Detroit Bankruptcy Judge Says He Can't Stop Controversial Water Shutoffs

The city of Detroit can continue shutting off water for some residents after a bankruptcy judge ruled today that he doesn't have the authority to block the controversial practice of disconnecting water services for homes and businesses with unpaid utility bills.

In court this morning, Judge Steven Rhodes — who is presiding over the city's ongoing bankruptcy proceedings that kicked off in early September — said he did not have jurisdiction over the issue that has resulted in thousands of people losing their water services. He also said that there is no "enforceable right" to water.

Rhodes stressed that putting a halt to the water shutoffs would take a negative toll on the city's already rocky financial situation, saying that, "Detroit cannot afford any revenue slippages."

"As it prepares to show the court its plan is feasible… the last thing it needs is this hit to its revenues," he said, echoing arguments from Detroit's legal team that the city would take a financial hit if it continued to provide water to customers who are not up to date on bill payments.

Water war: Dry in Detroit. Watch here.

Judge Rhodes acknowledged that Detroit's Water and Sewage Department (DWSD) had probably not done enough to assist low-income residents in the city, which has some of the highest poverty rates in the country. Yet he commended Detroit's recent establishment of two-year payment plans for outstanding water utility bills, which has already enrolled 30,000 customers.

The water shutoffs have been one of the more controversial issues throughout Detroit's bankruptcy perils. In early 2014, there were reportedly 90,000 residents and businesses in the city that were behind on their water bills. After ramping up collection efforts in March, the city began issuing shutoff notices in May.

Around 46,000 notices were handed out during May, with 4,500 service terminations — 2,700 of which secured service restoration within 24 hours of being cut-off through payments or payment negotiations. At the time, DWSD said the goal was not to shut off their water, but to get people to enter payment arrangements.

The water shutoffs garnered international criticism in June when the United Nations spoke out on the matter. A group of UN experts were critical of the city's shut off policy, saying it violated human rights.

"Disconnections due to non-payment are only permissible if it can be shown that the resident is able to pay but is not paying. In other words, when there is genuine inability to pay, human rights simply forbids disconnections," Catarina de Albuquerque, a UN expert on the human right to water and sanitation, said in a statement.

People in Detroit started having their water shut off again today. Read more here.

Detroit Mayor Mike Duggan implemented a month-long moratorium on the shutoffs in August, but since it came to an end, the city has cut off water services for around 350 customers each day.

Alice Jennings, a lawyer for the plaintiffs — a group that includes the advocacy groups Peoples Water Board and National Action Network — told the Detroit Free Press she will look at appealing Monday's decision. Jennings pointed to the plan the state created to keep the city from selling off the Detroit Institute of Art, saying they could develop a plan to help customers get affordable water.

While controversy surrounds the shutoffs and Judge Rhodes's comments, bankruptcy expert James Spiotto told VICE News that today's decision was a technical matter. He explained that Judge Rhodes's jurisdiction over DWSD is largely limited to debt adjustment as part of the bankruptcy proceedings, and the judge can only act to the degree that the state has given him permission.

"The question of whether or not you should turn off or not turn off the water is part of politics and state affairs, he really doesn't have jurisdiction to tell the city do do something," he said. "The debt can be adjusted, but the policy of how you run the utility remains with the municipality."

Regardless of jurisdiction, Emma Lui, a campaigner at the Blue Planet Project, a water rights advocacy group, told VICE News that the judge's comment about water not being an enforceable right was "very disappointing," and "wrong." Lui explained that countries around the world, including the US, have signed the UN resolution recognizing the human right to water and sanitation. She said it is not just up to actors at the national level to follow this agreement, but that the responsibility falls on states and municipalities as well.

All of Detroit's bankruptcy news in one easy-to-swallow capsule. Read more here.

"There's a disconnect to what the US committed to internationally and what is happening on the ground," she said.

Lui explained that with high water rates, affordability was the key issue in Detroit's ongoing water shutoff issues. Similarly, Peter Hammer, a professor at Wayne State University Law School, told VICE news that the cause of the city's water problems is rooted in the fact that 40 percent of residents live below the poverty line and struggle to pay their bills.

"The City and the DWSD have put forward little more than window dressing in terms of making water systemically more affordable," he said. "To permit water shutoffs to continue in this environment is unjust and intolerable."

Although it might seem contradictory, Spiotto said affordability of city services is also in the best interest of the creditors in the long-term. According to Spiotto, creditors actually benefit more when the city invests in central services and infrastructure, while encouraging economic growth and getting more taxpayers in the long run. He explained that when the city overpays the creditors in the short term — raising taxes, increasing utility prices, and reducing city services to do so — residents start to pick up and leave.

"Taxpayers will leave because services aren't being provided, we know that from Detroit and other cases," he said. "Lost taxpayers means losing revenue… that's a death spiral."

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