Newark, NJ – August 10, 2018 – Mayor Ras J. Baraka announced today that the City of Newark has reached a settlement with the East Orange Board of Water Commissioners that will end a seven-year lawsuit by the City against the Commission. The litigation was resolved by entering into two agreements: a settlement agreement which results in Newark receiving $5.6 million for outstanding sewage payments and a new sewer agreement which imposes a “Wheeling Fee” upon East Orange and to bill that city for future such service.
The new sewer agreement replaces the 99-year-old 1919 Sewer Agreement between the two municipalities, under which Newark only billed East Orange based upon the flow of East Orange’s wastewater through Newark’s wastewater system of pipes to PVSC for treatment. Newark did not charge for the costs associated with the maintenance and repair of the interconnection of these pipes to PVSC.
“This is a great victory for the taxpayers of the City of Newark,” Mayor Baraka said. “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 Sewage 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.”
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. Newark later learned that sometime around 2008, Newark 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 of the reasons Newark filed the instant action 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.
Under the terms of the settlement agreement, the East Orange Board of Water Commissioners will pay Newark $5.6 million to resolve the issue of outstanding sewage payments.
Under the terms of the sewage agreement, Newark will, among other things, bill East Orange a “Wheeling Fee.”
Contemporaneous with, and as part of, the new sewer agreement, the East Orange Board of Water Commissioners will enter into an agreement with the Passaic Valley Sewerage Commission wherein East Orange will become a Direct Bill customer with PVSC. Newark is not a part of the agreement between East Orange and PVSC.
As the case was highly technical, the Superior Court appointed a Special Master, a court-appointed attorney with expertise in the subject matter, to help both parties resolve the issue without lengthy and expensive in-court litigation.
The settlement agreement and sewer agreement were approved by the Newark Municipal Council on Wednesday. Both agreements were approved previously, in substance, by the East Orange Board of Water Commissioners at its June meeting.
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