomas of the Falls Church-based Reed Smith lawfirm, named a wide range of Virginia jurisdictions who do just what the City is now doing, including Richmond, Radford, Newport News, Mount Jackson, Danville, Rocky Mount and Round Hill.

In it, the City states, “Simply put, for over 80 years the Supreme Court of Virginia has explicitly authorized exactly what…Fairfax Water alleges is unconstitutional. Under Fairfax Water’s argument, the City’s water charges for its County customers are a ‘tax’ because the City generates a profit from those charges that is used for the general benefit of the City.

“But the Supreme Court of Virginia has held that localities are permitted to generate a profit from the sale of water to non-residents for the benefit of their inhabitants and that such a profit is not a tax.”

In the first days of the trial, Judge Nye has stressed that only evidence weighing on the constitutionality of the practice will be considered, and that no opinions or testimony of individual public officials not connected for formal policy resolutions or ordinances will be allowed.

At one point, Judge Nye questioned counsel for Fairfax Water on why, after decades of peaceful co-existence with the Falls Church water system, the issue of the City’s taking a fair ROI was not raised before now.

In fact, as was pointed out in court yesterday, the County has clearly long been aware of the policy, since the general manager of the Fairfax Water System, Chuck Murray, is a City of Falls Church resident and pays for Falls Church water at his residence, and the headquarters of the Fairfax Water System near the Route 50 and Gallows Road intersection, is also served by City of Falls Church water.

Indeed, historic cooperation between the two systems dates back to the 1950s.

Yesterday, when cross-examined by Thomas, a key expert witness for Fairfax Water, Christopher Woodcock from New England, was forced to concede he’d never studied or analyzed any Virginia situation pertaining to the issues in the case, and was able to summarize only general guidelines of the American Water Works Association.

The City’s expert witness, on the other hand, Glen Watkins of Technical Associates of Richmond, is well versed in Virginia matters on the subject.

Thomas showed that overall, Falls Church’s water rates fall in the middle of costs among regional systems.

The City was expected to conclude its case today, with the trial running until 4 p.m. There will be no court on Friday, before the matter resumes next Monday.