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Borough Of Princeton v. Board Of Chosen Freeholders Of The County Of Mercer

July 31, 2000

BOROUGH OF PRINCETON, A MUNICIPAL CORPORATION, PLAINTIFF-APPELLANT,
v.
BOARD OF CHOSEN FREEHOLDERS OF THE COUNTY OF MERCER AND MERCER COUNTY IMPROVEMENT AUTHORITY, DEFENDANTS-RESPONDENTS, WASTE MANAGEMENT OF PENNSYLVANIA, INC., DEFENDANT/INTERVENOR- RESPONDENT. IN THE MATTER OF CERTAIN AMENDMENTS TO THE ADOPTED AND APPROVED SOLID WASTE MANAGEMENT PLAN OF MERCER COUNTY.
AMERICAN REF-FUEL COMPANY OF ESSEX COUNTY, PLAINTIFF-APPELLANT,
v.
MORRIS COUNTY MUNICIPAL UTILITIES AUTHORITY AND WASTE MANAGEMENT OF PENNSYLVANIA, INC., DEFENDANTS-RESPONDENTS.



Before Judges Stern, Wefing and Steinberg.

The opinion of the court was delivered by: Wefing, J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued: December 15, 1999

A-2291-97T3 and A-2776-97T3 on appeal from the Superior Court of New Jersey, Law Division, Mercer County; A-2343-97T2 and A-3291-97T3 on appeal from Final Decisions of the Department of Environmental Protection; A-1704-98T3 on appeal from the Superior Court of New Jersey, Law Division, Morris County.

These five appeals were argued together before us on December 15, 1999. They involve related issues concerning solid waste disposal and we therefore consolidate them for purposes of this opinion. Two of the matters arise out of Morris County, three from Mercer County. The two Morris County matters are A-3291-97 and A-1704-98. In A-3291-97, In re Adoption and Approval of an Administrative Action Concerning the Morris County District Solid Waste Management Plan, American Ref-Fuel Co. of Essex County (American Ref-Fuel) appeals from a final decision of the New Jersey Department of Environmental Protection (DEP). In A-1704-98, American Ref-Fuel Co. v. Morris County Municipal Utilities Authority, American Ref-Fuel appeals from the trial court's grant of summary judgment to defendants Morris County Municipal Utilities Authority (Morris County) and Waste Management of Pennsylvania, Inc. (Waste Management).

The three Mercer County matters are A-2291-97, A-2776-97 and A- 2343-97. A-2291-97, Borough of Princeton v. Board of Chosen Freeholders, began as a challenge in lieu of prerogative writs by the Borough of Princeton (Princeton) to an amendment to Mercer County's solid waste management plan; it was transferred to this court by the trial court under R. 2:2-3(a)(2). In A-2776-97, Borough of Princeton v. Board of Chosen Freeholders, Waste Management appeals a trial court order permitting Princeton to amend the prerogative writs complaint at issue in A-2291-97. Finally, in A-2343-97, In re Certain Amendments to the Adopted and Approved Solid Waste Management Plan, Princeton appeals from a final decision of the DEP approving certain amendments to Mercer County's solid waste management plan.

I.

Before turning to the factual complexes and merits of the individual appeals, it is necessary to set forth some background so that the particular arguments asserted may be understood and analyzed in the proper context. Commencing in 1970, New Jersey undertook to adopt and implement a comprehensive system to regulate and control the disposal of solid waste within the State. New Jersey Solid Waste Management Act, N.J.S.A. 13:1E-1 to -207; Solid Waste Utility Control Act, N.J.S.A. 48:13A-1 to -13. One of the underlying goals of the structure New Jersey put in place was that the State would be self-sufficient in terms of solid waste disposal. Thus, if any of the State's twenty-two solid waste districts wanted to utilize an out-of-state facility to dispose of its solid waste, it had to obtain the approval of the DEP to do so. One condition of such DEP approval was a certification that no suitable site was available in that solid waste management district. N.J.S.A. 13:1E- 21(b)(3). The background of the regulatory development is set forth in Waste Management of Pa., Inc. v. Shinn, 938 F. Supp. 1243, 1246-47 (D.N.J. 1996).

Much of this State's solid waste management control was eventually struck down as unconstitutional under the dormant commerce clause to the United States Constitution and the State was enjoined from enforcing its restrictions against the disposal of solid waste outside the confines of a solid waste district. Atlantic Coast Demolition & Recycling, Inc. v. Board of Chosen Freeholders, 112 F.3d 652, 667 (3d Cir.), cert. denied, 522 U.S. 966, 118 S. Ct. 413, 139 L. Ed.2d 316 (1997), amended, 135 F.3d 891 (3d Cir. 1998) (Atlantic Coast II). Since that decision, parties across the State have struggled to deal with its consequences. IMO Passaic County Utils. Auth., ___ N.J. ___ (2000); Pollution Control Fin. Auth. v. County of Somerset, 324 N.J. Super. 391 (App. Div. 1999); Camden County Energy Recovery Assocs. v. New Jersey Dept of Envtl. Protection, 320 N.J. Super. 59 (App. Div. 1999).

Prior to Atlantic Coast II, both Mercer County and Morris County sought to achieve long-term stability in meeting their responsibilities for solid waste disposal by entering into agreements with Waste Management. *fn1

In 1988, Mercer County and Waste Management *fn2 executed an agreement under which Waste Management granted Mercer County "all rights, title and interest in an irrevocable non-exclusive license which shall run with the land." That "license" gave Mercer County the right, over a twenty-five year period, to dispose of 4.5 million tons of solid waste in a Pennsylvania landfill owned and controlled by Waste Management. In return for this license, Mercer made a down payment of $30 million. It also agreed to pay monthly "service fee purchase payments," which were computed on the basis of tonnage received at the landfill, together with operation and maintenance costs.

In 1993, Morris County and Waste Management executed a contract under which the County, in exchange for a $1 million down payment and monthly "deferred purchase payments," obtained "all rights, title and interest to an undivided interest in the Premises owned by [Waste Management], consisting of the acquisition of certain easement rights . . . which rights shall run with the land." The "easement" created under this agreement gave Morris County the right to deposit 4.5 million tons of solid waste in a Pennsylvania landfill owned and controlled by Waste Management, over a ten year period, as well as an option to extend the agreement for an additional five years. The monthly "deferred purchase payments" were computed on the basis of tonnage received at the landfill and a specified "unit charge." The cost per ton varied according to the nature of the waste deposited, i.e., whether it was characterized as municipal waste, bulky waste, baled waste or industrial waste or residue.

While each set of appeals involves questions particular to that county, the core issue projected in all the appeals is the validity of the purported Mercer County "license" agreement and the Morris County "easement" agreement. Princeton challenges the Mercer contract, while American Ref-Fuel contests the Morris agreement; both assert that the respective agreements should be struck down for violating the provisions of the Local Public Contracts Law, N.J.S.A. 40A:11-1 to -50.

At the time these agreements were initially entered into, this statute required that all contracts "for the performance of any work or the furnishing or hiring of materials or supplies" that called for the expenditure of more than $7,500 in public funds had to be publicly advertised for bidding. N.J.S.A. 40A:11-3 and -4. (The threshold amount has subsequently been increased to $17,500. In light of the size and scope of these contracts, that amendment is immaterial to our analysis.) While the statute further requires that the contract be awarded to the lowest responsible bidder, N.J.S.A. 40A:11-6.1, it also exempts certain transactions from the bidding process entirely, including purchases of real property or any interest therein, N.J.S.A. 40A:11-2(4), contracts for professional services, N.J.S.A. 40A:11- 5(1)(a)(i), and contracts for the marketing of recyclable materials. N.J.S.A. 40A:11-5(1)(s). Finally, the statute limits the period a public contract may run. N.J.S.A. 40A:11-15(3) restricts contracts for the collection and disposal of municipal solid waste to a term not exceeding five years.

II.

We turn now to the factual background particular to the two Morris County appeals. In 1992, Morris County published a Request for Proposals, under which it sought to acquire an "easement" in a landfill to provide for the disposal of 4.5 million tons of solid waste. At the time Morris County solicited proposals for this easement, it was contemplating constructing its own in-county resource recovery facility to comply with DEP's policy of self-sufficiency, and it thus referred to an easement for a ten-year period, with a five-year option to renew. Morris County received five responding proposals and eventually selected Waste Management's as "most advantageous" for the county.

One of the other entities that had submitted a competing proposal, Empire Sanitary Landfill, Inc. (Empire), commenced an action in lieu of prerogative writs that challenged the award to Waste Management. In January 1993, the trial court denied Empire's request for temporary injunctive relief. It gave an oral opinion in which it applied the principles governing applications for temporary injunctive relief, under Crowe v. De Gioia, 90 N.J. 126 (1982), and concluded that Empire had not demonstrated a likelihood of success on the merits because, in the view of the trial court, the transaction was not subject to the Local Public Contracts Law, even though it conceded that characterizing the transaction as an interest in real estate was "a somewhat artificial analysis." No appeal was taken from that determination and shortly after the denial of injunctive relief, the parties agreed to dismiss the matter with prejudice.

On January 6, 1993, Morris County and Waste Management executed an agreement titled "Agreement for the Acquisition of an Undivided Interest in Real Property, Consisting of the Acquisition of Certain Easement Rights Relating Thereto." We are informed the agreement was thereafter duly recorded. Morris County then adopted implementing amendments to its solid waste management plan and sought DEP approval. Approval was finally obtained in December 1994, conditioned on Morris County amending its plan to provide for long-term use of in-state waste disposal facilities.

In the interim, however, before DEP approval had been obtained, Morris County executed a Memorandum of Understanding with Essex County, under which Morris agreed to deliver to the Essex County Resource Recovery Facility the lesser of all acceptable waste generated in Morris County or 225,000 tons. The Essex County Resource Recovery Facility is owned and operated by American Ref-Fuel. Waste Management promptly filed suit, alleging that the Memorandum of Understanding with Essex County violated the terms of its easement agreement with Morris County. The trial court ruled that there was no ...


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