(a) The Commission is authorized to issue debt under the Annotated Code of Maryland, specifically Title 22 of the Public Utilities Article (“PUA”). This includes the nature and form of debt, exemption from taxation, eligible projects for debt proceeds, outstanding debt limits, maximum debt terms, revenue sources for debt service payments and debt retirement, refunding provisions, consolidation for sale provisions, and other guidelines.

(b) The State of Maryland administers State Revolving Loan Fund (SRF) which is a low-interest rate loan program for water quality infrastructure projects established in 1988 pursuant to the Maryland Water Quality Administration Act, Title 9, Subtitle 16 of the Environmental Article, Annotated Code of Maryland, and the Federal Clean Water Act of 1987. The SRF is currently administered within the Maryland Department of the Environment and leverages state debt issuances with other funding sources to enable participants to realize a borrowing rate at less than market levels. The SRF’s annual allocation of funding is via an application process, with resultant debt awards being a function of the number of applicants, the amount of funding requests, and the types of projects to be constructed. The State of Maryland establishes rules and procedures for participation in its SRF program.

(c) The Internal Revenue Service under the Tax Reform Act of 1986 and related regulations, as amended, provide limits and guidance on the tax-exempt issuance of public debt and limit the amount of interest the Commission can earn from investment of tax-exempt bond proceeds. The Commission may utilize forms of tax advantaged governmental debt created by federal legislation from time to time to accomplish lower debt service cost and savings to ratepayers.

(d) Federal Office of Management and Budget circulars prescribe the nature of expenditures that may be charged to federal grants. Federal legislation will influence the planning and expenditures of specific projects, such as requirements for environmental impact statements for certain federally assisted projects, and the Davis-Bacon Act, which requires local prevailing wage scales in contracts for federally assisted construction projects.

(e) The Securities and Exchange Commission limits the ability of underwriters to buy and sell bonds of bond issuers who do not provide sufficient disclosure to meet the requirements as defined in Rule 15c2-12 of the Securities Exchange Act of 1934 (“Rule 15c2-12”). The Commission will execute and deliver a continuing disclosure agreement (the “continuing disclosure agreement”) on or before the date of issuance and delivery of bonds in order to enable the underwriters to comply with Rule 15c2-12. It is noted that if certain reportable events as defined in Rule 15c2-12 occur they must also be reported during the time the bonds are outstanding.

(f) The Commission utilizes both internal personnel and external consultant services to ensure that it complies with all state and federal laws, regulations, rules and guidelines for debt issuances. (REG-FIN-FI-2015-002 § III)