From DWSD to GLWA: Transition without Reform?

This past February, Bankruptcy Judge Steven Rhodes extended his gag order in Detroit’s bankruptcy to cover ongoing regional water negotiations being mediated by U.S. District Judge Sean Cox.  The order reinforces the Detroit Water and Sewerage Department’s (DWSD’s) tradition of secrecy.  What kind of example does this set?  When does reform enter the picture?  How can democracy work where one federal judge after another presumes to know for a period of nearly 40 years what the citizenry wants in the way of water services?

DWSD’s history is riddled with secrecy, corruption and incompetence.  Not all of those characteristics ended with the convictions of Kwame Kilpatrick, Bobby Ferguson and Victor Mercado in federal court.

The following will serve as a review of some of the shortcomings that have plagued and, in some instances, continue to plague the department, its intended successor (the Great Lakes Water Authority or GLWA) and water services customers in southeast Michigan.  Also included are reminders of suggestions to correct some of the deficiencies.

1.  TRANSPARENCY

No matter how accurate and thorough, traditional annual audits can’t be read and understood by the public.  The means are available today to correct this shortcoming by making the details of public transactions instantly accessible. Of course, any steps taken to reveal mischief, sloth and mistakes as they happen will be resisted by some in the public arena.  Nevertheless, from New York City to South Bend, Indiana and Jackson, Michigan, the change is being made. Detroit and southeast Michigan shouldn’t be the last to adopt the new technology.

http://detroitwatersewerblog.blogspot.com/2014/02/support-revolutionary.html

2.  ABSENCE OF AUDITS

If there’s one thing worse than the typical DWSD audit, it’s no audit at all. DWSD didn’t release an annual audit report for 2013.  Ditto 2014.  What about 2015?  Your guess is as good as mine.  In the meantime, it occurs to me that the region’s news media has been conspicuous by its silence on this subject.

http://detroitwatersewerblog.blogspot.com/2014/02/dwsd-cooking-books.html

3.  FORENSIC AUDITS

Until such time as the newly available technology can be deployed at DWSD and/or GLWA, transparency could be achieved through the routine use of a formidable process known as the forensic audit.

Over the decades, millions of dollars have been spent on audits that failed to alert the public to crimes, waste, inefficiencies and incompetence within DWSD. Who knows why the auditors in Detroit failed?  A few years ago in a town in Massachusetts, however, they figured out why.  Said one of the town’s selectmen, surmising why a derelict auditor had not been forthcoming, “If you open your mouth, you’re going to get fired.” http://detroitwatersewerblog.blogspot.com/2014/02/forensic-audits-another-tool-related-to.html

4.  THE ARGUMENT FOR DISMANTLING THE DETROIT WASTEWATER TREATMENT PLANT

The wastewater treatment plant in Detroit is too big and unmanageable.  It is too susceptible to corruption.  Too much of its revenue is prone to be siphoned off for less than legitimate purposes. The plant’s technology is out of date. Equipment and facilities are broken down.

Detroit’s sewerage plant should be replaced by a number of smaller, modern plants with the latest technology, scattered throughout the region like the eight in Oakland County (Holly, Commerce, Milford, Walled Lake, Pontiac, South Lyon, Wixom and Lyon Twp.).

http://detroitwatersewerblog.blogspot.com/2014/07/a-plan-to-dismantle-detroits-wastewater.html

5.  DWSD’S UNJUSTIFIABLE OVERCAPACITY IN POTABLE WATER PRODUCTION

DWSD frequently cites fixed costs in water production, coupled with the decline in water customers, as causes for the escalating water rates that burden customers, especially the impoverished.  What DWSD rarely mentions is that fixed costs are high in part because the department operates five water plants, but only needs three or four.  There is no excuse for DWSD to pass on to GLWA all five of those plants or for GLWA to accept all five.

http://detroitwatersewerblog.blogspot.com/2015/02/dwsd-close-one-of-your-water-plants.html

6.  IS THE GAG ORDER CONSTITUTIONAL?

In the opinion of renowned legal scholar Erwin Chemerinsky, virtually all gag orders are flawed because they depend on untenable assumptions.  Look at his reasoning and consider how well it applies to Judge Rhodes’ order.  Doesn’t the public interest require transparency?  What other interest supersedes the public’s?  Why doesn't someone challenge Rhodes' gag order?

http://detroitwatersewerblog.blogspot.com/2015/03/is-glwa-gag-order-constitutional.html

Is GLWA Gag Order Constitutional?

For most purposes, Detroit’s historic bankruptcy (Case #13-53846) is over. However, on February 6, 2015, Bankruptcy Judge Steven Rhodes extended his Mediation Order (Docket #8468) of November 26, 2014, providing for negotiations concerning the lease of certain water treatment facilities from the Detroit Water and Sewerage Department by a newly created regional entity, the Great Lakes Water Authority.

Under the supervision of U.S. District Judge Sean Cox as mediator, representatives of the City of Detroit and the several counties that comprise the new authority will review anticipated costs and revenues and discuss the financial viability of the proposed lease.

In his Mediation Confidentiality Order (Docket #9176) of February 6, 2015, Judge Rhodes ordered that discussions and documents related to the lease negotiations shall be privileged and confidential. This is commonly referred to as a gag order.

For background, note that, concerning an overly broad, court-imposed gag order following the criminal indictment of former Massey Energy CEO Don Blankenship, the Corporate Crime Reporter said (November 18, 2014), “University [of] California Irvine Law Professor Erwin Chemerinsky has written on gag orders, including a seminal 1997 law review article…”

In the 1997 piece, [now Dean] Chemerinsky reminded us that, in Nebraska Press Association, 427 U.S. 539 (1976), the Supreme Court forbad gag orders on the press -- gag orders which were intended to thwart prejudicial pretrial publicity.  To get around that decision, trial courts began to impose gag orders on the parties and their attorneys.

Chemerinsky concluded that such orders are virtually always unconstitutional because they are founded on untenable assumptions.

First, it is assumed by judges imposing gag orders that publicity puts a fair outcome at too great a risk. Chemerinsky lists numerous, highly publicized criminal cases wherein defendants were subjected to prejudicial pretrial publicity but were acquitted nonetheless.

Next, even if publicity impairs fairness, it is false to assume that the comments of the parties or their attorneys outside the courtroom to the press or the public cause or exacerbate the impairment. Media frenzy doesn’t depend exclusively or even principally on what parties or counsel say.

In denying media access to the thoughts and opinions of participants, gag orders are likely counterproductive to a fair outcome.  That is to say, media are forced to rely on inferior sources of information, to which parties and counsel can’t respond, eroding the prospect of fairness even further.

The third untenable assumption is that, even if you accept that publicity is prejudicial and gag orders on participants make a positive difference, these considerations count more than our rights under the First Amendment.  Gag orders are prior restraints.  They restrict free speech and should be subjected to close, strict scrutiny.

http://scholarship.law.duke.edu/cgi/viewcontent.cgi?article=2165&context=faculty_scholarship

The public has a right to know what is being discussed behind closed doors about a proposed $50 million per year lease that water and sewer ratepayers will be obligated to pay for 40 years.  The GLWA/DWSD gag order is unconscionable, should be challenged in court and, if necessary, taken on appeal.

DWSD Denies FOIA Request, Elusive O&M Savings, Gag Order

Prior to the Detroit bankruptcy settlement, it was represented that the proposed $50 million annual lease payment for water-related facilities, payable by the new Great Lakes Water Authority (GLWA) to the City of Detroit, would be offset partially by cost savings initiated by the Detroit Water and Sewerage Department (DWSD).

Veolia, the international water management and consulting firm, in a report to DWSD this past December, stated, "...Veolia understands that during the negotiations for the creation of the regional authority, the viability of the Lease charge was based on several sources of funds, including O&M cost savings estimated by DWSD in an amount between $10 million and $20 million annually. The details of these savings estimates were not provided to Veolia and, therefore, were not included in the assessment.” (p.ES-3)

Because parties to the ongoing negotiations concerning the transition from DWSD to GLWA are prohibited by a renewed federal gag order from discussing the details surrounding the lease payment, I submitted a FOIA request to DWSD for copies of exclusively internal records of O&M cost savings in the $10-20 million range, independent of the negotiations.

Last Friday, DWSD denied my request for the reasons that (a) no such record exists,and (b) even if it did exist, its release would be prohibited by the gag order.

It looks to me like DWSD's dissembling continues unabated.  Ironically, media outlets later this month will be celebrating Sunshine Week, extolling the virtues of open government.

I can make a pro forma appeal of the denial to Director McCormick, but we all know how much good that will do.  Sooner or later, somebody in a position of public responsibility will have to challenge in court the gag order and DWSD secrecy and obfuscation.

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