Esta ley enmienda la Ley de la Autoridad de Acueductos y Alcantarillados de Puerto Rico (AAA) para modificar su estructura administrativa. Reemplaza directores gubernamentales con representantes municipales en la Junta de Gobierno, crea las posiciones de Directores Ejecutivos Regionales y Director Ejecutivo de Infraestructura, elimina las vicepresidencias ejecutivas y extiende el término del Presidente Ejecutivo y los nuevos directores ejecutivos a seis años. Define sus funciones principales y establece causas para su remoción. Autoriza a la AAA a ejecutar acuerdos con agencias reguladoras federales y locales, así como con municipios, y a declarar un estado de emergencia en el sistema de acueductos y alcantarillados. Elimina restricciones temporales en procesos de adquisición y licitación directa, y permite la contratación de empleados o exempleados de operadores privados o de las Oficinas Ejecutivas de la AAA, incluyendo jubilados, bajo ciertas excepciones temporales. Reduce la autorización otorgada al Banco Gubernamental de Fomento para garantizar pagos al operador privado y lo autoriza a otorgar un préstamo a la AAA para financiar mejoras de capital, compra de equipo y gastos operacionales.
(Approved March 31, 2004)
To amend subsections
(c) and
(d) and add subsections
(q) ,
(r) and
(s) to Section 1; amend the first paragraph and subsections
(a) and
(c) , correct the name of subsection ( g ) to rename it as subsection
(f) , amend the renamed subsection
(f) , add subsections
(g) ,
(h) , and
(i) and rename subsections
(h) through
(m) as subsections
(k) through
(p) of Section 3; add subsections
(p) and
(q) to Section 4; amend subsections 5 and 6 and the penultimate paragraph of Section 11 of Act No. 40 of May $1^{ ext {st }}, 1945$, as amended, known as the "Puerto Rico Aqueduct and Sewer Authority Act," in order to amend and add definitions; replace two (2) ex officio Government Directors with Directors who are representatives of the municipal governments at the Governing Board; modify the administrative structure of the Aqueduct and Sewer Authority; create the positions of Regional Executive Directors and Infrastructure Executive Director; eliminate the positions of Executive Vicepresidents of the Aqueduct and Sewer Authority; extend up to six (6) years the term of the Executive President, of the Regional Executive Directors and the Infrastructure Executive Director and define their main functions; add certain applicable prohibitions to the Executive President, the Infrastructure Executive Director, and the Regional Executive Directors and list the causes for which they may be removed from office; authorize the Aqueduct and Sewer Authority to execute agreements, plans and projects with federal and local regulating agencies and with municipalities; authorize the Aqueduct and Sewer Authority to declare the entire or part of the Commonwealth Aqueduct and Sewer System in a state of emergency (recognizing the special importance of tending to the state of the plants under the dispensation of Section 301(h) of the Federal Clean Water Act) and authorize to take the necessary measures to break away from said state of emergency; eliminate the restrictions of thirty-six (36) months effectiveness for certain provisions on acquisition processes and direct bids; authorize
the Aqueduct and Sewer Authority to contract employees or former employees of private operators or their affiliates, including those who have retired from the Aqueduct and Sewer Authority, as well as employees or former employees of the Executive Offices, for which purposes, the exceptions for recruiting or contracting granted in this Act may be used, for a period of two (2) years or until a reclassification and compensation is implemented in the Authority within a maximum period of five (5) years; and to reduce the amount of the authorization granted under Section 7 of Act No. 95 of June 30, 2002, to the Government Development Bank for Puerto Rico to secure on behalf of the Authority the amounts to be paid to the private operator and authorize the Government Development Bank for Puerto Rico to grant a loan to the Aqueduct and Sewer Authority for the sum of up to three hundred twenty-five million $(325,000,000)$ dollars chargeable to the General Fund under certain circumstances.
The main intent of this Act is to effect some changes in the administrative structure of the Puerto Rico Aqueduct and Sewer Authority ("PRASA") in view of the resuming of the PRASA of the control in operations and maintenance of the Commonwealth Aqueduct and Sewer System ("System") after over eight years of being operated by the private sector and after the determination to cancel the existing contract with said private operator. In view of the situation of the PRASA, which is one of transition from private operation to government operation, it is indispensable to provide it with the flexibility necessary for it to be able to operate the System effectively and also to provide it with the mechanisms that will expedite operations of the System over a long-term period, which will result in greater efficiency in both the administration and the services. The changes proposed take into account the experience acquired by the PRASA over the past few years, including the years during which its operations have been under the control of private operators and subject to the new trends of
government administration aimed at a greater regionalization of the administration of the services offered to the citizens.
This Administration has a solid commitment to offer an optimum water service to all Puerto Rican citizens. Undoubtedly, the problems in the water service has an impact in the quality of life of all Puerto Ricans. In seeing the fact that the option to have the PRASA operated privately has proven to be ineffective, the Government has the responsibility of reassuming the command on such an important entity, to deliver justice to all those citizens throughout the island who have suffered because of the problems with the water supplies. The objective is to have Water delivered to everyone in Puerto Rico promptly.
With this purpose, this Act is amending Act No. 40 of May $1^{ ext {st }}, 1945$, as amended, known as the "Puerto Rico Aqueduct and Sewer Authority Act," to replace the President of the Government Development Bank and the Secretary of the Department of Transportation and Public Works as exofficio members of the PRASA Governing Board with two private citizens to represent the municipalities. The remaining seven present Directors remain unaltered. In addition, the administrative structure is being modified by eliminating the positions of Executive Vicepresidents, which were created to conform PRASA activities to its main function of supervising its private operator, and by creating the position of Regional Executive Director. The Regional Executive Director shall have broad autonomy and independence to resolve the specific problems of his/her respective region, thus achieving greater efficiency and celerity in tending to the needs of each region. Five initial regions are established, to be designated as metro, north, south, east and west, which shall be delimited following the criteria established in this Act, and the Board, in turn, may create additional regions.
In addition, the powers of the Regional Executive Directors shall be established by the PRASA Governing Board through a resolution and at the very least shall include the functions listed in this Act. The position of Infrastructure Executive Director is also created, who shall be in charge all of the programming and administration of the Capital Improvements Plan in coordination with the Regional Executive Directors. These six Executive Directors shall respond to the President, who shall be the senior official of the Authority and who shall be in charge of all of the functions delegated to him/her by the Governing Board of this public corporation.
With the purpose of allowing the PRASA to fill the positions of Regional Executive Directors and Infrastructure Executive Director with highly capable professionals and thus give the PRASA a tool with which to satisfy the compelling need to maintain continuity in these offices and to prevent the tenure of the persons holding these offices from being affected by changes of administration, the PRASA Governing Board is hereby authorized to appoint persons that shall hold office as Regional Executive Director and Infrastructure Executive Director for six-year terms. The persons holding these offices may only be removed for the causes listed in this Act and not for reasons other than the performance of the person, and shall be subject to the prohibitions established by this Act. Likewise, with the purpose of providing continuity to this new administrative structure of the PRASA, the term of the Executive President thereof is hereby extended to six (6) years. The Executive President in tenure as of the date of approval of this Act is not eligible for the new six-year term.
The PRASA is authorized to subscribe agreements with the municipalities of the country, so that the latter may construct and finance capital improvements in order to propitiate cooperation agreements. In
addition, under certain circumstances, they may perform repair and maintenance works. In both circumstances, municipalities shall assume their responsibility in what concerns the environmental and health laws and regulations on the works and repairs they perform, as well as any cost or penalty imposed by the Authority for violations incurred at the facilities as a consequence of the works performed by the Municipalities. Likewise, it is the intent of this authorization to have these agreements entered into upon the basis of the analysis of the need and scope as determined by the Authority on the projects to be built by the Municipalities, as well as the projects comprised in the Capital Improvement Plan and the conditions for the Authority to be able to incorporate the project to its Commonwealth Aqueduct System or its Commonwealth Sewer System, as the case may be.
We are also aware of the urgent need of protecting the dispensations granted to certain PRASA treatment plants under Section 301(h) of the Federal Clean Water Act, known as the "301(h) Plants." Should said dispensations be revoked, the PRASA will be forced to make significant capital investments, which would deplete PRASA resources which are at the time directed toward other more compelling efforts, such as improving the quality of superficial and underground waters that are being used as potable water sources. In addition to the requirements related with the 301(h) Plants mentioned above, in general terms it is also needed to recognize that there are very many environmental and health requirements and regulations with which the PRASA has to comply, as well as responding effectively to petitions and commitments with the pertinent federal and local regulatory agencies. For this reason, the PRASA is hereby authorized to enter into agreements, plans and projects as needed with said regulatory agencies with the aim to addressing the present situation of the PRASA. In addition,
beyond the power that the PRASA currently has to determine an emergency for purposes of the procurement and contracting procedures, by means of this Act, we are expanding said power and authorizing the PRASA Governing Board to declare the entire or part of the system in a state of emergency when the circumstances so require. This power is geared, among other objectives, toward being able to address in an effective and urgent manner those administrative, operational and financial circumstances which are critical and compelling, which could result in incidences that affect the effective compliance with the pertinent environmental provisions, as determined by the Governing Board. In facilitating the effective execution of administrative, operational and maintenance measures so as to comply with the applicable environmental laws and regulations, these provisions are consonant with the commitment of the PRASA and the Commonwealth of Puerto Rico of complying with the Decrees by Consent between the PRASA and the U. S. Environmental Protection Agency. The power being granted of declaring states of emergency for the entire or part of the system, the PRASA shall be provided with an important tool to ensure compliance with the 301(h) Plant dispensation requirements and all other legal and regulatory requirements, reason for which the PRASA is urged to consider with priority the state of 301(h) Plants and, should a state of emergency be declared, to exercise all the necessary measures that its powers allow for to remedy the compelling risks for these plants.
In addition, as a mechanism to facilitate an orderly transition and to be able to count with all the necessary professional support when reverting the PRASA to government operation after over eight years of private operation, the contracting of employees and former employees of the private operator or its affiliates is hereby authorized, with those who worked in matters
related to the contract between the PRASA and the private operator during the effectiveness thereof, and with employees or former employees of the PRASA Executive Offices; and said contracting or appointment is authorized in an expeditious manner as an exception in the provisions of subsection
(c) of Section 3.7 of Act No. 12 of July 24, 1985, as amended, and other restrictions related to the contracting or appointment of personnel, including in the case of retirees who availed themselves of a window of early retirement or after having reached the total number of years in the government service. This authorization is limited to a term of up to two years. The new PRASA reclassification and redistribution program shall be implemented in its entirety within a maximum period of five years, in order to reduce the limitations to contract and maintain the professional personnel of the highest caliber.
In view of the reduction in PRASA obligations with the private operator as a consequence of the cancellation agreed on, we recogni9ze the reduction of the amount of the obligations authorized to be secured by the Government Development Bank for Puerto Rico under Section 7 of Act No. 95 of June 30, 2002, in the name of the Authority in favor of the private operator. The amount of the security as estimated initially was approximately $360,000,000 per year, which equal the value of the fixed compensation for the annual service under said contract. This amount is reduced to $37,500,000 as the total security for the debts of the PRASA with the private operator that arise during the transition period. This reduction in the amount to be secured by the Bank on the final transition stage shall be negotiated by using the instrument that the Bank and the Authority determine to secure the same. Thus, the risk of repayment by the Commonwealth of Puerto Rico is reduced significantly. This measure also
authorizes the Government Development Bank for Puerto Rico to grant a loan to the PRASA for the total amount, not to exceed three hundred twentyfive million $(325,000,000)$ dollars. The loan shall be used to finance capital improvements, purchase of equipment, operating expenses, and any other purpose that the PRASA Governing Board, through a resolution, believes to be necessary or convenient.
Section 1.-Subsections
(c) and
(d) are hereby amended and subsections
(q) ,
(r) and
(s) are added to Section 1 of Act No. 40 of May 1, 1945, as amended, to read as follows: "Section 1.—Short Title of the Act; Definitions.— This Act may be cited under the name of "Puerto Rico Aqueduct and Sewer Authority Act."
The following terms and words, as used in Sections 1 through 21 of this Act, shall have the meanings stated below, unless the context indicates any other or a different meaning or intent:
(a) ... ...
(c) Commonwealth Aqueduct System.—Shall mean all the plants, systems, facilities or properties that are used or usable, or having the present capacity for future use in connection with the supplying or distribution of water, or any integral part thereof, which are owned, operated or controlled by the Authority and it shall embrace water supply systems, water distribution systems, reservoirs, wells, intakes, mains, laterals, aqueducts, pumping stations, standpipes, filter stations, purification plants, hydrants,
meters, valves and equipment, improvements (as hereinafter defined) to any of such properties heretofore or hereafter constructed or acquired, and all properties, rights, easements and franchises relating to such facilities and deemed necessary or convenient by the Authority for the operation thereof, as distributed throughout the various regions (Metro, North, South, East and West), into which its operations are divided.
(d) Commonwealth Sewer System.—Shall mean all the plants, systems, facilities or properties that are used or usable, or having the present capacity for future use in connection with the collection, treatment or disposal of sewage, which are owned, operated or controlled by the Authority, including wastes resulting from any processes of industry, manufacture, trade or business or from the development or utilization of any natural resources, or any integral part thereof, and shall embrace treatment plants, pumping stations, intercepting sewers, collecting sewers, lateral sewers, pressure lines, mains and all necessary appurtenances and equipment, improvements (as hereinafter defined) of any such properties, rights, easements and franchises relating to such facilities and deemed necessary or convenient by the Authority for the operation thereof, as distributed throughout the various regions (Metro, North, South, East and West), into which its operations are divided. .. .
(q) Infrastructure Executive Director.-Shall mean the person that holds the office of Infrastructure Executive Director pursuant to the provisions of Section 3 of this Act.
(r) Regional Executive Director.-Shall mean the person that holds the office of Regional Executive Director pursuant to the provisions of Section 3 of this Act.
(s) Executive Offices.-Shall mean all offices, positions and former or present employees appointed as of July 1, 2002, for the supervision of the private operator pursuant to Act No. 95 of June 30, 2002."
Section 2.-The first paragraph and subsections
(a) and
(c) are hereby amended, the name of subsection
(g) is corrected to be named subsection
(f) , amend the renamed subsection
(f) , new subsections
(g) ,
(h) ,
(i) and
(j) are added and subsections
(h) through
(m) are renamed as subsections
(k) through
(p) , in Section 3 of Act No. 40 of May 1, 1945, as amended, to read as follows: "Section 3.-Governing Board; Executive Officers; Private Operators.-
The powers of the Authority shall be exercised and its general policy shall be determined by a Governing Board, hereinafter the Board, which shall be composed of nine (9) members, of which five (5) shall be private citizens, who shall hold office as Independent Directors, and two (2) shall be the Executive Director of the Mayors Association and the Executive Director of the Mayors Federation. Independent Directors shall be appointed by the Governor with the advice and consent of the Senate. The persons selected to occupy the position of Independent Director shall be persons with a good reputation and of renowned experience in business or professional matters, and except for the position of Executive President of the Authority, which may be filled by an Independent Director, said persons thus selected may not be employees or officials of the Authority or its
Board, nor shall they be a person who is directly related to the unions of the Authority. The remaining two (2) members shall be the President of the Planning Board and the Executive Director of the Electric Power Authority, who shall be ex-officio members of the Board. Both the ex-officio members and the municipal representatives shall hold office as Government Director.
(a) Two (2) of the Independent Directors shall be appointed for an initial term of one (1) year; two (2) shall be appointed for an initial term of two (2) years; and one (1) shall be appointed for an initial term of three (3) years. The two representatives from the municipalities shall be appointed, one (1) for a term of four (4) years, and the other for a term of five (5) years. As the initial term of each Independent Director expires, his/her successor shall be appointed pursuant to the provisions of this Section for a term of five (5) years. As of the end of the first appointment term of five (5) years of the Independent Directors and the Directors who represent the Municipalities, inclusion shall be made or representatives for each of the five (5) Regions recognized in this Act. The Independent Director and the municipal representatives whose term expires, shall continue in office until his/her successor is appointed and takes office, which appointment shall be effected within ninety (90) days from the expiration date of the appointment of the predecessor.
(b) ...
(c) Five (5) of the Board members or, in the event there are vacancies in the Board, a majority of the Board members shall constitute a quorum to conduct its business, and for any other end, and any
agreement of the Board shall be reached by the affirmative vote of not less than five members.
However, the following actions must be approved by not less than six (6) Board members:
Unless prohibited or restricted by the regulations of the Authority, any action needed to be taken at any Board meeting or any committee thereof, except for the actions that shall require the approval of not less than six (6) Board members, may be authorized without having to hold a meeting, as long as all the members of the Board or committee thereof, as the case may be, give their written consent to said action, which document shall be part of the minutes of the Board or committee thereof, as the case may be ...
(d) ...
(e) $\ldots$
(f) The Authority shall have the positions of executive officers that the Board creates. The executive officers of the Authority shall be those appointed by the Board to hold office as executive officers. Executive officers shall include an Executive President, who shall
be the chief executive officer of the Authority; an Infrastructure Executive Director; and the five (5) Regional Executive Directors, from the Metro, North, South, East and West Regions, whose main functions are established hereinafter, in addition to those delegated by the Board, and shall be appointed by the Board and supervised by the Executive President. The Board may in the future create additional Authority executive officer offices, in function of the decentralized managerial structure adopted by this Act and as the needs of the Authority may so require. The appointment and removal conditions for the Executive President, the Regional Executive Directors, and the Infrastructure Executive Director, are provided for hereinafter, as well as the term of said appointments, which shall be for six years. These conditions and terms exclude the Executive President in office as of the date of approval of this Act. The appointments of the Executive President (excluding the Executive President holding office as of the approval of this Act), of the Regional Executive Directors, and the Infrastructure Executive Director, may provide, not to be construed as a limitation, the following: (1) the duties, functions, obligations and powers delegated by the Board to each one, in addition to those provided for hereinafter; provided, that the Board may not delegate the function of approving all or part of any collective bargaining agreement with the unions representing the employees of the Authority, nor the remaining functions listed in subsections
(c) ,
(k) , or
(n) of this Section;
(2) a term of six (6) years, subject to the removal or cancellation before the expiration date of said term by reason of noncompliance with his/her obligations or for any other causes whereby he or she may be removed from office, as provided for hereinafter; and (3) the financial compensation to be paid during the term of his/her appointment, which may include fringe benefits and bonuses that facilitate the recruitment of professionals of the highest caliber.
(g) Functions of each Regional Executive Director:
(i) To be responsible for administering and supervising all of the assets and employees of the Commonwealth Aqueduct System and the Commonwealth Sewer System within his/her region; (ii) To design and present for the evaluation and approval of the Executive President and then of the Board, the annual budget for his/her region. Once approved, he/she shall be in charge of managing said budget in coordination with the Executive President; (iii) To submit to the Infrastructure Executive Director, through the Executive President, the needs for capital improvements he or she identifies in his/her region, in order of priority, so that said needs be incorporated into the Capital Improvement Program for the short and the long term; (iv) To meet with the elected officials of his/her region to address the claims and needs of the citizens;
(v) To submit a report to each Mayor of his/her Region and to the Legislature on or before February 15 and August 15 of each year; and (vi) To also have all the duties, powers and faculties that the Board delegates to him/her, in function of the decentralized managerial structure being adopted in this Act and as the needs of the Authority so require, except that the Board may not delegate the functions listed in clause (1) of subsection
(f) of this Section 3.
(h) Functions of the Infrastructure Executive Director:
(i) To prepare, in coordination with the Regional Executive Directors, a Capital Improvement Program that addresses the needs of the system on the short and the long term, and through the Executive Director, he/she shall present said Program for the approval of the Governing Board; (ii) To administer and execute said Capital Improvement Program according to the priorities established by the Board and as provided by the budget and schedule for each work under this Program; (iii) To meet with the elected officials to address the claims and needs of the citizens; (iv) To submit a report to the Legislature on or before February 15 of each year and August 15 of each year; and
(v) To also have all the duties, powers and faculties delegated to him/her by the Board, in function of the decentralized managerial structure being adopted in this Act and as the needs of the Authority so require, except that the Board may
not delegate the functions listed in clause (1) of subsection
(f) of this Section 3.
(i) The remaining executive officers of the Authority shall exercise the duties and obligations inherent to their offices and those other duties that the Board may establish. Unless the Board determines otherwise, the executive officers appointed by the Board may delegate to other persons the power of substituting for them during any period of justified absence, as this concept is defined by the Board through regulations.
(j) The Executive President, the Infrastructure Executive Director and the Regional Executive Directors of the Authority may not: (1) contribute money directly or indirectly to any political parties, candidates, or organizations; (2) perform or campaign to hold any office in the direction or organization of a political party, nor run for an elective public office; (3) participate or collaborate directly or indirectly in a political campaign of any kind, or in events of a political-partisan nature.
The Executive President, the Infrastructure Executive Director and the Regional Executive Directors of the Authority may be removed from office by the Board only for the following causes: (1) immoral or unlawful conduct, or conduct which violates the prohibitions provided for in this Act; (2) incompetence, manifest professional inability or negligence in the performance of their functions and duties;
(3) a conviction for any felony or misdemeanor that implies moral turpitude; (4) manifest abuse of authority or of the discretion conferred to them by this or other laws; or (5) dereliction of duty.
They may also be severed from office for reason of physical or mental disability to exercise their essential functions. This severance due to the inability to perform the essential functions of the position shall not be considered a removal from office.
(k) When the Governing Board evaluates the composition or modification of the initial regions provided for in this Act, concerning the delimitations thereof or the creation of new regions, it shall take into account the following elements in said analysis and shall be taken into account altogether, within the circumstances, at the time of making the final determination: (1) the connectivity of the water transmission systems, the location of hydrographical basins and the analysis of the best use of said resources; (2) the assets and the state of said assets in the Commonwealth Aqueduct System and the Commonwealth Sewer System; (3) the needs for improvements in the Commonwealth Aqueduct System and the Commonwealth Sewer System; (4) the length of the network and the size of the service area that comprises the region under analysis; (5) the population density and the number of current and projected clients at the short, the medium and the long term within the region;
(6) the projects proposed for the region within the Capital Improvements Program and all other strategic plans developed by the Board; (7) the findings of noncompliance and orders of the environmental and health regulatory agencies; and (8) the analysis of the cost-effectiveness of operating the region as is and the cost-effectiveness of operating the potential region being studied under the proposed modification.
The Board shall determine the relevance that will confer upon each of the above criteria, or others that in its judgment it should ponder, at the time of making decisions concerning the delimitations of the regions. Once the Board concludes any evaluation concerning modifications to the regions, it shall submit for the approval of the Legislature the determinations together with a report that proves the study conducted upon which the Board has based its conclusions. The determination of the Board regarding the new composition of the regions shall be understood to have been approved if the Legislature, through a Joint Resolution, approves it as submitted by the Board. The Legislature shall approve or reject through a Joint Resolution within a term not greater than ninety (90) days of Regular Session. Should no action be taken within said term, the determination of the Board shall be considered as approved. The Authority shall submit its first regional reorganization plan to the Legislature on or before June 1, 2004, for its consideration and approval pursuant to the above provisions. The five (5) initial regions
that are hereby created are the Metro Region, North Region, South Region, East Region, and West Region. The study to be presented to the Legislature on June 1, 2004, shall include the proposed delimitation of said regions. (1) $\ldots$
(m) $\ldots$
(n) $\ldots$
(o) $\ldots$
(p) $\ldots$ $\ldots .{ }^{\prime \prime}$ Section 3.-A subsection
(p) and a subsection
(q) are hereby added to Section 4 of Act No. 40 of May 1, 1945, as amended, to read as follows: "Section 4.—Purposes and Powers.—
(a) $\ldots$
(p) Enter into agreements and execute plans, projects, including delegation and co-management agreements, among others, with federal and local environmental and health regulatory agencies, including the U. S. Environmental Protection Agency.
(q) When grave circumstances of administration, operation, of financial nature, or difficulty to comply with environmental and health regulations so require in the judgment of the Board, it shall make a declaration of a State of Emergency of the entire or part of the aqueduct and sewer system through a resolution to that effect, and once said resolution has been ratified by the Governor, the Board may take all the measures that in the judgment of the Board
are necessary to bring the Aqueduct and Sewer Authority or part thereof out of such a state of emergency as soon as possible. This procedure to declare a State of Emergency shall not be necessary to determine an operational emergency by the management for the purposes of Section 11 of this Act, even though a declaration of a State of Emergency under the present subsection
(q) would indeed constitute a cause to activate the procedures allowed under said Section 11."
Section 4.-Subsections 5 and 6 are hereby amended, as well as the next to last paragraph of Section 11 of Act No. 40 of May 1, 1945, as amended, to read as follows: "Section 11.— Purchases and Construction Contracts.- All purchases and supply or service contract, except personal services rendered on behalf of the Authority, including contracts for the construction of its works, shall be made through bidding. Provided, that when the estimated expense for the acquisition or performance of the work does not exceed twenty thousand $(20,000)$ dollars, such an expense may be incurred with no need for a call for bids. However, bidding shall not be necessary when: (1) An emergency requires the immediate delivery of materials, supplies or equipment, or the rendering of services; or (2) $\ldots$ (3) $\ldots$ (4) $\ldots$ (5) the expenses are from the Capital Improvement Program or related with the operation and maintenance of treatment plants that do not exceed two hundred thousand $(200,000)$ in the case of
acquisitions, or that do not exceed five hundred thousand $(500,000)$ dollars in the case of the performance of works, in which cases the Authority shall request written quotes from at least three (3) supplying sources, previously qualified pursuant to Act No. 164 of July 23, 1974, as amended, if any; or (6) when the Authority has conducted two (2) bids identical in specifications, terms and conditions within a period not greater than six (6) months and have been declared deserted for lack of participation.
In such cases, the purchase of such materials, supplies or equipment, or the procurement of such services, may be made in the open market in the usual and regular form it is made in business. The Authority shall reserve the right to award to a bidder at a public bid on the basis of other considerations other than the price.
The Authority shall be exempted from complying with the public bid requirement for the award of construction contracts, purchases, or other contracts when due to an emergency situation it is deemed necessary and convenient in order to protect the lives or the health of the residents of Puerto Rico, or to prevent noncompliance with environmental regulations that could lead to the imposition of fines, as well as to comply with the public purposes of this Act, and is so authorized by the Board in each particular case through a resolution to that effect. Said resolution shall state the circumstances that justify that the Authority be exempted from the bidding requirement. A copy of said resolution shall be presented at the office of the Secretary of the Senate and the Clerk of the House of Representatives of the Legislature
within the five (5) working days following the approval of said resolution by the Board.
Section 5.—Special Temporary Authorization.— The Board may authorize the Executive President to contract or appoint for the positions or functions that the Executive President deems necessary, all or some of the employees or former employees of the private operator or its affiliates, including among them those Authority retirees who availed themselves of an early government retirement or after having served their years in the government, and the employees or former employees of the Executive Offices, as provided hereinafter. To that effect, the Board may authorize the Executive President to appoint them or contract them from time to time to hold office, positions or functions as executive officers or executive employees or other professional services, pursuant to the managerial structure being adopted in this Act and under those conditions or terms that the Authority deems appropriate or necessary for their contracting, which may include the granting of fringe benefits similar to those they are enjoying at the time of approval of this Act, excluding personal expenses, residence, children's education, and personal trips abroad. With the urgent purpose of ensuring an effective transition from the private operator to the Authority and to provide continuity to its operations without affecting the service, and for the maximum term provided for hereinafter, the Authority is hereby expressly authorized to conduct the contracts and appointments mentioned above as an exception to the provisions of subsection
(e) of Section 3.7 of Act No. 12 of July 24, 1985, as amended and Section 15 of Act No. 174 of August 12, 2000, as well as to the provisions related to the recruiting and contracting of government
personnel and of retirees imposed by law, regulations, guidelines or circulars (particularly under the provisions of Act No. 40 of June 15, 1959) that could prevent the Authority from effecting the expedite contracting or appointment of these resources that worked in matters related to the contract with the private operator during the effectiveness thereof. The employees covered under the benefits of the Retirement System of the Commonwealth of Puerto Rico and who are enjoying their retirement at the time of being contracted under the exceptions referred to in this Section, shall not be contributing again to the Retirement System while they are exercising the functions authorized herein. The exceptions provided for in this paragraph on the contracting or appointment procedure of the abovementioned professional human resources necessary shall be extended for a period of not more than two (2) years as of the date of approval of this Act or when a new Reclassification and Compensation Plan is implemented, for which the Authority shall be given a maximum period of five (5) years as of the date of effectiveness of this Act. The preceding notwithstanding, a person may not be appointed as an executive officer if he/she has held office as the Executive President of the Authority until two (2) years have transpired of having ceased to function as such. The Authority shall submit annual reports to the Central Labor Advisory and Human Resources Administration Office (OCALARH, Spanish acronym), and shall use its advisor services, on the management of the resources whose contracting or appointment is authorized during the period provided for in this Section and the advancement toward the creation of the positions and classes necessary for the integration of such functions within the confidence and career managerial structure of the Authority, as pertinent, before the conclusion of the five (5)-year period provided herein.
Section 6.—Loan Authorization.—
(a) The amount of the authorization granted to the Government Development Bank for Puerto Rico under Section 7 of Act No. 95 of June 30, 2002, to secure on behalf of the Authority the amounts to be paid to the private operator until the necessary transition period is concluded, is hereby reduced. The amount of the reduced securement allowed shall not exceed “$37.5 million.” The remaining terms and conditions of the instrument executed by the Bank with the private operator and the Aqueduct and Sewer Authority under the original authorization granted, shall be negotiated or remain unaltered, in the discretion of the Bank, and it shall determine together with the Authority the instrument they shall use to secure the same, be it by securement, credit charter or any other similar or equivalent instrument.
(b) The Government Development Bank for Puerto Rico is also authorized to grant a loan to the Aqueduct and Sewer Authority for the amount determined by the Board of the Aqueduct and Sewer Authority, and which shall not exceed three hundred million (300,000,000) dollars, the proceeds of which shall be used for capital improvements, purchase of equipment, operational expenses, and any other purpose the Board of the Aqueduct and Sewer Authority, through a resolution, believes to be necessary and convenient. The Bank is also authorized to expand the line of credit with funds in addition to the three hundred million (300,000,000) dollars mentioned above, up to a maximum of twenty-five million (25,000,000) dollars, for the purchase of electric power generators and/or for alternate projects addressed to
tending to the electric failure situations at the filtering plants and pumping stations of the Aqueduct and Sewer Authority.
The Aqueduct and Sewer Authority shall have to prepare and submit to the Government Development Bank for Puerto Rico in January, 2005, and every year thereafter, as the plan evolves and develops, a report on the plan to restructure and retrain all the personnel of the Aqueduct and Sewer Authority that the Authority must implement. This report shall also include the plan for the development and implementation of the new managerial structure, as well as the development of the Classification and Compensation Plan for the entire Aqueduct and Sewer Authority, as provided in Section 5 of this Act. The purpose of these plans shall be to gradually reduce the number of employees without dismissing them, and it shall so be stated in the reports. The Government Development Bank for Puerto Rico may not make disbursements beyond the line of credit approved in this Act, from January, 2005, if in its judgment it concludes that the reports submitted after that date do not reflect that there has been progress in the plans mentioned above. The Government Development bank for Puerto Rico shall give notice of said conclusion to the Legislature.
(c) The Secretary of the Treasury shall secure the repayment of the amounts owed by the Aqueduct and Sewer Authority to the Government Development Bank for Puerto Rico (including the principal, interest, and any other payment in connection with said loan(s)), obtained by the Aqueduct and Sewer Authority from the
Government Development Bank for Puerto Rico as provided in Sections 5(a) and
(b) .
(d) The principal, interest, and any other payment that the Aqueduct and Sewer Authority has to do under the loan authorized herein shall be repaid by the Authority, or in default thereof, by the Secretary of the Treasury, from budget appropriations on the base of twenty million $(20,000,000)$ dollars a year beginning in fiscal year 2007-2008, subject to the ability of the Aqueduct and Sewer Authority, if it has the resources, to repay said loan before fiscal year 2007-2008. Interest shall be capitalized at the rate negotiated by the parties from the disbursement until the first payment.
Section 7.-The Puerto Rico Engineer and Surveyor Association, with the collaboration of the private and the public university institutions of the country, as well as with any other entity with competence on planning and administration matters, shall present to the Legislature a report breaking down recommendations on how the Commonwealth Aqueduct System and the Commonwealth Sewer System should be operated and managed.
Section 8.-Section 10 of Act No. 40 of May 1, 1945, as amended, is hereby amended to read as follows: "Section 10.—Assignment of public assets. - The title deed of any property of the Commonwealth of Puerto Rico, as well as of any municipality, agency, or instrumentality thereof, which has been acquired before the date of effectiveness of this Act or that is acquired in the future, which is deemed to be necessary or convenient for the purposes of the Authority, may be transferred to this Authority by the official in charge of said property or who has jurisdiction thereon, pursuant to the terms and conditions that the Council of Secretaries determine.
The Authority shall have the right and the power to construct or locate any part or parts of any of its works, projects, enterprises, or property, and to operate, maintain, and extend the same, on, above, under, through and throughout any street, public thoroughfare or any lands that are at present, or could be in the future, property of the Commonwealth of Puerto Rico or any municipality or political subdivision thereof without obtaining a any franchise or any other permit whatsoever for that purpose, but it shall obtain the consent of the Secretary of Transportation and Public Works when dealing with constructions that affect public land whether these are or not under the jurisdiction of the Commonwealth or a municipal government, so that it be left in the condition or state it was at the beginning of the works and shall not use the same in a way that undermines its usefulness unnecessarily.
When necessary to relocate Authority facilities located in the public thoroughfare or in any other place, by reason or as a result or consequence of the performance of a public work, of which the Department of Transportation and Public Works or any other government agency is in charge, the costs of said relocation shall be considered as part of the expenses entailed by such a public work and shall be satisfied or reimbursed to said Authority by the agency to which it corresponds, pursuant to the system in effect concerning the payments pertaining to the performance of a public work; Provided, that when the federal government is able to make a contribution to cover such relocation expenses, the requirements that enable such a contribution shall be met; and, Provided, also, that if the relocation is taken advantage from for an improvement or extension of the affected system, the Authority shall be responsible for the resulting additional costs.
The Authority shall establish and maintain at least one minor repairs brigade for each three (3) municipalities in each region, subject to the condition that its establishment and maintenance conforms the new Reclassification and Compensation to be adopted as of January 1, 2004.
The Authority and the municipalities of the Country shall be authorized to subscribe cooperation agreements for the latter to perform and finance, subject to reimbursement by the Authority, capital improvements that would become a part of the Aqueduct and Sewer system of the Authority. These agreements shall be effected taking as a basis the analysis of need and the scope determined by the Authority regarding the projects to be constructed by the Municipalities, as well as the projects comprised in the Capital Improvement Plan and the conditions for the Authority to incorporate the project to its Commonwealth Aqueduct System or its Commonwealth Sewer System, as the case may be.
When a municipal government makes a written request for a declaration of a 'state of limited emergency' on the potable water supply services in its municipal term, the Authority, within the following fifteen (15) working days, shall give notice of a declaration of approval or denial thereof. If said declaration is not issued within this term, it shall be construed as the recognition of the state of limited emergency. In the event that the it coincides with the Municipal Government's request or the state of limited emergency has been recognized, the Authority shall establish an Emergency Management Plan within the nondeferrable term of thirty (30) working days as of the date of acceptance by the Authority.
If the Authority fails to issue the corresponding management plan within the term provided for, the municipal governments of the Commonwealth are hereby empowered, subject to the terms contained
herein, to perform limited infrastructure or repair and maintenance works to improve the aqueduct and sewer services in its municipal territory pursuant to the applicable environmental protection laws and regulations. The direct expenses incurred by the municipal governments in these works shall be reimbursed by the Authority.
For purposes of this Act, a 'state of limited emergency' shall occur when a community or sector within a municipal term has not received water service or has received service interruptedly or uncleanly during a period of thirty (30) working days or more and the solution to the matter has not yet been initiated by the Authority.
In circumstances under which Authority facilities require repairs or other maintenance works, other than capital improvements, which are not considered a state of limited emergency, and which are causing harm to citizens, the municipality thus affected may conduct the repair or the maintenance work necessary, without the need of the previous agreement with the Authority, only under the following circumstances: i. if after thirty (30) working days have elapsed from the date of written notice of the situation to the Executive President and the corresponding Regional Director, the Authority has not begun to repair or perform the works required.
In the case of urgent repair and maintenance works by the municipalities, as well as in cases in which there are agreements for the performance of capital works, as provided above, the municipalities may require from the Authority, and the same shall be under the obligation to pay, the reimbursement of the direct costs of the works performed.
In the case of repair and maintenance works, the Authority shall reimburse the direct expenses incurred by the municipal governments within
forty-five (45) working days from the date of having certified the expense incurred by the municipal government.
The municipalities shall be responsible for complying with environmental and health laws in relation to the works and repairs they perform, as well as for any cost or damages claimed by third parties, or for the penalty imposed to the Authority for violations at the facilities or due to negligence in the performance of the works as a consequence of the works performed by the municipalities."
Section 9.—Severability.—If any Section, subsection, clause, paragraph, subparagraph or any other portion of this Act were to be found unconstitutional by a court of competent jurisdiction, the ruling issued to that effect shall not affect, impair or nullify the remaining provisions of this Act and its effect shall be limited to the Section, subsection, clause, paragraph, subparagraph or portion of this Act found to be unconstitutional.
Section 10.—This Act shall take effect immediately after its approval.
I hereby certify to the Secretary of State that the following Act No. 92 (H.B. 4337) of the $7^{ ext {th }}$ Session of the $14^{ ext {th }}$ Legislature of Puerto Rico:
AN ACT to amend subsections
(c) and
(d) and add subsections
(q) ,
(r) and
(s) to Section 1; amend the first paragraph and subsections
(a) and
(c) , correct the name of subsection
(g) to rename it as subsection
(f) , amend the renamed subsection
(f) , add subsections
(g) ,
(h) , and
(i) and rename subsections
(h) through
(m) as subsections
(k) through
(p) of Section 3; add subsections
(p) and
(q) to Section 4; amend subsections 5 and 6 and the penultimate paragraph of Section 11of Act No. 40 of May $1^{ ext {st }}, 1945$, as amended, known as the "Puerto Rico Aqueduct and Sewer Authority Act," in order to amend and add definitions; etc., has been translated from Spanish to English and that the English version is correct.
In San Juan, Puerto Rico, today $16^{ ext {th }}$ of May of 2005.
Luis E. Fusté-Lacourt Director