STOCKTON, Calif. - A Superior Court judge has tossed out a landmark contract that privatized Stockton's water operations, calling the City Council's approval of the $600 million agreement "an abuse of discretion."
Judge Bob McNatt ruled that the city should have considered the environmental impacts of handing control of its water, wastewater and stormwater systems to OMI-Thames Water before approving the deal.
The city had argued that the 20-year deal was legally exempt from an environmental review.
"It may well be that OMI-Thames can provide excellent service at a cost lower than municipal government," McNatt wrote in his ruling earlier this week.
"However, in order to allow the public and government to reasonably evaluate these possibilities, more environmental review of this issue is necessary than a simple declaration of exemption."
The ruling throws into question the current and future operation of Stockton's municipal utilities. OMI-Thames assumed operations of the waterworks systems this summer, and approximately 85 city workers became employees of the private company.
OMI-Thames also had taken the first steps toward a $57 million upgrade of the city's troubled wastewater plant.
With the contract deemed invalid, the city also may now have to seek voter approval of any new deals.
Stockton voters in March approved an initiative giving them the right to vote on any utilities privatization contract. But the vote came two weeks after the City Council approved the agreement with OMI- Thames.
The city has the right to appeal the decision.
The ruling is a victory for the Concerned Citizens Coalition of Stockton, the Sierra Club and the League of Women Voters, the three groups that sued the city.
"They'll have to go back now and do the environmental review that they should have done," said Brian Johnson, an attorney for Concerned Citizens.
What will really happen through the "relief"
Judge Bob McNatt will issue the final order requiring Stockton's City Council to
rescind its February approval of the contract. The city could then appeal to the Third
District Court in Sacramento. City attorneys could seek a stay, or temporary reprieve,
from McNatt's order until the appeals court hears the case.