Thursday, July 28, 2011

City of Detroit Petitions Federal Court to End Decades-Long Oversight of DWSD

On July 25, 2011, the City of Detroit petitioned U.S. District Judge Sean Cox to dismiss the federal lawsuit originally filed in 1977 by the U.S. Environmental Protection Agency to remedy violations of the Clean Water Act by the Detroit Water and Sewerage Department.

For the past 34 years, the federal court (Judge John Feikens) has overseen the City of Detroit Water and Sewerage Department (DWSD) and enforced a series of consent judgments designed to bring the Department's waste water treatment plant (WWTP) into compliance with its NPDES discharge permit. 

On July 21, 2011, DWSD and the Michigan Department of Environmental Quality (DEQ) entered into an Administrative Consent Order, which is designed to supersede the Second Amended Consent Judgment entered by the federal court in August, 2000.

In its July 25, 2011 Motion to Dismiss and for Relief from Second Amended Consent Judgment, the City of Detroit requests that Judge Cox dismiss with prejudice the 1977 lawsuit because the Administrative Consent Order will serve the same purpose as the Second Amended Consent Judgment and the DEQ will provide for more appropriate oversight and enforcement: 
"[The Administrative Consent Order] provides a more comprehensive and current structure for addressing the compliance issues that DWSD is facing and for ensuring DWSD's long-term compliance. While the DWSD has made substantial progress under the [Second Amended Consent Judgment], ultimately the SACJ was not sufficient to sustain long-term compliance. The ACO will take DWSD through to full compliance."
No hearing date has been set for the City's motion.

Comment: The City's motion to dismiss the 1977 federal case should not come as a surprise. The City has sought for years to end federal oversight of DWSD. But it took the retirement of Judge Feikens to clear a path to the end of the case.  Shortly after Judge Cox took over the case in November, 2010, he signaled a desire to end the decades-long oversight of DWSD. In February, 2011, Judge Cox disbanded the advisory groups that had grown up around the case. Public opinion favored ending federal oversight.

As part of Mayor Bing's breakthrough agreement with Wayne, Oakland and Macomb Counties, and the February 11, 2011 Stipulated Order that led to a more autonomous Board of Water Commissioners, the Court allowed for any party to seek dismissal of the case upon a showing of substantial compliance with the Second Amended Consent Judgment. 

The City's pending motion represents that DWSD has achieved substantial compliance with the federal consent judgment and that the new Administrative Consent Order with the Michigan DEQ will see it through to full compliance. Time will tell, but now is the time to end 34 years of federal supervision. 

For more about DWSD Update, click here.

      Wednesday, July 27, 2011

      Clintondale Pump Station, Walsh Construction Submits Low Bid on Project

      Earlier this afternoon, Walsh Construction was read low bidder on the construction project known as “Clintondale Pump Station Improvements," Macomb County Public Works Project No. 10-0004.4.  There were 4 bids submitted and received. 

      The bids were as follows:
      1. Walsh Construction  - - - - - - $ 22,929,000
      2. Walbridge  - - - - - - - - - - - - $ 25,720,000
      3. Ric-Man Construction - - - - - $ 26,654,606
      4. Weiss Construction - - - - - - - $ 32,100,000

      The Engineer's Estimate for this project was $25,338,000.

      The Clintondale Pump Station was originally owned and operated by the City of Detroit (DWSD), but was part of the agreement that transferred ownership of the Oakland-Macomb County Interceptor to Oakland and Macomb Counties.  The Clintondale Pump Station is now part of the Macomb Interceptor Drain Drainage District. 

      (*Congratulations to Sam Bahou and his Team at Walsh.)  

      Update: On August 19, 2011, the Macomb County Department of Public Works approved award of this project to Walsh Construction. Three days earlier, Standard & Poors affirmed Macomb County's AAA bond rating. All good news for Macomb County.  

      Update (10/13): The Detroit Free Press reports today that Macomb County has sold $30 million worth of bonds for this project.   

      Tuesday, July 26, 2011

      Oakland Macomb Interceptor Drain (OMID) Contract 3 - Owner Rejects All Bids

      Earlier this morning, the Oakland Macomb Interceptor Drain Drainage Board voted to reject both bids submitted for OMID Contract 3 that were submitted on July 19, 2011 (here).  

      The principal reason cited for rejecting the low bid of Inland Waters Pollution Control and second bid of L. D'Agostini & Sons, Inc. was that the bids exceeded the engineer's estimate by some 38%. However, the Drainage Board also rejected a second resolution that would have deducted more than $19 million from Contract 3, which would have brought the project into line with their budget. 

      Board Members also voiced concerns over the lawsuit filed on July 18, 2011 by the Macomb Interceptor Drain Drainage District against some 40 contractors, including Inland Waters and L. D'Agostini & Sons. In addition, Board Members noted that under Contract 3, Inland Waters apparently identified D'Agostini as one of its  subcontractors; D'Agostini's second bid had included Inland Waters as a proposed subcontractor. 

      Update (7/26): Crain's Detroit Business has additional coverage (here) of the OMI Board Meeting and the Board's decision to reject both bids. 

      For more about DWSD Update, click here.

      Wednesday, July 20, 2011

      Oakland Macomb Interceptor Drain (OMID) Contract 3 - Inland Waters Submits Low Bid

      On July 19, 2011, the Oakland Macomb Interceptor Drain (OMID) Drainage District received and opened bids for Contract 3.  Two bidders submitted bids:  
      • Inland Waters Pollution Control . . . . .$34,773,040
      • L. D'Agostini & Sons . . . . . . . . . . . . . . . . $36,127,338
      The details of this project were in an earlier post (here).

      Comment: There is great irony in the fact that both of these bidders were named in the federal lawsuit filed by Macomb County on July 18, 2011. That lawsuit arises out of repair work performed by Inland Waters and L. D'Agostini & Sons on the very same interceptor in 2004. 

      Update (7/25): The OMI Drain Board is meeting on July 26, 2011 and is scheduled to vote on a resolution to award Contract 3 to Inland Waters Pollution Control.

      Monday, July 18, 2011

      Macomb County Takes Aim At DWSD Contractors Involved in 15 Mile Sewer Repair Project

      While the Detroit City Council was still considering a legal services contract with Miller Canfield, to investigate contractors linked to disgraced former Mayor Kwame Kilpatrick, former Director Victor Mercado and contractor Bobby Ferguson (here), Macomb County was busy preparing its own lawsuit to recover millions of dollars in  allegedly inflated sewer repair bills dating to 2004.   
      Earlier today, the Macomb Interceptor Drain Drainage District fired the first volley when it filed a six-count civil lawsuit in U.S. District Court against 40 contractors involved in the repair of the 15 Mile sewer interceptor in Sterling Heights

      The lawsuit alleges that the Co-Defendants, led by Kwame Kilpatrick, Victor Mercado, Bobby Ferguson and Inland Waters Pollution Control, participated in a scheme to inflate repair costs associated with the 15 Mile sanitary sewer interceptor that collapsed on August 22, 2004. The sewer was repaired by DWSD under an emergency contract.

      Macomb County alleges that Inland Waters originally proposed a repair budget of $31.7 million to DWSD, but that final costs ballooned to $54.4 million due to inflated invoices submitted by Inland Waters and its subcontractors, including $350,000 paid to Ferguson Enterprises for which no work was allegedly performed. 

      Macomb County seeks to recover $23 to $26 million from the 40 Co-Defendants under counts for civil racketeering (RICO), anti-trust violations, both the Sherman Anti-Trust Act and Clayton Anti-Trust Acts, and fraud. 

      Macomb County first signaled its interest in pursuing these claims in January, 2011 (here). 

      For a copy of Macomb County's lawsuit, click here

      For more about DWSD Update, click here.

      Monday, July 11, 2011

      Former DWSD Director Files Federal Lawsuit, Alleges Discrimination in Pay

      Former DWSD Director Pamela Turner last Friday filed a lawsuit in U.S. District Court alleging 2 counts of sex discrimination against the City of Detroit.  Ms. Turner seeks unspecified money damages.

      Ms. Turner, who was appointed Interim Director in September, 2008 and reportedly retired in May, 2010, alleges that her immediate (male) predecessors, Victor Mercado and Anthony Adams were paid an average $240,000 per year, while she was paid only $130,000.  Ms. Turner won praise, but apparently only a modest pay increase (to $155,000) during her tenure as Director. Ms. Turner's lawsuit alleges that her departure in 2010 was by way of resignation, not retirement as the press reported at the time.

      DWSD has been seeking Ms. Turner's replacement for more than a year. In March, Detroit City Council approved Mayor Bing's request to increase the money that could be offered to potential Directors to $256,000.

      2011-07-08.Pamela Turner v City of Detroit - Lawsuit

      Thursday, July 7, 2011

      New Details Emerge on DWSD Efforts to Recover Kick-Backs and Illegal Profits

      New details have emerged about DWSD's nvestigation into contractors linked to the corruption probe and federal indictments of disgraced former Mayor Kwame Kilpatrick, former Director Victor Mercado and contractor Bobby Ferguson (Ferguson Enterprises, Inc. and Xcel Construction Services).  

      As we reported last month (here), the Board of Water Commissioners on May 25, 2011 approved a $250,000 contract  to retain the Miller Canfield law firm to investigate both contracts and contractors identified in the 38-count federal indictment handed down last December 

      When this agreement went to City Council for approval earlier this week, head of the City of Detroit Law Department, Krystal Crittendon reportedly told Council Members that Miller Canfield would be paid $250,000 to research possible claims, but that any lawsuits to recover kick-backs or illegal profits would be handled on a contingency fee basis.

      For more about DWSD Update, click here.

      Update (9/28): Acting Director Chris Brown indicated at today's Water Board Meeting, in response to a question from Chairperson Mary Blackmon, that Miller Canfield will be submitting their report to the Board by the October 26, 2011 Board Meeting.