Borough of Saddle River, Application of

• Decision Date: 19 July 1976
• Citation: 71 N.J. 14,362 A.2d 552
• Parties: Application of the BOROUGH OF SADDLE RIVER for an Increase in Rates Applicable to Solid Waste Collection and for a Determination that the New Jersey Bidding Statutes are Inapplicable Thereto.
• Court: New Jersey Supreme Court

Page 14

71 N.J. 14

362 A.2d 552

Application of the BOROUGH OF SADDLE RIVER for an Increase

in Rates Applicable to Solid Waste Collection and

for a Determination that the New Jersey

Bidding Statutes are

Inapplicable Thereto.

Supreme Court of New Jersey.

Argued Dec. 1, 1975.

Decided July 19, 1976.

Brian D. Vesley, Paterson, for appellant Borough of Saddle River (Evans, Hand, Allabough &amp Amoresano, Paterson, attorneys; Brian D. Vesley of counsel and on the brief).

Carla Vivian Bello, Deputy Atty. Gen., for respondent Bd. of Public Utility Com's (William F. Hyland, Atty. Gen., attorney; Stephen Skillman, Asst. Atty. Gen., of counsel; Carla Vivian Bello on the brief).

William Gural, Director of Division of Rate Counsel, Newark, for amicus curiae Dept. of Public Advocate (Stanley C. Van Ness, Public Advocate, attorney; William Gural of counsel and on the brief).

The opinion of the Court was delivered by

MOUNTAIN, J.

This case presents the question of whether municipalities are still required by N.J.S.A. 40:66--4 ¹ to advertise for competitive bids with respect to solid waste collection contracts, following the passage of the Solid Waste Utility Control Act of 1970, N.J.S.A. 48:13A--1 Et seq., which places persons engaged in solid waste collection and disposal under the jurisdiction on the Board of Public Utility Commissioners (hereafter PUC or Board).

Petitioner, the Borough of Saddle River, is a small residential community in which most of the houses are located on large lots and have long driveways. Its residents require rear-yard pickup from their solid waste collectors. Until 1969, solid waste was collected by a private scavenger, licensed by petitioner, who was paid directly by the individual residents. This service deteriorated to the point where petitioner's officials considered that uncollected garbage was becoming a health hazard. As a result, petitioner decided to contract for scavenger service at the municipal level. It advertised for bids twice in 1968 and once in 1969, without success. Eventually petitioner passed a resolution declaring that a health emergency existed, ² and on October 20, 1970, negotiated a contract with Leone Brothers, a local scavenger, by the terms of which Leone was to provide pickup services and equipment, using a vehicle supplied by petitioner.

The Borough of Saddle River describes itself as having been pleased with the quality of Leone's work. During 1972, however, it became apparent that the Borough's residents required more extensive services. Leone also found that the compensation agreed upon was not adequate to bring in a fair rate of return. Consequently, on March 26, 1973, after considerable negotiation, the parties signed an amendment to the contract to become effective May 1, 1973. This amendment extended the term of the original contract for one year (i.e., until December 31, 1975), enlarged the pickup services to be performed, and increased the compensation to be paid Leone.

Shortly after the signing of the original contract, the Solid Waste Utility Control Act, N.J.S.A. 48:13A--1 Et seq., went into effect. ³ Pursuant to its provisions, the PUC promulgated regulations for solid waste collection and disposal utilities, N.J.A.C. 14:3--10.1 Et seq., requiring, among other things, that scavengers file with it their tariffs, rate schedules and contracts. N.J.A.C. 14:3--10.10. The amendment to the contract with Leone of March 26, 1973, which had been expressly conditioned upon approval by the PUC, was accordingly filed with that Board.

On April 25, 1973, petitioner made formal application to the Board, requesting approval of the contract as amended. It also sought a declaratory ruling that solid waste collectors are public utilities within the meaning of the exception to the competitive bidding requirements of the Local Public Contracts Law, ⁴ N.J.S.A. 40A:11--5(1)(f), so that municipalities need not advertise for bids when entering into solid waste collection contracts.

The Board's hearing examiner found support for petitioner's position and recommended to the Board that it issue the declaratory ruling and approve the amended contract (which had not been the result of competitive bidding) as requested. He also recommended, however, that the Board petition the Legislature to remove solid waste disposal and collection utilities from the list of public utility exceptions, stating his belief that

the public interest would best be served by having an added check (in addition to Board supervision) to insure that rates and charges for solid waste collection/disposal services rendered to governmental entities are reasonable and that service is proper.

(Hearing Examiner's Report and Recommendations, Docket No. 734--331, Nov. 21, 1973).

The Board, while agreeing with the examiner that a comparison of the relevant statutes appeared to support petitioner's contention that competitive bidding was no longer required for solid waste collection services, declined to issue a declaratory ruling. The bases for this decision were twofold. First, the Board believed, as did the examiner, that competitive bidding as well as Board supervision was necessary to protect the public interest. Second, the Board considered itself bound by the then recent holding in Capasso v. Pucillo, 132 N.J.Super. 542, 334 A.2d 370 (Ch. & Law Div. 1974), that the statute requiring competitive bidding for solid waste collection, N.J.S.A. 40:66--4, had not been repealed by implication. In its decision and order of March 14, 1971, the Board recommended to the Legislature that clarifying legislation be enacted setting forth unequivocally that competitive bidding is required with respect to contracts with solid waste collection utilities, except in such areas as the Board might in the future, pursuant to N.J.S.A. 48:13A--5, designate as franchise areas.

Petitioner appealed to the Appellate Division, which, in an unreported opinion, upheld the Board on the authority of its earlier decision in Capasso v. Pucillo, 132 N.J.Super. 473, 334 A.2d 334 (App.Div.1974). We granted certification, 68 N.J. 165, 343 A.2d 453 (1975), to resolve the question of how the statutes involved can be harmonized so as best to carry out the policies of the Legislature. ⁵

I

In this era of environmental concern, there can be no doubt that the activity of collecting and disposing of solid waste is affected with a public interest and is consequently an appropriate subject for regulation by the state. Hackensack Meadowlands v. Municipal Sanitary Landfill Authority, 68 N.J. 451, 348 A.2d 505 (1975); Prob. juris. noted sub nom. City of Philadelphia v. New Jersey, 425 U.S. 910, 96 S.Ct. 1504, 47 L.Ed.2d 760 (1976); Southern Ocean Landfill, Inc. v. Mayor & Council, Township of Ocean, 64 N.J. 190, 314 A.2d 65 (1974); Ringlieb v. Township of Parsippany-Troy Hills, 59 N.J. 348, 283 A.2d 97 (1971). In amending N.J.S.A. 48:2--13 to include solid waste collection and disposal facilities within the definition of public utilities, and in enacting the Solid Waste Utility Control Act of 1970, N.J.S.A. 48:13A--1 Et seq., the Legislature has chosen supervision by the PUC as one of its regulatory mechanisms. ⁶

In taking this step, the Legislature departed to some extent from the traditional concept of a public utility, which might perhaps be characterized as an enterprise enjoying monopoly power by virtue of a governmentally granted franchise, and as a result requiring regulation in the public interest. But New Jersey has long since abandoned the view that the concept of a public utility must entail 'a locked-in consumer group receiving a necessity of life through a monopolistic supplier.' In re Petition of New Jersey Natural Gas Co., 109 N.J.Super. 324, 333, 263 A.2d 174, 179 (App.Div.), certif. denied 56 N.J. 475, 267 A.2d 57 (1970). With the passage of the Solid Waste Utility Control Act, the Legislature has further expanded the definition of a public utility to meet the requirements of an increasingly complex and interdependent society.

Such an expanded concept would appear to carry with it the need for differing regulatory techniques appropriate to the variety of enterprises now emerging as public utilities. The structure of the solid waste collection industry is not monolithic, like that of the more conventional utilities--railroads, electric, gas and telephone companies. Rather, the industry is composed of numerous scavengers, serving overlapping territories and utilizing landfill sites run by various governmental and private operators. From testimony adduced at the many legislative investigations of the industry, it is apparent that the system as it existed prior to the passage of the Solid Waste Utility Control Act not only tended to inefficiency in the form of wasteful fragmentation and conflicting licensing requirements, but also was fraught with the potential for abuse in the form of favoritism, rigged bids, official corruption, and the infiltration of organized crime. ⁷ To remedy this situation, while at the same time giving due attention to the public health and environmental aspects of the industry, most of the recommendations to the Legislature stressed the importance of encouraging competition within a regulated framework.

Underlying petitioner's arguments would appear to be the unstated premise that competitive bidding and public regulation cannot coexist. This would seem to be an impermissible assumption. It is true that many public utilities, notably common carriers, are required to publish tariffs which apply equally to all customers and hence preclude the negotiation of individual agreements. Others, however, conduct many of their operations pursuant to contract. Conspicuous among these, at the Federal level, are natural gas companies and electric power companies regulated by the Federal Power Commission. ⁸ Many New Jersey examples also exist. See E.g., Hackensack Water Co. v. Board of Public Utility Commissioners, ...