EOWC settles seven-year legal dispute with Newark

Mayor Ras Baraka recently announced a $5.6 million settlement and new sewage transportation bargain that ended a seven-year lawsuit by Newark against the East Orange Water Commission.

EAST ORANGE, NJ — East Orange Mayor Ted Green and East Orange Water Commission Executive Director Chris Coke recently closed the tap on a longstanding legal dispute with Newark by agreeing to pay a $5.6 million settlement and striking a new sewage deal.

As the case was highly technical, the New Jersey Superior Court appointed a special master — a court-appointed attorney with expertise in the subject matter — to help resolve the issue without lengthy, expensive in-court litigation. The settlement agreement and sewer agreement were approved by the Newark Municipal Council on Wednesday, Aug. 8.

Both agreements had been previously approved, in substance, by the East Orange Board of Water Commissioners at its June meeting. On Friday, Aug. 10, Newark Mayor Ras Baraka announced the $5.6 million settlement and new sewage transportation bargain that ended a seven-year lawsuit by Newark against the East Orange Water Commission.

According to Baraka, the two-part deal resolved the dispute between East Orange and Newark regarding outstanding sewer payments and ended 99 years of Newark incurring all costs associated with transporting East Orange’s sewage through its wastewater system to the Passaic Valley Sewerage Commissioners’ sewage treatment facility in Newark. From now on, East Orange will pay an agreed-upon fee.

“This is a great victory for the taxpayers of the city of Newark,” said Baraka on Friday, Aug. 10. “Since 1919, our residents have borne the costs associated with transmitting East Orange’s wastewater sewage, and maintaining and repairing the pipes whose purpose is to move sewage from East Orange to the Passaic Valley Sewerage Commission’s treatment plant. I am glad that the legal teams of both great municipalities have been able to resolve this matter after so long.”

Green echoed Baraka’s sentiments.

“The East Orange Board of Water Commissioners has closed yet another chapter in its efforts to rebuild our valuable Water Department and to restore the faith of our customers,” said Green on Wednesday, Aug. 22. “We’ve had to make some tough choices to correct past wrongs; however, the settlement and agreement we recently made with the city of Newark was in the best interest of our utility and our constituents. We appreciate Newark’s cooperation in striking an agreement that is fair to both of our municipalities and represents the best of municipal cooperation.”

The new sewer agreement replaces the 99-year-old 1919 Sewer Agreement between the two municipalities, through which Newark only billed East Orange based on the flow of East Orange’s wastewater through Newark’s wastewater system of pipes to the Passaic Valley Sewerage Commission for treatment. Newark did not charge for the costs associated with the maintenance and repair of the interconnection of these pipes to the Passaic Valley Sewerage Commission.

Between 1919 and 2008, East Orange paid Newark 8.658 percent of the cost of Newark’s total sewage flow, to account for its share. Sometime around 2008, Newark learned it was being underpaid and not receiving full payments, in accordance with the agreed-upon rate.

East Orange’s failure to pay its fees according to the agreed rate was one reason Newark filed suit in 2011. The claims concerning outstanding sewer payments were part of a larger lawsuit; the other claims in the lawsuit, concerning water issues, were resolved in 2013.

Only the issues concerning the outstanding sewer payments remained unresolved, until Newark and East Orange reached an agreement. According to the terms of the settlement, the East Orange Board of Water Commissioners will pay Newark $5.6 million to resolve the issue of outstanding sewage payments.

According to the agreement, Newark will also bill East Orange a “wheeling fee,” analogous to the fee one electrical power company will charge another to share the use of its power lines. According to the Independent Energy Producers Association website, www.iepa.com, “wheeling allows utility areas with too much supply to transmit excess power to other utilities with too much demand.”

According to Newark officials, the East Orange Board of Water Commissioners is also entering into an agreement with the Passaic Valley Sewerage Commission, wherein East Orange will become a direct bill customer with the commission. Newark is not a part of the agreement between East Orange and the Passaic Valley Sewerage Commission.