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National Waste Recycling, Inc. v. Middlesex County Imp. Authority

July 17, 1997

NATIONAL WASTE RECYCLING, INC. AND JOHN GRYWALSKI, PLAINTIFFS, AND DEPARTMENT OF ENVIRONMENTAL PROTECTION AND DIVISION OF LOCAL GOVERNMENT SERVICES, INTERVENORS-APPELLANTS,
v.
THE MIDDLESEX COUNTY IMPROVEMENT AUTHORITY AND WASTE MANAGEMENT OF NORTH JERSEY, INC., DEFENDANTS-RESPONDENTS.



On certification to the Superior Court, Appellate Division, whose opinion is reported at 291 N.J. Super. 283 (1996).

The opinion of the Court was delivered by Stein, J. Chief Justice Poritz and Justices Handler, Pollock, O'hern, Garibaldi and Coleman join in Justice STEIN's opinion.

(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).

National Waste Recycling, Inc., et al. v. The Middlesex County Improvement Authority and Waste Management of North Jersey, Inc. (A-104-96)

Argued February 18, 1997 -- Decided July 17, 1997

STEIN, J., writing for a unanimous Court.

In this appeal, the Court addresses the applicability of the exception from the public bidding requirement set forth in the Local Public Contracts Law (LPCL) to the curbside-collection component of a county's integrated recycling contract.

In October 1994, the Department of Environmental Protection (DEP) approved a plan by the Middlesex County Board of Chosen Freeholders to comply with the New Jersey Statewide Mandatory Source Separation and Recycling Act (Recycling Act). The plan required that a private contractor be chosen to implement the recycling program on behalf of all municipalities electing to participate and designated the Middlesex County Improvement Authority (MCIA) as the local agency responsible for the program's implementation.

Thereafter, MCIA publicly issued a Request for Qualifications (RFQ), which specified that the successful respondent would be responsible both for the curbside collection of all recyclable materials and for their ultimate sale or other Disposition. National Waste Recycling, Inc. (National) and Waste Management of North Jersey (WMNJ) both submitted proposals to service either a portion of the county and/or the entire county. MCIA then entered into negotiations with both National and WMNJ, obtaining significant price concessions.

In February 1995, MCIA awarded a five-year contract to WMNJ, based on the fact that WMNJ's final proposal for the entire County represented the lowest five-year cost. The negotiation process itself resulted in a total savings to the County of approximately $5,500,000.

National filed suit against MCIA and WMNJ, seeking a temporary injunction and invalidation of the contract. Although National's amended complaint asserted several challenges to the validity of the contract, this appeal focuses on the claim that the contract had been awarded without public bidding of the curbside collection portion of the contract, in violation of the LPCL.

MCIA and WMNJ both moved for summary judgment, arguing that the contract was exempt from public-bidding requirements pursuant to N.J.S.A. 40A:11-5, which provided for the exemption from public bidding for the marketing of recyclable materials recovered through a recycling program. The trial court found a strong public policy favoring public bidding and concluded that the curbside collection obligation under the contract did not fit within the exception of the statute, construing the exception, instead, to refer only to the marketing of the material recovered or the post-collection phase of the recycling process. The court found the contract void and ordered that it be set aside. MCIA and WMNJ successfully moved for a stay pending appeal.

While the appeal was pending, the Attorney General, acting on behalf of the Division of Solid Waste Management (DSWM) of the New Jersey DEP and the Division of Local Government Services (DLGS), the agencies responsible for enforcing the solid waste laws, filed an amicus curiae brief concerning the interpretation of the bidding-requirement exception contained in the statute.

The Appellate Division, construing the bidding exception statute on the basis of its plain meaning, concluded that the contract was a marketing contract within the plain meaning of the statute. The panel further concluded that the bidding exemption reflected a legislative assumption that the public entity charged with the responsibility of effecting the recycling program has greater leverage to achieve more favorable prices through negotiations than through bidding.

Finally, the Appellate Division held that a joint advisory opinion letter issued by the DSWM and the DLGS that had concluded that the exception applied only to the sale of recyclable materials was not binding on the Appellate Division because the letter contained only the Conclusions of law of a state agency.

Thereafter, the Attorney General moved for leave to intervene for the purpose of seeking certification. The Supreme Court granted the motion and the subsequent petition for certification.

HELD: The Legislature did not intend to exempt the curbside collection of solid waste for eventual recycling from the public bidding requirement of the Local Public Contracts Law. However, to avoid unfairness and prejudice to both WMNJ and County taxpayers, the contract may remain in effect until its termination date.

1. The LPCL requires public bidding for all municipal and county contracts exceeding $7,500. (pp. 11-13)

2. The investigative reports received by the Legislature prior to the enactment of Solid Waste Utility Control Act documented the continued necessity for competitive bidding and for strict judicial construction of the LPCL as applied to solid waste collection. (pp. 13-15)

3. Although the Legislature has enacted numerous other exceptions to the bidding statute, courts have construed the LPCL exceptions strictly. (pp. 16-17)

4. When a statute is ambiguous, the Court must construe it in a way that will best effectuate the Legislature's intent. (pp. 17-22)

5. The application of contemporary legal commentary to the statute suggests that marketing of recyclable materials recovered through a recycling program is not intended to refer to the collection component of a recycling program. (pp. 22-23)

6. Where agency interpretation coincides with the original enactment of a regulatory statute that the agency is charged with enforcing, the case for deference to the agency is strong. (pp. 23-26)

7. Since 1989, when enacting solid waste legislation, the Legislature reiterated its longstanding concern about competition in the solid waste collection industry, emphasizing the continuing need for supervision of the industry because of the impact of anti-competitive forces. (pp. 26-27)

8. Because in this unique instance ordering re-bidding of the collection phase would be unfair to WMNJ and may be prejudicial to the County taxpayers, the contract may remain in effect until its termination date. Any subsequent contracts for the collection of recyclables, however, must be procured in compliance with the LPCL bidding requirement. (pp. 28-29)

Judgment of the Appellate Division is REVERSED and the matter is REMANDED to the Law Division for entry of judgment consistent with this opinion.

CHIEF JUSTICE PORITZ and JUSTICES HANDLER, POLLOCK, O'HERN, GARIBALDI and COLEMAN join in JUSTICE STEIN's opinion.

The opinion of the Court was delivered by

STEIN, J.

Under the Local Public Contracts Law (LPCL), N.J.S.A. 40A:11-1 to -49, local public entities must submit any proposed purchase of goods or services in excess of $7500 to public advertisement and bidding. See N.J.S.A. 40A:11-3, -4. The LPCL provides a number of exemptions from the bidding requirement. See N.J.S.A. 40A:11-5. N.J.S.A. 40A:11-5(1)(s) provides an exemption from the public bidding requirement for "the marketing of recyclable materials recovered through a recycling program . . . ." In a reported decision, the Appellate Division reversed a trial court's ruling that invalidated a five-year contract, which included the curbside collection and marketing of recyclable materials in Middlesex County, between defendants Middlesex County Improvement Authority (MCIA) and Waste Management of North Jersey, Inc. (WMNJ), on the ground that the curbside collection aspect of the contract had not been publicly bid contrary to the LPCL. See 291 N.J. Super. 283, 287, 289-95, 677 A.2d 268(1996). The Department of Environmental Protection (DEP) and the Division of Local Government Services (DLGS) (collectively intervenors) petitioned the Court for certification on ...


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