Judge ends court oversight of Detroit water system

By Corey Williams Associated Press DETROIT (AP) -- A judge in Detroit on Wednesday ended the 35-year federal oversight of the city's massive water system after determining the utility that serves about 4.2 million southeastern Michigan residents has improved its compliance with environmental regulations. But U.S. District Judge Sean Cox denied a proposal that would have allowed the operation of the Detroit Water and Sewerage Department to be turned over to an authority. Federal oversight began in 1977 after the city was sued by the Environmental Protection Agency over pollution discharged into the Detroit River. The city repeatedly failed to make corrections, which included hiring more qualified workers to staff the system's operations. Cox noted in his 34-page order that staffing issues have been addressed and the department now has its own human resources office. He also said the Board of Water Commissioners, made up of appointees from the city and Wayne, Oakland and Macomb counties, is more empowered. The Water Department also hired its first director since 2008. "This court finds that while the DWSD's compliance record is still not perfect, it is vastly improved, especially in the historically problematic areas," Cox wrote. The state Department of Environmental Quality will work with the water department on compliance with a discharge elimination system permit. Suburban communities pay the city for water and sewer services. The Water Department listed combined water and sewerage revenues and expenditures of more than $932 million in its fiscal year 2013-2014 financial plan. Its combined operation and maintenance budget was listed as $367.3 million. Debt service is nearly $420 million. Cox's order is "a good thing," said Bill Johnson, Board of Water Commissioners spokesman. "What is disappointing ... is that the judge did not see fit to include the ability of the water department and the Board of Water Commissioners to pursue an avenue where it would spin off from the city and go off on an independent water authority where it would be independently run." A proposal in a report to Cox called for the city to transfer all the utility's assets to a regional authority that would lease the department's operation to a newly created authority. The second authority would make annual payments of up to $70 million to the city. Cox said that he didn't have the authority to do that, and if he had that power he would not use it in Detroit's case. "Arguably, if the court were to order or approve transfer of one of the city of Detroit's largest assets, at this juncture, that could potentially force the city into bankruptcy or have other highly undesirable consequences," Cox wrote. Detroit has a $327 million budget deficit and more than $14 billion in long-term debt. A state-appointed emergency manager was put in place Monday to help pull the city out of its fiscal troubles. Kevyn Orr is a Washington D.C.-based bankruptcy lawyer and turnaround specialist. He was part of team that helped Chrysler LLC through its bankruptcy. Under state law, Orr has the power to sell off city assets. "We're still reviewing it in terms of what it means going forward," Orr spokesman Bill Nowling said of Cox's action. "That's just going to make it easier for whatever we need to do. We're going to be focusing on how do we manage those resources in the best possible way so that they benefit the city and its citizens?" The Associated Press left a message Wednesday seeking comment from water department director Sue McCormick. Published: Fri, Mar 29, 2013