CONYERS, KILDEE, and LAWRENCE Reintroduces Bill To Stop Emergency Managers: Three Years After Disastrous Flint Water Switch

Washington, D.C. – U.S. Representatives John Conyers (D-MI), Ranking Member of the House Judiciary Committee, Dan Kildee (D-MI), Brenda Lawrence (D-MI), and 17 cosponsors, today reintroduced the Emergency Financial Manager Reform Act to address unchecked decision-making powers that appointed emergency financial managers have in financially distressed cities. Last week marks three years since the disastrous water switch that resulted in lead contamination in Flint, Michigan.  

Recently, Congressman Conyers, Congresswoman Brenda Lawrence and Congressional Black Caucus Chair Cedric Richmond, sent a letter to President Trump questioning the Administration’s commitment to the Flint area in light of proposed budget cuts to EPA and other agencies.

Dean of the U.S. House
of Representatives
John Conyers, Jr.

“Three years later, the people of Flint continue to suffer from the misguided and disastrous choices of an emergency financial manager they did not elect to represent them. We cannot undo the damage already done by the lead-poisoned water in Flint or fix the harm already caused by the hazardous conditions in Detroit’s public schools.  But we must continue to stand together and make sure the unaccountable emergency financial managers responsible for these disasters – and the legal system that empowered them – are not permitted to inflict further harm on our citizens or our constitutional rights. I will continue to introduce the Emergency Financial Manager Reform Act until its passage. We must ensure that what happened in Flint, will never happen again.” said Rep. John Conyers, Jr. (MI-13).

“Our state’s emergency financial manager law has hurt Flint and families throughout Michigan,” Congressman Dan Kildee (MI-05) said. 

“Unelected emergency financial managers made the decisions that led to the Flint water crisis. Their failed governing philosophy is solely focused on the bottom-line and cutting cost, often at the expense of people. Michigan families and their elected officials – not appointed and unaccountable emergency financial managers – should be in charge in the communities that they live in. This bill will help ensure what happened in Flint does not happen to other communities.”

“The Flint Water Crisis was a man-made disaster, and the people of Flint needed strong and responsible leadership to do their job and work in the best interest of the community they serve.  This never happened.  The people suffered, and they continue to suffer; while the leaders who caused this disaster hold no accountability for their actions.  This is shameful for the state of Michigan and shameful for America. It is imperative that the citizens of this great country are not denied their right to have a government that is elected and accountable.  We need immediate reform of the lack of accountability with emergency financial managers and we simply cannot allow a tragedy like this to ever happen again,” said Rep. Brenda Lawrence (MI-14).

There are many cities in financial distress across our nation still struggling to recover from the Great Recession.  While most states work cooperatively with their cities to foster economic stability and growth, others such as the state of Michigan, use draconian, autocratic laws that usurp local elected officials and replace them with unaccountable political appointees – typically known as emergency financial managers – who, through their vast powers, can jeopardize the health and safety of those who live and work in these struggling cities. 

For example, Atlantic City, New Jersey, which is also in financial distress, is now dealing with similar issues as it struggles under the control of an unaccountable state appointed overseer with powers similar to those available to Michigan’s emergency financial managers.  Last month, that city’s police union filed a lawsuit in response to the state’s announced intention to slash pay and benefit cuts in violation of the police union’s contract, claiming that these “cuts could harm public safety and the state takeover law is unconstitutional because it impairs their contract rights.

Earlier this year, the state also proposed a 25 percent reduction in compensation for that city’s firefighters’ union members.

The Emergency Financial Manager Reform Act would authorize the U.S. Attorney General to withhold five percent of the law enforcement funds that would otherwise be allocated to a state under the Edward Byrne Justice Assistance Grant Program (Byrne-JAG) if the Attorney General determines that the state-appointed emergency financial manager fails to protect against the following six abuses: discriminatory impact on voting, conflicts of interest, mismanagement, and abuse of discretion, harm to public health, unilateral rejection of other contracts, and lack of notice to affected communities who cannot provide comment.

The objective of the legislation is not to deny Byrne-JAG grant funds, but rather to incentivize the states to protect their citizens against these risks and abuses when emergency financial managers are appointed.  However, if in the event the funds are withheld, they are directly reallocated to the local government for which an emergency financial manager is appointed. 

The Emergency Financial Manager Reform Act was introduced with support from the following original cosponsors: Representatives Brenda Lawrence (D-MI); Dan Kildee (D-MI); Karen Bass (D-CA), Matt Cartwright (D-PA), Judy Chu (D-CA), Steve Cohen (D-TN), Gerald Connolly (D-VA), Elijah Cummings (D-MD), Shelia Jackson Lee (D-TX), Pramila Jayapal (D-WA), Hakeem Jeffries (D-NY), Eddie Bernice  Johnson (D-TX), Henry C. “Hank” Johnson, Jr. (D-GA), Barbara Lee (D-CA), Zoe Lofgren (D-CA), Jerrold Nadler (D-NY), Eleanor Holmes Norton (D-DC), Marc Veasey (D-TX), and Bonnie Watson Coleman (D-NJ).

This legislation is identical to H.R. 4754, the “Emergency Financial Manager Reform Act of 2016,” introduced in the 114th Congress and supported by the American Federation of State, County and Municipal Employees (AFSCME), the United Auto Workers (UAW), the American Federation of Teachers (AFT), and the American Civil Liberties Union (ACLU), among others.

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CONYERS Statement In Opposition To REINS Act

Washington, DC – House Judiciary Committee Ranking Member John Conyers, Jr. (D-MI) submitted the following statement for the Congressional Record in opposition to the Regulations from the Executive in Need of Scrutiny Act of 2017 (REINS Act):

Dean of the U.S. House
'of Representatives
John Conyers, Jr.

Mr. Chair, H.R. 26, the “Regulations from the Executive in Need of Scrutiny Act of 2017,” otherwise known as the REINS Act, would amend the Congressional Review Act to require that both Houses of Congress pass and the President sign a joint resolution of approval within 70 legislative days before any major rule issued by an agency can take effect.

Simply put, H.R. 26 would impose unworkable deadlines for the enactment of a major rule under procedures that could charitably be referred to as convoluted.

Under this bill, the House may only consider a resolution for a major rule on the second and fourth Thursday of each month.  Keep in mind that typically 80 major rules are promulgated annually.  Yet, there may be as little as just 15 days available to consider such measures based on the Majority’s legislative calendar for the current year. 

Furthermore, Congress may only consider such resolutions within 70 legislative days of receiving a major rule. This process would constructively end rulemaking as we know it.

           

Now, Mr. Chair, the reason why my friends on the other side of the aisle say we need this kind of gumming-the-works legislation -- is because they claim regulations stifle economic growth.

           

For example, they point to the outgoing Administration and say that regulations promulgated during its tenure have hurt our Nation’s economy.

           

What they fail to tell the American people is that it was the Republican George Bush Administration’s economic policies that caused the Great Recession.

           

Without question, it was the lack of regulatory controls that facilitated rampant predatory lending, which nearly destroyed our Nation’s economy.

           

It led to millions of home foreclosures and devastated neighborhoods across America.  In fact, it nearly caused a global economic meltdown. 

           

Nevertheless, as a consequence of strong regulatory policies implemented by President Obama through such measures as the Dodd-Frank Act, our Nation has recovered to a point where the unemployment has been cut nearly in half to less than 5%.

           

Yet, the REINS Act would reverse these gains by empowering Congress to control and override the rulemaking process, even in the absence of any substantive expertise.

More than 80 of the Nation's leading professors on environmental and administrative law have warned in connection with substantively identical legislation considered in the last Congress, that without this expertise, any congressional disapproval is more likely to reflect the political power of special interests.

           

Lastly, by upending the process for agency rulemaking so that Congress can simply void major rules through inaction, the REINS Act likely violates the presentment and bicameralism requirements of article I of the Constitution.

           

As a leading expert on administrative law states:  “The reality is that the act is intended to enable a single House of Congress to control the implementation of the laws through the rulemaking process. Such a scheme transgresses the very idea of separation of powers, under which the Constitution entrusts the writing of the laws to the legislative branch and the implementation of the laws to the executive branch.''

           

The REINS Act will further encourage corporate giants to hold our country hostage through a deregulatory, profits-first agenda and facilitate a political influence process rivaling the destructive industrial monopolies from the past century.

           

In sum, H.R. 26, like the “Midnight Rules Relief Act” we considered yesterday on the House floor, is yet another blatant gift to big business to weaken the critical regulatory protections that ensure the safety of the air we breathe, the cars we drive, the toys we give our children, and the food we eat. 

               

Accordingly, I strongly urge my colleagues to oppose this ill-conceived bill and I reserve the balance of my time.

CLOSING REMARKS

Mr. Chair, we need real solutions for real problems. 

           

In stark contrast, however, the REINS Act attempts to address a non-existent problem with a very dangerous solution. 

           

We need legislation that creates middle class financial security and opportunity.

           

We need sensible regulations that protect American families from economic ruin and that bring predatory financial practices to an end.

           

We need workplace safety regulations that ensure hardworking Americans who go to work each day are protected from hazardous work environments.

           

We need strong regulations that protect the safety of the food we eat, the air we breathe, and the water we drink. 

           

Unfortunately, H.R. 26 does nothing to advance those critical goals. 

This explains why more than 150 organizations strongly oppose this legislation, including:

·         Americans for Financial Reform

·         The American Lung Association

·         Consumers Union

·         The Humane Society of the United States

·         The League of Conservation Voters

·         Public Citizen

·         The American Federation of State, County, and Municipal Employees

·         Earthjustice

·         The Coalition for Sensible Safeguards

·         The American Public Health Association

·         The Environmental Defense Action Fund

·         The Center for American Progress, and

The Trust for America’s Health.

I therefor urge my colleagues to oppose H.R. 26 and I yield back the balance of my time.

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CONYERS Statement On Criminal Charges In Flint Water Crisis

Detroit, MI - Congressman John Conyers, Jr. (MI-13) released the following statement after criminal charges were filed concerning the Flint water crisis:

Dean of the U.S. House
of Representatives
John Conyers, Jr.

“We welcome all efforts to secure justice for the people of Flint, including the investigation of criminal actions by emergency managers and others. However, much remains to be done in the pursuit of justice for Flint residents and to ensure that no other community suffers from the actions of unaccountable political appointees that they did not elect.

“The simple fact is that no matter how many people are prosecuted or sued by Attorney General Schuette, it will not undo the damage Flint has suffered. The State must continue its efforts to ameliorate the harms committed in Flint and the Governor and others must ensure that sufficient resources are provided to those who continue to be harmed.  If the state is unwilling to secure the requisite funding, the City of Flint should have the opportunity to bring a civil action seeking compensation from the State for the harms it caused to the citizens of Flint. The State also needs to finally repeal its Emergency Law which is antidemocratic, discriminatory, and a vehicle for corporate privatization, conflicts of interest, and corruption.

“Until Flint’s water is fully safe, its children are made whole, and we see consequences for all those who stripped Flint’s citizens of their political and civil rights to protect themselves, there will be neither justice nor resolution for the people of Flint.”

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Michigan Congressional Democrats Call On DOJ To Review Decision To Block Flint From Suing The State

Michigan – U.S. House Judiciary Committee Ranking Member John Conyers, Jr. (MI-13) and Congressman Dan Kildee (MI-05) today led a letter signed by every Democratic House member of Michigan’s congressional delegation, calling for the U.S. Department of Justice (DOJ) to review the State of Michigan’s actions to block the City of Flint from suing the State in connection with the Flint Water Crisis.

As stated in the letter, in March 2016, the City of Flint filed a notice of intent to sue the State. Just a week later, the Governor-appointed Receivership Transition Advisory Board (RTAB) issued a recommendation requiring that it approve the initiation of any litigation by Flint, which was approved by the state treasurer.  The letter raises concerns about the lawfulness of Michigan’s actions and requests the Department of Justice to review whether denying the City of Flint the ability to seek legal redress from the State implicates constitutional due process, equal protection and associated environmental justice issues for the people of Flint.

In their letter, the Members wrote, “First, we are concerned that the state-appointed RTAB’s potentially unauthorized action to restrain Flint’s authority to initiate litigation and its apparent failure to adequately notify the City of the import of its actions may have deprived the City of Flint and its residents of constitutionally protected due process…Given the fact that Flint is a majority African American municipality, the denial of the City’s right to obtain judicial redress may therefore implicate the Equal Protection Clause…Third, we are concerned that the actions of the State may have violated principles of environmental justice, which are premised on notions of Equal Protection.”

 

Dean of the U.S. House
of Representatives
John Conyers, Jr.

“Much remains to be done in the pursuit of justice for Flint residents and to ensure no other community suffers from the actions of unaccountable political appointees that they did not elect,” said Congressman Conyers. “The people of Flint must have their rightfully deserved access to legal redress, due process, equal protection under the law and associated environmental justice. I urge DOJ to thoroughly review actions by Governor Snyder and the Michigan Receivership Transition Advisory Board against the people of Flint. I will continue to monitor the situation in Flint in the months and years ahead.”

“The state of Michigan should focus on bringing clean drinking water to the people of Flint, not maneuvering to prevent them from accessing the judicial system,” said Congressman Kildee. “Our letter asks the Department of Justice to investigate the constitutional and environmental justice issues implicated by the State’s decision to effectively prevent the city of Flint from suing the state. Quite simply, this is wrong.”

The letter to DOJ was signed by Congressman John Conyers, Jr. (MI-13), Congressman Dan Kildee (MI-05), Congressman Sandy Levin (MI-09), Congresswoman Debbie Dingell (MI-12) and Congresswoman Brenda Lawrence (MI-14).

In March, Congressman Conyers introduced H.R. 4754, the Emergency Financial Manager Reform Act of 2016, to address unchecked decision-making powers that appointed emergency financial managers have in financially distressed cities which cause situations like the Flint Water Crisis.

Democratic Michigan Congressional Delegation Letter to DOJ To Review Decision To Block Flint From Suing The... by Beverly Tran on Scribd

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U.S. Representatives John Conyers and Brenda Lawrence Hold Voting Rights Forum, June 28, 2016 in Detroit

U.S. Representatives John Conyers and Brenda Lawrence hold voting rights forum, June 28, 2016, at University of Detroit-Mercy Law School from 6:00 p.m. to 8:00 p.m. at 651 E. Jefferson Ave, Detroit, Michigan, 48226.

U.S. Representatives Conyers and Lawrence Hold Voting Rights Forum June 28, 2016 by Beverly Tran

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CONYERS, Kildee & Lawrence Urge Governor Snyder To Ensure Local Taxpayers Don't Foot The Bill For Emergency Managers' Mistakes

Washington, D.C. – Congressman John Conyers, Jr. (MI-13), Ranking Member of the House Judiciary Committee, today led a letter to Michigan Governor Rick Snyder, urging him to strongly reconsider requirements that local governments operating under Emergency Management, pay the legal fees and judgements against their Emergency Managers.  In addition to Congressman John Conyers, Jr., the letter to Governor Snyder is signed by Congressman Dan Kildee (MI-5) and Congresswoman Brenda Lawrence (MI-14). 

Currently, Michigan’s Local Financial Stability and Choice Act, MCL § 141.1560, requires local governments to cover the costs associated with appointed emergency managers who are sued in that capacity. However, legal fees incurred during Congressional investigations by former Emergency Manager for Detroit Public Schools and the City of Flint, Darnell Earley, have been voluntarily paid by the state. Congressman Conyers, Congressman Kildee, and Congresswoman Lawrence are calling on Governor Snyder to ensure all of Earley’s legal fees are covered by the state, not local taxpayers; and to ensure local governments are not required to pay legal fees associated with emergency managers’ mistakes.

“The exception made in the case of Darnell Earley, should be the rule moving forward,” said Congressman Conyers. “Local taxpayers shouldn’t have to foot the bill for mistakes made by state appointed officials who they didn’t elect. Governor Snyder must ensure the burden of legal fees incurred by emergency managers falls on the state, not local governments.”

“Michigan families should not have to pay the legal bills for state-appointed emergency financial managers. Unelected emergency financial managers are accountable only to the Governor and the state should have to pay for their mistakes,” Congressman Kildee 

Dean of the U.S. House
of Representatives
John Conyers, Jr.

said.

“I find it unreasonable to place the burden of legal fees incurred by emergency managers on local taxpayers,” said Congresswoman Lawrence. “Michiganders should not be on the hook for the mistakes of the Governor’s appointed emergency managers. The State’s emergency manager law disenfranchises voters and takes away local control. Local taxpayers should not be required to foot the bill of fraud and abuse committed by Snyder’s appointees. The State should absorb the financial burden imposed by such crimes and Governor Snyder should ensure that taxpayers are protected from the misuse of their hard earned dollars.”

In their letter, the Members wrote, “…we find it deeply troubling that the former Emergency Manager of the Detroit Public Schools and the City of Flint, Darnell Earley, requested that Flint reimburse more than $75,000 in legal fees that he incurred while under investigation by Congress regarding his role in causing the City’s water crisis…By diverting local taxes from crucial priorities to pay for unelected officials’ legal fees representation and damages, this law places a burden on local taxpayers even as it removes their control of that burden.”

“Further, it would appear to frustrate several federal statutes designed to protect the civil and constitutional rights of our citizens.  And, it permits the State of Michigan to shift responsibility for its actions to localities by dipping into the local taxpayers’ pocketbooks, even in cases where those taxpayers are injured by an Emergency Manager’s conduct…,” the Members continued.

Conyers, Kildee, Lawrence Letter to Snyder 5.19.16 by Beverly Tran

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Conyers: Charges in Flint Water Crisis are not the Final Resolution to Long-Standing Inequities

WASHINGTON – Today, Representative John Conyers, Jr. released the following statement in response to the charges filed against three government officials (two state officials and a city employee) in Michigan in connection with the Flint Water Crisis.

Dean of the U.S. House
of Representatives
John Conyers, Jr.

“Today’s news demonstrates the regrettable consequences of encouraging state and local workers to put the health and safety of Michiganders behind cutting costs, pleasing industry, and fighting federal authorities.  The decision to charge low-level employees is one that may give the people of Flint some small sense of reckoning—but under no circumstances should these charges or this trial be seen as bringing either closure or justice to the people of Flint.”

“Charging these individuals and even convicting these individuals may be the legally correct course, but it does not one single thing to address the fundamental inequality that communities like Flint and Detroit have to face every single day—and will do so regardless of the outcome of this case.  Tomorrow, they will still live in toxic homes, send their children to toxic schools, and be forced to plan for a future with a dwindling safety net and fewer ladders of opportunity.”

“The simple truth is that we are seeing action on Flint because there is a trail of evidence that leads to the conservative ideology currently in power. For those who have pushed a deregulatory, anti-environment agenda, it appears that their outrage and compassion begins and ends with their own legal culpability—and their support vanishes once the blame is fixed on someone else. Were that not true, we would see the governor taking a substantial part of that billion-dollar surplus and rebuilding Flint’s infrastructure.  Were that not true, we would see the state investing in Detroit’s literally toxic public schools in the way that they invest in the schools where they send their children.  Were that not true, we would see the Attorney General’s office stop wasting resources fighting to permit mercury pollution in Michigan.

“While I want to see people held accountable, I am worried that people are being charged today so that tomorrow the problem can be swept under the rug and the conservatives running Lansing can again focus on their most important issues: eliminating worker and environmental protections, cutting public support services, and usurping the political power of urban and low-income communities.  We cannot afford any more of the governance that has brought places like Flint and Detroit to their knees, and charging low-level civil servants will not prevent that.”

Rep. John Conyers, together with 31 original cosponsors, introduced H.R. 4754, the Emergency Financial Manager Reform Act of 2016 to address unchecked decision-making powers that appointed emergency financial managers have in financially distressed cities which cause 

Section-By-Section HR 4754, Emergency Financial Manager Reform Act of 2016

HR 4754 Emergency Financial Manager Reform Act of 2016 by Beverly Tran

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Conyers: Time to rein in Michigan’s emergency managers

By John Conyers, Jr.

A task force appointed by Gov. Rick Snyder confirmed last month what we had suspected all

Dean of the U.S. House
of Representatives
John Conyers, Jr.

along — the water crisis in Flint was caused by emergency management. It’s time Michigan reins in its out-of-control emergency manager law. The questions now are: how our state got to this point, and what the lessons for reform are going forward.

When Snyder had just been elected governor and the Republicans took control of the Michigan Legislature in 2011, one of their first orders of business was to radically expand the Michigan financial distress law. The new statute granted EMs unprecedented powers to take over all aspects of local government — not just finances — and unilaterally reject collective bargaining agreements. Under Snyder, the frequency of EM appointments greatly increased due to the Great Recession and state-imposed cutbacks in local revenue sharing.

The result has not only led to public health disasters, such as Flint and the Detroit Public Schools, but numerous instances of conflicts of interest and abuse. This includes documented mismanagement by EMs in Pontiac (potential loss of $1.4 million in federal grant money), Highland Park (terminated for making $200,000 in unauthorized payments to himself), and Benton Harbor (exceeded budget and failed to make required pension contributions).

Worse still is the law’s encroachment on our constitutional rights, most notably by disproportionately targeting African-American voters. A recent academic study found that while 73 percent of black residents were subject to emergency management over the last decade, only 21 percent of whites were covered over the same period.

The EM law has also been found to contravene constitutional protections for collective bargaining agreements. Professor Kenneth Klee, a pre-eminent bankruptcy expert, testified at a 2011 forum I held that “no prior legislature has had the audacity to legislate the unilateral termination, rejection, or modification of a collective bargaining agreement” and that the law “is violative of (the U.S. Constitution’s) Contracts Clause.”

I, along with U.S. Reps. Brenda Lawrence and Dan Kildee, recently introduced legislation responding to the most problematic features of the EM law. We had little choice given that Snyder and Republicans in Lansing had previously overruled a voter referendum repealing the statute.

The “Emergency Financial Manager Reform Act” would authorize the U.S. Attorney General to withhold a small portion of law enforcement funds from the state if the EM fails to adequately protect against discrimination in voting, harm to public health, conflicts of interest and mismanagement, or unilaterally denying collective bargaining rights. Adoption of these incentives would allow the state the ability to assist financially troubled local governments without jeopardizing our citizens’ safety or constitutional rights.

We cannot retroactively undo the damage already done in Flint or Detroit’s schools, but we can help make sure the unaccountable emergency managers are not permitted to inflict further harm on our citizens.

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Michigan emergency manager law targeted in congressional bill

DETROIT, MI -- Democrats in Congress on Thursday introduced a bill seeking to hinder emergency management policies that give far-reaching power over local governments to state appointees.

Michigan Former Emergency Manager, Darnell Earley

U.S. Rep. John Conyers, D-Detroit, introduced the bill with support from 30 other Democrats, including Michigan Reps. Dan Kildee, D-Flint Twp., and Brenda Lawrence, D-Southfield.

The Emergency Financial Manager Reform Act would give the U.S. Attorney General authority to withhold law enforcement funding from states where an state-appointed emergency manager rejects collective bargaining agreements or other contractual agreements without local consent.

The law would also allow funding to the be withheld if an emergency manager "fails to protect against... discriminatory impact on voting rights, harm to public health or safety, conflicts of interest, mismanagement, and abuse of discretion," according to Conyers' office.

It would allow states to be stripped of up to 5 percent of funds allocated under the Edward Byrne Justice Assistance Grant Program.

"We cannot undo the damage already done by the lead-poisoned water in Flint or fix the harm already caused by the hazardous conditions in Detroit's public schools," Conyers said in a statement.

"But we can stand together and make sure the unaccountable emergency managers responsible for these disasters – and the legal system that empowered them – are not permitted to inflict further harm on our citizens or our constitutional rights."

Michigan's powerful emergency manager law has placed state appointees in control of Detroit, Pontiac, Flint, Ecorse, Hamtramck, Allen Park Lincoln Park and Benton Harbor in recent years.

Each of those cities have since transitioned out of emergency management and remain under oversight of financial advisory boards.

Emergency managers remain in the school districts of Detroit, Highland Park and Muskegon Heights.

"Sadly one only has to look at my hometown of Flint, Michigan, to see the dangerous consequences of emergency financial managers," said Kildee in a statement.

"It was decisions by such unelected emergency financial managers that led to the current water crisis in Flint. They are entirely bottom-line focused, bringing a failed philosophy to government that puts saving money at any cost ahead of the livelihood of people. Under Michigan's current laws, democracy is suspended in cities like Flint in favor of absolute power in the hands of emergency financial managers."

Detroit schools have been under emergency management since 2009, and the district is now seeking $715 million from the state legislature to relieve it of burdensome debt built up over years of state control.

But state control over Detroit city government in 2013 and 2014 has faced less criticism, with the city being relieved of $7 billion in debt after a bankruptcy case that was led by an emergency manager.

A message seeking comment on the bill was left with Gov. Rick Snyder's office.

HR 4754 Emergency Financial Manager Reform Act of 2016

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Statement of the Honorable John Conyers, Jr., Ranking Member Subcommittee on Regulatory Reform, Commercial and Antitrust Law Hearing on the “Triple Threat to Workers and Households: Impacts of Federal Regulations on Jobs, Wages and Startups”

Dean of the U.S. House
of Representatives
John Conyers, Jr.

“Today’s hearing is the 29^th anti-regulatory hearing that the Committee has held over the past 5 years.  Yet, during those same 5 years, the Committee has not conducted a single hearing on –

•                     The devastating impact that overwhelming student loan debt has on families and our Nation’s economy; or

•                     How to strengthen protections for employees and retirees of companies and municipalities that seek bankruptcy relief; or

•                     The life-threatening public health and safety ramifications of penny-wise, but dollar-foolish budget cuts made by unelected emergency financial managers, as illustrated by the catastrophic Flint water crisis and hazardous condition of Detroit’s Public School buildings.

“These are matters that affect millions of hardworking Americans and that have real consequences, not the illusionary, so-called ‘triple threat’ referred to in the title of today’s hearing. 

“I say illusionary for several reasons.

“To begin with, there is absolutely no empirical evidence that regulations have a deleterious impact on job growth.  In fact, one could argue that a strong, regulatory environment actually promotes job growth. 

“For example, my colleagues on the other side of the aisle assert that the current Administration has issued an unprecedented number of regulations.  Assuming that is true for the sake of argument, how can they ignore these facts -

•                     Unemployment has fallen by half since the 2008 Great Recession;

•                     The United States is in the midst of one of the longest running streaks of private-sector job creation in history; and

•                     14 million new jobs created over the past 7 years.

“And, what about the impact of regulations on wages?  The Economic Report of the President, which was just issued earlier this week, reports that wages grew faster last year than at any time since the Great Recession.

“Admittedly, wages have not increased as much as they should.  But the cause is not over-regulation. Rather, wage stagnation is largely a symptom of workplace inequality fostered by declining union membership and the resultant diminished bargaining power of lower- and middle-wage workers. Sixty years ago, 1 out of every 4 workers belonged to a union.  Now, less than 10% of Americans belong to a union.  In fact, union membership in some states is less than 3%.  

“Declining unionization, according to one study, accounts for between a fifth and a third of the increase in inequality since the 1970s.  And finally, with regard to the illusionary threat that regulations inhibit the creation of new businesses, this too is a canard.  Startup companies, by bringing new products and services to the marketplace, are vital to productivity growth in the United States. And, startups create jobs.  In 2013, startups created more than 2 million new jobs compared with established firms that accounted for over 8 million new jobs.

“Unfortunately, there are real barriers to entry for new companies.  Weak antitrust enforcement over the years has substantially reduced competition thereby allowing larger firms to squeeze new entrants.  In addition, existing firms often lobby for rules protecting them from new entrants.

“Eliminating these real barriers to entry should be our Committee’s priority, not spending yet another hearing dealing with illusionary problems.

“In closing, I want to thank the witnesses for their participation and I look forward to hearing their testimony.” 

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Flint Is the Predicted Outcome of Michigan’s Long, Dangerous History With ‘Emergency Managers’

By John Conyers, Jr.

Dean of the U.S. House
of Representatives
John Conyers, Jr.

For years, I have joined voters, other elected officials, and even courts in warning that the right-wing takeover of local government would end this way.

The immediate causes of the water-contamination crisis in Flint and the hazardous conditions of Detroit’s public schools are by now common knowledge: the poor, shortsighted decisions made by the emergency managers appointed by Michigan’s Republican governor, Rick Snyder. Far less known are the numerous warning signs of the dangers posed by these unaccountable EMs to the people of Michigan—signs that Governor Snyder chose to ignore. The resulting tragedies were thus not only foreseeable, but entirely preventable.

Enacted in 1988, Michigan’s original financial-distress law—which simply authorized the state to involve itself in the affairs of local governments facing a “financial emergency”—was rarely used. Then, in 2005, the right-wing think tank Mackinac Center for Public Policy advocated that law be broadened to grant EMs the power to take over all aspects of local government, including the power to unilaterally reject collective-bargaining agreements, and to insulate EMs from any resulting legal liability. By 2011, Snyder had been elected governor, and Republicans had taken control of both the State Senate and House. One of their first orders of business was to dramatically expand the law along the lines proposed by the Mackinac Center. The EM law soon came to be seen as a vehicle for corporate privatization, with a 2011 New York Times investigation revealing that EM training sessions were “run primarily by representatives from companies who stand to benefit financially.”

As EM appointments increased sharply due to state-imposed cutbacks in local revenue-sharing as well as the impact of the Great Recession, numerous red flags were raised. The Michigan Department of Treasury’s own internal analysis highlighted the law’s overreach, concluding: “This bill allows emergency managers too much power and control over local units of government. Emergency managers can’t be trusted to act in the interests of the local unit and will use the enhanced powers granted under this bill for their own gain.” Professor Kenneth Klee, one of the nation’s preeminent experts on bankruptcy, wrote that the law “is violative of [the US Constitution’s] Contracts Clause…. No prior legislature has had the audacity to legislate the unilateral termination, rejection, or modification of a collective bargaining agreement.” Voting-rights expert Jocelyn Benson, the current dean of Wayne State Law School, found that “there is significant evidence [that the] amended Emergency Financial Manager law has disproportionate impact on the state’s Black and Latino population.”

The appointment of EMs with the power to usurp local elected officials proved to have a significant negative impact on minority communities and their votes, with more than half of the state’s black voters subject to governance by EMs since 2009. Emergency managers have run cities with large African-American populations, such as Highland Park (94 percent), Benton Harbor (89 percent), Detroit (83 percent), Flint (56 percent), Pontiac (52 percent), and Ecorse (46 percent). Benton Harbor, which has been operating under an EM since 2010, saw its voter-participation rate decline by more than half.

Organized labor, civil-rights groups, and others challenging the law’s unprecedented scope initiated a series of lawsuits. The Ingham County Circuit Court found the law’s implementation to be in contravention of the Open Meetings Act. In 2010, a Wayne County court found the Detroit Public Schools EM had exceeded his mandate by attempting to make academic reforms, which at that time were within the elected school board’s sole discretion.

Numerous instances of abuse, conflict of interest, and mismanagement by EMs came to light. In Pontiac, EMs incurred a potential loss of $1.4 million in US Department of Housing and Urban Development funding due to mismanagement of grants. EM Michael Stampfler outsourced the city’s wastewater treatment to United Water shortly after the firm faced a 26-count indictment in Indiana for violating the Clean Water Act. In Highland Park, the EM had previously been terminated for making more than $200,000 in unauthorized payments to himself.

The sad part is that there are more sensible alternatives than the top-down approach to which Governor Snyder clings.

In Benton Harbor, an independent audit found that the EM had exceeded the budget by more than $650,000, had inadequate controls over its financial reporting, and had failed to make required contributions to pension plans. Senator Gary Peters and I called for a Government Accountability Office investigation, which found in 2015 that under the Flint EM, workforce cuts had reduced the city’s ability to obtain critical federal grants and led to federal funds being withheld from the city as a result of its failure to address grant-monitoring deficiencies.

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None of this went unnoticed by elected officials and voters. Along with two other members of Congress, 55 state legislators, and eight members of the Detroit City Council, I wrote a letter in December 2011 expressing concerns regarding the legislation’s implementation. Similar letters were issued by both of Michigan’s senators and two additional congressional representatives. In March 2012, we again wrote the governor seeking evidence that he was properly overseeing his emergency managers.

But voters themselves delivered perhaps the most significant warning sign. When a petition drive was initiated to allow Michigan voters to decide whether to retain the emergency-manager law, Republicans sought to thwart the effort with a series of legal and legislative maneuvers. Those attempts ultimately failed, and in November 2012, 52 percent of Michigan voters opted to repeal the controversial law outright.

Governor Snyder and the Republicans in Lansing responded to all of these warning signs by doubling down on the flawed law. Instead of listening to the voters and their elected representatives, independent experts, and watchdogs, they passed a substitute bill during a hastily called lame-duck session that retained many of its predecessor’s deficiencies. Even worse, the legislature added an appropriations rider, thereby preventing the citizens of Michigan from being able to overturn the new law. The same failed EMs that had been in place earlier returned to work or were recycled to other jurisdictions. For example, Darnell Earley, who presided over the Flint water debacle, was later appointed to run the Detroit public-school system, where he ignored health hazards that endanger our teachers, students, and parents.

The sad part is that there are more sensible alternatives than the heavy-handed, top-down approach to which Governor Snyder clings. There are numerous cases in which more effective legal alternatives have been used to restore fiscal stability while remaining true to the principles of representative government through the use of financial-control boards and similar supportive fiscal devices. Such methods have been used in New York City (1975), Cleveland (1978), Philadelphia (1991), Bridgeport, Connecticut (1991), the District of Columbia (1995), and Harrisburg, Pennsylvania (2011), among other cities.

But after we’ve seen cities starved of desperately needed revenues; and citizens denied the right to elect their own leaders; and short-sighted, mindless budget cuts and privatization schemes; and failed EMs recycled into new jobs; and a steady drumbeat of warnings—from the courts, elected officials, independent watchdogs, and the voters themselves—ignored, the real question isn’t how the disasters in Flint and the Detroit public schools could have happened, but how many other state-made catastrophes are looming.

We can’t undo the damage already done by the lead-poisoned water in Flint, or fix the harm already caused by the deplorable conditions in Detroit’s public schools. But we can make sure that the unaccountable emergency managers responsible for these debacles—and the legal system that empowered them—are not permitted to inflict further harm on our citizens.

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