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Terminal Construction Corp. v. Hoboken-Union City-Weehawken Sewerage Authority

Decided: December 7, 1990.


On appeal from Superior Court of New Jersey, Law Division, Hudson County.

Pressler, Baime and Arnold M. Stein. The opinion of the court was delivered by Baime, J.A.D.


[244 NJSuper Page 539] This appeal requires us to revisit the arcane subject of solid waste regulation. At issue is whether a thermal reduction facility designed to reduce the volume of sludge residuals through exposure to high temperature is exempt from the requirement of solid waste registration. The question is presented in a somewhat unusual factual setting. Defendant, the Hoboken-Union City-Weehawken Sewerage Authority (HUCWSA), seeks to rescind a contract it awarded to plaintiff, Terminal Construction Corporation (Terminal Construction), to build a sludge treatment plant. HUCWSA contends that it has not obtained a permit from the Department of Environmental Protection (DEP), which it argues is a prerequisite for construction of the facility under the Solid Waste Management Act (N.J.S.A. 13:1E-1 through -48). Under its Statewide Sludge Management Plan (SSMP), a component of the Statewide Solid Waste Management Plan (SWMP) adopted pursuant to N.J.S.A. 13:1E-6a(3) and N.J.S.A. 13:1E-46, the DEP has historically exempted sludge thermal reduction facilities from the solid waste permitting process. HUCWSA nevertheless argues that the exemption is not set forth in a duly promulgated regulation and thus the proposed treatment plant may not be constructed without a solid waste permit. The Law Division rejected HUCWSA's assertion and enjoined it from abrogating the contract. We affirm.


This case has a tortuous history. In 1979, the Hudson County Utilities Authority (HCUA) developed plans for a wastewater treatment facility. Shortly thereafter, the United States Environmental Protection Agency (EPA) and the DEP approved design plans for the proposed treatment plant. In addition, the EPA approved federal grant funds for the project.

For reasons that are not disclosed in the record, the project remained dormant. In the interim, the existing wastewater treatment facility has discharged treated effluent into the Hudson River without satisfying federal and state secondary treatment standards, resulting in a continuing series of regulatory actions by the EPA and the DEP. These proceedings culminated in the entry of a judicial consent order directing the City of Hoboken to meet interim deadlines for prior compliance actions. The City was directed to comply with a previously entered administrative consent order requiring it to construct a plant satisfying secondary treatment standards. Additionally, the City was ordered to adopt an acceptable residuals plan.

In compliance with the judicial and administrative consent orders, Hoboken proposed a wastewater treatment facility which included a residuals component for the stabilization and reduction of sewage sludge by an on-site gasification and power generation system.*fn1 On August 31, 1987 the EPA approved the proposal by issuing a "Finding of No Significant Impact," which specifically addressed primary and secondary effects of

the plant on hydrology and water quality, air quality, noise, natural resources, population projections and social and economic factors. One month later, the EPA awarded a grant to HCUA in the amount of $24,442,292 for the construction of the plant. Innovative grants were awarded in succeeding years amounting to $4,897,346.

On May 9, 1988 the DEP's Bureau of Engineering authorized HCUA to receive bids, pending issuance of the required air quality control permit. A single bid for the entire project was received, but the high dollar amount was unacceptable. HCUA then requested separate bids, one for the "liquid train" (effluent treatment) and the other for the "solids processing" (sludge). On November 21, 1989, the DEP authorized HCUA to award the contract for the effluent treatment component. Construction has commenced on that part of the project. Terminal Construction was determined to be the lowest qualified bidder for the sludge facility at approximately the same time.

The final air quality control permit was issued on May 18, 1990, accompanied by 12 pages of conditions. We need not recite the exacting federal and state standards that must be satisfied under the permit. See In re Pennsauken Solid Waste Mgt., 238 N.J. Super. 233, 569 A.2d 826 (App.Div.1990). We merely note that every aspect of the design and engineering plans was exhaustively reviewed by the EPA and the DEP to insure environmental safety.

In any event, issuance of the final air quality control permit constituted the last outstanding item required prior to commencement of construction. The DEP thus authorized HUCWSA, which had been assigned HCUA's interest in the project, to conduct a preconstruction conference. However, HUCWSA abruptly cancelled the meeting. This development generated Terminal Construction's concern that HUCWSA wished to either delay or abrogate the contract. In that respect, we note that at some point HUCWSA had sought to delay issuance of the air quality control permit, apparently contending that the

gasification technology envisioned in the plans was inadequate. Although the DEP later rejected HUCWSA's arguments and, as we noted previously, issued the air quality control permit, Terminal Construction became convinced by the cancellation of the preconstruction conference that the Authority wished to abort the sludge management project.

On August 21, 1990 Terminal Construction instituted this action by filing an order to show cause and a verified complaint in the Law Division, seeking an order restraining HUCWSA from rescinding the contract. The DEP was named as a defendant. The sole issue presented was whether a solid waste permit constitutes a prerequisite for construction and operation of the proposed sludge treatment plant. In a thorough and well-reasoned oral opinion, Judge Wefing held that the DEP had properly exempted sludge thermal reduction facilities from the solid waste registration requirement pursuant to appropriate ...

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