Case Title: Borough of Princeton v. Board of Chosen Freeholders of the County of Mercer

Citation: 

Docket Number: a-42-00

State: new-jersey

Court: New Jersey Supreme Court

Date: 2001-07-23T00:00:00Z

Document:
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized). STEIN, J., writing for a unanimous Court. The Local Public Contracts Law (LPCL) requires that certain contracts entered into by local public entities be procured through a public bidding process set out in the statute. The LPCL exempts from public bidding contracts for real property or any interest in real property. In these consolidated appeals, Mercer County (Mercer) and Morris County (Morris) argue that the LPCL did not require them to bid publicly the contracts they entered into with Waste Management of Pennsylvania, Inc. (Waste Management) for disposal of the counties' solid waste because the respective contracts granted, in part, easement rights on landfill space owned by Waste Management. In this appeal, the Court addresses whether these contracts violated the LPCL. In 1970, the Legislature enacted the Solid waste Management Act (SWMA) and the Solid Waste Utility Control Act (SWUCA), creating a comprehensive regulatory framework for the disposal of solid waste in New Jersey. In accordance with those statutes, each county was considered a solid waste management district, responsible for developing and implementing a long-term solid waste management plan, subject to approval by the New Jersey Department of Environmental Protection (DEP). In 1997, the United States Court of Appeals for the Third Circuit in Atlantic Coast Demolition & Recycling, Inc. v. Board of Chosen Freeholders of Atlantic County (Atlantic Coast II) held unconstitutional elements of the SWMA and SWUCA that imposed heightened requirements on districts that wanted to contract with out-of-state operators of solid waste disposal facilities. In August 1997, the DEP issued an order requiring all solid waste disposal districts to review their strategies in light of the Atlantic Coast II mandate and, if necessary, adopt plan amendments. Mercer enacted its original solid waste plan in 1979. The long-term objective was for the county to be self- sufficient in its treatment and disposal of solid waste. In 1987, Mercer abandoned its plan to develop a landfill and contracted with Waste Management to dispose of the county's solid waste. Mercer also failed to finance a resource recovery facility. At present, Mercer's solid waste is directed to Waste Management's landfills without resource- recovery processing. On February 17, 1988, Mercer and Waste Management executed a License Agreement, granting to Mercer an easement on landfill space owned by Waste Management and located in Buck County, Pennsylvania. The contract also provided a metes and bounds description of the landfill area. Under the agreement, Waste Management is to accept a maximum of 4.5 million tons of solid municipal waste, and to provide all services at the landfill facilities necessary to receive the waste, including taking all legally required steps to bury, cover, or otherwise process the waste. In addition, the agreement provides that if the original landfill is depleted, Waste Management must provide additional landfill space necessary to dispose of Mercer's solid waste. In return, Mercer paid to Waste Management $30 million initially and agreed to make monthly service fee purchase payments equal to $47 per ton of accepted waste plus operating costs. The per-ton payments increase for specific types of waste. The original agreement extended for a period of twenty-five years or the depletion of the maximum waste tonnage, whichever came first. Although not affected adversely by Atlantic Coast II, the agreement was amended in 1997 to reduce the contract term from twenty-five to nineteen years. In September 1997, the Borough of Princeton (Princeton) filed a complaint in lieu of prerogative writs in the Law Division against Mercer, alleging that the process undertaken to promulgate the 1997 plan amendment violated procedural requirements in the SWMA. Waste Management was permitted by the court to intervene. The matter was transferred to the Appellate Division. Simultaneously, the Law Division granted Princeton's motion to amend its complaint to include an allegation that the original agreement in 1988, and the 1997 amendment, were invalid because they were not bid publicly pursuant to the LPCL. In January 1993, Morris executed its agreement with Waste Management, granting Morris all rights, title and interest to an undivided interest in an easement on landfill space owned by Waste Management. The agreement provides a metes and bounds description of the easement and authorizes Morris to deposit a maximum of 4.5 million tons of solid waste on the landfill area for a period of ten years beginning January 1, 1995, with an option to extend the term of the easement for another five years. In return, Morris made an initial payment to Waste Management of $1 million and is responsible for a monthly deferred purchase payment based on tonnage of waste disposed at the landfill. Like the Mercer agreement, this agreement assigns different per-ton dollar amounts based on the type of waste disposed . The Morris agreement obligates Waste Management to maintain all permits necessary to provide for the disposal of Morris's waste and to take all lawfully required steps to bury, grade, cover, and otherwise process the waste deposited at the landfill. Waste Management had the sole responsibility under the contract for operating the landfill facilities. In addition, the agreement, like the Mercer agreement, requires that Waste Management provide additional landfill space, if necessary, to dispose of the Morris's acceptable waste. This agreement was incorporated into Morris's waste management plan, which was approved by the DEP. Like Mercer, Morris had originally planned to build a resource-recovery facility within the county but ultimately abandoned the plan. Thus, in 1994, Morris contracted with Essex County for use of a resource recovery facility located in Newark and operated by American Ref-Fuel Company of Essex County (American Ref-Fuel). The DEP issued an administrative order confirming that the 1993 agreement complied with Atlantic Coast II and reaffirming the agreement as an element of Morris's solid waste management plan. In February 1998, American Ref-Fuel filed a direct appeal in the Appellate Division challenging that administrative action. Two months later, American Ref-Fuel filed a complaint in lieu of prerogative writs in the Law Division challenging the 1993 agreement between Morris and Waste Management as being in violation of the LPCL bidding requirement. The Law Division granted Waste Management's motion to intervene, and then granted judgment to Morris on the basis of American Ref-Fuel's delay in bringing the LPCL action. The court did not address the public bidding issue. Mercer, Morris, and Waste Management filed separate appeals before the Appellate Division, which were consolidated because they involve related issues. In a unanimous opinion, the Appellate Division held that the Princeton and American Ref-Fuel complaints were not barred on timeliness grounds, and that both the Mercer and Morris agreements with Waste Management were invalid because they were not bid publicly pursuant to the LPCL. HELD: The Mercer County and Morris County agreements with Waste Management constitute, for the purposes of the Local Public Contracts Law, service contracts and are not contracts for real property or any interest therein. Thus, the agreements are subject to the LPCL public bidding requirements. 1. An action in lieu of prerogative writs generally has to be filed within forty-five days of the accrual of a right to relief. That limitations period can be enlarged where the interests of justice so require. There are three interests of justice exceptions: cases involving 1) important and novel constitutional questions; 2) informal or ex parte determinations of legal questions by administrative officials; and 3) important public rather than private interests that require adjudication of clarification. The time period also may be enlarged if there will be a continuing violation of public rights. Interests of justice require an enlargement of the forty-five-day limitations period. The Mercer and Morris agreements are ten and fourteen years longer than the LPCL would authorize for such contracts. Thus, they impose a continuing violation of public rights. The LPCL contract duration limits provide increased opportunity for competition that can potentially provide a more favorable package of services to the public. Public bidding serves an important public policy of unfettered competition that guards against favoritism, improvidence, extravagance, and corruption. Those considerations have particular force in the solid waste arena, which is filled with the potential for favoritism and corruption. (Pp. 20-25) 2. In view of both the policies underlying the LPCL and the unique circumstances surrounding the Mercer and Morris agreements, there are important public interests that require adjudication or clarification. Further, other solid waste management districts may have entered into similar agreements. Thus, it is prudent to resolve the merits of the LPCL claims now. The potential prejudice to the public in not reaching the issues raised outweighs any prejudice that Mercer, Morris, or Waste Management may suffer by the Court's disposition. (Pp. 25-30) 3. The Mercer and Morris agreements are similar. They grant explicit interests in property to the respective counties. However, the bulk of the obligations under the agreements are service obligations undertaken by Waste Management. The agreements are not merely contracts for the acquisition of property rights. They deal predominantly with solid waste disposal services, both in terms of obligations undertaken by Waste Management and the compensation provided in return by Morris and Mercer. Accordingly, these agreements are subject to the public bidding requirements of the LPCL. (Pp. 30-39) 4. Waste Management's constitutional challenges have no merit. (Pp. 39-41) 5. Mercer, Morris, and Waste Management seek prospective application of today's holding. However, the potential of prejudice to the public, combined with the duration of the Mercer and Morris agreements require that these contracts be rebid. The lack of any apparent corruption or favoritism in the procurement of these agreements does not justify overlooking violations of the public bidding laws. This is not a unique instance where prospective application would be appropriate. On remand, the Law Division should take into consideration the time required for the counties to prepare bid specifications, as well as other equitable considerations. Nonetheless, the court should delay no longer than necessary. The Mercer and Morris agreements shall remain in force until the bidding process is complete and new contracts are implemented. (Pp. 41-43) Judgment of the Appellate Division is AFFIRMED and the matter is REMANDED to the Law Division with instructions to set appropriate deadlines for re-bidding of the Mercer and Morris solid waste disposal contracts. JUSTICES COLEMAN, LONG, VERNIERO and ZAZZALI join in JUSTICE STEIN'S opinion. CHIEF JUSTICE PORITZ and JUSTICE LAVECCHIA did not participate. SUPREME COURT OF NEW JERSEY A-42/43/ 44 September Term 2000 BOROUGH OF PRINCETON, a municipal corporation, Plaintiff-Respondent, v. BOARD OF CHOSEN FREEHOLDERS OF THE COUNTY OF MERCER and MERCER COUNTY IMPROVEMENT AUTHORITY, Defendants-Appellants, and WASTE MANAGEMENT OF PENNSYLVANIA, INC., Defendant-Intervenor- Appellant. AMERICAN REF-FUEL COMPANY OF ESSEX COUNTY, Plaintiff-Respondent, v. MORRIS COUNTY MUNICIPAL UTILITIES AUTHORITY and WASTE MANAGEMENT OF PENNSYLVANIA, INC., Defendants-Appellants. Argued March 12, 2001 -- Decided July 23, 2001 Sandra T. Ayres argued the cause for appellant Waste Management of Pennsylvania, Inc. (Schwartz, Tobia, Stanziale, Rosensweig & Sedita, attorneys). Joseph J. Maraziti, Jr., argued the cause for appellant Morris County Municipal Utilities Authority (Maraziti, Falcon & Healey, attorneys; Brent T. Carney and Kimberly A. Kearney, on the briefs). Michael R. Cole argued the cause for appellant Mercer County Improvement Authority and Alfred B. Vuocolo, Jr., Mercer County Counsel, argued the cause for appellant Board of Chosen Freeholders of the County of Mercer (DeCotiis, Fitzpatrick, Gluck, Hayden & Cole and Mr. Vuocolo, attorneys; Andrew Bayer and Gregory J. Bevelock, on the briefs). Lewis P. Goldshore argued the cause for respondent Borough of Princeton (Szaferman, Lakind, Blumstein, Watter, Blader, Lehmann & Goldshore, attorneys; Robert J. Cash, on the briefs). Ross A. Lewin argued the cause for respondent American Ref-Fuel Company of Essex County (Windels Marx Lane & Mittendorf, attorneys; Mr. Lewin and Charles M. Fisher, on the briefs). Leslie Dannin Rosenthal, Deputy Attorney General, argued the cause for respondent New Jersey Department of Environmental Protection (John J. Farmer, Jr., Attorney General of New Jersey, attorney). The opinion of the Court was delivered by The Local Public Contracts Law (LPCL), N.J.S.A. 40A:11-1 to -50, requires that certain contracts entered into by local public entities be procured through a public bidding process detailed in that statute. The LPCL exempts a number of transactions from the public bidding requirement, including contracts for real property or any interest therein. N.J.S.A. 40A:11-2(4). In these consolidated appeals, defendants Mercer County (Mercer) and Morris County (Morris) argue that the LPCL did not require them to bid publicly contracts they entered into with defendant- intervenor Waste Management of Pennsylvania, Inc. (Waste Management) for disposal of the counties' solid waste, because the respective contracts granted, in part, easement rights on landfill space owned by Waste Management. The Appellate Division held that both contracts were subject to the LPCL bidding requirements, notwithstanding their purported grants of property rights, because the transactions also required Waste Management to perform services, and, taken as a whole, the entire thrust of the contracts were that of a contract for solid waste disposal. Borough of Princeton v. Board of Chosen Freeholders of Mercer County, 333 N.J. Super. 310, 327 (App. Div. 2000). We granted certification, 165 N.J. 676 (2000), and now affirm. NO. A-42/43/44 BOROUGH OF PRINCETON, a municipal corporation, Plaintiff-Respondent, v. BOARD OF CHOSEN FREEHOLDERS OF THE COUNTY OF MERCER and MERCER COUNTY IMPROVEMENT AUTHORITY, Defendants-Appellants, and WASTE MANAGEMENT OF PENNSYLVANIA, INC., Defendant-Intervenor- Appellant. DECIDED July 23, 2001 Justice Stein