Judge puts off decision on Detroit water shutoffs, orders mediation

DETROIT, Sept 3 Wed Sep 3, 2014 10:21am EDT

DETROIT, Sept 3 (Reuters) - A federal bankruptcy judge has ordered Detroit and civil rights attorneys into two weeks of confidential mediation over the city's practice of shutting off water to residents with unpaid bills.

Federal Bankruptcy Judge Steven Rhodes will announce on Sept. 17 whether he will issue a temporary restraining order on Detroit's controversial attempt to reduce its $90 million backlog of unpaid water bills, according to an order signed on Tuesday and publicly released on Wednesday.

Until then, the court's chief judge, Phillip Shefferly, will mediate negotiations with the bankrupt city and those who filed a class action to stop the city from cutting off water access to delinquent accounts.

The Motor City received international criticism this summer when it halted service to residents who were months behind or owed thousands of dollars on their water bills. It then put in place a one-month moratorium on shutoffs and introduced payment plans.

The moratorium ended last week and cutoffs resumed.

Rhodes is currently holding a confirmation hearing on Detroit's plan to exit its historic bankruptcy.

Attorney Alice Jennings - who is leading the class action - asked him to stop the shutoffs until she could present evidence at a hearing on their health and social implications.

"There's going to be a potential for imminent harm," she told the judge, noting some Detroit residents with medical issues could be in danger and parents could lose custody of their children due to lack of water in their homes.

Jennings added customers were not receiving adequate information from the Detroit Water and Sewerage Department on how to keep their water flowing.

"The city of Detroit needs to get its stuff together," Jennings said.

Timothy Fusco, an attorney at Miller Canfield representing the city, argued the request for a restraining order was beyond the jurisdiction of the U.S. Bankruptcy Court and if granted would be the "most far-reaching TRO issued in a Chapter 9" municipal bankruptcy. (Additional reporting by Fiona Ortiz in Chicago and Lisa Lambert in Washington; editing by Matthew Lewis)