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612 Associates, L.L.C. v. North Bergen Municipal Utilities Authority

January 21, 2009

612 ASSOCIATES, L.L.C., PLAINTIFF,
v.
NORTH BERGEN MUNICIPAL UTILITIES AUTHORITY, DEFENDANT-APPELLANT, AND NORTH HUDSON REGIONAL SEWER AUTHORITY, DEFENDANT-RESPONDENT, AND NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION,*FN1 DEFENDANT.



On appeal from the Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-3946-07.

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

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

APPROVED FOR PUBLICATION

Argued December 10, 2008

Before Judges Cuff, Fisher and Baxter.

This appeal requires us to interpret portions of the Sewerage Authorities Law (SAL), N.J.S.A. 40:14A-1 through -45, and the Municipal and Counties Utilities Authorities Law (MCUAL), N.J.S.A. 40:14B-1 through -78. In particular, we are called upon to decide whether the trial court erred when it concluded that only the sewerage or utilities authority to which a housing development is directly connected is entitled to a sewerage connection fee, even though such entity does not ultimately treat the effluent. The judge rejected the argument that the entity that has an indirect connection to the property in question--but which ultimately treats the effluent--is entitled to share the connection fee on a non-duplicative basis. We conclude the entity that actually treats the effluent is entitled to collect from a new user a non-duplicative connection fee representing a fair contribution for the past capital costs of its treatment facility even though the actual connection is only indirect. The Law Division erred when it held otherwise. We accordingly reverse its order of January 22, 2008.

I.

Plaintiff, 612 Associates, L.L.C., constructed a fifty-two unit condominium development ("the project" or "the property") at 612 30th Street in Union City. As development progressed, plaintiff sought to connect the project to a sewerage system. Because the project is located within Union City, plaintiff was required to directly connect its sewerage disposal system to the sewer lines operated by defendant, North Hudson Sewerage Authority (North Hudson SA). However, because of the project's elevation, effluent flows only 300 feet through North Hudson SA's collection lines before reaching defendant North Bergen Municipal Utilities Authority's (North Bergen MUA) sewer lines, where it ultimately travels to, and is treated by, North Bergen MUA's treatment facility.

It is undisputed that the sewerage flow generated by plaintiff's project will only be treated by North Bergen MUA's treatment facility, not by the treatment facility operated by North Hudson SA. Thus, without the indirect connection to the North Bergen MUA lines, the effluent from plaintiff's development could not, and would not, be treated.

Although North Hudson SA treats seventy-five percent of the sewage collected from Union City, the balance is treated either by defendant North Bergen MUA or by the Jersey City Sewerage Authority. Plaintiff's property is among the twenty-five percent of Union City properties whose sewage enters the collection lines of North Hudson SA, but is not treated by North Hudson SA, instead flowing to another entity, here North Bergen MUA, for ultimate treatment.

Because North Hudson SA and North Bergen MUA both asserted the right to collect a connection fee, and plaintiff was unwilling to pay a duplicative fee, plaintiff filed a complaint in interpleader in which it sought a determination from the court determining which entity--North Hudson SA or North Bergen MUA--was entitled to the connection fee. By order of September 7, 2007, the court permitted plaintiff to deposit the $153,655 connection fee into an escrow account pending the determination of the dispute. The Law Division rendered an oral decision on January 18, 2008, holding that North Bergen MUA was not entitled to a connection fee because the relevant portions of the SAL and MCUAL, N.J.S.A. 40:14A-8 and N.J.S.A. 40:14B-21, respectively, did not authorize North Bergen MUA "to charge a connection fee to those properties that [only] indirectly connect to its sewer system."*fn2 Accordingly, the judge concluded that only North Hudson SA would receive the connection fee related to the connection of plaintiff's development into the Union City sewer system, while North Bergen MUA would receive all subsequent service fees associated with the processing of effluent from plaintiff's property.

In reaching that determination, the judge framed the issue in an either/or fashion, posing the question of whether the connection fee was owed to North Hudson SA or whether instead it was owed to North Bergen MUA. The judge did not consider whether the applicable statutes required plaintiff's connection fee to be apportioned on a non-duplicative basis between both defendants.

In reaching the conclusion that only North Hudson SA was entitled to the connection fee, the judge observed that although applicable portions of the MCUAL and SAL authorize municipal utilities authorities and sewerage authorities to impose service charges on properties that connect both directly and indirectly to a sewerage system, the statutes addressing connection fees contain no reference to "indirect" connections. The judge then concluded that the Legislature's exclusion of "indirect connection" language from the connection fee portion of the statutes required the conclusion that entities with only an indirect connection are not entitled to share a connection fee with the entity that has the direct connection. She then held that only North Hudson SA was entitled to collect a connection fee from plaintiff because only North Hudson SA provided a direct physical connection for the new project.

On appeal, North Bergen MUA raises a single claim, arguing that "as a user of the North Bergen Sewer System, plaintiff is required to pay a connection fee to North Bergen." We granted the motion of amicus curiae, Bergen County ...


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