N.J. Stat. § 40A:31-4
A local unit may, either separately or in combination with one or more other local units, a private water company subject to regulation by the Board of Public Utilities as a public utility, or the State, acquire, construct or operate a water supply facility upon a determination by the governing body of the local unit or each participating local unit that the public health, safety or welfare can best be assured by the acquisition, construction or operation of water supply facilities by the local unit or units. The determination shall be by ordinance or resolution, or parallel ordinances or resolutions, as the case may be, of the governing body of the local unit or each of the participating local units.
No water supply facilities may be acquired, constructed or operated pursuant to this act until all necessary permits and approvals have been received from the appropriate State agency.
N.J.S. § 40A:31-4