Stockton Water Deal Runs Dry

In December, the largest water privatization deal on the West Coast was struck down when San Joaquin County Judge Robert McNatt ruled that the city of Stockton violated state environmental laws in its water contract with OMI-Thames, a joint US-British firm. The judge ruled that the agreement, which officially went into effect last August, is illegal, because it was awarded without a full environmental impact review. OMI-Thames was to receive $600 million over 20 years to maintain, upgrade, and operate Stockton’s formerly public water system.
“The Stockton privatization issue is going to be significant statewide and nationally,” says Stockton resident Dale Stocking, a lead critic of the privatization deal. “The pendulum is swinging back away from privatization, and I don’t think the companies are finding it quite as profitable as they thought it was going to be.”
According to Brian Johnson, lead attorney for the coalition that sued to block the deal, this case is among the first to require that a municipal district comply with the California Environmental Quality Act’s full environmental review process. The decision may reverberate far beyond Northern California, says Alex Hafini, an attorney with the Environmental Law Alliance Worldwide, a nonprofit that aims to get legal information to activists and public interest lawyers in developing nations.
“This case could mean that other countries could use their environmental impact laws to better scrutinize water privatization,” Hafini says. “This will plug environmental considerations into what tends to be a [strictly] cost-benefit analysis.”
Judge McNatt’s ruling requires the city to immediately begin severing ties with OMI-Thames and reconstituting the public water agency over the next six months. But the city council voted six to one on December 12 to pursue an appeal, and may seek to delay breaking ties with the private water company. The appeal must be filed 60 days after McNatt’s ruling is officially filed, likely in late January. Stockton Mayor Gary Podesto, a major proponent of privatization, did not return calls for comment.

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