City not alone in water
councils trying to buy back public rights
Charleston Mayor Jay Goldman might have
spoiled the holiday season for Chris Jarrett, president
of West Virginia-American Water Co., when he announced
plans to explore a possible city buyout of the company’s
local water plant this week.
But in national terms, Goldman was not
breaking any new ground with his proposal. Folks in Peoria,
Ill., have been exploring the same idea for more than
a decade and lately have won some court victories. Buyback
negotiations are expected to start soon.
Ten miles away, people in Pekin, Ill.,
are trying to buy their water system through eminent domain.
In Lexington, Ky., the mayor and several
City Council members who favor the purchase of their city’s
water system won election last month, according to a lawyer
for the citizens group Bluegrass For Local Ownership of
"This is a movement now, like Arlo
Guthrie used to say," said Lexington lawyer Foster
Ockerman Jr., referring to Guthrie’s song "Alice’s
Indeed. In the face of a worldwide movement
to privatize water systems, there is another, perhaps
less publicized effort to put private water systems back
into public ownership and to keep public water systems
out of private hands.
For example, the New Orleans Water and
Sewerage Board in October rejected the country’s largest
municipal water-privatization proposal. A coalition of
churches, senior-citizen groups and environmentalists
opposed the sale sought by subsidiaries of French companies
Suez and Vivendi Universal.
The Charleston, Lexington, Peoria and
Pekin cases differ in their details, but they share a
common target: American Water Works. In each case, American
Water Works subsidiaries own the local water systems.
In Illinois, the cities of Peoria and Pekin are battling
Illinois-American Water Co.; in Kentucky, Lexington is
squaring off against Kentucky-American Water Co.; in the
Mountain State, the corporate owner is West Virginia-American
Jarrett already has indicated that a court
fight might be brewing in Charleston. In other states,
American Water Works affiliates have aggressively fought
The company reportedly spent $6 million
in 1998 alone fighting takeover attempts in Peoria and
in Chattanooga, Tenn., according to an October 2001 report
by Alex Tsybine of Public Citizen, the Washington nonprofit
research group founded by Ralph Nader.
Terry Kohlbuss, executive director of
the Tri-County Regional Planning Commission in Illinois,
said the Peoria battle began around 1990, when a new city
manager wondered why the city’s water system was in private
Kohlbuss, then a private consultant, was
part of a group that found a repurchase-option clause
in the city’s 1889 franchise agreement with the water
company. Despite an advisory public referendum called
for by Illinois-American Water in 1994 that was overwhelmingly
against a buyout, sentiment for the effort grew during
the late 1990s, he said.
By 1998, the city served notice on the
water company that it was invoking the repurchase option.
The water company immediately filed suit, Kohlbuss said,
but lost in circuit court and on appeal to appellate court.
The state Supreme Court decided a few weeks ago not to
hear an appeal of the lower court ruling, which allows
the city to proceed with the buyout.
"We are now in the process of scheduling
a first meeting to see if we can negotiate a purchase
price," he said.
In Lexington, the citizens group Bluegrass
FLOW was organized in early 2002 in reaction to the proposed
sale of Kentucky-American Water and its parent, American
Water Works, to the German firm RWE.
Lexington officials might have to go through
condemnation proceedings to buy their water system, said
Ockerman, the lawyer for Bluegrass FLOW.
"The city has hired a condemnation
counsel," he said.
A city-financed consultant’s study of
the proposed buyout is due in late February or early March,
"We’re going into the new council
in January with strong sentiment in favor of purchase,"
Ockerman said. "I feel strongly that Lexington will
make an offer in the spring."