The United States of America et al v. The City of Jackson, Mississippi

Filing 81

ORDER. Signed by District Judge Henry T. Wingate on 12/22/2023. (nd)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
NORTHERN DIVISION
____________________________________
UNITED STATES OF AMERICA,
)
)
and the STATE OF MISSISSIPPI,
)
)
Plaintiffs,
)
)
Case No. 3:12-cv-790-HTW-LGI
)
(Clean Water Act Case)
v.
)
)
THE CITY OF JACKSON, MISSISSIPPI, )
)
Defendant.
)
)
UNITED STATES OF AMERICA,
)
)
Plaintiff,
)
)
Case No. 3:22-cv-00686-HTW-LGI
)
(Safe Drinking Water Act Case)
v.
)
)
THE CITY OF JACKSON, MISSISSIPPI, )
)
Defendant.
)
)
ORDER

THIS MATTER is before the Court on the ore tenus motion of the Interim Third-Party
Manager, d/b/a JXN Water, Inc. (“JXN Water”), for clarification of this Court’s Interim Stipulated
Order [the “ISO,” Case No. 3:22-cv-686 Doc. 6], Amendment to the ISO [Case No. 3:22-cv-686
Doc. 23] and Stipulated Order on the Sewer System [Case No. 3:12-cv-790 Doc. 72] regarding
JXN Water’s income.
Under the ISO and Amendment to the ISO, the Interim Third-Party Manager, through JXN
Water, is operating and maintaining the City of Jackson, Mississippi’s public drinking water
system on an interim basis as an officer and agent of this Court. Under the ISO, the Interim Third-

Party Manager was given oversight and responsibility for the Water Sewer Billing Administration
(“WSBA”). Likewise, pursuant to the Stipulated Order on the Sewer System, the Interim ThirdParty Manager, again working through JXN Water, has recently been tasked with operating and
maintaining the City of Jackson’s sewer system over at least the next four years, as an officer and
agent of this Court.
Although, based on the terms of the ISO, the Amendment to the ISO, and the Stipulated
Order on the Sewer System, the City of Jackson is cooperating with and assisting JXN Water in
the operation and maintenance of the public drinking water system and sewer system, JXN Water
exists separately from and is not a part of the City of Jackson. The Interim Third-Party Manager
reports that income received by JXN Water from its operation of the public drinking water system,
the sewer system, and the WSBA is used entirely to operate and maintain the systems, and
therefore no private interest can, has, or will receive distributions from JXN Water’s revenue, now
or upon JXN Water’s dissolution. Based on the Interim Third-Party Manager’s representation, all
income received by JXN Water, now and forever, accrues solely to the benefit of the City of
Jackson as a result of functions performed by JXN Water that otherwise would be performed by
the City of Jackson.
For these reasons, the Court finds that the ore tenus motion for clarification should be
GRANTED.
IT IS, THEREFORE, ORDERED that JXN Water’s income is and shall be used entirely
to operate and maintain the systems, and JXN Water’s income shall not be used for any other
purpose. 1

IT IS FURTHER ORDERED that nothing in this Order shall be considered a

This Order is limited to income received by JXN Water and does not concern income received by the Interim ThirdParty Manager or his agents as compensation for services and expenses incurred operating and maintaining the City
of Jackson’s public drinking water system and sewer system. Moreover, this Order does not modify the ITPM’s
liability for any willful misconduct or gross negligence as provided in the ISOs.

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determination that any income received by JXN Water constitutes gross income within the
meaning of Section 115 of the Internal Revenue Code 2 and that nothing in this Order shall be
considered a determination of the tax status of JXN Water under the Internal Revenue Code and
further, nothing in this Order shall be considered binding upon the United States or the Internal
Revenue Service.
SO ORDERED this the 22nd day of December, 2023.

/s/HENRY T. WINGATE
UNITED STATES DISTRICT JUDGE

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Gross income does not include-(1) income derived from any public utility or the exercise of any essential governmental function and accruing to a
State or any political subdivision thereof, or the District of Columbia; or
(2) income accruing to the government of any possession of the United States, or any political subdivision thereof.
26 U.S.C.A. § 115 (West)

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