The Department’s role is limited to the review of the municipal determination that one or more emergent conditions specified by WIPA exists. The Department will ensure the municipality demonstrates the pre-requisite process as part of the application for review and accept or reject the municipal determination based on the information submitted and available to the Department.

Emergent Condition #1 – the system is located in an Area of Critical Water Supply Concern I or II, or any future designation or newly added area of critical water supply concern;
Emergent Condition #2 – the owner of the system is a significant noncomplier, as defined pursuant to the Water Pollution Control Act, N.J.S.A. 58:10A-1 et seq., the system has been the subject of a formal enforcement action initiated by the Department or is substantially out of compliance with an administrative consent order, settlement agreement, or stipulation of settlement or judicial consent order entered into with the Department;
Emergent Condition #3 – there is a present deficiency or violation of maximum contaminant levels established pursuant to the Safe Drinking Water Act, N.J.S.A. 58:12A-1 et seq., concerning the availability or potability of water, or concerning the provision of water at adequate volume or pressure, or distribution or treatment of wastewater;
Emergent Condition #4 – there is a demonstrated lack of historical investment, repair, or sustainable maintenance as determined by the Department, or material damage to the infrastructure of the system; or
Emergent Conditions #5 – the system owner lacks the financial, technical, or managerial capacity to adequately address any of the foregoing on a sustainable basis or own and operate the system in a way that supports economic activity in the municipality on a sustainable basis.

WIPA defines “owner” as any municipality that owns water or wastewater assets, except a municipality that is a city of the first class with a population of 270,000 or more according to the latest federal decennial census. Municipalities constituting a joint meeting and the joint meeting itself are not considered an owner. Municipal utility and sewerage authorities are also not considered an owner.

Department staff will conduct a review of the Emergent Condition evaluation and any supporting documentation submitted by the municipal owner or available to the Department.

WIPA directs the Department to approve or reject the municipal determination within 30 days of receipt of the municipal resolution adopting the determination that one or more emergent conditions exist.

The Emergent Conditions refer to the water and/or wastewater system only. WIPA defines “system” as the “plants, structures, and other real and personal property of an owner that is, or is to be, acquired, constructed, or operated for the purpose of processing water or wastewater, including sewage, for distribution or treatment.”

The Department has developed a Guidance Document and a submission checklist which provide recommendations for information that supports a determination that a particular Emergent Condition exists. This supporting information will enable the Department to make an informed decision to accept or reject the municipal determination. If the Department finds that it cannot make a decision on the information provided, it will work with the owner, as needed, to acquire additional information.

Any information that the owner or its advisors considers to be evidence of the Emerging Condition may be considered by the Department during its review. Some examples of additional information that could be provided are annual reports provided to municipal leadership and ratepayers, newsletters and other communications to the community, municipal budgets and budget narratives, Consumer Confidence Reports, etc.

Toggle content goes here, click edit button to change this text.

Area of Critical Water Supply Concern (ACWSC) is defined in the Water Supply Management Act N.J.S.A 58:1A as “a region of the State where excessive water usage or diversion presents undue stress, or wherein conditions pose a significant threat to the long-term integrity of a water supply source, including a diminution of surface water due to excess groundwater diversion and is a mechanism for assuring the proper management of potable water (drinking water).” However, the Act does not specifically say that Emergent Condition #1 is met for drinking water systems. The Department will review, on a case by case basis, the supporting information provided and justification within the Emergent Condition evaluation whether the assets being located within the ACWSC demonstrates an emerging condition for the System or municipality.

The nature of the allocation is important to planning and decision-making associated with water supply. However, the Act only refers to the System being located within an ACWSC, not the nature of the water allocation. The Department will review all the supporting information provided by the owner justifying the Emergent Condition. The municipality may decide that for the purposes of public justification that the type of allocation provides further evidence the urgency of the Emergent Condition.

Yes; however, to qualify under this Emergent Condition, a portion of the system must be in the designated ACWSC.

If a system has filed for an affirmative defense, the owner would not be able to produce documentation of noncompliance since final agency action would not have been taken.

Emergent Condition #2 references multiple criteria for being out of compliance with regulatory or statutory requirements and can apply to both drinking water and wastewater systems. While significant noncomplier refers to wastewater systems, the remainder of the qualifying conditions applies to both drinking water and wastewater systems.

Emergent Condition #3 references multiple criteria for determining a deficiency in providing service whether drinking water or wastewater. For drinking water that may be a violation of maximum contaminant levels (MCLs) or the inability to provide potable (meeting standards) water at adequate pressure and volume. For wastewater, the deficiency may be in the collection, treatment or conveyance of wastewater.

Public water systems are required to maintain adequate pressure (a minimum of 20 psi) and to provide a sufficient volume of water to meet daily and peak demands, and emergencies. An inability to perform either of the above would be considered a deficiency in the availability of water. A deficiency in the potability of water concerns the presence of an emerging and unregulated contaminant or issues severely affecting the aesthetics of the water.

Municipal wastewater systems may collect stormwater and sanitary wastewater and /or treat the wastewater and discharge the treated effluent. The inability to conduct any of these operations may be evidence of deficiency in the wastewater service.

The Department considers historical investment, maintenance, and repair as dedicated and sustained attention over time to the System operations and infrastructure components in such a way to substantially impact the ability of a system to operate currently and into the future and meet the requirements of N.J.A.C. 7:10, N.J.A.C. 7:10A, N.J.A.C. 7:19 and/ or N.J.A.C. 7:14A.

Material damage is evidence of components of the System infrastructure unable to perform the functions they were designed to do. This may be result of an incident, exceedance of design life, and/ or poor maintenance. The Department’s WIPA Emergent Conditions Guidance provides examples of supporting information that may be supplied as evidence of damage to the System infrastructure.

The Department considers the Emergent Condition to apply to individual System infrastructure components such as pipes, wells, intakes, treatment units, pumps, transmission lines, storage units, and any other appurtenant components of the System. These are components that are needed for the System to continue operations and service as well as comply with all standards/requirements.

While the lack of financial, technical or managerial capacity to address an emergent condition on a sustainable basis qualifies as an emergent condition, this emergent condition is directly related to another underlying emergent condition. It is expected that documentation of the underlying emergent condition would be submitted to as a basis to support a finding that the municipal owner lacks financial, technical or managerial capacity to address an underlying emergent condition on a sustainable basis.

The purpose of the independent financial analysis is to report on the economic viability of the System to provide an estimate as to the financial requirements necessary to (i) address and rectify the Emergent Condition(s), (ii) to operate and maintain the system so as to deliver a defined level of service, and (iii) identify the short and long term impacts to rate-payers of the cash-flow structure of the proposed transaction. The financial analysis is submitted to the Board of Public Utilities (BPU) and the Division of Local Government Services (DLGS) of the Department of Community Affairs (DCA), which are responsible for reviewing the contract of sale and use of proceeds, respectively. The NJDEP also receives a copy of the financial analysis. The financial analysis may be used as supporting evidence of Emergent Condition #5, Financial Capacity.

Yes, Municipal credit ratings serve as a financial indicator to potential investors of debt securities such as bonds. The ratings are based on a number of factors including, but not limited to, demographics, debt service, cash on hand, and projected cashflows in the future.

Independent means separate from the municipality as a whole or other operations overseen by the municipality. The purpose is to show that the indicators of capacity are related to the operations of the System/ Utility despite the operations of other programs or departments of municipal government.

The Department is asking if a financial plan has been in place and utilized (for at least three (3) years) for the System/ Utility separate from that of the municipality as a whole. Such a plan assures the proper level of resources is being expended for maintenance and capital improvements to sustain operations as well as is available for planning and responding to emergencies.

Appendix I of Guidance

The Department, in conjunction with the New Jersey Environmental Infrastructure Trust, has prepared a financial capacity evaluation form based on industry standards. These standards refer to investment ratings, financial plans, debt and asset valuation, and liquidity and cash flow of the system. A System owner may provide explanation as to why there is not sufficient financial capacity to address an Emerging Condition or operate the System in such a way to support economic activity in the municipality on a sustainable basis.