Professor: Blame Treasury, not just DEQ, in Flint water mess
LANSING — Michigan's Treasury Department was willing to bend rules to facilitate financing for the $285-million Karegnondi Water Authority pipeline, but was apparently unconcerned that the City of Flint did not have the millions of dollars it needed to upgrade its treatment plant to produce safe drinking water from the Flint River, says a law professor at Wayne State University.
The city turned to the Flint River for its drinking water as an interim measure in 2014 after failing to negotiate a deal to continue receiving treated water from its former supplier, the Detroit Water and Sewerage Department, while awaiting completion of the KWA line to Lake Huron. The move, which happened while the city was under the control of a state-appointed emergency manager, proved disastrous because the Michigan Department of Environmental Quality did not require corrosion control chemicals as part of the treatment. Corrosive Flint River water caused lead to leach from pipes, joints and fixtures and into homes, resulting in a spike in harmful lead levels in the blood of Flint children.
Peter J. Hammer, director of the Damon J. Keith Center for Civil Rights at Wayne State University Law School, says in a research paper that the Michigan Departments of Environmental Quality and Health and Human Services have taken most of the blame for the lead contamination.
But Hammer says the Michigan Treasury Department, which oversaw local emergency managers, including Flint's, is "equally blameworthy," because its actions pushed Flint toward joining the KWA project and interim use of the Flint River, without making sure the city had the financial resources to do either.
The Treasury Department, through a spokeswoman, declined to respond in detail to Hammer's report.
"Treasury disagrees with many of the facts and conclusions reached in the study," Treasury spokeswoman Danelle Gittus said in an e-mail to the Free Press on Thursday.
"But we aren’t going to spend time worrying about that because it would take our focus off of what matters: having the state work well with its local partners to do all we can to improve the lives of the residents of Flint and other Michigan cities."
Andy Dillon, who was state treasurer at the time, did not respond to an e-mail seeking comment. Dillon told the Free Press in March he was concerned in 2013 that "rejecting KWA ... would upset the locals and potentially cause the governor a political headache," but as more questions were answered, "we got comfortable with KWA."
Gov. Rick Snyder has described the Flint tragedy as a failing at the local, state and federal levels of government and has particularly pointed the finger at state-level "career bureaucrats" who were more focused on technical compliance with government rules than on making sure water was safe to drink.
A task force Snyder appointed to investigate the crisis said in its March report that the DEQ was most blameworthy for Flint, though it also criticized DHHS, the governor and the U.S. Environmental Protection Agency, among others. But it also identified Treasury as one of the three state agencies most responsible for the crisis, due to the fact that emergency managers report directly to Treasury.
Attorney General Bill Schuette is investigating what happened in Flint and so far has charged five DEQ officials, three from DHHS, and one from the City of Flint.
The report, which Hammer prepared as testimony before the Michigan Civil Rights Commission and plans to publish in a law review journal, draws on e-mails and other state and city internal records released in the wake of the Flint water crisis to analyze the catastrophe as "a morality play about the dangers of structural racism and fiscal austerity." Hammer says structural racism need not be intentional but is the result of unconscious biases which, over time, produce racially distinct outcomes in areas such as health, education, income, housing and the environment.
Snyder said in March that environmental justice is important, but "I don't know if you can conclude it was a racial issue by any means."
Hammer says:
- Flint was so broke at the time of the crisis it didn't have the money to pay for needed improvements to the Flint Water Treatment Plant in order to safely put the plant into operation to start treating water from the Flint River. Though estimates of the amount of investment needed in the plant were pegged at $69 million in 2011 and at $25 million in 2013, it appears only about $8 million was spent on the plant before it started treating Flint River water in April 2014.
- Flint's financial crisis was largely state-made: From 2006 — the last year Flint ran a budget surplus — to the 2012 fiscal year, when it was placed under state receivership, state revenue sharing to Flint fell 61%, from $20 million to $7.9 million.
- Treasurer Dillon and officials in his department signed off on Flint's participation in the KWA project in March 2013 without knowing how Flint was going to pay for its 30% share of the cost. Flint had no debt capacity to bond for the money. Months later, at the urging of bond attorneys who said KWA construction would otherwise have to be halted, Treasury officials helped push through an environmental consent order tied to the KWA, so the project's cost would not count against Flint's debt limit. News of this "sweetheart administrative consent order" was first reported by the Free Press in May.
- An effect of the administrative consent order was to tie Flint to using the Flint River until the KWA was completed.
- Treasury ended Flint’s emergency management earlier than it otherwise would have, in April 2015, to avoid continued responsibility for the growing public health crisis. Hammer says if the $12 million necessary to pay for clean Detroit Water and Sewerage Department drinking water had been put back on the books, Flint’s debt in April 2015 would have been larger than when the financial emergency was declared in 2011.
- The emergency manager’s decision to ask the Flint City Council to approve the KWA in 2013 was window dressing and tied to an ulterior motive: E-mails suggest the council's approval was sought as an insurance policy in case the emergency manager law was struck down by the courts, as an earlier version of the law had been.
Hammer said the ultimate decision on whether Flint would join the KWA was not the City Council's or the EM's, but the Treasury Department's. Dillon rejected an engineering report he commissioned that said it would be more costly for Flint to go with KWA than to stay with Detroit, then deferred to the DEQ, which did not have primary expertise in financial analysis.
"It is difficult to excuse Treasury's failure to exercise separate, independent judgment in this matter," Hammer wrote.
"Treasury was the ultimate decision maker and Treasury cannot escape ultimate responsibility for the crisis."
He said Treasury apparently did not know how Flint would pay for its share of the KWA project when it signed off on Flint's participation. It was months later that Treasury moved along an environmental order that had the effect of keeping the KWA debt off of Flint's books and allowing its participation in KWA, Hammer said.
In response to requests from bond attorneys, Treasury and other agencies "started searching for a regulatory violation to justify an ACO (administrative consent order), in order to bootstrap financing for the KWA, and was completely unrelated to the underlying regulatory violation justifying the ACO," Hammer said.
Though much has been made of the Flint City Council's 2013 vote to join the KWA, Hammer said that vote should be viewed in a different light.
John O'Malia, an engineering consultant involved in promoting the KWA project, said in a January 2012 e-mail to Liane Shekter Smith, who has since been fired as head of the DEQ's drinking water section and is facing criminal charges related to the public health catastrophe, that the Flint emergency manager "has given powers back to Mayor and Council to make the decision on KWA as a precaution if the EM court challenge holds up. This will enable the Mayor and Council to approve the KWA agreement and not be challenged in court!"
Hammer noted that in viewing the video of the March 2013 Flint City Council meeting where the KWA project was approved in a 7-1 vote, council members express confusion and consternation about why, on this one issue, the EM had asked them to make the decision. "If one believes the O'Malia memo, the City Council vote on KWA was a strategic ploy with no legal effect," unless the EM law was struck down.
It "was not an exercise of democracy, but an insurance policy for KWA," he wrote.
Contact Paul Egan: 517-372-8660 or pegan@freepress.com. Follow him on Twitter @paulegan4