California judge voids
OMI-Thames Stockton
design-build contract

Joint venture ordered to wind-down project

Dec. 6, 2003

A San Joaquin County judge, today, rescinded the $600 million water privatization contract that OMI-Thames have been performing for Stockton, CA since August.

The contract, the largest of its kind in the western United States, would transfer the costs of upgrading the city's aging sewer pipes and treatment plants to OMI-Thames Water, a joint venture of American and British firms.

But three groups -- the Concerned Citizens Coalition, the Sierra Club, and the League of Women Voters' -- sued the city in March, arguing that city leaders should have paid more attention to the 20-year contract's environmental impacts before signing it.

"The city proceeded recklessly, knowing that they were in violation of (state environmental laws)," said Diane Park, policy director for the League of Women Voters' San Joaquin County Chapter.

The judge gave Stockton leaders six months to "wind down the relationship" that started Aug. 1, when the city hired OMI-Thames to operate its water, wastewater, and storm water systems.

City officials expect that private operation of its water utilities would save the city $100 million over the next 20 years. It is not clear, from the judges ruling, if his decision affects the 20 year operations contract or just the design- build sub-contract. 

The city and OMI-Thames may still appeal the decision to a court of appeal in Sacramento.

If the ruling stands, Stockton voters will have to approve any new contract.

City voters approved an initiative in March giving them the final say on any deal worth more than $5 million.