SENATE FISCAL AGENCY

MEMORANDUM

DATE: October 16, 2018

TO: Members of the Senate Appropriations Committee

FROM: Ellyn Ackerman, Fiscal Analyst

Joe Carrasco, Fiscal Analyst
Cory Savino, Fiscal Analyst
Josh Sefton, Fiscal Analyst

RE: Flint Water Emergency Legal Costs

Pursuant to various requests from members of the Senate Appropriations Committee, the Senate
Fiscal Agency has prepared a summary of Flint water emergency legal costs to date. Funding for legal
costs related to the Flint water emergency is appropriated primarily in the Department of Attorney
General and the Department of Technology, Management, and Budget (DTMB) budgets, beginning in
fiscal year (FY) 2015-16. Additionally, the Departments of Environmental Quality, Health and Human
Services, and Treasury are paying legal costs related to the water emergency through excess funds
in various administrative line items.

This memo summarizes line item expenditures by department, and Table 1 shows actual expenditures
according to the line items from which the expenditures have been made. Table 2 categorizes the
same expenditures based on contracts related to civil cases, contracts related to criminal cases, and
other legal costs. The majority of the State's legal expenditures for the Flint water emergency are
pursuant to contracts with law firms.

Department of Attorney General

The Department of Attorney General funding used to pay for legal costs related to the Flint water
emergency is a combination of General Fund/General Purpose (GF/GP) dollars and State restricted
revenue from the Lawsuit Settlement Proceeds Fund (LSPF). Money from that Fund may be used only
for legal costs associated with the Flint water emergency that include investigations and prosecutions.
The amounts displayed in Tables 1 and 2 show the expenditures to date for the Department. The
majority of the expenditures are for investigations and prosecutions and are paid from the LSPF. The
expenditures for FY 2015-16 totaled $2.7 million. Of that amount, $403,504 in GF/GP funding was
spent from the Operations line item for the costs of one staff attorney working on State defense-related
cases. This funding was not appropriated specifically for the Flint water emergency.

The expenditures for FY 2016-17 totaled $3.4 million. Of that amount $2.9 million were spent for
investigations and prosecutions and were paid primarily from the LSPF. Of the $2.9 million, $308,362 in
GF/GP funding also was spent from the Operations line item for the costs of one staff attorney working
on State defense-related cases and was not originally appropriated for the Flint water emergency.
Additionally, $528,221 in GF/GP funding was spent on State defense costs in FY 2016-17.

Finally, for FY 2017-18, expenditures totaled $2.0 million through June 30, 2018, for investigations
and prosecutions and were paid primarily from the LSPF. Of this amount, $238,881 in GF/GP funding
also was spent from the Operations line item for the costs of one staff attorney working on State
defense-related cases. Additionally, $273,183 in GF/GP funding has been spent thus far in FY 2017-
18 on State defense costs.
 MEMORANDUM
October 16, 2018
Page 2

Department of Environmental Quality (DEQ)

The DEQ has spent funding (all State restricted revenue) from the Administrative Hearings, Central
Support Services, Environmental Investigations, Environmental Support Projects, Executive Direction,
and Unclassified Salaries line items for legal defense costs in cases involving Department employees.
The Department spent $2.4 million on legal defense costs in FY 2015-16, $2.8 million in FY 2016-17,
and $2.2 million in FY 2017-18. In FY 2017-18, $3.0 million from the Lawsuit Settlement Proceeds
Fund was appropriated in the Central Support Services line to cover these costs. An identical
appropriation also was included in the FY 2018-19 DEQ budget.

Department of Health and Human Services (DHHS)

The DHHS has used excess GF/GP revenue from the Departmental Administration and Management,
Health Policy Administration, and Medical Services Administration line items to cover costs related to
legal action for employees within the Department. In FY 2017-18, all contracts except for Baker
McKenzie EPA were paid using work project funds from FY 2015-16. Additionally, the Department has
entered into two interagency agreements with the Attorney General's office, totaling $9,600 in FY
2015-16, $147,000 in FY 2016-17, and $414,000 in FY 2017-18. The Department spent $623,000 on
legal defense costs and interagency agreements in FY 2015-16, $1.6 million in FY 2016-17, $4.4
million in FY 2017-18, and $21,000 so far in FY 2018-19. There were no funds specifically appropriated
to cover legal costs for the DHHS.

Department of Technology, Management, and Budget (DTMB)

The DTMB has spent funding (all GF/GP) from the Legal Services line item for legal defense costs
(including securing outside legal services) in cases involving the Governor or the Attorney General in
their official capacities. In FY 2015-16, the Department spent $2.7 million on legal defense costs. The
Department spent $3.2 million on legal defense costs in FY 2016-17. Finally, for FY 2017-18
expenditures total $1.5 million through June 30, 2018. All of the expenditures on legal costs for the
DTMB have been paid with GF/GP funds.

Department of Treasury

The Department of Treasury has spent all funding from the Supervision of the General Property Tax Law
line item using GF/GP revenue. The line item has the Office of Fiscal Responsibility, which is responsible
for Emergency Managers, including legal costs. In FY 2015-16, expenditures totaled $138,380 GF/GP.
Of that total, $28,540 went toward civil legal costs, $19,040 went toward criminal legal costs, and $90,800
was for the reimbursement of legal preparation and documents costs for Emergency Manager testimony
at a congressional committee. In FY 2016-17, expenditures totaled $138,469. Of that total, $114,148
went to civil legal costs and $24,321 went toward criminal legal costs.

In FY 2017-18, the Department of Treasury spent $46,467 GF/GP for legal costs. Of that amount,
$21,100 went to civil legal costs and $25,367 went towards criminal legal costs. In addition, the
Attorney General, Department of Treasury, DEQ, and DHHS entered into a memorandum of
understanding (MOU) to allocate responsibility for the payment of civil legal defense costs, which
included a number of contracts. Under the MOU, the Department of Treasury would pay the defense
costs, while the DEQ and the DHHS each would reimburse 40% of the costs. The contracts included
in the MOU include those for Rosalind Shoof, Robert Ferrari, Robin Cantor, David Schretlen, Robert
Rottersman, and the Attorney General for operational cost reimbursements. Additionally, the contract
to Paul Monicatti was the subject of another MOU between the Department of Treasury and the DEQ.
Under that agreement, the Department of Treasury would pay for the services, and the DEQ would
reimburse the Department for 50% of those costs.
 MEMORANDUM
October 16, 2018
Page 3

Conclusion

As noted above, Table 1 summarizes the Flint water emergency legal expenses by line item in each
department. Table 2 shows the same expenditure information from Table 1, but breaks it down by
contract for legal costs relating to the Flint Drinking Water Declaration of Emergency. The table breaks
down expenditures into three categories: contracts related to criminal cases, contracts related to civil
cases, and other. The other category includes funding that is being used to pay for legal costs, but is
not being paid directly to a law firm, a court, or the Attorney General. Total Gross expenditures for Flint
water emergency legal costs are estimated to be $8.5 million for FY 2015-16, $11.1 million for FY
2016-17, $10.5 million for FY 2017-18, and $21,000 thus far through October 16, 2018. The estimated
cumulative Gross total spent on Flint legal costs through October 16, 2018, is $30.1 million.

/mh

c: Senator Jim Ananich

Ellen Jeffries, Director
Bill Bowerman, Associate Director
Steve Angelotti, Associate Director
 Table 1: Flint Water Emergency Legal Expenditures
Department/Line Item FY 2015-16 FY 2016-17 FY 2017-18 FY 2018-19
Gross Federal Restricted GF/GP Gross Federal Restricted GF/GP Gross Federal Restricted GF/GP Gross Federal Restricted GF/GP
Attorney General
Attorney General Operations $2,719,463 $0 $2,315,959 $403,504 $2,908,362 $0 $2,600,000 $308,362 $1,988,710 $0 $1,749,829 $238,881 $0 $0 $0 $0
Legal Defense 0 0 0 0 528,221 0 0 528,221 273,183 0 0 273,183 0 0 0 0

DEQ
Administrative Hearings $0 $0 $0 $0 $135,980 $0 $135,980 $0 $0 $0 $0 $0 $0 $0 $0 $0
Central Support Services 0 0 0 0 50,744 0 50,744 0 1,101,252 0 1,101,252 0 0 0 0 0
Environmental Investigations 0 0 0 0 730,364 0 730,364 0 11,137 0 11,137 0 0 0 0 0
Environmental Support Projects 2,350,221 0 2,350,221 0 1,495,893 0 1,495,893 0 1,007,933 0 1,007,933 0 0 0 0 0
Executive Direction 0 0 0 0 173,925 0 173,925 0 76,075 0 76,075 0 0 0 0 0
Unclassified Salaries 0 0 0 0 207,544 0 207,544 0 7,817 0 7,817 0 0 0 0 0

DHHS
Departmental Administration and Management $550,622 $0 $0 $550,622 $1,260,989 $0 $0 $1,260,989 $2,858,036 $0 $0 $2,858,036 $20,946 $0 $0 $20,946
Health Policy Administration 30,792 0 0 30,792 0 0 0 0 0 0 0 0 0 0 0 0
Medical Services Administration 31,928 0 0 31,928 142,182 0 0 142,182 1,177,683 0 0 1,177,683 0 0 0 0
Inter-agency Agreement with AG's Office for Population Health 0 0 0 0 104,295 0 0 104,295 346,723 0 0 346,723 0 0 0 0
Inter-agency Agreement with AG's Office for Pastor litigation 9,581 0 0 9,581 42,995 0 0 42,995 67,347 0 0 67,347 0 0 0 0

DTMB
Legal Services $2,673,837 $0 $0 $2,673,837 $3,194,138 $0 $0 $3,194,138 $1,527,969 $0 $0 $1,527,969 $0 $0 $0 $0

Treasury
Supervision of the General Property Tax Law $138,380 $0 $0 $138,380 $138,469 $0 $0 $138,469 $46,467 $0 $0 $46,467 $0 $0 $0 $0
Total Expenditures $8,504,824 $0 $4,666,180 $3,838,644 $11,114,101 $0 $5,394,450 $5,719,651 $10,490,332 $0 $3,954,043 $6,536,289 $20,946 $0 $0 $20,946
Source: Attorney General; Department of Environmental Quality; Department of Health and Human Services; Department of Technology, Management, and Budget; Department of Treasury; compiled by Senate Fiscal Agency, October 15, 2018.
 Table 2: Flint Water Emergency Legal Expenditures
Department/Civil or Criminal/Legal Contractor FY 2015-16 FY 2016-17 FY 2017-18 FY 2018-19
Civil Gross Federal Restricted GF/GP Gross Federal Restricted GF/GP Gross Federal Restricted GF/GP Gross Federal Restricted GF/GP
DEQ
Burdick Law $0 $0 $0 $0 $0 $0 $0 $0 $66,540 $66,540 $0 $0 $0 $0 $0
Clark Hill $603,725 $0 $603,725 $0 $693,693 $0 $693,693 $0 494,679 0 494,679 0 0 0 0 0
Foster Swift 319,060 0 319,060 0 383,448 0 383,448 0 281,678 0 281,678 0 0 0 0 0
Frasier Trebilcock 192,007 0 192,007 0 296,524 0 296,524 0 246,082 0 246,082 0 0 0 0 0
Kotz Sangster Wysocki 592,051 0 592,051 0 473,266 0 473,266 0 244,089 0 244,089 0 0 0 0 0

DHHS
Baird & Zulakis PC $3,525 $0 $0 $3,525 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Baker & McKenzie EPA 0 0 0 0 0 0 0 0 156,007 0 0 156,007 0 0 0 0
Discovia 0 0 0 0 79,750 0 0 79,750 34,414 0 0 34,414 0 0 0 0
Dykema Gossett PLLC 30,792 0 0 30,792 0 0 0 0 0 0 0 0 0 0 0 0
Frank D. Eaman PLLC 9,050 0 0 9,050 0 0 0 0 6,467 0 0 6,467 0 0 0 0
George Brookover PC 11,263 0 0 11,263 29,294 0 0 29,294 7,641 0 0 7,641 0 0 0 0
Gurewitz & Raben PLC 21,410 0 0 21,410 27,580 0 0 27,580 85,626 0 0 85,626 0 0 0 0
Kalniz Iorio & Reardon 6,332 0 0 6,332 6,082 0 0 6,082 7,521 0 0 7,521 0 0 0 0
L. David Bush PC 7,476 0 0 7,476 21,851 0 0 21,851 21,630 0 0 21,630 0 0 0 0
Ldiscovery 157,551 0 0 157,551 101,530 0 0 101,530 117,564 0 0 117,564 0 0 0 0
McShane & Bowie PLC 40,098 0 0 40,098 35,311 0 0 35,311 89,337 0 0 89,337 0 0 0 0
Mika Meyers PLC 14,775 0 0 14,775 17,978 0 0 17,978 28,716 0 0 28,716 0 0 0 0
O'Keefe Law PLC 3,325 0 0 3,325 11,015 0 0 11,015 0 0 0 0 0 0 0 0
Reid PLLC OIG 0 0 0 0 13,113 0 0 13,113 0 0 0 0 0 0 0 0
Richard E. Zambon PLLC 42,478 0 0 42,478 38,319 0 0 38,319 14,388 0 0 14,388 0 0 0 0
Springstead Bartish & Borgula 16,820 0 0 16,820 15,920 0 0 15,920 10,990 0 0 10,990 0 0 0 0
Varnum LLP 73,007 0 0 73,007 170,261 0 0 170,261 911,014 0 0 911,014 0 0 0 0

Treasury
Attorney General $0 $0 $0 $0 $7,273 $0 $0 $7,273 $0 $0 $0 $0 $0 $0 $0 $0
David Schretlen 0 0 0 0 0 0 0 0 5,711 0 0 5,711 0 0 0 0
Hanson/Renaissance Court Reporters 423 0 0 423 0 0 0 0 0 0 0 0 0 0 0 0
Heckaman & Nardone Inc. 1,006 0 0 1,006 0 0 0 0 0 0 0 0 0 0 0 0
Network Reporting Corp 3,504 0 0 3,504 0 0 0 0 0 0 0 0 0 0 0 0
Paul Monicatti 0 0 0 0 21,400 0 0 21,400 0 0 0 0 0 0 0 0
Record Copy Services 0 0 0 0 50 0 0 50 0 0 0 0 0 0 0 0
Rene Twedt 1,000 0 0 1,000 0 0 0 0 0 0 0 0 0 0 0 0
Ripka Boroski & Associates 967 0 0 967 0 0 0 0 0 0 0 0 0 0 0 0
Robert Ferrari 12,910 0 0 12,910 39,121 0 0 39,121 2,993 0 0 2,993 0 0 0 0
Robert Rottersman 0 0 0 0 0 0 0 0 3,169 0 0 3,169 0 0 0 0
Robin Cantor 0 0 0 0 615 0 0 615 65 0 0 65 0 0 0 0
Rosalind Schoof 8,729 0 0 8,729 45,690 0 0 45,690 9,162 0 0 9,162 0 0 0 0

Criminal Gross Federal Restricted GF/GP Gross Federal Restricted GF/GP Gross Federal Restricted GF/GP Gross Federal Restricted GF/GP
Attorney General
Investigations/Prosecutions (Flood Law) $2,291,100 $0 $2,291,100 $0 $2,600,000 $0 $2,600,000 $0 $1,749,829 $0 $1,749,829 $0 $0 $0 $0 $0
Agency Support Costs/Staff Attorney (paid from Dept. funds) 428,363 0 24,859 403,504 308,362 0 0 308,362 238,881 0 0 238,881 0 0 0 0
State Legal Defense (Costs paid by AG for defense costs) 0 0 0 0 528,221 0 0 528,221 273,183 0 0 273,183 0 0 0 0
 Table 2: Flint Water Emergency Legal Expenditures
Department/Civil or Criminal/Legal Contractor FY 2015-16 FY 2016-17 FY 2017-18 FY 2018-19
Criminal (continued) Gross Federal Restricted GF/GP Gross Federal Restricted GF/GP Gross Federal Restricted GF/GP Gross Federal Restricted GF/GP
DEQ
Burdick Law $46,208 $0 $46,208 $0 $170,786 $0 $170,786 $0 $42,420 $0 $42,420 $0 $0 $0 $0 $0
Clark Hill 205,426 0 205,426 0 356,224 0 356,224 0 7,631 0 7,631 0 0 0 0 0
Dykema 149,303 0 149,303 0 61,718 0 61,718 0 7,817 0 7,817 0 0 0 0 0
Foster Swift 108,346 0 108,346 0 127,025 0 127,025 0 236,790 0 236,790 0 0 0 0 0
Frasier Trebilcock 17,597 0 17,597 0 89,063 0 89,063 0 241,141 0 241,141 0 0 0 0 0
LaRene & Kriger 66,660 0 66,660 0 46,148 0 46,148 0 224,990 0 224,990 0 0 0 0 0
Nichols Law Firm 3,641 0 3,641 0 18,318 0 18,318 0 9,278 0 9,278 0 0 0 0 0
Smietanka, Buckleitner, Steffes & Gezon 46,197 0 46,197 0 78,237 0 78,237 0 101,079 0 101,079 0 0 0 0 0

DHHS
Alane & Chartier PLC $42,065 $0 $0 $42,065 $320,089 $0 $0 $320,089 $599,247 $0 $0 $599,247 $0 $0 $0 $0
Bursch Law PLLC 0 0 0 0 24,098 0 0 24,098 101,778 0 0 101,778 0 0 0 0
Cafferty & Associates 3,392 0 0 3,392 50,592 0 0 50,592 101,736 0 0 101,736 0 0 0 0
Pear Sperling Eggan & Daniels PLC 22,402 0 0 22,402 103,246 0 0 103,246 562,649 0 0 562,649 20,946 0 0 20,946
Smith Haughey Rice & Roegge PC 33,727 0 0 33,727 0 0 0 0 0 0 0 0 0 0 0 0
Willey & Chamberlain LLP 73,854 0 0 73,854 337,143 0 0 337,143 1,177,683 0 0 1,177,683 0 0 0 0

DTMB
Barris Sott Dean & Driker $652,910 $0 $0 $652,910 $688,639 $0 $0 $688,639 $406,261 $0 $0 $406,261 $0 $0 $0 $0
Dickinson Wright 0 0 0 0 103,456 0 0 103,456 177,397 0 0 177,397 0 0 0 0
John A Shea 0 0 0 0 24,588 0 0 24,588 0 0 0 0 0 0 0 0
Michael Joseph Dunn 0 0 0 0 0 0 0 0 63,198 0 0 63,198 0 0 0 0
Dykema Gossett 0 0 0 0 0 0 0 0 552 0 0 552 0 0 0 0
Natural Resource Defense 0 0 0 0 895,000 0 0 895,000 0 0 0 0 0 0 0 0
Randall S Levine 0 0 0 0 89,813 0 0 89,813 46,576 0 0 46,576 0 0 0 0
Warner Norcross & Judd 2,020,927 0 0 2,020,927 1,371,929 0 0 1,371,929 544,100 0 0 544,100 0 0 0 0
L Discovery 0 0 0 0 20,713 0 0 20,713 289,885 0 0 289,885 0 0 0 0

Treasury
Dykema Law Firm $19,040 $0 $0 $19,040 $24,321 $0 $0 $24,321 $ 25,367 $0 $0 $ 25,367 $0 $0 $0 $0

Other Gross Federal Restricted GF/GP Gross Federal Restricted GF/GP Gross Federal Restricted GF/GP Gross Federal Restricted GF/GP
DHHS
Inter-agency Agreement with AG's Office for Population Health $0 $0 $0 $0 $104,295 $0 $0 $104,295 $346,723 $0 $0 $346,723 $0 $0 $0 $0
Inter-agency Agreement with AG's Office for Pastor litigation 9,581 0 0 9,581 42,995 0 0 42,995 67,347 0 0 67,347 0 0 0 0
William Morris 0 0 0 0 0 0 0 0 1,313 0 0 1,313 0 0 0 0

Treasury
Reimbursement to City of Flint $90,800 $0 $0 $90,800 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Expenditures $8,504,824 $0 $4,666,180 $3,838,644 $11,114,101 $0 $ 5,394,450 $ 5,719,651 $10,490,332 $0 $3,954,043 $6,536,289 $20,946 $0 $0 $20,946
Source: Attorney General; Department of Environmental Quality; Department of Health and Human Services; Department of Technology, Management, and Budget; Department of Treasury; compiled by Senate Fiscal Agency, October 15, 2018.