NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-3036-07T33036-07T3

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,

Defendant.

________________________________________________________________

Argued December 10, 2008 - Decided

Before Judges Cuff, Fisher and Baxter.

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

Geoffrey Johnson argued the cause for appellant (Johnson & Conway, LLP, attorneys; Mr. Johnson and John A. Napolitano, on the brief).

Frank Covello argued the cause for respondent (Leanza & Agrapidis, P.C., attorneys; Mr. Covello, of counsel and on the brief).

Laurence R. Maddock argued the cause for amicus curiae Bergen County Utilities Authority (Waters, McPherson, McNeill, P.C., attorneys; E. Neal Zimmermann, of counsel; Mr. Maddock, Donald J. Fay and Robert D. Thompson, on the brief).

The opinion of the court was delivered by

BAXTER, J.A.D.

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." 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 Utilities Authority, to submit a brief and participate in argument.

II.

The parties do not dispute the facts, but instead argue that the judge misapplied the law. "A trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference." Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).

North Bergen MUA and amicus both argue that the Law Division's interpretation of the statute was erroneous and unfairly deprives the entity that will be treating the waste the opportunity to recoup its original construction costs from a property that benefits from the service provided by that entity. Amicus informs us that many of the largest sewerage treatment facilities in New Jersey currently assess connection fees for indirect connections to their sewerage systems. Amicus explains the relationship between the direct and indirect connection in the following terms:

In the typical case, when a new user directly connects to a local sewerage authority's or municipality's collection system, there is also a simultaneous and extremely important indirect connection linking the new user to the regional or county utilities authority's treatment system, which includes trunk lines and the treatment facility. Both the collection system, operated by a municipality or local sewerage authority and the sewerage treatment system, operated by the regional or county utilities authority, are vital to the sewerage treatment process. It is axiomatic that without the infrastructure of both of these entities, the new user's sewerage could not be treated.

It is common in the industry that a connection fee is paid to the municipality or local sewerage authority to which the direct connection is made in order to help to pay for the original construction costs of that municipality's or local sewerage authority's sewerage collection systems, which includes its sewer pipelines and pumping stations. A connection fee is also commonly paid by the new user to the regional or county utilities authority for the indirect, but simultaneous connection to its trunk lines and sewerage treatment facility in order for that new user to help pay for the original construction costs of the regional or county utilities authority's sewerage treatment system.

. . . .

There ordinarily is no overlap or duplication between the two connection fees. The new user reimburses its "fair share" of the investment made by the governmental entities in two distinct infrastructure systems: to wit, the local or municipal sewerage authority's collection system and the regional or county utilities authority's treatment system.

N.J.S.A. 40:14A-8(b), a portion of the SAL, sets forth the connection fees that a sewerage authority such as North Hudson SA may collect. The statute provides:

In addition to any such periodic service charges, a separate charge in the nature of a connection fee or tapping fee, in respect of each connection of any property with the sewerage system, may be imposed upon the owner or occupant of the property so connected. . . . [T]he amount thereof shall not exceed the actual cost of the physical connection, if made by the authority, plus an amount computed in the following manner to represent a fair payment toward the cost of the system:

(1) The amount representing all debt service, including but not limited to sinking funds, reserve funds, the principal and interest on bonds, and the amount of any loans and interest thereon, paid by the sewerage authority to defray the capital cost of developing the system as of the end of the immediately preceding fiscal year of the authority shall be added to all capital expenditures made by the authority not funded by a bond ordinance or debt for the development of the system as of the end of the immediately preceding fiscal year of the authority.

[N.J.S.A. 40:14A-8(b).]

Under the SAL, the definition of "sewerage system" encompasses both a sewage collection line and a sewage treatment plant. The statute provides:

[T]he plants, structures, on-site waste-water systems, and other real and personal property acquired, constructed, maintained or operated or to be acquired, constructed, maintained or operated by a sewerage authority for the purposes of the sewerage authority, including sewers, conduits, pipe lines, mains, pumping and ventilating stations, sewage treatment or disposal systems, plants and works, connections, and outfalls, compensating reservoirs, and other plants, structures, boats, conveyances, and other real and personal property, and rights therein, and appurtenances necessary or useful and convenient for the collection, treatment, purification or disposal in a sanitary manner of any sewage, liquid or solid wastes, night soil or industrial wastes[.]

[N.J.S.A. 40:14A-3(8) (emphasis added).]

N.J.S.A. 40:14B-22, a portion of the MCUAL, is virtually identical to the relevant language in the SAL. It authorizes municipal and county authorities, such as North Bergen, to collect a connection fee. That statute provides:

Every municipal authority is hereby authorized to charge and collect rents, rates, fees and other charges (in this Act sometimes referred to as "sewerage services charges") for direct or indirect connection with, or the use or services of, the sewerage system. . . .

In addition to any such sewerage service charges, a separate charge in the nature of a connection fee or tapping fee, in respect of each connection of any property with the sewerage system, may be imposed upon the owner . . . of the property so connected. . . .

[N.J.S.A. 40:14B-22.]

In addition, the definition of a "sewerage system" under the MCUAL is virtually identical to the definition set forth in the SAL. See N.J.S.A. 40:14B-3(9).

The connection fee "has two components: the cost of physical connection if made by the authority and an amount representing 'a fair payment' by the connector 'toward the cost of the system.'" Nestl