On certification to the Superior Court, Appellate Division, whose opinion is reported at 234 N.J. Super. 530 (1988).
For affirmance -- Justices Handler, Pollock and Garibaldi. For reversal -- Chief Justice Wilentz, and Justices Stein and Clifford. Handler, Pollock and Garibaldi, JJ., concurring. Stein, J., dissenting. Chief Justice Wilentz and Justice Clifford pin in this opinion.
The members of the Court being equally divided, the judgment of the Appellate Division, 234 N.J. Super. 530 is affirmed.
HANDLER, POLLOCK and GARIBALDI, JJ., concurring.
We would affirm the judgment of the courts below substantially for the reasons expressed in the opinion of the Appellate Division, reported at 234 N.J. Super. 530 (1988).
In this case the Manasquan River Regional Sewerage Authority (Manasquan) alleged that a 111% rate increase imposed on it in 1984 by the Ocean County Utilities Authority (Ocean) was unlawful to the extent that it reflected rates lower than those required by law during the period prior to Manasquan's affiliation with Ocean. The trial court ruled that the Manasquan/Ocean service agreement, which provided that Manasquan's rates could not be more favorable than the rates of
other users, superseded any illegality inherent in Ocean's rate structure prior to Manasquan's affiliation. Based largely on that legal conclusion, the trial court granted Ocean's motion for summary judgment, and the Appellate Division affirmed. 234 N.J. Super. 530 (1988). This Court granted Manasquan's petition for certification, 111 N.J. 610 (1988), and now affirms on the basis of the opinion below. I dissent.
Manasquan, a regional sewerage authority, was created by parallel ordinances adopted by the Boroughs of Freehold and Farmingdale, and the Townships of Freehold, Howell, and Wall, in Monmouth County. Manasquan was established to provide for the collection and treatment of wastewater in western Monmouth County at the headwaters of the Manasquan River.
Ocean, the respondent and third-party plaintiff, was originally established in 1970 as the Ocean County Sewerage Authority, but was reconstituted as the Ocean County Utilities Authority in 1978. Ocean was created to provide for the collection and treatment of wastewater throughout Ocean County. Third-party defendant, Boland, Saffin, Gordin & Sautter, was Ocean's financial consultant.
From its inception, Manasquan had planned to construct a sewerage-treatment facility in Monmouth County. The Manasquan plan required the approval of both the United States Environmental Protection Agency (EPA) and the New Jersey Department of Environmental Protection (DEP). While Manasquan was pursuing the necessary approvals, Ocean proposed to both agencies that Manasquan sewage be diverted to Ocean's northern treatment facility for processing.
In August 1980, DEP's Division of Coastal Resources conducted a public hearing to review Manasquan's proposal to construct its own treatment facility. At the hearing, DEP officials suggested that diverting the Manasquan flow to the Ocean treatment facility would eliminate environmental problems
resulting from the discharge of treated wastewater into the Manasquan River. Subsequently, DEP retained an independent engineering firm to prepare a report on the proposed diversion to Ocean's treatment plant.
Among other conclusions, the DEP consultant's report determined that Ocean could absorb Manasquan's flow without a significant rate increase:
The OCUA user charge of $850 per million gallons which became effective January 1, 1981 is expected to remain constant for approximately four years. We have made the assumption that future increases in this charge will approximate the rate of inflation and therefore is consistent with the cost methodologies used throughout this analysis ...