WATER

Has Water Privatization Gone

Too Far in New Jersey?
Fact Sheet • September 2010

N ew Jersey has a long history with water privatization — one marred with
failure and disappointment. The state serves as headquarters for two of the
largest water companies in the country: American Water, based in Voorhees,
and United Water, based in Harrington Park.1 Perhaps partly because of this
corporate presence, the state has adopted several laws that facilitate private
takeovers of municipal water and sewer systems,2 and American Water considers
New Jersey among the friendliest states for privatization.3

But plans to auction off sewers, outsource treatment plants the city millions of dollars and potentially jeopardized the
and otherwise privatize water utilities are irresponsible and health and safety of its residents. The utility lost and could
can have lasting consequences for New Jersey residents. not account for nearly half (45 percent) of its water from
Consumers across the state have reported unsatisfac- 2004 to 2008 because of leaks and other errors, and the
tory service and high rates when private entities run their company was not properly maintaining water tanks, wells,
systems. Their experiences show how the public loses out fire hydrants and other equipment.8
after private interests take over water resources.
Watershed destruction in Bergen County. During the
1980s, United Water transferred hundreds of acres of land,
New Jersey’s Experiences with Water originally acquired to protect the water supply in Bergen
Privatization County, to its real estate development subsidiary.9 This
Higher water prices. New Jersey residents pay higher rates prompted passage of the state’s Watershed Protection Act
when private companies operate water systems. On aver- of 1988. Nearly two decades later, after a state investiga-
age, privately run systems charge 64 percent more than tion into the company’s land deals made since the passage
municipal ones charge for the same amount of water. That
means that a typical New Jersey household pays an extra
New Jersey Water Bill Comparison
$153 a year if their water services are privatized.4
Average Annual Water Bill for a Household Using 5,000
Gallons a Month
Childhood cancer in Toms River. In 2001, a massive six-
year federal and state investigation found an association $400
$392.82
between certain types of childhood cancer in Toms River $350
and contaminated drinking water served by United Water
Toms River.5 The water company and two chemical com- $300
panies made multimillion-dollar payments to families of $250
$239.52
children with cancer to settle the $800 million claims of
wrongful death and personal injury.6 Several years later, in $200
2006, the state fined the company $64,000 for failing to $150
notify the public about radionuclide contamination. It also
$100
found that the company’s operators manipulated drinking
water tests to conceal possible quality violations.7 $50
0
Millions wasted in Camden. A 2009 state audit found that Publicly Run Privately Run
Camden’s privatization contract with United Water cost Systems Systems
of the act, then-New Jersey Commissioner of Environmen-
tal Protection Lisa Jackson — who now heads the U.S. En-
vironmental Protection Agency — said that United Water
likely broke this law.10 As a result, in 2009 the company
settled with Bergen Save the Watershed Action Network
and Hackensack Riverkeeper agreeing to preserve more
than 3,000 acres along its reservoirs to redress 165 viola-
tions of the Watershed Protection Act.11
David slays goliath in Trenton. Trenton residents rebuffed
a plan to sell part of their water system to New Jersey
American Water. The company had waged an aggressive
campaign to sway residents to support the sale, spending
in excess of a million dollars ($1,047,467) in the process.
That’s more than 32 times the amount ($32,000) raised by
Stop the Sale, the local anti-sale group aided by Food &
Water Watch. But the company’s efforts weren’t enough.
In June 2010 voters crushed the proposal, rejecting it by a
margin of nearly 4-to-1.12
The public almost didn’t get a chance to weigh in on the
future of their water works. Trenton officials, led by then-
Mayor Douglas Palmer and backed by New Jersey Ameri-
can Water, fought the efforts of a group of residents who
petitioned to bring the issue to a public vote. The residents
persevered through a year-long legal battle, taking their
case all the way to the state Supreme Court where the jus-
tices ruled in their favor.13
Preserving local control in Newark. In August 2010, the
Newark City Council killed the mayor’s plan to restructure
the city’s water and sewer utilities as an independent au-
thority. The council’s unanimous vote was a direct response
to ardent public opposition to the proposal, which commu-
nity members feared would have sacrificed local control
over the water system. The idea to create a municipal utili-
ties authority keeps resurfacing in Newark, and each time,
public resistance stops it in its tracks.14
Renew New Jersey’s Water
Privately run water utilities have a bad track record in New
Jersey. From Bergen County to Camden, consumers across
the state have experienced problems when private com-
panies run their water systems. Instead of turning valuable
water resources over to private interests, New Jersey needs
responsible public management to safeguard its valuable
water assets. With strong local oversight, public operation
can often improve services and offer better environmental
outcomes — all at a lower cost.
A dedicated source of federal funding for water infrastruc-
ture can support these public operators as they renovate
their aging systems and make the improvements necessary
to protect human and environmental health. Accountable
public governance and a renewed federal commitment to
our nation’s water resources will help ensure that every New
Jersey resident has safe, clean and affordable water service.
Endnotes
1 American Water Works Company, Inc. U.S. Securities and Exchange
Commission. Form 10-K. March 1, 2010 at 1 and 3; Suez Environnement
Company. Autorite Des Marches Financiers. 2009 Reference Document.
April 12, 2010 at 89, 90 and 335.
2 West, Teno A. Pannone Lopes Devereaux & West LLC. “State laws advanta-
geous to P3 projects.” Presented at NCPPP Annual Meeting, Phoenix,
Arizona. November 20, 2009 at 8.
3 Patterson, Bill. Senior Vice President. American Water. “Corporate and Busi-
ness Development.” Presented at Investor Conference. December 7, 2009 at
73 to 74.
4 Rates of New Jersey’s very large community water systems, excluding the
New Jersey District Water Supply Commission. Data sources: U.S. Environ-
mental Protection Agency. Safe Drinking Water Information System-Federal.
Public Water System Inventory. July 2009; Utility rate schedules for Altantic
City MUA, Jersey City MUA, Middlesex Water Company, New Jersey Ameri-
can Water, Newark Water Department, Passaic Valley Water Commission,
Trenton Water Works and United Water, current as of April 30, 2010, on file
with Food & Water Watch.
5 New Jersey Department of Health and Senior Services, Environmental and
Occupational Health, Division of Epidemiology and U.S. Department of
Health and Human Services, Agency for Toxic Substances and Disease
Registry. “Volume 1: Summary of the Final Technical Report.” Case-control
Study of Childhood Cancers in Dover Township (Ocean County), New
Jersey. January 2003 at 6,10 and 11; MacPherson, Kitta. “Toms River cancer
tied to pollutants.” The Star-Ledger. December 19, 2001.
6 Hill, Walton. United Water. “Risk and reality. United Water Toms River.”
National Association of Regulatory Utility Commissioners, Water Commit-
tee. February 20, 2007 at 5 and 6; Peterson, Iver. “Firms settle with parents
of ill children.” The New York Times. December 14, 2001; Avril, Tom.
“Toms River, N.J., children get $13 million in water-pollutant deal.” The
Philadelphia Inquirer. January 23, 2002; Williams, Cuker & Berezofsky et al.
[Press Release]. “Settlement reached in claims regarding childhood cancer
concerns in Toms River, New Jersey.” December 13, 2001; “Consent order
settles lawsuits filed over Superfund site.” The Associated Press. August
6, 2002; Alaya, Ana M. “Toms River families press fight.” The Star-Ledger.
December 18, 2002.
7 State of New Jersey Department of Environmental Protection. [Press re-
lease]. “DEP fines water systems, licensed operators for fraudulent monitor-
ing and reporting.” May 10, 2006.
8 Office of the State Comptroller, State of New Jersey. [Press release]. “State
Comptroller finds Camden’s mismanagement of water contract cost taxpay-
ers millions.” December 16, 2009; Boxer, A. Matthew. Office of the State
Comptroller, State of New Jersey. “A Performance Audit of the Management
Services Agreement for the City of Camden’s Water and Wastewater Collec-
tion Systems.” (PA-06). December 16, 2009 at 5, 6, 12 to 17.
9 United Water Resources. [Press release]. “Hackensack Water gets OK from
New Jersey Board of Public Utilities to transfer ownership of land to Riv-
ervale Realty.” November 1, 1984; Stokes, Stephanie. “At a watershed – a
drain on United Water protesters continue fight over land sale.” The Record.
May 12, 1992; Spencer, Louisa C. “A vote for legislation to save Bergen
County’s watershed.” The Record. April 24, 1991.
10 Nussbaum, Alex. “Did N.J. supplier endanger our water?” The Record.
February 9, 2007.
11 Hackensack Riverkeeper. [Press Release]. “Bergen SWAN and Hackensack
Riverkeeper combine forces, secure protection of 3,300 acres in Upper
Hackensack River Watershed.” April 14, 2009; Fallon, Scott. “3,100 water-
shed acres spared.” The Record. March 28, 2009.
12 The Committee for Trenton Yes. New Jersey Election Law Enforcement Com-
mission. Form R-1. July 6, 2010; Stop the Sale. New Jersey Election Law
Enforcement Commission. Form R-1. July 6, 2010; Parker, L.A. “American
Water begins campaigning for water deal referendum.” The Trentonion.
April 29, 2010; Rinde, Meir. “Backers of water sale swimming in funds.”
The Times of Trenton. May 27, 2010; Mercer County Clerk. June 15, 2010
Election Information. June 24, 2010.
13 In Re Petition for Referendum on City of Trenton ordinance 09-02, Supreme
Court of New Jersey, (A-70). April 6, 2010 at 1, 26; Rinde, Meir. “High court
will hear Water Works appeal.” The Times of Trenton. February 12, 2010;
Duffy, Erin. “Tide turn: Court blocks water utility sale.” The Times of Trenton.
April 7, 2010.
14 Giambusso, David. “Newark City Council tables Mayor Cory Booker’s MUA
proposal.” The Star-Ledger. August 4, 2010; Giambusso, David. “Newark
Mayor Cory Booker meets public resistance over municipal utilities author-
ity.” The Star-Ledger. August 1, 2010; Ortega, Ralph R. “Cory Booker ditches
proposal for water authority.” The Star-Ledger. May 31, 2009.
For more information:
web: www.foodandwaterwatch.org
email: info@fwwatch.org
phone: (202) 683-2500 (DC) • (202) 683-4925 (NJ)
Copyright © September 2010 Food & Water Watch