Savaged: Michigan EFM Outsources Water Treatment to Company Indicted By DOJ For Felony Violations of the Clean Water Act

by Chris Savage/A2 politico

Innocent until proven guilty? Better safe than sorry? What would you do? In 2009, Democratic GovernorJennifer Granholm appointed Fred Leeb as the Emergency Financial Manager (EFM) for Pontiac, a city by all accounts in a true financial emergency. In June 2010, after Leeb resigned, Michael Stampfler (pictured left) was hired to replace him. This past week, Stampfler became the first of Michigan’s EFMs to utilize one of the enhanced powers granted them by Republicans, who passed the legislation that became Public Act 4. Under this new law, greatly expanded by Governor Rick Snyder, EFMs now have the ability to essentially dismiss elected officials, as Joe Harris has done in Benton Harbor, Michigan, and also to break union contracts at will. Until this week, no contracts had been broken by an EFM — until Stampfler did so with the Police Dispatchers union.

The city of Pontiac received state approval to cancel union contract protections for 11 police dispatchers, allowing the city to complete the process of eliminating its police department in an effort to close its more than $10 million budget deficit.

Monday’s action will make them the first Michigan public employees to have a contract tossed under the law signed by Republican Gov. Rick Snyder in March granting expanded powers to state-appointed emergency financial managers, the Detroit Free Press reported. Emergency financial manager Michael Stampfler proposed eliminating the police force last year.

“We reached the conclusion there really is an impasse,” said state Treasurer Andy Dillon, who said he met with the dispatchers union twice to work out an agreement. “We dug into it pretty deep to make sure his request was worth being approved.”

~SNIP~

Two city police unions had already agreed Stampfler’s plan to shut down the department, and he fired the city’s police chief in March as the city moved toward shifting law enforcement responsibility to the sheriff’s department effective July 1.

It should be noted that Andy Dillon was the former Democratic House Speaker and considered by many to be more Republican than Democratic.

Historic and unprecedented as Stampfler’s move is, it is matched, and likely surpassed, by another of his actions recently that has gone largely unreported by the media, significant details of which have gone completely unreported. Last Friday, in addition to dissolving Pontiac’s Planning Commission and replacing it with hand-picked, unelected members, Stampfler privatized the water treatment services andhired United Water Services to takeover that role.

Emergency Manager Michael Stampfler issued three orders Friday afternoon, irking elected officials as what they argue is an example of his circumventing their offices. The documents announced layoffs in the water and wastewater department; a deal with United Water Environmental Services; and the reestablishment of a new Planning Commission.

~SNIP~

The city’s wastewater treatment plants have been operating under a consent judgment since 2009 following allegations of violating the federal pollution permit by the Department of Environmental Quality.

A list of employees to be laid off will be distributed June 6. Their final day of employment will be June 30.

The contract with United Water will become effective July 1 and it is projected to save Pontiac an estimated $2.8 million in the first year, with additional savings in the next five years.

A month-to-month agreement with United Water was part an order issued March 30. It announced the company would serve as the temporary head of the city’s Department of Public Works and Utilities.

The new contract will include performance goals, including compliance with state and federal laws.

Privatizing water treatment services is something Stampfler is not unfamiliar with. According to his resume, Stampfler did the same thing for Portage, Michigan during his stint there as City Manager.

But that last bit there? The part that says the “the new contract will include performance goals, including compliance with state and federal laws?” That’s a pretty good idea. In fact, when you’re dealing with United Water, it may be the item you want at the top of your priority list. Why? Because United Water was indicted by the U.S. Department of Justice last December for violating the Clean Water Act.

United Water Services Inc., the former contract operator of the Gary Sanitary District wastewater treatment works in Gary, Ind., and two of its employees, were charged today with conspiracy and felony violations of the Clean Water Act in a 26-count indictment returned by a federal grand jury, the Justice Department announced today.

United Water Services Inc., and employees Dwain L. Bowie, and Gregory A. Ciaccio, have been charged with manipulating daily wastewater sampling methods by turning up disinfectant treatment levels shortly before sampling, then turning them down shortly after sampling.

~SNIP~

According to the indictment, the defendants conspired to tamper with E. colimonitoring methods by turning up levels of disinfectant dosing prior to E. coli sampling. The indictment states that the defendants would avoid taking E. coli samples until disinfectants had reached elevated levels, which in turn were expected to lead to reduced E. coli levels. Immediately after sampling, the indictment alleges, the defendants turned down disinfectant levels, thus reducing the amount of treatment chemicals they used.

~SNIP~

The case was investigated by the Northern District of Indiana Environmental Crimes Task Force, including agents from the Criminal Investigation Division of the U.S. Environmental Protection Agency, the FBI and the Indiana State Police. The case is being prosecuted by the U.S. Attorney’s Office for the Northern District of Indiana and the Justice Department’s Environmental Crimes Section.

As anyone who has read the news lately knows, E. coli can be quite dangerous, even deadly. The Clean Water Act specifically requires testing for this bacteria because it poses such a public health threat. United Water and several of its employees are accused of raising chlorine levels just prior to sample over 60 times over a five year period. This gave the impression that the levels of E. coli were lower than they actually were. The effluent from this water treatment plant is discharged into the Grand Calumet River, which empties into Lake Michigan with its recreation areas and swimming beaches. The potential for human contamination was significant.

United Water, in an arrogant display of heartless business-speak issued this statement:

The government’s claim is, at best, a disagreement about operating and monitoring methods, with no allegation of environmental harm. Trying to make a crime out of this disagreement is an abuse of prosecutorial discretion.”

An abuse of prosecutorial discretion? For busting a company for potentially putting the general public in grave danger? If there was never a risk of E. coli contamination, what would be the need for the increased levels just before sampling? Make no mistake, according to emails obtained in the investigation, officials at the company knew about the problem as far back as 2003.

This isn’t just raising a fuss domestically. Because United Water is owned by French-based GDF SUEZ, international labor unions have filed a complaint, as well. In their complaint, they note the hubris of United Water:

We emphasise that there have no convictions at this point and United Water has not been found guilty; the indictment was only issued five weeks ago and the case must now wind its way through the American jurisprudence system. We also note here that the Gary, Indiana, Sanitation Board terminated United Water’s contract last March.

But in investigating this matter, we are highly troubled by the public comments made by both United Water President (Robert Iacullo) and the company’s Senior Vice President for Corporate Communications (Richard Henning) following the indictment. Both state publicly that the alleged felony violations are mere technical disagreements, with Mr Iacullo calling it “an abuse of prosecutorial discretion.”

We find their responses repugnant and we find it contrary to the spirit contained in the Global Framework Agreement, as well as contrary to decent civic respect and corporate social responsibility. If the U.S. government’s charges prove true, the discharge of untreated, or sub-standard wastewater into waterways poses a serious public health threat.

The trial against United Water hasn’t begun yet. The Utility Workers Union of America has a webpage, UnitedWaterIndictment.net, where news and updates are post

So, back to Pontiac. How can privatizing the water treatment services save a city nearly $3 million in one year? Perhaps it is because Michael Stampfler hired a company that (a) is clearly willing to cut costs without regard to public health if federal investigators have it right, and (b) because of their reputation, have had to lower their price, so to speak. Chances are lower profit margins may incentivize the company to cut corners even more.

Emergency Financial Managers are generally good at what they do. They are typically trained as accountants and business optimizers. They know how to trim and cut and lean out organizations to squeeze every last drop of profits out of them. Unfortunately for the residents of Michigan, things like parks, public safety and the protection of natural resources don’t produce profits and generally are presented as “costs,” just as Ann Arbor’s own would-be-EFM Roger Fraser, with the help of John Hieftje and Council members such as Tony Derezinski, Stephen Rapundalo, Christopher Taylor, and Sandi Smith have done recently. When we begin to put a price tag on the very things that make our cities, society and state good, safe, livable and lovable, while putting CPA-like EFMs in charge, you can expect that these things will suffer in order to save money, even if it puts our citizens at risk.

And that is exactly what has happened in Pontiac, Michigan.

Benton Harbor City Commission defies Emergency Manager

By Eartha Jane Melzer  via The Michigan Messenger 

In defiance of an order that prohibits them from taking any action, the Benton Harbor City Commission passed a resolution last night declaring the appointment of Emergency Manager Joe Harris unconstitutional and calling for his removal.

With a vote of 6-2 the commission approved the following:

Whereas, The City of Benton Harbor declares the appointment of an Emergency Manager a violation of Article I §1, which states that all political power is inherent in the people and that government is instituted for their equal benefit, security and protection.

Whereas, The City of Benton Harbor declares the appointment of an Emergency Manager a violation of Article I §3, which allows the citizens of Benton Harbor the right to petition the government for redress of grievances.

Whereas, The City of Benton Harbor declares the appointment of an Emergency Manager a violation of Article VII §22, which affords Benton Harbor citizens the the power and authority to frame, adopt and amend its charter, and to amend an existing charter of the city or village heretofore granted or enacted by the legislature for the government of the city or village. Each such city and village shall have power to adopt resolutions and ordinances relating to its municipal concerns, property and government, subject to the constitution and law.

Whereas, The City of Benton Harbor declares the appointment of an Emergency Manager a violation of Article VII §34, which states that the provisions of this constitution and law concerning counties, townships, cities and villages shall be liberally construed in their favor.

Whereas, The City of Benton Harbor declares the appointment of an Emergency Manager a violation of Article IX §2, which provides the citizens of Benton Harbor the right of taxation with representation.
Resolved, The appointment of an Emergency Manager is in direct violation of the Michigan Constitution and therefore demands the removal of said Emergency Manager immediately.

Resolved, That the Benton Harbor City Commission is hereby directed to forward copies of this resolution to Governor Rick Snyder, State Senate Majority Leader Randy Richardville, Speaker of the House Jase Bolger, State Senator John Proos, and State Representative Al Pscholka.

Last month Emergency Manager Joe Harris used new powers created by Public Act 4 — the Emergency Manager law — to bar city officials from taking any action without his written approval.

Commissioner Dennis Knowles, who drafted the resolution, said that it will be mailed to officials on city letterhead but that city commissioners will have to buy the stamps to do the mailing because they are no longer able to order supplies.

“This is the government working beyond the dictatorship,” he said. “That is what we are doing.”

“This is about democracy … it is about human rights. It is a litmus test to see if the Constitution even still exists.”

Knowles said that copies of the resolution will be sent to the U.S. Dept. of Justice Civil 

Rachel Maddow video: Robert Bobb, EFM and DPS takeover

Visit msnbc.com for breaking news, world news, and news about the economy

Michigan Emergency Manager Robert Bobb Issues Layoff Notice to All Detroit Public School Teachers

E.D. Kain

We’ve discussed Rick Snyder’s “Emergency Financial Manager” bill in this space previously. Now it’s time to take a look at what happens when a law like this is put into practice. In Detroit, a city that has faced decline now for several decades, Emergency Financial Manager Robert Bobb has issued a layoff notice to all 5,466 public school teachers.

Bobb has said he will take advantage of the new Financial Martial Law known as Public Act 4 to “unilaterally modify” the district’s collective bargaining agreement with the Federation of Teachers. According to Reuters:

Under a law known as Public Act 4, passed by the Michigan legislature and signed by the state’s new Republican governor in March, emergency managers like Bobb have sweeping powers. They can tear up existing union contracts, and even fire some elected officials, if they believe it will help solve a financial emergency.

"I fully intend to use the authority that was granted under Public Act 4," Bobb said in the statement.

Under Public Act 4 Emergency Managers have sweeping, almost dictatorial power to modify contracts, fire officials, and disregard public input.

So who is Robert Bobb?

It turns out, he’s a recent graduate of the Broad Foundation’s Superintendent Academy. The Broad Foundation, along with the Kellogg Foundation, pays Bobb $145,000 a year on top of his $280,000 government salary. For those of you not familiar with Broad, it is one of the leading foundations promoting school choice and privatization across the country. One might almost think that paying a public official hundreds of thousands of dollars a year might amount to nothing short of bribery, especially given the very specific agenda of a foundation like the Broad Foundation.

Now, Bobb is proposing to create charter schools for 16,000 students from 41 schools slated for closure. He argues that this will save millions of dollars. I have to wonder, however, at the conflict of interest.

Let’s zoom out for a moment.

What we have in Detroit is an Emergency Manager appointed by the previous governor who was facing a challenge from the School District which was frustrated by his top-down approach to school reform. That challenge was effectively crushed by the passage of Public Act 4. This same Emergency Manager was a graduate from a foundation that promotes corporate school reform and also pays around a third of his six-figure salary. The Emergency Manager has the power to break union contracts, layoff teachers, and open charter schools that benefit the same foundation that is so heavily invested in the Emergency Manager’s career.

This is nothing short of a coordinated effort between the billionaire foundations pushing school reform and Tea Party conservatives intent on slashing benefits and ending collective bargaining rights. Public schools are under assault by the forces of privatization, and public school teachers face benefit and salary cuts while the very rich are promised tax cuts. Similar efforts are underway in Florida and Wisconsin.

Rachel Maddow video: Benton Harbor takeover

Visit msnbc.com for breaking news, world news, and news about the economy

M.C.L Comment: This report should make the local news networks ashamed of themselves, Ed Schultz, Rachel Maddow and Randi Rhodes have done more reporting on the Snyder administration than channel 2,4 and 7 combine. Sorry to break it to the news stations a governor granting one person the ability to get rid of a city's entire government is bigger than a special interest stories of a woman and her wedding day promise.

While it's a cool story and all but what Rick Snyder and his Republican flunkies in Lansing are allowing to happen set a  precedent and the media have a obligation to tell the people what the hell is going on in their backyard.

Michigan Governor Plays Fast and Loose with Democracy, Invokes Radical New Powers

By E.D. Kain

This is a takeover by the right wing and it’s an assault on democracy like I’ve never seen.”

~ Mark Gaffney, Michigan State President of the AFL-CIO.

Perhaps lost in the Wisconsin shuffle is the story of what exactly is happening in Michigan. Newly elected Republican governor, Rick Snyder, is set to pass one of the most sweeping, anti-democratic pieces of legislation in the country – and almost no one is talking about it.

Snyder’s law gives the state government the power not only to break up unions, but to dissolve entire local governments and place appointed “Emergency Managers” in their stead. But that’s not all – whole citiescould be eliminated if Emergency Managers and the governor choose to do so. And Snyder can fire elected officials unilaterally, without any input from voters. It doesn’t get much more anti-Democratic than that.

Except it does. The governor simply has to declare a financial emergency to invoke these powers – or he can hire a private company to declare financial emergency and take over oversight of the city. That’s right, a private corporation can declare your city in a state of financial emergency and send in its Emergency Manager, fire your elected officials, and reap the benefits of the ensuing state contracts.

These Republican governors have risen to power in what will eventually be seen as one of the great political farces of our time. The Tea Party movement talks a good game about democracy and limited government, but in practice its elected leaders are crony-capitalists and union-busters. There is nothing limited about a state government that can erase entire cities or take control of school districts and local governments with the swipe of a pen. Manufactured crisis and a litany of politicians and power-brokers talking about how broke we are is all it takes to rob us of our democracy.

Public services are on the auction block, and unions, teachers, and anyone else standing in the way are all going to have to fight for their continued existence – or at least their continued membership in the ranks of the middle class.

If “Emergency Manager” is not dystopian enough a term for you, perhaps the fact that such radical legislation could go almost unnoticed in the national press is. Fortunately, Rachel Maddow proves an exception to the rule: