(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).
Argued March 12, 2001 -- Decided July 23, 2001
STEIN, J., writing for a unanimous Court.
The Local Public Contracts Law (LPCL) requires that certain contracts entered into by local public entities
be procured through a public bidding process set out in the statute. The LPCL exempts from public bidding
contracts for real property or any interest in real property. In these consolidated appeals, Mercer County (Mercer)
and Morris County (Morris) argue that the LPCL did not require them to bid publicly the contracts they entered into
with Waste Management of Pennsylvania, Inc. (Waste Management) for disposal of the counties' solid waste
because the respective contracts granted, in part, easement rights on landfill space owned by Waste Management.
In this appeal, the Court addresses whether these contracts violated the LPCL.
In 1970, the Legislature enacted the Solid waste Management Act (SWMA) and the Solid Waste Utility
Control Act (SWUCA), creating a comprehensive regulatory framework for the disposal of solid waste in New
Jersey. In accordance with those statutes, each county was considered a solid waste management district,
responsible for developing and implementing a long-term solid waste management plan, subject to approval by the
New Jersey Department of Environmental Protection (DEP).
In 1997, the United States Court of Appeals for the Third Circuit in Atlantic Coast Demolition &
Recycling, Inc. v. Board of Chosen Freeholders of Atlantic County (Atlantic Coast II) held unconstitutional
elements of the SWMA and SWUCA that imposed heightened requirements on districts that wanted to contract with
out-of-state operators of solid waste disposal facilities. In August 1997, the DEP issued an order requiring all solid
waste disposal districts to review their strategies in light of the Atlantic Coast II mandate and, if necessary, adopt
plan amendments.
Mercer enacted its original solid waste plan in 1979. The long-term objective was for the county to be self-
sufficient in its treatment and disposal of solid waste. In 1987, Mercer abandoned its plan to develop a landfill and
contracted with Waste Management to dispose of the county's solid waste. Mercer also failed to finance a resource
recovery facility. At present, Mercer's solid waste is directed to Waste Management's landfills without resource-
recovery processing.
On February 17, 1988, Mercer and Waste Management executed a “License Agreement,” granting to
Mercer an easement on landfill space owned by Waste Management and located in Buck County, Pennsylvania.
The contract also provided a metes and bounds description of the landfill area. Under the agreement, Waste
Management is to accept a maximum of 4.5 million tons of solid municipal waste, and to provide all services at the
landfill facilities necessary to receive the waste, including taking all legally required steps to bury, cover, or
otherwise process the waste. In addition, the agreement provides that if the original landfill is depleted, Waste
Management must provide additional landfill space necessary to dispose of Mercer's solid waste. In return, Mercer
paid to Waste Management $30 million initially and agreed to make monthly service fee purchase payments equal
to $47 per ton of accepted waste plus operating costs. The per-ton payments increase for specific types of waste.
The original agreement extended for a period of twenty-five years or the depletion of the maximum waste tonnage,
whichever came first. Although not affected adversely by Atlantic Coast II, the agreement was amended in 1997 to
reduce the contract term from twenty-five to nineteen years.
In September 1997, the Borough of Princeton (Princeton) filed a complaint in lieu of prerogative writs in
the Law Division against Mercer, alleging that the process undertaken to promulgate the 1997 plan amendment
violated procedural requirements in the SWMA. Waste Management was permitted by the court to intervene. The
matter was transferred to the Appellate Division. Simultaneously, the Law Division granted Princeton's motion to
amend its complaint to include an allegation that the original agreement in 1988, and the 1997 amendment, were
invalid because they were not bid publicly pursuant to the LPCL.
In January 1993, Morris executed its agreement with Waste Management, granting Morris all rights, title
and interest to an undivided interest in an easement on landfill space owned by Waste Management. The agreement
provides a metes and bounds description of the easement and authorizes Morris to deposit a maximum of 4.5
million tons of solid waste on the landfill area for a period of ten years beginning January 1, 1995, with an option to
extend the term of the easement for another five years. In return, Morris made an initial payment to Waste
Management of $1 million and is responsible for a monthly “deferred purchase payment” based on tonnage of waste
disposed at the landfill. Like the Mercer agreement, this agreement assigns different per-ton dollar amounts based
on the type of waste disposed .
The Morris agreement obligates Waste Management to maintain all permits necessary to provide for the
disposal of Morris's waste and to take all lawfully required steps to bury, grade, cover, and otherwise process the
waste deposited at the landfill. Waste Management had the sole responsibility under the contract for operating the
landfill facilities. In addition, the agreement, like the Mercer agreement, requires that Waste Management provide
additional landfill space, if necessary, to dispose of the Morris's acceptable waste. This agreement was incorporated
into Morris's waste management plan, which was approved by the DEP.
Like Mercer, Morris had originally planned to build a resource-recovery facility within the county but
ultimately abandoned the plan. Thus, in 1994, Morris contracted with Essex County for use of a resource recovery
facility located in Newark and operated by American Ref-Fuel Company of Essex County (American Ref-Fuel).
The DEP issued an administrative order confirming that the 1993 agreement complied with Atlantic Coast II and
reaffirming the agreement as an element of Morris's solid waste management plan. In February 1998, American
Ref-Fuel filed a direct appeal in the Appellate Division challenging that administrative action. Two months later,
American Ref-Fuel filed a complaint in lieu of prerogative writs in the Law Division challenging the 1993
agreement between Morris and Waste Management as being in violation of the LPCL bidding requirement. The
Law Division granted Waste Management's motion to intervene, and then granted judgment to Morris on the basis
of American Ref-Fuel's delay in bringing the LPCL action. The court did not address the public bidding issue.
Mercer, Morris, and Waste Management filed separate appeals before the Appellate Division, which were
consolidated because they involve related issues. In a unanimous opinion, the Appellate Division held that the
Princeton and American Ref-Fuel complaints were not barred on timeliness grounds, and that both the Mercer and
Morris agreements with Waste Management were invalid because they were not bid publicly pursuant to the LPCL.
HELD: The Mercer County and Morris County agreements with Waste Management constitute, for the purposes of
the Local Public Contracts Law, service contracts and are not contracts for “real property or any interest
therein.” Thus, the agreements are subject to the LPCL public bidding requirements.
1. An action in lieu of prerogative writs generally has to be filed within forty-five days of the accrual of a right to
relief. That limitations period can be enlarged where the interests of justice so require. There are three interests of
justice exceptions: cases involving 1) important and novel constitutional questions; 2) informal or ex parte
determinations of legal questions by administrative officials; and 3) important public rather than private interests
that require adjudication of clarification. The time period also may be enlarged if there will be a continuing
violation of public rights. Interests of justice require an enlargement of the forty-five-day limitations period. The
Mercer and Morris agreements are ten and fourteen years longer than the LPCL would authorize for such contracts.
Thus, they impose a continuing violation of public rights. The LPCL contract duration limits provide increased
opportunity for competition that can potentially provide a more favorable package of services to the public. Public
bidding serves an important public policy of unfettered competition that guards against favoritism, improvidence,
extravagance, and corruption. Those considerations have particular force in the solid waste arena, which is filled
with the potential for favoritism and corruption. (Pp. 20-25)
2. In view of both the policies underlying the LPCL and the unique circumstances surrounding the Mercer and
Morris agreements, there are important public interests that require adjudication or clarification. Further, other solid
waste management districts may have entered into similar agreements. Thus, it is prudent to resolve the merits of
the LPCL claims now. The potential prejudice to the public in not reaching the issues raised outweighs any
prejudice that Mercer, Morris, or Waste Management may suffer by the Court's disposition. (Pp. 25-30)
3. The Mercer and Morris agreements are similar. They grant explicit interests in property to the respective
counties. However, the bulk of the obligations under the agreements are service obligations undertaken by Waste
Management. The agreements are not merely contracts for the acquisition of property rights. They deal
predominantly with solid waste disposal services, both in terms of obligations undertaken by Waste Management
and the compensation provided in return by Morris and Mercer. Accordingly, these agreements are subject to the
public bidding requirements of the LPCL. (Pp. 30-39)
4. Waste Management's constitutional challenges have no merit. (Pp. 39-41)
5. Mercer, Morris, and Waste Management seek prospective application of today's holding. However, the potential
of prejudice to the public, combined with the duration of the Mercer and Morris agreements require that these
contracts be rebid. The lack of any apparent corruption or favoritism in the procurement of these agreements does
not justify overlooking violations of the public bidding laws. This is not a unique instance where prospective
application would be appropriate. On remand, the Law Division should take into consideration the time required for
the counties to prepare bid specifications, as well as other equitable considerations. Nonetheless, the court should
delay no longer than necessary. The Mercer and Morris agreements shall remain in force until the bidding process
is complete and new contracts are implemented. (Pp. 41-43)
Judgment of the Appellate Division is AFFIRMED and the matter is REMANDED to the Law Division
with instructions to set appropriate deadlines for re-bidding of the Mercer and Morris solid waste disposal contracts.
JUSTICES COLEMAN, LONG, VERNIERO and ZAZZALI join in JUSTICE STEIN'S opinion.
CHIEF JUSTICE PORITZ and JUSTICE LAVECCHIA did not participate.
SUPREME COURT OF NEW JERSEY
A-42/43/
44 September Term 2000
BOROUGH OF PRINCETON, a
municipal corporation,
Plaintiff-Respondent,
v.
BOARD OF CHOSEN FREEHOLDERS
OF THE COUNTY OF MERCER and
MERCER COUNTY IMPROVEMENT
AUTHORITY,
Defendants-Appellants,
and
WASTE MANAGEMENT OF
PENNSYLVANIA, INC.,
Defendant-Intervenor-
Appellant.
AMERICAN REF-FUEL COMPANY OF
ESSEX COUNTY,
Plaintiff-Respondent,
v.
MORRIS COUNTY MUNICIPAL
UTILITIES AUTHORITY and WASTE
MANAGEMENT OF PENNSYLVANIA,
INC.,
Defendants-Appellants.
Argued March 12, 2001 -- Decided July 23, 2001
On certification to the Superior Court,
Appellate Division, whose opinion is
reported at
333 N.J. Super. 310 (2000).
Sandra T. Ayres argued the cause for
appellant Waste Management of Pennsylvania,
Inc. (Schwartz, Tobia, Stanziale, Rosensweig
& Sedita, attorneys).
Joseph J. Maraziti, Jr., argued the cause
for appellant Morris County Municipal
Utilities Authority (Maraziti, Falcon &
Healey, attorneys; Brent T. Carney and
Kimberly A. Kearney, on the briefs).
Michael R. Cole argued the cause for
appellant Mercer County Improvement
Authority and Alfred B. Vuocolo, Jr., Mercer
County Counsel, argued the cause for
appellant Board of Chosen Freeholders of the
County of Mercer (DeCotiis, Fitzpatrick,
Gluck, Hayden & Cole and Mr. Vuocolo,
attorneys; Andrew Bayer and Gregory J.
Bevelock, on the briefs).
Lewis P. Goldshore argued the cause for
respondent Borough of Princeton (Szaferman,
Lakind, Blumstein, Watter, Blader, Lehmann &
Goldshore, attorneys; Robert J. Cash, on the
briefs).
Ross A. Lewin argued the cause for
respondent American Ref-Fuel Company of
Essex County (Windels Marx Lane &
Mittendorf, attorneys; Mr. Lewin and Charles
M. Fisher, on the briefs).
Leslie Dannin Rosenthal, Deputy Attorney
General, argued the cause for respondent New
Jersey Department of Environmental
Protection (John J. Farmer, Jr., Attorney
General of New Jersey, attorney).
The opinion of the Court was delivered by
STEIN, J.
The Local Public Contracts Law (LPCL), N.J.S.A. 40A:11-1 to
-50, requires that certain contracts entered into by local public
entities be procured through a public bidding process detailed in
that statute. The LPCL exempts a number of transactions from the
public bidding requirement, including contracts for “real
property or any interest therein.” N.J.S.A. 40A:11-2(4). In
these consolidated appeals, defendants Mercer County (Mercer) and
Morris County (Morris) argue that the LPCL did not require them
to bid publicly contracts they entered into with defendant-
intervenor Waste Management of Pennsylvania, Inc. (Waste
Management) for disposal of the counties' solid waste, because
the respective contracts granted, in part, easement rights on
landfill space owned by Waste Management. The Appellate Division
held that both contracts were subject to the LPCL bidding
requirements, notwithstanding their purported grants of property
rights, because the transactions also required Waste Management
to perform services, and, taken as a whole, the “entire thrust”
of the contracts were “that of a contract for solid waste
disposal.” Borough of Princeton v. Board of Chosen Freeholders
of Mercer County,
333 N.J. Super. 310, 327 (App. Div. 2000). We
granted certification,
165 N.J. 676 (2000), and now affirm.
We begin with some brief background. In 1970, the Legislature enacted the Solid Waste Management Act (SWMA), N.J.S.A. 13:1E-1 to -207, and the Solid Waste Utility Control Act (SWUCA), N.J.S.A. 48:13A-1 to -13, in an effort to establish a comprehensive regulatory framework for the disposal of solid waste in New Jersey. See Atlantic Coast Demolition & Recycling, Inc. v. Board of Chosen Freeholders of Atlantic County, 48 F.3d 701, 704-08 (3d Cir. 1995) (detailing solid waste disposal system created by SWMA and SWUCA). In accordance with those statutes, the State was divided into twenty-two solid waste management districts, including all twenty-one counties and a “Hackensack- Meadowlands” district. N.J.S.A. 13:1E-20. Each district was assigned the responsibility for developing and implementing a long-term solid waste management plan, subject to approval by the State Department of Environmental Protection (DEP). N.J.S.A. 13:1D-19; 13:1E-20, -24.
In 1997, the United States Court of Appeals for the Third Circuit held unconstitutional, under the dormant Commerce Clause doctrine, elements of the SWMA and SWUCA that imposed heightened requirements on districts that desired to contract with out-of- state operators of solid waste disposal facilities. Atlantic Coast Demolition & Recycling, Inc. v. Board of Chosen Freeholders of Atlantic County, 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). In the wake of that decision, the DEP issued an order in August 1997 requiring all solid waste disposal districts to review their strategies in view of the Atlantic Coast II mandate and, if necessary, adopt plan amendments. Mercer and Morris had entered into contracts with Waste Management for long-term solid waste disposal prior to Atlantic Coast II, in 1988 and 1993, respectively.See footnote 11 In response to the DEP order, the counties both certified that they were in compliance with Atlantic Coast II, and the present suits were brought following those certifications.
Mercer and Waste Management executed a “License Agreement” on February 17, 1988. The agreement grants to Mercer “all rights, title and interest in an irrevocable, non-exclusive license which shall run with the land,” and an attachment to the agreement provides a metes and bounds description of the landfill area, located in Bucks County, Pennsylvania. The agreement requires Waste Management to accept a maximum of 4,500,000 tons of solid municipal waste, and to provide “all necessary services at the Landfill Facilities to receive such Acceptable Waste,” including taking all measures required by law to bury, cover or otherwise process the waste. The agreement defines “Landfill Facilities” as
the Landfill and all other facilities related thereto, including, without limitation, liners, protective covers, leachate collection and treatment facilities, storm water collection and treatment facilities, erosion and sedimentation control facilities, gas vents, gas collection systems, borrow areas, offices, haul roads, equipment, gear and other tangible property used in connection with the operation of the Landfill.
The agreement provides further that if the “rate of depletion of the remaining capacity” of the landfill could cause Waste Management to default on any of its contractual obligations, Waste Management is required to “mak[e] available to [Mercer] additional landfills to which [Mercer] is granted by [Waste Management] license rights identical to such rights granted pursuant to this Agreement in the Landfill, except as to location.”
In return, Mercer made an initial payment to Waste Management of $30 million, and agreed to make monthly “service fee purchase payments” equal to $47 per ton of accepted waste plus certain operating costs. The per-ton purchase payments increase for specific types of waste, such as “Baled Waste” and “Special Waste,” that are defined in the agreement. The original agreement extended for a period of twenty-five years from the date of the first service fee purchase payment, or until Mercer exhausted its maximum deposit amount of 4,500,000 tons of waste, whichever occurred first.
The agreement was not affected adversely by Atlantic Coast II because Waste Management, as an out-of-state company, had not been disadvantaged by the regulatory scheme invalidated by that decision. Nevertheless, in August 1997 Mercer adopted a resolution recommending certain amendments to its solid waste management plan, including modifications to the Waste Management contract. The proposed amendment, agreed to by Waste Management, authorized modification of the license agreement by reducing its term from twenty-five to nineteen years and reducing Mercer's monthly per-ton service fee purchase payments. Mercer adopted the plan amendment after holding public hearings, and in November 1997 the DEP approved the aspects of the plan amendment that are relevant to this review. The amended license agreement went into effect on November 10, 1997.
In September 1997, plaintiff Borough of Princeton (Princeton) filed a complaint in lieu of prerogative writs in the Law Division against Mercer. Princeton's original complaint alleged that the process undertaken to promulgate the 1997 plan amendment violated procedural requirements set forth in the SWMA. The Law Division granted Waste Management's motion to intervene. After hearing arguments on the defendants' motions to dismiss, but without issuing any dispositive order, the Law Division transferred the entire case to the Appellate Division. Simultaneous with that order, the Law Division granted Princeton's motion to amend its complaint to include an allegation that the original 1988 license agreement, and the 1997 amendment, were invalid because they were not bid publicly pursuant to the LPCL. In December 1997, Princeton filed a separate action in the Appellate Division challenging the DEP administrative order approving the Mercer plan amendment.
Morris received five proposals. In December 1992, a team of experts hired by Morris to evaluate the competing proposals recommended that the County accept the proposal submitted by Waste Management. Following that recommendation, the county executed an agreement with Waste Management on January 6, 1993 for the “Acquisition of an Undivided Interest in Real Property, Consisting of the Acquisition of Certain Easement Rights Relating Thereto.”See footnote 22 The agreement grants to Morris “all rights, title and interest to an undivided interest in the Premises owned by the Grantor, consisting of the acquisition of certain easement rights relating thereto, which shall run with the land.” The agreement describes the landfill area subject to the easement in metes and bounds, and provides for the recording of the easement with “the appropriate county, municipal or state office responsible for recording transfers of real property.” The agreement authorizes Morris to deposit a maximum of 4.5 million tons of solid waste on the landfill area over a ten-year period beginning January 1, 1995, with an option to extend the term of the easement for another five years with a corresponding increase in the maximum waste load. In return, Morris made an initial payment to Waste Management of $1,000,000, and is responsible for a monthly “deferred purchase payment,” which includes primarily a “Unit Charge” based on tonnage of waste disposed at the landfill facilities. The agreement, like the Mercer agreement, assigns different per-ton dollar amounts based on the composition of the waste to be disposed of, with a per-ton charge of $33.00 for “Municipal Waste and Non-Municipal Waste” and higher charges, ranging from $47.05 to $49.00 per-ton, for “Bulky Waste,” “Baled Waste,” and “Residue.” The agreement obligates Waste Management to maintain all permits necessary to provide for the disposal of Morris's waste, and to take “all steps required by Applicable Law to bury, grade, cover and otherwise process all Acceptable Waste deposited in the Landfill.” Waste Management has the sole responsibility under the contract to operate the “Landfill Facilities,” which the contract defines - in language nearly identical to the Mercer agreement - to include
the Landfill and all other facilities related thereto, including, without limitation, liners, protective covers, leachate collection and treatment facilities, stormwater collection and treatment facilities, erosion and sedimentation control facilities, gas vents, gas collection systems, borrow areas, offices, haul roads, truck weigh scale, equipment, gear and other tangible property used in connection with the operation of the Landfill.
The agreement states that Morris “shall have no duties, obligations, responsibilities or rights of any nature with respect to the operation, maintenance, design, construction or management of the Landfill or Landfill Facilities.”
In addition to the metes and bounds description of the easement area, the agreement requires Waste Management to “continue to construct and add to the Landfill and Landfill Facilities, as and when necessary, in order to enable [Waste Management] to accept the unused portion of the Maximum Waste Amount.” The contract specifies further that if “as a result of issuance of a Governmental Order . . . [Waste Management] is prohibited from accepting any Acceptable Waste for deposit in the Premises, [Waste Management] shall . . . make additional landfill sites available to [Morris] for the disposal of . . . Acceptable Waste.” The contract specifies that “all terms and conditions contained in this Agreement” would apply to the additional landfill space with the single exception of “the provisions . . . relating to the acquisition of a[n] Easement.”
The agreement was recorded shortly after it was signed, and in March 1993 Morris enacted a plan amendment incorporating the agreement into its waste management plan. The DEP approved the amendment in December 1994, subject to the condition that Morris amend its plan to provide for long-term use of in-state waste disposal facilities. After Atlantic Coast II was decided, however, the DEP withdrew that condition.
Morris, like Mercer, originally had planned to build a resource-recovery facility within the county but ultimately abandoned that plan. Accordingly, in 1994 Morris entered into a contract with Essex County for use of a resource recovery facility that is located in Newark and operated by plaintiff American Ref-Fuel Company of Essex County (American Ref-Fuel). The contract provided that Morris would deliver all of its solid waste, up to a maximum of 225,000 tons, to the Essex County facility. After that contract was incorporated into Morris's plan amendment, Waste Management filed suit in the Law Division alleging that under its 1993 contract with Morris the county was required to dispose of all of its solid waste at the Waste Management landfills, and could not rely on another out-of-county provider for resource recovery services. The Law Division rejected that claim, holding that Morris was free to use the Essex facility as long as a proportional share of non-processible waste and ash was transferred to the Waste Management landfills.
In the wake of Atlantic Coast II, Morris determined that its contract with Waste Management was in compliance with the Atlantic Coast II mandate. Accordingly, in December 1997 Morris submitted a request for administrative action, N.J.A.C. 7:26- 6.11(b)(9), petitioning the DEP to reaffirm Morris's reliance on the 1993 Waste Management contract. The following month, the DEP issued an administrative action confirming that the 1993 agreement complied with Atlantic Coast II and reaffirming the agreement as an element of Morris's solid waste management plan.
In February 1998, American Ref-Fuel filed a direct appeal in the Appellate Division challenging the DEP administrative action. Two months later, American Ref-Fuel filed a complaint in lieu of prerogative writs in the Law Division challenging the 1993 agreement between Morris and Waste Management as being in violation of the LPCL public bidding requirement. The Law Division granted Waste Management's motion to intervene, and then granted summary judgment to defendants on all counts. The court did not resolve the question whether the agreement should have been bid publicly pursuant to LPCL requirements, finding it a “very arguable debatable question.” Instead, the court granted summary judgment on the basis of American Ref-Fuel's delay in bringing the LPCL claim. The court emphasized defendants' interest in “repose with respect to long-standing arrangements,” and noted that the bidding process undertaken by Morris, although not in compliance with the LPCL, was nevertheless an open process: “[t]here's absolutely nothing hidden or mysterious about this arrangement. It may have been controversial in the sense that people had policy differences about it, but there was no favoritism or preferential treatment at all involved in this case.”
American Ref-Fuel filed a timely appeal of the Law Division order granting summary judgment.
The Appellate Division consolidated the various Mercer and Morris appeals, R. 4:38, finding that they involved “related issues concerning solid waste disposal.” Borough of Princeton, supra, 333 N.J. Super. at 315. In a unanimous opinion, the court held that the Princeton and American Ref-Fuel complaints filed in the Law Division were not barred on timeliness grounds, and that both the Mercer and Morris agreements were invalid because they were not bid publicly pursuant to the LPCL.
With respect to timeliness, the court recognized that actions in lieu of prerogative writs “generally have to be commenced within forty-five days 'after the accrual of the right to the review, hearing or relief claimed.'” Id. at 322 (quoting R. 4:69-6(a)). The court was “entirely satisfied,” ibid., however, that the forty-five day time frame should be enlarged pursuant to Rule 4:69-6(c), which allows for enlargement “where it is manifest that the interest of justice so requires.” R. 4:69-6(c). The court emphasized “this State's long history of concern about the possibilities of abuse in the solid waste industry,” ibid., and noted specifically both the length and costs involved in both contracts and the fact that “[o]ther counties . . . have attempted to negotiate similar agreements.” Id. at 324. The court also emphasized that the issues raised in the complaints “cannot be separated, in any analytically sound way,” from the challenges to the 1997 DEP approvals of the Mercer and Morris plans. Id. at 323. In view of those factors, the court concluded that “the public interest . . . would not be served by invoking a rigid deadline beyond which the expenditure of millions of public dollars over an extended period of years would be immune from judicial scrutiny.” Id. at 322-23. The court recognized “that considerations of fairness to the parties and stability in public affairs should not be disregarded,” but determined that considerations of fairness could be addressed “during the process of crafting a remedy.” Id. at 323.
The court then turned to plaintiffs' claim that the Mercer and Morris agreements were invalid because they were not bid publicly pursuant to the LPCL. When those agreements were executed, the LPCL provided in relevant part that
[e]very contract or agreement for the performance of any work or the furnishing or hiring of any materials or supplies, the cost or the contract price whereof is to be paid with or without public funds . . . shall be made or awarded only by the governing body of the contracting unit after public advertising for bids and bidding therefor, except as is provided otherwise in this act or specifically by any other law.
[L. 1985, c. 60, § 2, amended by L. 1999, c. 440, § 8.See footnote 33]
The LPCL specifies a number of requirements for contracts subject to public bidding, including requirements relating to the drafting of bid specifications, N.J.S.A. 40A:11-13, and to the contracting unit's determination of which bid to accept. N.J.S.A. 40A:11-6.1. The bidding requirement applied to contracts exceeding $7,500, and that threshold amount subsequently has been increased to $17,500. L. 1985, c. 469, § 7, amended by L. 1999, c. 440, § 7. The statute exempts certain categories of transactions entirely from the bidding process, including contracts for professional services, N.J.S.A. 40A:11- 5(1)(a)(i), contracts for the marketing of recyclable materials, N.J.S.A. 40A:11-5(1)(s), and, critical for our purposes, contracts for “real property or any interest therein.” N.J.S.A. 40A:11-2(4).
The Appellate Division began its analysis by defining the general requirements for creating easement rights in contracts, noting that “[b]ecause the parties' claim to an easement arises from their respective written agreements, we must analyze those agreements to determine if they indeed contain the elements of an easement and reflect an intent to create an easement.” Borough of Princeton, supra, 333 N.J. Super. at 324-25. The court did not, however, resolve the question whether the contracts created legal easements. Instead, it held that, notwithstanding the language purporting to grant easement rights, both agreements were subject to the LPCL because they involved the performance of services: “[h]aving reviewed these documents . . . we are satisfied that their entire thrust, apart from using the terminology 'easement' and providing for their recordation, is that of a contract for solid waste disposal services.” Id. at 325. The court stressed certain elements of the agreements - including Waste Management's obligations to maintain the landfill facilities and to expand the size of the landfills, and the counties' obligations to pay Waste Management on the basis of the nature of the waste deposited - and found that “the conclusion is inescapable that the counties were envisioning contracts for solid waste disposal and that they entered [into] contracts for solid waste disposal, albeit clothed in different raiment.” Id. at 327. Emphasizing this State's “long tradition of requiring open and free competitive bidding for public contracts,” id. at 328, the court concluded that neither of the agreements “creates an easement such as would exempt the transactions from the requirements of the Local Public Contracts Law.” Ibid. Rather than ordering that the agreements be set aside immediately, the court remanded to the Law Division to set “a realistic but firm date . . . for the counties to propose a fair method of disengagement.” Id. at 331. The court noted that it had an “inadequate record upon which to determine what remedies may be appropriate in this unique situation,” and recognized that “suddenly disrupting a county's established method of disposing its solid waste does not adequately protect the interests of the affected citizens.” Id. at 330.
In view of its disposition of the LPCL issue, the court declined to address issues relating to the DEP approvals of the Mercer and Morris plan amendments. Ibid. The court also rejected without discussion an argument by Waste Management that the Law Division erred in allowing Princeton to amend its complaint to allege a violation of the LPCL. Ibid.
We address first defendants' contention that the complaints in lieu of prerogative writs filed by American Ref-Fuel and Princeton are time-barred because they were brought in excess of forty-five days after the agreements were enacted. Rule 4:69- 6(a) of the Rules Governing Civil Practice provides that “[n]o action in lieu of prerogative writs shall be commenced later than 45 days after the accrual of the right to the review, hearing or relief claimed.” Princeton and American Ref-Fuel filed their complaints approximately nine years and five years, respectively, after the Mercer and Morris agreements were signed. Plaintiffs argue, however, that the forty-five day period should be enlarged pursuant to Rule 4:69-6(c), which authorizes enlargement “where it is manifest that the interest of justice so requires.” R. 4:69-6(c).
This Court previously has defined three general categories of cases that qualify for the “interest of justice” exception: “cases involving (1) important and novel constitutional questions; (2) informal or ex parte determinations of legal questions by administrative officials; and (3) important public rather than private interests which require adjudication or clarification.” Brunetti v. Borough of New Milford, 68 N.J. 576, 586 (1975). The Court has added that one of the “[o]ther factors that will ordinarily guide courts include whether there will be a continuing violation of public rights.” Reilly v. Brice, 109 N.J. 555, 559 (1988) (citing Jones v. MacDonald, 33 N.J. 132, 138 (1960)). Balanced against those interests “is the important policy of repose expressed in the forty-five day rule. The statute of limitations is designed to encourage parties not to rest on their rights.” Ibid.
We are convinced that review of the merits of plaintiffs' LPCL claims is warranted under Rule 4:69-6(c). Several specific considerations inform our analysis. First, we note that the Mercer and Morris agreements extend for terms of fifteen and nineteen years, respectively. Section 15 of the LPCL imposes duration limits on all contracts subject to the act's public bidding rules, including a five-year maximum duration for contracts involving “[t]he collection and disposal of municipal solid waste.” N.J.S.A. 40A:11-15(3). The Mercer and Morris agreements are, therefore, ten and fourteen years longer than the LPCL would authorize for such contracts.
Defendants observe that the LPCL authorizes a maximum duration of forty years for contracts involving “[t]he provision of resource recovery services by a qualified vendor” or “the disposal of solid waste delivered for disposal which cannot be processed by a resource-recovery facility.” N.J.S.A. 40A:11- 15(17). The Mercer and Morris agreements clearly, however, do not qualify for the forty-year duration limit. Waste Management does not provide resource recovery services under either agreement, and both agreements oblige Waste Management to accept the counties' municipal solid waste irrespective of whether it is capable of being treated at a resource recovery facility. By requiring that contracts subject to the Act be open to re-bidding on a regular basis, the LPCL contract duration limits provide increased opportunity for companies that are new to the relevant market, or have become more competitive within it, to compete for public contracts and provide a potentially more favorable package of services to the public. Likewise, the limits ensure that the public does not find itself bound in the long-term to contracts that, while advantageous at the time of execution, become unfavorable as a consequence of changes in market conditions. Thus, if the Mercer and Morris agreements are found to be subject to the LPCL, the extended duration of the agreements would work to impose “a continuing violation of public rights,” Reilly, supra, 109 N.J. at 559, because the reduction in competition resulting from the extended term of the agreements constitutes a continuing impairment both of the solid waste management industry's right under the LPCL to the regular re- bidding of public contracts, and of the public's right to the protections afforded by an open market.See footnote 44 Defendants counter that the Mercer and Morris agreements, in fact, constitute favorable transactions for the public, and re- bidding would result in higher rates for the respective counties. However, the parties in both cases presented conflicting affidavits and documentation in the Law Division on the relative costs and benefits of re-bidding. Considering the enormity of the sums involved in these agreements - the record indicates that the monthly payments made by Mercer and Morris under the agreements both aggregate to several millions of dollars per year - we decline from our vantage point to gauge the solid waste disposal market. We can assume only what the LPCL assumes - that open and regular competition for solid waste disposal contracts is the best method for ensuring that the public enjoys the most favorable contract terms that are available in that market. See, e.g., Hillside v. Sternin, 25 N.J. 317, 326 (1957) (noting that public bidding laws must be enforced regardless of whether negotiated contract was “reasonable” or “as advantageous to the city as any other contract which it will be likely to secure”) (citations and quotation marks omitted).
Beyond the duration of the agreements, we note also that the agreements, and the foundation for plaintiffs' challenges to them, both include issues that we have identified previously as involving unique public policy concerns. This Court has emphasized the importance of the LPCL to “'secure for the public the benefits of unfettered competition,' and to 'guard against favoritism, improvidence, extravagance, and corruption.'” National Waste Recycling, Inc. v. Middlesex County Improvement Auth., 150 N.J. 209, 219 (1997) (quoting Terminal Constr. Corp. v. Atlantic County Sewage Auth., 67 N.J. 403, 410) (1975). The practice of public bidding “is universally recognized and deeply embedded in the public policy of this State.” N.E.R.I. Corp. v. Atlantic County Sewage Auth., 147 N.J. 223, 236 (1996). See also Hillside, supra, 25 N.J. at 326 (noting that public bidding is “rooted deep in the sound principles of public policy”) (citations omitted). Those considerations have particular force in the context of solid waste management contracts, which this Court has described as being “fraught with the potential for abuse in the form of favoritism, rigged bids, official corruption and the infiltration of organized crime.” In re Application of Saddle River, 71 N.J. 14, 22 (1976). Consequently, if a party has shown a potential violation of the LPCL public bidding requirements - especially with respect to contracts involving the cost, duration and subject matter of the Mercer and Morris agreements - the concerns at stake provide a strong motivation for courts to reach beyond timeliness barriers and adjudicate the merits.
In view of both the policies underlying the LPCL and the unique circumstances surrounding the Mercer and Morris agreements, we perceive in these petitions “important public . . . interests which require adjudication or clarification.” Brunetti, supra, 68 N.J. at 586. Our determination to reach the merits is bolstered by the likelihood, suggested in the record, that other solid waste management districts have entered into contracts similar to the Mercer and Morris agreements. If the potential injuries alleged in these petitions are being multiplied in other agreements throughout this State, we find it most prudent to resolve the underlying legal issues now.See footnote 55 Defendants have emphasized their interest in repose. We recognize that defendants have relied on the Mercer and Morris agreements for a number of years, and that they may have made decisions in reliance on the continuing enforceability of the rights created by those agreements. Nevertheless, we find the potential prejudice to the public that would result from not reaching the merits in these petitions to outweigh any prejudice that defendants might suffer by our disposition. As the Appellate Division noted below, considerations of fairness can be “appropriately considered during the process of crafting a remedy, should that prove necessary, rather than serve to bar examination of the underlying issue completely.” Borough of Princeton, supra, 333 N.J. Super. at 323.
In addition to arguing that plaintiffs' complaints are time- barred, Waste Management contends that American Ref-Fuel lacks standing to bring suit and that Princeton's suit is barred by the doctrines of laches and unclean hands. The Appellate Division did not address those arguments, but because they were raised in Waste Management's petition we will consider them briefly here.
Waste Management contends that American Ref-Fuel has not shown an injury that would give it standing to challenge the Morris agreement because “the 1993 Agreement does not prevent Morris . . . from directing processible waste to Ref-Fuel's RRF [(resource recovery facility)]” in Essex County. As noted, however, Waste Management sued Morris in 1994 after Morris entered into an agreement with Essex County to dispose of certain portions of its waste at American Ref-Fuel's Newark resource recovery facility. The Law Division's Final Judgment in that matter ordered Morris to dispose at the Waste Management landfill “all Acceptable Waste generated within the geographic boundaries of Morris County required to be landfilled, including by-passed and non-processible waste and the pro-rata portion of ash . . . that remains after Acceptable Waste generated within . . . Morris County is processed” at a resource recovery facility. Thus, American Ref-Fuel clearly is precluded by the terms of the Morris agreement from receiving for disposal the bulk of the waste generated in Morris County. That fact constitutes an injury that satisfies our standing jurisprudence. See, e.g., In re Charter School Application of Englewood, 320 N.J. Super 174, 222 (App. Div. 1999), aff'd, 164 N.J. 316 (2000) (noting that to determine whether standing exists, court must determine “whether the party has a sufficient stake in and real adverseness with respect to the subject matter, and whether the party will be harmed by an unfavorable decision.”).
With respect to Princeton, Waste Management argues that Princeton is barred by the doctrines of laches because of the length of the delay in bringing its complaint. We have noted recently that “[l]aches is an equitable defense that may be interposed in the absence of the statute of limitations,” and is defined as “an inexcusable delay in asserting a right.” Northwest Covenant Med. Ctr v. Fishman, 167 N.J. 123, 140 (2001) (quotation marks omitted). Factors considered in determining whether to apply laches include “the length of delay, reasons for delay, and changing conditions of either or both parties during the delay.” Id. at 141 (quotation marks omitted). However, the “central issue” in determining whether the laches doctrine bars a lawsuit “is whether it is inequitable to permit the claim to be enforced.” Lavin v. Board of Educ. of Hackensack, 90 N.J. 145, 152-53 (1982). In view of our discussion above, we find that the equities in this case weigh in favor of allowing the Princeton suit to proceed, and the laches doctrine therefore does not bar review of the merits.
Waste Management argues that the doctrine of “unclean hands” precludes Princeton from bringing suit because the Borough of Princeton is located within Mercer County, and therefore Princeton has benefitted from the Mercer agreement in the years since it was executed. We find no basis in the Princeton case for application of the doctrine of unclean hands. The essence of that doctrine, which is “discretionary on the part of the court,” Heuer v. Heuer, 152 N.J. 226, 238 (1998), is that “[a] suitor in equity must come into court with clean hands and he must keep them clean after his entry and throughout the proceedings.” A. Hollander & Son, Inc. v. Imperial Fur Blending Corp., 2 N.J. 235, 246 (1949). “In simple parlance, it merely gives expression to the equitable principle that a court should not grant relief to one who is a wrongdoer with respect to the subject matter in suit.” Faustin v. Lewis, 85 N.J. 507, 511 (1981). Apart from Princeton's delay in bringing suit, Waste Management has not indicated that Princeton has acted improperly with respect to this litigation or the Mercer agreement. Delay in itself, while perhaps an appropriate basis for rejecting a claim pursuant to the laches doctrine, does not establish “unclean hands” for purposes of our jurisprudence.
We turn, then, to the question whether the Mercer and Morris agreements should have been bid publicly pursuant to the LPCL. As noted, at the time the agreements were entered into, the LPCL required public bidding, pursuant to rules specified in the act, for all contracts “for the performance of any work or the furnishing or hiring of materials or supplies” that involved the expenditure of more than $7,500 in public funds. L. 1985, c. 469, § 7. The act defined the term “work” expansively to include “services and any other activity of a tangible or intangible nature performed or assumed pursuant to a contract or agreement with a contracting unit.” L. 1987, c. 102, § 30 (subsequent amendments omitted). However, the LPCL exempts altogether a number of contract types from the public bidding requirement, including contracts for “real property or any interest therein.” N.J.S.A. 40A:11-2(4).
The essence of defendants' position is that because the Mercer and Morris contracts purported to grant to the counties interests in real property owned by Waste Management, the contracts are exempt from the LPCL public bidding requirement pursuant to the N.J.S.A. 40A:11-2(4) exception. In their briefs and at oral argument, defendants have emphasized their view that the agreements created bona fide easements, and that it was essential for the counties to acquire interests in property because such interests would, for instance, protect the counties against interference by the Commonwealth of Pennsylvania, authorize specific performance in the event of breach by Waste Management, and provide to the counties certain benefits with respect to creditor law. We need not resolve, however, whether the agreements create bona fide property rights, or whether such rights would provide the protection that defendants claim. Even if the agreements create such rights, those qualities do not overcome the fact that the agreements also involve substantial service obligations on the part of Waste Management. The question for our review is whether the agreements, taken as a whole, should be characterized, for purposes of the LPCL, as contracts for “real property or any interest therein,” N.J.S.A. 40A:11-2(4), or as contracts “for the performance of any work.” L. 1987, c. 102, § 30.
We have noted that “[p]ublic bidding statutes exist for the benefit of taxpayers, not bidders, and should be construed with sole reference to the public good.” National Waste, supra, 150 N.J. at 220 (citations omitted). Accordingly, this Court has curtailed “the discretion of local authorities by demanding strict compliance with public bidding guidelines.” L. Pucillo & Sons, Inc. v. Mayor and Council of the Borough of New Milford, 73 N.J. 349, 356 (1977) (citations omitted). See also Autotote Ltd. v. New Jersey Sports & Exposition Auth., 85 N.J. 363, 370 (1981) (noting that courts have construed LPCL strictly “so as not to dilute [public policy] or permit a public body to avoid pertinent legislative enactments”); Kurman v. City of Newark, 124 N.J. Super. 89, 94 (App. Div.) (“Statutes calling for public bidding . . . should be construed with sole reference to the public good and rigidly adhered to by the court.”), certif. denied, 63 N.J. 563 (1973). “Nevertheless, 'the exceptions should not be read out of the statute,' thereby frustrating the intent of the Legislature in its grant of power to the contracting authority.” National Waste, supra, 150 N.J. at 223 (quoting Autotote, supra, 85 N.J. at 376 (Pashman, J., concurring)).
As noted, both the Mercer and Morris agreements, which are substantially similar, grant explicit interests in property to the respective counties - the Mercer agreement grants to Mercer “all rights, title and interest in an irrevocable, non-exclusive license which shall run with the land,” and the Morris agreement grants to Morris “all rights, title and interest to an undivided interest in the Premises owned by Grantor, consisting of the acquisition of certain easement rights relating thereto, which shall run with the land.” The bulk of the obligations under the agreements, however, are service obligations undertaken by Waste Management. As noted, Waste Management is responsible under both agreements to, among other things, maintain liners, protective covers, burrow areas, and haul roads, and to operate leachate collection and treatment facilities, stormwater collection and treatment facilities, erosion and sedimentation control facilities, gas vents, and gas collection systems. The counties pay to Waste Management, on a monthly basis, a sum that is calculated on the basis of the composition of the waste that Waste Management stores and treats that month. Perhaps most telling for our purposes, both agreements require Waste Management to provide additional landfill space, beyond that specified in the metes and bounds descriptions of the property grants, if the current landfill capacity subject to the “easement” is not sufficient to permit Waste Management to satisfy its contractual obligations.
Clearly, therefore, the agreements are not merely contracts for the acquisition of property rights. They deal predominantly with solid waste disposal services, both in terms of the obligations undertaken by Waste Management and the compensation provided in return by the respective counties. Defendants emphasize the language incorporated into the agreements, as well as their designated titles, that emphasize that the agreements confer a “License” and an “Easement” but make no mention of service obligations. That terminology does not, however, alter the over-riding purposes of the agreements. To hold otherwise would permit stylistic drafting of language to transform contracts otherwise subject to the LPCL into a contract subject to one of the Act's narrow exceptions. “[I]t is axiomatic that statutory exemptions to public bidding requirements should be strictly construed so as not to dilute [the policy of public bidding] or permit a public body to avoid pertinent legislative enactments.” Autotote, supra, 85 N.J. at 370.
The question in this case is not, in short, whether the Mercer and Morris agreements confer easements, but whether, understood as a whole, the defining quality of the agreements involves the creation of property interests or the establishment of an obligation to provide waste disposal services. Considering that the preponderance of both agreements relate exclusively to the provision of services, we hold that both agreements constitute, for purposes of the LPCL, service contracts and not contracts for “real property or any interest therein.” N.J.S.A. 40A:11-2(4). Accordingly, the agreements are subject to the LPCL bidding requirements.
Our holding is supported by a notice issued to county agencies by the Division of Local Government Services in the New Jersey Department of Community Affairs (Division) in response to Atlantic Coast II. In that notice, which presumably was distributed to Morris and Mercer, the Division stated that the termination of historic waste flow controls “does not mean[] that municipalities may seek alternate sites for solid waste disposal without going through the procurement process. If alternative disposal sites are pursued, the service must be procured in accordance with the Local Public Contracts Law.” Letter from Beth Gates, Director, Division of Local Government Services, to Public Officials 1 (November 1997) (emphasis added). That statement by the Division - an agency delegated by the LPCL with the authority to “assist contracting units in all matters affecting the administration of this law,” N.J.S.A. 40A:11-37 - is “entitled to deferential consideration,” National Waste, supra, 150 N.J. at 228, and explicitly contradicts defendants' position in this appeal.
Defendants emphasize the significance of Autotote, supra, 85 N.J. 363, but we find Autotote to be of marginal relevance. Autotote involved an award by the New Jersey Sports and Exposition Authority (Authority) to a private company, without public bidding, for the installation at the Meadowlands racetrack of a “totalisator system,” described by the Court as a “complex computer network designed to tabulate and categorize the bets made on every horse in each race.” Id. at 365. The New Jersey Sports and Exposition Authority Law (NJSEAL) provided at that time for the public bidding of all contracts entered into by the Authority “for the doing of any work,” but excepted from the bidding requirement contracts “for the furnishing or performing [of] services of a professional nature.” L. 1971, c. 137, § 21, repealed by L. 1981, c. 447, § 7, eff. Jan. 9, 1982.
The Autotote Court held that the “professional services” exemption to the NJSEAL public bidding requirement applied because “the services to be provided under the . . . contract called for such a degree of technical knowledge and professional skill as to bring the contract within the 'professional services' exception to the bidding requirement.” Autotote, supra, 85 N.J. at 373. The Autotote Court did not have before it, however, the sort of hybrid property-services contract that we are considering in this appeal, and its conclusion that the contract was one for “professional services” does not inform our determination whether the Mercer and Morris agreements should be regarded, for purposes of the LPCL, as contracts for “real property or any interest therein.” N.J.S.A. 40A:11-2(4).
Defendants also make much of our statement in McGuire v. City of Jersey City, 125 N.J. 310 (1991), that the LPCL “has no application to acquisitions of interests in real property.” Id. at 318. McGuire is clearly distinguishable. That case involved a lease entered into by an individual for twenty years for the use of two buildings owned by the City