Third-party to take charge of city’s water system, billing system as part of agreement, U.S. DOJ says

WASHINGTON, D.C. (WLBT) - If it’s approved by the court, a third-party manager would soon take control over most aspects of the city of Jackson’s water system, and, in some cases, have the ability to raise water rates without the consent of the city council.

Tuesday, the U.S. Department of Justice announced that it had filed a proposal in federal court that would “appoint an interim third-party manager to stabilize the city of [Jackson’s] public drinking water system and build confidence in the systems’ ability to supply safe drinking water to the system’s customers.”

The proposed agreement was filed in U.S. District Court for the Southern District of Mississippi, weeks after the city council approved it, and comes with a memorandum from the federal attorneys asking the Court to take “immediate action.”

“The city’s drinking water system has faced significant challenges for years, with frequent breaks in distribution lines and other equipment failures,” attorneys for the federal government wrote. “In late August 2022, the majority of the system’s customers completely lost access to running water... As this emergency demonstrates, immediate action is needed to ensure that the city’s drinking water system can reliably provide its users with safe water until a final resolution of this case is reached.”

Under the proposal, the third-party manager would have the authority to:

• Operate and maintain the city’s public drinking water system in compliance with the Safe Drinking Water Act, the Mississippi Safe Drinking Water Act and related regulations
• Take charge of the Water Sewer Business Administration, the arm of the city responsible for billing water users
• Implement capital improvements to the city’s public drinking water system, in particular, a set of priority projects meant to improve the system’s near-term stability, including a winterization project meant to make the system less vulnerable to winter storms
• And correct conditions within the drinking water system that present, or may present, an imminent and substantial endangerment to the health of the city’s residents.

According to a copy of the order, Ted Henifin will serve as the third-party manager. Henifin was the same individual that recommended Jackson bring on WaterTalent LLC to provide temporary staffing for its water treatment facilities.

Henifin, a registered professional engineer with 40 years of service in public works, is the former of director of Public Works for the city of Hampton, Virginia, a city of approximately 146,000 people, court records indicate. He also is a senior fellow with the U.S. Water Alliance, a nonprofit organization focused on nonprofit water issues, and a member of a number of professional organizations. He has been working with the city of Jackson since mid-September, serving as part of the unified command overseeing the city’s water crisis.

Henifin will have sweeping authority to carry out the stipulated order, including the ability to pay bills related to system and WSBA, direct city employees in the undertaking of stipulated order projects, respond to notices of violations related to the water system, perform, modify or terminate pre-existing contracts, enter into new contracts, and make purchases he or his team deems necessary for the benefit of the system or WSBA.

He and his team’s office will be funded with a nearly $3 million grant from EPA, of which about $400,000 will go to Henifin for salary, living expenses and travel expenses, court records show.

The city will be able to dispute only a handful of items: including proposals from the third party to raise water rates; the decision to issue loan applications in excess of the amount of debt capacity recommended in the city’s latest financial management plan; the formation of new contracts; issues that arise under the stipulated order related to the operations and maintenance account; and decisions regarding the system or WSBA that could adversely impact the city’s sewer system.

Within 60 days of the effective date of the order, the third-party management team must draw up a financial management plan for the system that will take into consideration short-term (12-18 months), mid-term (1.5 to 5 years), and long-term (more than 5 years) operations and maintenance and capital funding needs for the water system and WSBA, court documents show.

30 days after that plan is submitted, and annually until the stipulated order is terminated, the third-party manager will meet with city leaders to discuss the need to adjust water rates, rates under the existing or modified rate structure.

If the third-party deems a rate increase is necessary, the mayor shall propose an amendment consistent with the third-party manager’s recommendation and present it to the council for consideration. If the council refuses to approve it and it has been more than 365 days since the last increase, the ITPM “shall have the full power and authority to adjust rates, rate structure, and/or fees without the necessity of any actions on the part of the council.”

The proposal, which is called a “proposed stipulated order” in court filings, is meant to serve as interim measure while the United States, the city and MSDH attempt to negotiate a judicially enforceable consent decree to achieve long-term sustainability of the system, the release states. It was filed along with a complaint filed by the U.S. Attorney General’s Office on behalf of the EPA Administrator Michael Regan.

“The Department of Justice takes seriously its responsibility to keep the American people safe and to protect their civil rights. Together with our partners at EPA, we will continue to seek justice for the residents of Jackson... And we will continue to prioritize cases in the communities most burdened by environmental harm,” U.S. Attorney General Merrick Garland said in a statement.

In September, DOJ sent a letter to Mayor Chokwe Antar Lumumba saying the city’s water was not safe and that it was prepared to take legal action if the city did not enter talks on creating a consent decree.

Weeks earlier, the state temporarily took over the city’s system after equipment failures at the O.B. Curtis Water Treatment Plant left tens of thousands of customers in the capital city, Byram and Hinds County without water.

In October, the council signed off on a confidentiality agreement to prevent any discussions between the city and DOJ from being made public. The council approved a draft of the stipulated order earlier this month.

Council President Ashby Foote said the order is a sign that the federal government does not have confidence in the city to run its water system. He pointed to an order the council signed off on in 2021 that the city has yet to come into compliance with, as well as WLBT’s report that shows severe staffing shortages at its O.B. Curtis and J.H. Fewell Water Treatment Plants.

“The EPA is determined to get the people they want in charge of the system so they can increase the reliability and long-term prospects of the water system,” Foote said. “This is a bold move, and I wish them all the luck in the world to make it happen.”

Court documents back up Foote’s claims. According to a memorandum filed by U.S. attorneys in support of the stipulated order, the city has averaged 55 main breaks per 100 miles of water line every year from 2017 to 2021. And since May 2020, more than 340 boil water notices had been issued due to the safety of the city’s drinking water.

“As these statistics demonstrated, the city currently lacks the financial and operational resources to effectively manage and run the system and make urgent changes needed to reduce risks to public health,” attorneys wrote. “A new approach is warranted, and... an ITPM is the best short-term method to stabilize the drinking water system.”

The Mississippi Center for Justice applauds the lawsuit, citing the mishandling of the Jackson water crisis.

“Today’s announcement by the Department of Justice is an important and necessary move to ensure that residents of Jackson and surrounding communities have access to safe drinking water - a vital necessity for all communities to thrive. Unfortunately, the deplorable and unsafe condition of Jackson’s water system didn’t happen overnight but stems from decades of neglect and the intentional disinvestment of resources for the majority-Black municipality,” said MCJ President and CEO Vangela Wade. “While we praise the Biden Administration and the Department of Justice for today’s suit, we also recognize that this is only the beginning of achieving justice for the residents of Jackson.”

Jackson Director of Communications Melissa Faith Payne says the city will have a statement later Tuesday or early Wednesday.

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