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WATER

Water Privatization in New Brunswick, NJ


Fact Sheet August 2015

n 2014, New Brunswick privatized the management of its water system to American Water Operations
and Maintenance, Inc. (AWO&M),1 a wholly owned subsidiary of American Water Works Company,
Inc. (American Water).2 American Water is the largest domestic water utility company.3 By targeting
struggling municipal water systems for takeover, American Water seeks to purchase, lease or manage
water and sewer services particularly ones adjacent to its existing network to secure profit.4
With high costs and water quality violations, privatization has failed New Brunswick. The city needs
responsible public management and operation to best serve its residents.

The Privatization Movement


in New Brunswick
New Brunswick hired a private manager for its public water
utility after its water utility director Frank Marascia and its
water plant superintendent both left unexpectedly to work
for other firms.5 The city had hired Marascia less than two
years prior to clean up pre-existing problems at the treatment
plant,6 but shortly after receiving a top award from a trade
association,7 Marascia was offered and accepted a position at
American Water.8
Within a month after leaving his city job, Marascia returned
to the New Brunswick water utility as a plant operator and
short-term director under a memorandum of understanding
that the city entered into with American Water.9 Under this
temporary arrangement, the city reportedly paid $38,000
more per month for him and his new American Water colleagues than when the plant was fully staffed with its own
employees.10 The city contended that the plan would simply
help ensure a seamless short-term solution to the staffing
shortage.11
In September 2014, New Brunswick extended the arrangement
and signed a year-long contract to have AWO&M operate and
manage its water facilities.12 The utility has since experienced
various problems including operational malfunctions and
improper or insufficient water treatment.

Water Treatment Technique


Failures and Violations
Under supervision of AWO&M, New Brunswicks water treatment plant violated water quality regulations by failing to

properly treat the water 11 times.13 While the public notification indicated that the violations occurred because of monitoring errors by the contracted plant operator,14 it is possible that
the treatment failure occurred partly because of a management model focused on the bottom line.
In 2014, certain disinfection by-products (DBPs) total
trihalomethanes, which include possible carcinogens,15 and
haloacetic acids, which are linked to liver tumors in mice16
were at their maximum contaminant levels.17 From 2013
to 2014, their levels increased by 11 percent and 99 percent,
respectively.18 These contaminants form when chlorine, which
is used to treat drinking water and kill disease-causing organisms, interacts with organic matter in the water.19 The longer
that water is in contact with a disinfectant, the more likely
DBPs will form.20
Reducing the chlorine contact time is one approach that
utilities can use to reduce DBPs to permissible levels, but
although this method is cheap,21 utilities should not jeopardize public health by failing to properly treat water to remove
pathogens.22 Indeed, removing organic matter from the water
supply prior to treatment is the best way to prevent DBP from
forming and contaminating drinking water.23
The water utility may have chosen a lower-cost, riskier approach to the disinfection-DBP dilemma that treatment
facilities face. Under supervision of AWO&M, the treatment
plant failed to meet the minimum chlorine contact time for
water disinfection set by the New Jersey Department of Environmental Protection 10 times in December 2014 and once
in January 2015.24 When chlorine contact times are too low,
water can contain disease-causing organisms known to cause
nausea, cramps, diarrhea and associated headaches.25 The

utility then failed to provide public notice within the 30-day


time frame as required by federal law.26 In fact, the public
notice was not released until April 17, more than three months
after the city learned that the violations had occurred.27

Higher Costs and Rate Increases


In 2015, New Brunswick increased its water rates by 5 percent,28 generating an additional $477,000 for the year.29 Most
of the additional revenue will fund capital improvement projects, with $1 million of improvements budgeted for the water
facilities over the course of the year.30 Some of the revenue,
however, may have been necessary to cover the higher cost
of private management. The contract cost the city an extra
$360,000 over the one-year term a 71 percent increase over
the cost of public operation.31

According to the contract, the city will pay the company at


least $867,880 for the year.32 The monthly fee for this arrangement can be increased to cover certain additional costs that
may arise, such as emergency call-outs.33 The contract also
contains language that entitles AWO&M to additional payment from the city for preparing and submitting documentation in the case of certain litigation.34

Ways Forward
New Brunswicks contract with American Water has failed to
live up to expectations. It was not a seamless solution. Water
quality violations and high costs marred the deal. The city
should sever and not renew its management contract with
American Water when it ends in September 2015.

Endnotes

18

19

WHO, 2000 at 1 to 2.



UHODQG(QYLURQPHQWDO3URWHFWLRQ$JHQF\2FHRI(QYLURQPHQWDO
Enforcement. EPA Drinking Water Guidance on Disinfection ByProducts: Disinfection By-Products in Drinking Water. Advice Note
No. 4. Version 2. 2012 at 8.

21

Water Research Foundation. Guidance on Complying with Stage 2 D/


DBP Regulation. 2013 at 23 and 84.

22

WHO. Guidelines for drinking-water quality, fourth edition. 2011 at 173;


Ireland Environmental Protection Agency, 2012 at 14; WHO, 2000 at 13.

23

WHO. Chemical Safety of Drinking Water: Assessing Priorities For Risk


Management. 2007 at 76.

New Brunswick (NJ). [Press release]. City administration proposes


12-month agreement with American Water. September 15, 2014;
Operations Support and Management Services Agreement between
American Water Operations and Maintenance, Inc. and City of New
Brunswick, New Jersey. September 17, 2014.
American Water Works Company, Inc. U.S. Securities and Exchange Commission. Form 10-K. Fiscal year ending December 31, 2014 at Exhibit 21.1.

Ibid. at 2.

For more information, see Food & Water Watch. American Water: A
&RUSRUDWH3UROH1RYHPEHUDW

New Brunswick (NJ). [Press release]. An update regarding the New


Brunswick water utility. July 16, 2014.

New Brunswick (NJ). [Press release]. Information on the Citys water


department and corrective measures that have been implemented.
December 10, 2013; New Brunswick (NJ). [Press release]. City water
GLUHFWRUKRQRUHG0DUFK0DNLQ%RE6WDVKRUWDJHKXUWV
New Brunswick Water Utility. myCentralJersey.com. July 8, 2014.



$PDUDO%ULDQ$IWHUZDWHUTXDOLW\DSKHDGRI1HZ%UXQVZLFNVZDter utility wins top award. NJ.com. April 1, 2014; New Brunswick (NJ),
March 31, 2014.

Marascia, Frank. Letter of resignation. To Thomas Loughlin. May 27,


2014; New Brunswick (NJ), July 16, 2014.

Tompeck, Mark A. Hatch Mott MacDonald. City of New Brunswick


Interim Water Treatment Plant Operations License Operator. July 2,
2014; New Brunswick (NJ), July 16, 2014.

10

New Brunswick (NJ), July 16, 2014.

11

New Brunswick (NJ). [Press release]. A Letter to New Brunswick Residents Regarding the New Brunswick Water Utility. July 7, 2014.

12

Operations Support and Management Services Agreement between


American Water Operations and Maintenance, Inc. and City of New
Brunswick, New Jersey- Draft. City of New Brunswick, New Jersey.
September 17, 2014; New Brunswick (NJ), September 15, 2014.

13

Ibid.; New Brunswick Water Utility. Water Quality Report 2013:


PWSID#NJ1214001-New Brunswick, New Jersey. 2014 at 3.

24

New Brunswick (NJ), April 17, 2015.

25

Ibid.

26

Ibid86(QYLURQPHQWDO3URWHFWLRQ$JHQF\5HYLVHG3XEOLF1RWLFDtion Handbook. (EPA 816-R-09-013). March 2010 at 6 and 79.

27

New Brunswick (NJ), April 17, 2015.

28

Food & Water Watch calculation based on New Brunswick (NJ). Ordinance O-121407. December 17, 2014.

29

New Brunswick (NJ). 2015 Municipal Budget as Introduced. March 18,


2015 at 31.

30

Ibid. at 40c.

31

Food & Water Watch calculation based on New Brunswick (NJ), July
16, 2014; Operations Support and Management Services Agreement
between American Water Operations and Maintenance, Inc. and City
of New Brunswick, New Jersey. September 17, 2014 at Schedule D.

32

Operations Support and Management Services Agreement between


American Water Operations and Maintenance, Inc. and City of New
Brunswick, New Jersey. September 17, 2014 at Schedule D.

33

Ibid. at 5.1, Schedule B and Schedule D.

34

Ibid. at 11.6.

New Brunswick (NJ). [Public Notice]. Notice of Surface Water Treatment Technique Violation (Daily). April 17, 2015.

14

Ibid.

15

World Health Organization (WHO). Water Sanitation Health Program.


Summary Statement, Trihalomethanes (bromoform, bromodichloromethane, dibromochloromethane, chloroform). 2004 at 3.

16

WHO. Environmental Health Criteria 216: Disinfectants and DisinfecWDQW%\3URGXFWVDW7DR/HWDO(HFWRIGLFKORURDFHWLFDFLG


and trichloroacetic acid on DNA methylation in liver and tumors of
female B6C3F1 mice. PubMed MPID 9710955. Toxicology Science. Vol.
43, No. 2. June 1998 at 139-144.

For more information:


web: foodandwaterwatch.org
email: info@fwwatch.org
phone: (202) 683-2500 (DC) (732) 839-0860 (NJ)

17

New Brunswick Water Utility. Water Quality Report 2014: PWSID#


NJ1214001- New Brunswick, New Jersey. 2015 at 3.

Copyright August 2015 Food & Water Watch