(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 February 18, 1997 -- Decided July 17, 1997
STEIN, J., writing for a unanimous Court.
In this appeal, the Court addresses the applicability of the exception from the public bidding
requirement set forth in the Local Public Contracts Law (LPCL) to the curbside-collection component of a
county's integrated recycling contract.
In October l994, the Department of Environmental Protection (DEP) approved a plan by the
Middlesex County Board of Chosen Freeholders to comply with the New Jersey Statewide Mandatory Source
Separation and Recycling Act (Recycling Act). The plan required that a private contractor be chosen to
implement the recycling program on behalf of all municipalities electing to participate and designated the
Middlesex County Improvement Authority (MCIA) as the local agency responsible for the program's
implementation.
Thereafter, MCIA publicly issued a Request for Qualifications (RFQ), which specified that the
successful respondent would be responsible both for the curbside collection of all recyclable materials and for
their ultimate sale or other disposition. National Waste Recycling, Inc. (National) and Waste Management
of North Jersey (WMNJ) both submitted proposals to service either a portion of the county and/or the
entire county. MCIA then entered into negotiations with both National and WMNJ, obtaining significant
price concessions.
In February l995, MCIA awarded a five-year contract to WMNJ, based on the fact that WMNJ's
final proposal for the entire County represented the lowest five-year cost. The negotiation process itself
resulted in a total savings to the County of approximately $5,500,000.
National filed suit against MCIA and WMNJ, seeking a temporary injunction and invalidation of the
contract. Although National's amended complaint asserted several challenges to the validity of the contract,
this appeal focuses on the claim that the contract had been awarded without public bidding of the curbside
collection portion of the contract, in violation of the LPCL.
MCIA and WMNJ both moved for summary judgment, arguing that the contract was exempt from
public-bidding requirements pursuant to N.J.S.A. 40A:11-5, which provided for the exemption from public
bidding for the marketing of recyclable materials recovered through a recycling program. The trial court
found a strong public policy favoring public bidding and concluded that the curbside collection obligation
under the contract did not fit within the exception of the statute, construing the exception, instead, to refer
only to the marketing of the material recovered or the post-collection phase of the recycling process. The
court found the contract void and ordered that it be set aside. MCIA and WMNJ successfully moved for a
stay pending appeal.
While the appeal was pending, the Attorney General, acting on behalf of the Division of Solid Waste
Management (DSWM) of the New Jersey DEP and the Division of Local Government Services (DLGS), the
agencies responsible for enforcing the solid waste laws, filed an amicus curiae brief concerning the
interpretation of the bidding-requirement exception contained in the statute.
The Appellate Division, construing the bidding exception statute on the basis of its plain meaning,
concluded that the contract was a marketing contract within the plain meaning of the statute. The panel
further concluded that the bidding exemption reflected a legislative assumption that the public entity charged
with the responsibility of effecting the recycling program has greater leverage to achieve more favorable
prices through negotiations than through bidding.
Finally, the Appellate Division held that a joint advisory opinion letter issued by the DSWM and the
DLGS that had concluded that the exception applied only to the sale of recyclable materials was not binding
on the Appellate Division because the letter contained only the conclusions of law of a state agency.
Thereafter, the Attorney General moved for leave to intervene for the purpose of seeking
certification. The Supreme Court granted the motion and the subsequent petition for certification.
HELD: The Legislature did not intend to exempt the curbside collection of solid waste for eventual
recycling from the public bidding requirement of the Local Public Contracts Law. However, to avoid
unfairness and prejudice to both WMNJ and County taxpayers, the contract may remain in effect until its
termination date.
l. The LPCL requires public bidding for all municipal and county contracts exceeding $7,500. (pp. 11-13)
2. The investigative reports received by the Legislature prior to the enactment of Solid Waste Utility Control
Act documented the continued necessity for competitive bidding and for strict judicial construction of the
LPCL as applied to solid waste collection. (pp. 13-15)
3. Although the Legislature has enacted numerous other exceptions to the bidding statute, courts have
construed the LPCL exceptions strictly. (pp. 16-17)
4. When a statute is ambiguous, the Court must construe it in a way that will best effectuate the
Legislature's intent. (pp. 17-22)
5. The application of contemporary legal commentary to the statute suggests that marketing of recyclable
materials recovered through a recycling program is not intended to refer to the collection component of a
recycling program. (pp. 22-23)
6. Where agency interpretation coincides with the original enactment of a regulatory statute that the agency
is charged with enforcing, the case for deference to the agency is strong. (pp. 23-26)
7. Since 1989, when enacting solid waste legislation, the Legislature reiterated its longstanding concern about
competition in the solid waste collection industry, emphasizing the continuing need for supervision of the
industry because of the impact of anti-competitive forces. (pp. 26-27)
8. Because in this unique instance ordering re-bidding of the collection phase would be unfair to WMNJ and
may be prejudicial to the County taxpayers, the contract may remain in effect until its termination date. Any
subsequent contracts for the collection of recyclables, however, must be procured in compliance with the
LPCL bidding requirement. (pp. 28-29)
Judgment of the Appellate Division is REVERSED and the matter is REMANDED to the Law
Division for entry of judgment consistent with this opinion.
CHIEF JUSTICE PORITZ and JUSTICES HANDLER, POLLOCK, O'HERN, GARIBALDI and
COLEMAN join in JUSTICE STEIN's opinion.
SUPREME COURT OF NEW JERSEY
A-
104 September Term 1996
NATIONAL WASTE RECYCLING,
INC. and JOHN GRYWALSKI,
Plaintiffs,
and
DEPARTMENT OF ENVIRONMENTAL
PROTECTION and DIVISION OF
LOCAL GOVERNMENT SERVICES,
Intervenors-Appellants,
v.
THE MIDDLESEX COUNTY IMPROVEMENT
AUTHORITY and WASTE MANAGEMENT OF
NORTH JERSEY, INC.,
Defendants-Respondents.
Argued February 18, 1997 -- Decided July 17, 1997
On certification to the Superior Court,
Appellate Division, whose opinion is reported
at
291 N.J. Super. 283 (1996).
Regina H. Nugent, Deputy Attorney General,
argued the cause for intervenors-appellants
(Peter Verniero, Attorney General of New
Jersey, attorney; Andrea M. Silkowitz,
Assistant Attorney General, of counsel).
Jonathan L. Williams argued the cause for
respondent Middlesex County Improvement
Authority (DeCotiis, Fitzpatrick & Gluck,
attorneys; Benjamin Clarke, on the brief).
Robert S. Moraff argued the cause for respondent Waste Management of North Jersey, Inc. (Schwartz, Tobia, Stanziale, Becker,
Rosensweig & Sedita and Ambrosio, Kyreakakis,
DiLorenzo, Moraff & McKenna, attorneys).
The opinion of the Court was delivered by
STEIN, J.
Under the Local Public Contracts Law (LPCL), N.J.S.A.
40A:11-1 to -49, local public entities must submit any proposed
purchase of goods or services in excess of $7500 to public
advertisement and bidding. See N.J.S.A. 40A:11-3, -4. The LPCL
provides a number of exemptions from the bidding requirement.
See N.J.S.A. 40A:11-5. N.J.S.A. 40A:11-5(1)(s) provides an
exemption from the public bidding requirement for "[t]he
marketing of recyclable materials recovered through a recycling
program . . . ." In a reported decision, the Appellate Division
reversed a trial court's ruling that invalidated a five-year
contract, which included the curbside collection and marketing of
recyclable materials in Middlesex County, between defendants
Middlesex County Improvement Authority (MCIA) and Waste
Management of North Jersey, Inc. (WMNJ), on the ground that the
curbside collection aspect of the contract had not been publicly
bid contrary to the LPCL. See
291 N.J. Super. 283, 287, 289-95
(1996). The Department of Environmental Protection (DEP) and the
Division of Local Government Services (DLGS) (collectively
intervenors) petitioned the Court for certification on the issue
whether the Appellate Division panel had erroneously concluded
that the MCIA/WMNJ integrated recycling contract fell within the
scope of the exemption from public bidding provided by N.J.S.A.
40A:11-5(1)(s). We granted the intervenors' petition for
certification,
146 N.J. 565 (1996).
I
The essential facts are undisputed. Pursuant to the Solid
Waste Management Act (Act), N.J.S.A. 13:1E-1 to -207, each county
in New Jersey and the Hackensack Meadowlands District is required
to implement a solid waste management plan regulating the
disposal of all solid waste generated within its borders. See
N.J.S.A. 13:1E-19 to -23. A 1987 amendment to the Act, known as
the New Jersey Statewide Mandatory Source Separation and
Recycling Act (Recycling Act), L. 1987, c. 102 (codified at
N.J.S.A. 13:1E-99.11 to -.32), requires that every county's solid
waste management plan must include a recycling component. See
N.J.S.A. 13:1E-99.13. Initially, the Legislature set the
mandatory recycling goal at twenty-five percent of the total
waste stream generated. L. 1987, c. 102, §3. In 1992, it
increased that goal to require by December 31, 1995, at least
sixty percent recycling. L. 1992, c. 167, § 1 (codified at
N.J.S.A. 13:1E-99.13).
Pursuant to that legislative requirement, the Middlesex
County Board of Chosen Freeholders amended the recycling plan of
Middlesex County (County) on June 2, 1994, to achieve the sixty
percent goal within the specified time period. The amended plan,
approved by the DEP on October 3, 1994, required that a private
contractor be chosen to implement the recycling program on behalf
of all municipalities electing to participate, and designated
MCIA as the local agency responsible for the program's
implementation.
On October 14, 1994, MCIA publicly issued a Request for
Qualifications (RFQ) for the "Collection and Marketing of Source-Separated Recyclable Materials, Including the Processing and
Transfer Services Necessary for such Marketing." Critical to the
issue requiring resolution in this appeal, the RFQ specified that
the successful respondent would be responsible both for the
curbside collection of all recyclable materials and for their
ultimate sale or other disposition. The RFQ specified the
schedule for collection and the materials to be collected;
provided that the successful respondent would be responsible for
negotiating and entering into contracts for the sale or
disposition of the recyclables collected; and, finally, required
that the successful respondent would be responsible for supplying
sufficient equipment to provide recycling and marketing services.
Additionally, the RFQ stated MCIA's preference to select two
contractors to service the participating municipalities in the
County: one contractor for the northern and one contractor for
the southern sections of the County. However, it provided that
one contractor could be selected for the entire County if the
contractor could demonstrate that it was capable of servicing the
entire County efficiently and at a lower cost.
MCIA received responses from ten companies, six of which met
its qualifications. Plaintiff National Waste Recycling, Inc.
(National) and Defendant WMNJ were among those found to be
qualified. On November 30, 1994, MCIA issued a Request for
Proposals (RFP) to the six qualified companies. Five of those
companies, including National and WMNJ, submitted proposals.
National submitted a proposal to service the southern portion of
the County; WMNJ submitted a proposal to provide services for the
entire County or any portion thereof.
Pursuant to the RFP, MCIA conducted a preliminary review and
evaluation of the proposals, ranking National and WMNJ highest
after considering the cost proposals, technical proposals,
contractual proposals and the financial condition of each
company. MCIA then entered into negotiations with both
companies. MCIA representatives met separately with National and
WMNJ to negotiate terms, exploring each candidate's willingness
to make price concessions. During the negotiation process, each
candidate was apprised of the price terms proposed by the other.
One major concession that MCIA obtained from both National and
WMNJ was a guaranteed "floor price" to be paid to the County for
the recyclable materials.
On February 8, 1995, MCIA awarded the five-year $22,000,000
contract to WMNJ based on the recommendation contained in a
written evaluation of the two proposals. The evaluation was
prepared by a Project Team that included a consulting engineer,
special legal counsel and a financial advisor. MCIA's executive
director certified that its decision was premised on the fact
that WMNJ's final proposal for the entire County represented the
lowest five-year cost to MCIA. WMNJ's contract price for the
entire County was lower by $259,520 than the aggregate cost the
County would incur if the MCIA awarded National the contract for
the southern section of the County and WMNJ had been selected to
provide services for the northern section of the County. Another
factor that tipped the balance in favor of WMNJ was that, despite
repeated requests by MCIA, National had failed to furnish an
audited financial statement, which was one of the conditions
under which MCIA had agreed to qualify National. The negotiation
process itself resulted in a total savings to the County of
approximately $5,500,000.
On February 21, 1995, plaintiff National filed suit against
defendants MCIA and WMNJ, seeking a temporary injunction and
invalidation of the contract. John Grywalski, a Middlesex County
resident, joined National as a plaintiff. Plaintiffs' amended
complaint asserted three separate challenges to the validity of
the contract. This appeal focuses on the claim that the contract
was invalid because it had been awarded without public bidding of
the curbside collection portion of the contract, in violation of
the LPCL. See N.J.S.A. 40A:11-3, -4.
Defendants moved for summary judgment, arguing that
plaintiffs lacked standing and that their claims lacked merit as
a matter of law. Concerning the standing issue, defendants
asserted that New Jersey law estops a party from challenging the
validity of the process used to award a contract when that party
had participated without complaint in that very process until a
decision contrary to its interests was reached. Defendants
argued that this rule applied to both National and Grywalski,
because discovery had revealed that Grywalski was a personal
friend of one of the principals of National and that he was not
spending any personal funds to prosecute the lawsuit. Concerning
the merits of the bidding issue, defendants asserted that the
contract was exempt from public-bidding requirements pursuant to
N.J.S.A. 40A:11-5, which provided:
Any purchase, contract or agreement of
the character described in [section 4 of the
LPCL] of the act may be made, negotiated or
awarded by the governing body without public
advertising for bids and bidding therefor if:
(1) The subject matter thereof consists of:
. . . .
(s) The marketing of recyclable materials
recovered through a recycling program or the
marketing of any product intentionally
produced or derived from solid waste received
at a resource recovery facility or recovered
through a resource recovery program,
including, but not limited to, refuse-derived
fuel, compost materials, methane gas, and
other similar products.
[emphasis added.]
The trial court held that National was barred from
contending that the contract required public bidding because it
had actively participated in the procurement process. However,
the trial court found that, although it was troubled by the facts
and circumstances surrounding Grywalski's participation in the
lawsuit, Grywalski had standing based on his status as a taxpayer
and "potential user of this county-wide recycling program."
Concerning the merits of plaintiffs' claim, the trial court
stated that "in matters of discretion courts must give very
respectable deference to the decision and the judgments of
[public] authorities." However, it found that that principle was
outweighed by the strong public policy favoring public bidding
and the corollary requirement that "exceptions to the bidding
statute must be interpreted narrowly." The trial court concluded
that the curbside collection obligation under the contract did
not fit within the N.J.S.A. 40A:11-5(1)(s) bidding exception,
construing the exception to refer only to the marketing of
materials recovered from a recycling program, specifically, the
post-collection phase of the recycling process, stating:
The exception applies to "the marketing of
recyclable materials recovered through a
recycling program." . . .
The exception distinguishes between
marketing and recovery in its very terms.
Any fair reading of that language . . .
indicates that it clearly contemplates
recovery of recyclables through a recycling
program, followed by marketing. It is the
marketing phase of the operation which the
statute says need not be bid.
The court found the contract void and ordered that it be set
aside. The parties consented to a dismissal without prejudice of
plaintiffs' remaining claims. Defendants successfully moved for
a stay pending appeal.
Defendants MCIA and WMNJ appealed the trial court's
judgment. While the appeal was pending, the Attorney General,
acting on behalf of the Division of Solid Waste Management (DSWM)
of the New Jersey DEP and the DLGS, the agencies respectively
responsible for enforcing the solid waste laws, see N.J.S.A.
13:1E-9(a), and administering the LPCL, see N.J.S.A. 40A:11-37,
40A:11-49, 52:27BB-6, 8, filed an amicus curiae brief concerning
the interpretation of the bidding-requirement exception contained
in N.J.S.A. 40A:11-5(1)(s).
The Appellate Division affirmed the trial court's holding
that plaintiff Grywalski had satisfied the standing requirement.
291 N.J. Super at 287. However, the Appellate Division reversed
the trial court on the bidding issue, holding that the contract
fell within the statutory exception to the LPCL relating to the
marketing of recyclable materials. Ibid.
The Appellate Division construed the bidding exception
statute on the basis of its plain meaning. Id. at 291. Applying
a dictionary definition of "marketing," the panel concluded that
the contract, which encompasses functions from curbside
collection of recyclables through the sale of the recycled goods
to a third party for reuse, is a "marketing" contract within the
plain meaning of N.J.S.A. 40A:11-5(1)(s). Id. at 292.
The Appellate Division reasoned that a broad reading of the
exception was appropriate because most of the exceptions in the
bidding statute are "designed to promote policy goals that the
Legislature has found to be of sufficient independent importance
to outweigh the salutary but constrictive effects of public
bidding procedures." Id. at 291. The panel found support for
its conclusion from the context in which the Legislature adopted
N.J.S.A. 40A:11-5(1)(s), noting that the "provisions of
subparagraph (s) and the definition of marketing that accompanied
it into the LPCL were but part of a larger piece of legislation,"
the Recycling Act. Id. at 292. The court explained that the
legislative history of the Recycling Act revealed that the Act's
focus "was to mandate source separation of goods that could be
recycled and `returned to the economic mainstream in the form of
raw materials or products[.]'" Id. at 293 (quoting N.J.S.A.
13:1E-99.11). The panel concluded that the exemption from
bidding enacted in N.J.S.A. 40A:11-5(1)(s) "reflects a
legislative assumption that in this new field the public entity
charged with the responsibility of effecting the recycling
program has greater leverage to achieve more favorable prices
through negotiations than through bidding." Ibid. The court
believed that MCIA's certification verified that assumption
because it stated that the negotiation process had resulted in
savings of approximately $5,500,000. Ibid. Additionally, the
court relied on a certification by the former Director of the
DSWM, which explained that with an integrated contract it was
less likely that the recyclables would be contaminated by other
solid waste, and that an integrated contract would assure the
greatest retention of value for source-separated recyclables.
Ibid.
The court rejected the trial court's narrow interpretation
of subparagraph (s) because it determined that the policy
considerations, such as prevention of corruption and excessive
cost, that underlie the formal public bidding process were not
implicated in the award of the contract to WMNJ. The court noted
that the MCIA had used a competitive, negotiated process, with no
evidence of favoritism, partiality or corruption. Id. at 294.
Additionally, the panel found that no evidence existed that a
bifurcated approach, which would require bidding for the
collection component of the contract and negotiation for the
marketing and sale components of the contract, would save the
County money or further the legislative intent underlying the
Recycling Act. Ibid.
Finally, the Appellate Division held that a joint advisory
opinion letter issued by the DSWM and the DLGS that had concluded
that N.J.S.A. 40A:11-5(1)(s) applied only to the sale of
recyclable materials was not binding on the Appellate Division
because the letter contained only "the conclusions of law of a
state agency." Ibid.
National did not seek review of the Appellate Division's
decision. On July 8, 1996, intervenors, represented by the
Attorney General, moved for leave to intervene for the purpose of
seeking certification. The Court granted intervenors' motion and
subsequent petition for certification. Neither party appealed
the standing issue.
II
The LPCL requires public bidding for all municipal and county contracts exceeding $7500. See N.J.S.A. 40A:11-3, -4;
Meadowbrook Carting Co. v. Borough of Island Heights,
138 N.J. 307, 313 (1994). The purpose of the public bidding requirement
is to "secure for the public the benefits of unfettered
competition[,]" and to "guard against favoritism, improvidence,
extravagance, and corruption." Terminal Constr. Corp. v.
Atlantic County Sewerage Auth.,
67 N.J. 403, 410 (1975); see also
N.E.R.I. Corp. v. New Jersey Highway Auth.,
147 N.J. 223, 236
(1996) ("The practice of public bidding is universally recognized
and deeply embedded in the public policy of this State.");
Utilimatic, Inc. v. Brick Township,
267 N.J. Super. 139, 144 (Law
Div. 1993) ("The present statutory provisions are reflective of
long established principles of common law. The purpose of the
bidding laws is to protect the public by placing bidders on an
equal footing and to ensure that competition will eliminate the
possibility of fraud, extravagance or favoritism in the
expenditure of public funds."). See generally 10 McQuillin, The
Law of Municipal Corporations § 29.29, at 375 (Gail A. O'Gradney
& Charity R. Miller eds., 3rd ed. 1990) (discussing purpose of
public bidding).
Public bidding statutes exist for the benefit of taxpayers,
not bidders, and should be construed with sole reference to the
public good. See N.E.R.I., supra, 147 N.J. at 236; Township of
Hillside v. Sternin,
25 N.J. 317, 322 (1957). Courts have
accordingly curtailed the "discretion of local authorities by
demanding strict compliance with public bidding guidelines." L.
Pucillo & Sons, Inc. v. Mayor of New Milford,
73 N.J. 349, 356
(1977); see, e.g., Meadowbrook Carting, supra, 138 N.J. at 314;
Terminal Constr., supra, 67 N.J. at 409-10; Township of Hillside,
supra, 25 N.J. at 325-26; 426 Bloomfield Ave. Corp. v. City of
Newark,
262 N.J. Super. 384, 387 (App. Div. 1993); see also
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).
Municipal garbage collection contracts are subject to the
LPCL public-bidding requirement. See Meadowbrook Carting, supra,
138 N.J. at 310; In re Application of Saddle River,
71 N.J. 14,
28 (1976). See generally New Jersey, State Commission of
Investigation, Solid Waste Regulation 1-2 (April 1989) (1989
Commission Report) (documenting and evaluating need for solid
waste reform in New Jersey during period of 1969 to 1989, and
recommending continued encouragement of competitive processes in
securing municipal solid waste contracts). Prior to the
enactment of the Solid Waste Utility Control Act, L. 1970, c. 40
(codified at N.J.S.A. 48:13A-1 to -13), the Legislature received
reports from several investigative bodies concerning the solid
waste industry, indicating that the waste collection system "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."
In re Application of Saddle River, supra, 71 N.J. at 22; see
Frederick B. Lacey, U.S. Attorney for the District of New Jersey,
Recommendations to the 1970 Session of the New Jersey Legislature
Concerning Legislation Which Might Be Enacted to Curb the Power
and Influence of Organized Crime in New Jersey 45-46 (Jan. 20,
1970); New Jersey, State Commission of Investigation, Report
Relating to the Garbage Industry of New Jersey 2-7 (October 7,
1969). To remedy the systematic corruption, "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." In re Application of Saddle
River, supra, 71 N.J. at 22. The legislative response reflected
the Legislature's intent to ensure and encourage competition in
the awarding of municipal solid waste contracts through the
regulation of the solid waste industry as a public utility by the
Board of Public Utilities (BPU), see N.J.S.A. 48:13A-1 to -13, in
addition to public bidding. In re Saddle River, supra, 71 N.J.
at 21-25.
In 1989, the State Commission of Investigation issued a
second report, concluding that the regulation process had failed
to encourage competition. 1989 Commission Report, supra, at 1,
33-50. The report recommended that the BPU regulation of
haulers' rates be abolished and that the State should instead
concentrate its efforts on encouraging competition through
"eliminating unsavory elements from the industry." Id. at 2. It
also recommended that an independent Solid Waste Authority be
created to "subsum[e] the resources and remaining authority of
the BPU and focus . . . its attention on monitoring and
stimulating competition among haulers." Ibid. Thereafter, the
Legislature accepted those recommendations and enacted the Solid
Waste Collection Regulatory Reform Act (Regulatory Reform Act),
L. 1991, c. 381 (codified at N.J.S.A. 48:13A-7.1 to .23), which
provided for the eventual elimination of the rate regulation
function of the BPU. The Regulatory Reform Act, however,
continued supervision by the DSWM of the solid waste collection
industry to ensure competition. See, e.g., N.J.S.A. 48:13A-7.19.
The investigative reports from both 1969-70 and 1989 document the
continued necessity for competitive bidding and for strict
judicial construction of the LPCL as applied to solid waste
collection.
In April 1987, the Legislature enacted the Recycling Act,
supra, "the most comprehensive mandatory recycling program in the
nation." Anthony T. Drollas, Jr., The New Jersey Statewide
Mandatory Source Separation and Recycling Act: The Nation's
First Comprehensive Statewide Mandatory Recycling Program, 12
Seton Hall Legis. J. 271, 272 (1989). The Act was part of a
systematic attempt to improve the prior "crisis" situation caused
by inadequate landfill space and resulted in the establishment of
a system of waste management where "waste is disposed of
efficiently and with a minimal negative impact on the
environment." Atlantic Coast Demolition & Recycling, Inc. v.
Board of Chosen Freeholders,
931 F. Supp. 341, 346 (D.N.J. 1996),
rev'd on other grounds
112 F.3d 652 (1997).
Concurrently with its passage of the Recycling Act, the
Legislature amended the LPCL by adding, among other provisions,
the exception set forth at N.J.S.A. 40A:11-5(1)(s). See L. 1987,
c. 102, § 32. The Legislature also inserted the following
definition of "marketing" in the LPCL's definition section:
(13) "Marketing" means the marketing of
designated recyclable materials source
separated in a municipality which entails a
marketing cost less than the cost of
transporting the recyclable materials to
solid waste facilities and disposing of the
materials as municipal solid waste at the
facility utilized by the municipality.
[L. 1987, c. 102, § 30(13) (codified at
N.J.S.A. 40A:11-2(13)).]
The question the Court must resolve is whether the exception in
subparagraph (s) should be construed to apply to the curbside-collection component of a county's integrated recycling contract,
or be limited to the post-collection sale of collected and sorted
materials to an end-user.
The Legislature has enacted numerous other exceptions to the
bidding statute, see N.J.S.A. 40A:11-5(1)(a) to -(bb), generally
applying to situations in which public bidding would be
"meaningless or impractical." Capasso v. L. Pucillo & Sons,
132 N.J. Super. 542, 550 (Ch. & Law Div.), aff'd,
132 N.J. Super. 473
(App. Div. 1974). Courts have construed the LPCL exceptions
strictly "so as not to dilute [the public policy] or permit a
public body to avoid pertinent legislative enactments." Autotote
Ltd. v. New Jersey Sports & Exposition Auth.,
85 N.J. 363, 370
(1981). 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.
See id. at 376 (Pashman, J., concurring).
When construing a statute, courts initially consider the
statute's plain meaning. State v. Szemple,
135 N.J. 406, 421
(1994); Merin v. Maglaki,
126 N.J. 430, 434 (1992). However, the
meaning of a statute is not self-evident where varying
interpretations are plausible. Szemple, supra, 135 N.J. at 421-22. In this case, the trial court narrowly construed the term
"marketing" in the subparagraph (s) exception, noting that the
statute explicitly distinguished between recovery and recycling,
and found that the exception did not apply to the curbside-collection aspect of a recycling contract. However, the
Appellate Division, relying on a dictionary definition of the
term "marketing," construed the text of the exception broadly to
encompass the entire recycling process, including collection.
Those differing interpretations suggest that the statutory
meaning of the term "marketing" may not be obvious or self-evident. See ibid.
"When a statute is ambiguous, the Court must construe the
statute in a way that will best effectuate the Legislature's
intent." Id. at 422; see Cedar Cove, Inc. v. Stanzione,
122 N.J. 202, 213 (1991). The general intent of the statute controls the
interpretation of its component parts. Szemple, supra, 135 N.J.
at 422. N.J.S.A. 13:1E-99.11 states the Legislature's "findings
and declarations" concerning the Recycling Act and broadly
describes its goals:
The Legislature . . . declares that it is in
the public interest to mandate the source
separation of marketable waste materials on a
Statewide basis so that reusable materials
may be returned to the economic mainstream in
the form of raw materials or products rather
than be disposed of at the State's
overburdened landfills, and further declares
that the recycling of marketable materials by
every municipality in this State, and the
development of public and private sector
recycling activities on an orderly and
incremental basis, will further demonstrate
the State's long-term commitment to an
effective and coherent solid waste management
strategy.
The lower courts attempted to effectuate the Legislature's
expressed goals in their respective construction of the bidding
exception for the marketing of recyclable materials. The trial
court considered of paramount importance the long-standing policy
requiring public bidding. The Appellate Division, on the other
hand, emphasized the overall goal of the Recycling Act. Because
it determined that an integrated contract was more practical in
view of the potential long-term risk of a negative or non-existing market for recovered recyclable materials, the Appellate
Division concluded that its interpretation better effectuated the
legislative intent.
Given the contradictory interpretations of the lower courts,
we resort to other sources to inform our conclusion, such as
legislative history, legal commentary, agency interpretation and
prior precedent, if available. Extrinsic aids may be used to
interpret language beyond that expressly written in the statute.
See Szemple, supra, 135 N.J. at 422; Cedar Cove, supra, 122 N.J.
at 211. "Courts may . . . freely refer to legislative history
and contemporaneous construction for whatever aid they may
furnish in ascertaining the true intent of the legislation." New
Jersey Pharmaceutical Ass'n v. Furman,
33 N.J. 121, 130 (1960).
The legislative history does not explicitly indicate the
Legislature's intended meaning concerning the term "marketing"
contained in subparagraph (s). When originally proposed in 1986,
the sponsors of the proposed legislation included as part of the
Recycling Act a public-bidding exception only for the "sale of
recyclable materials," in the form of an amendment to N.J.S.A.
40A:11-36, the LPCL section requiring public sales to the highest
bidder for the sale of a local contracting unit's personal
property. See Senate Bill No. 1478, § 35 (1986) and Assembly
Bill No. 1781 , § 32 (1986). The congruent sections in those
bills provided:
b. Any contracting unit may, by
resolution of its governing body, authorize
the sale or disposition of recyclable
materials recovered through a recycling
program undertaken by the contracting unit.
The sale of these recyclable materials, by
contract or agreement, may be entered into or
negotiated without public bidding by that
contracting unit.
Intervenors observe that that proposed amendment suggests that
the Legislature was concerned with the final disposition of
recovered recyclables, not the initial collection phase.
Shortly before the final passage of Senate Committee
Substitute Senate Bill No. 1478 in April 1987, the Senate
Revenue, Finance and Appropriations Committee removed the sale of
personal property amendment from the bill, substituting for it
the definition of marketing contained in N.J.S.A. 40A:11-2(13),
and adding the exception for marketing of recycled goods to
N.J.S.A. 40A:11-5(1)(s), which initially provided: "The marketing
of recyclable materials recovered through a recycling program."
L. 1987, c. 102, § 32. The Senate Committee Statement
accompanying the amendments stated that its purpose in amending
that section was to "[c]larify the definitions and provisions of
the local contracts law regarding contracts for recyclable
materials." Senate Revenue, Finance and Appropriations
Committee, Statement to Assembly Committee Substitute for Senate
No. 1478 and Assembly No. 1781, at 2 (Feb. 5, 1987).
The Legislature has considered the subparagraph (s)
exception several times since its original enactment. In 1989,
the Legislature expanded the exception to include the language
contained in the current version:
(s) The marketing of recyclable materials
recovered through a recycling program, or the
marketing of any product intentionally
produced or derived from solid waste received
at a resource recovery facility or recovered
through a resource recovery program,
including, but not limited to, refuse-derived
fuel, compost materials, methane gas, and
other similar products.
[L. 1989, c. 92 (emphasis added).]
The statements accompanying the assembly bill that was eventually
enacted in chapter 92 do not clarify the Legislature's intent
regarding the scope of the exception in subparagraph (s). See
Senate Energy and Environment Committee, Statement to Assembly
Committee Substitute for Assembly Bill No. 464, at 1 (Apr. 27,
1989); Assembly Solid Waste Management Committee, Statement to
Assembly Committee Substitute for Assembly Bill No. 464, at 1
(Sept. 16, 1988).
In May 1992, a bill amending the definition of marketing in
the LPCL to a definition virtually identical to the one contained
in the Recycling Act was introduced in the Senate. See Senate
Bill No. 834, § 1. Subsequently, that amendment was removed from
the enacted bill. See L. 1992, c. 98. Neither the Assembly nor
the Senate committee statements explain why that amendment was
ultimately deleted. The bill, which was enacted into law,
included an amendment to the LPCL allowing local contracting
units to enter into contracts for the collection and disposition
of recyclable materials for periods of up to five years, and
added the term "disposition" to the definitional section of the
LPCL. L. 1992, c. 98, § 1. "Disposition" was defined as "the
transportation, placement, reuse, sale, donation, transfer or
temporary storage of recyclable materials for all possible uses
except for disposal as municipal solid waste." Ibid.
Finally, the Recycling Act was recently amended, authorizing
any county, municipality, or authority to enter into a written
cooperative agreement for the cooperative marketing of the
recyclable materials designated in a district recycling plan. L.
1995, c. 103. The amendment added to the LPCL's definitional
section a definition of "cooperative marketing," defined as the
"joint marketing . . . of the source separated recyclable
materials designated in a district recycling plan." N.J.S.A.
40A:11-2(18). Assembly and Senate committee statements
concerning the enacted bill stated that "`[c]ooperative
marketing' refers to the joint sale or competitive disposition of
the source separated recyclable materials . . . ." Senate
Natural Resources, Trade and Economic Development Committee,
Statement to Assembly Committee Substitute for Assembly No. 571,
at 1 (Dec. 1, 1994); Assembly Solid and Hazardous Waste
Committee, Statement to Assembly Committee Substitute for
Assembly No. 571, at 1 (June 9, 1994). As part of that amending
bill, the cooperative marketing of recyclables was added to
N.J.S.A. 40A:11-5(1) as an exception from the public-bidding
requirement. L. 1995, c. 103, § 4 (codified at N.J.S.A. 40A:11-5(1)(aa)). The legislative history thus reveals that although
the Legislature has considered the subparagraph (s) exception
several times, it has not undertaken to amend or clarify its
definition of the term marketing of recyclable materials beyond
the expansion of the exception in 1989, which delineated specific
end-products of recycling and resource recovery.
Contemporary legal commentary reflects the general
understanding that recovery and recycling are separate and
distinct concepts. "Recovery is the process whereby recyclable
materials are removed from the solid waste stream. In contrast,
recycling is the actual process by which recovered materials are
incorporated into new products." Nicolas M. Kublicki, The Paper
Triangle: National Forest Timber, Solid Waste Disposal and
Recycling,
7 Tul. Envtl. L.J. 1, 28 (1993); see also James T.
O'Reilly, Recycling and Municipal Liability: Environmental
Benefits and U.C.C. Risks,
23 Urb. Law. 97, 99 (1991) ("Recycling
is a term of art in the solid waste industry. It refers to the
total process of diverting a collected solid waste, separating it
into usable materials, and processing those materials into a new
finished product. No recycling occurs from mere collection
alone."). The application of those concepts to the statute
suggests that "marketing of recyclable materials recovered
through a recycling program" is not intended to refer to the
recovery stage, which is the collection component of a recycling
program.
Governmental agencies charged with the enforcement of
legislation can provide additional guidance in the interpretation
of a statute. Statutory interpretations by the administrative
agencies who have been charged by the Legislature with a
statute's enforcement are entitled to deferential consideration.
See Merin, supra, 126 N.J. at 436-37; Service Armament Co. v.
Hyland,
70 N.J. 550, 561 (1976); McCay Corp. v. Mt. Laurel
Township Council,
203 N.J. Super. 550, 559 (App. Div. 1984).
Since the 1987 adoption of the subparagraph (s) exception, the
controlling interpretation provided by those agencies responsible
for the implementation, enforcement and regulation of the LPCL,
see N.J.S.A. 52:27BB-6, N.J.S.A. 52:18A-46; N.J.S.A. 40A:11-37,
and the Recycling Act, see N.J.S.A. 13:1E-1-9(a), has been that
public bidding is required for the collection phase of a
recycling contract. In April 1988, the DLGS, together with the
Division of Solid Waste Management (DSWM), issued a joint
advisory opinion letter that addressed the question whether
N.J.S.A. 40A:11-5(1)(s) applied to contracts combining the
collection of recyclables with the final sale of the recovered
recyclable goods. The letter stated:
Please be advised that both State
agencies believe that the [LPCL]'s
competitive bidding exemption enacted along
with the [Recycling Act] is not all
inclusive. In our view the new exemption,
N.J.S.A. 40A:11-5[(1)](s), is limited to the
marketing of recyclables. Simply stated we
believe the exemption only applies to the
sale of recyclable materials.
. . . .
The exemption does not apply to
contracts for recycling processes,
consultants, collection or supplies and
equipment. Furthermore, public bidding may
not be circumvented by combining a nonexempt
item within an exempt marketing contract.
Such combination contracts continue to be
subject to applicable bidding requirements
i.e. competitive bidding, informal quotes,
extraordinary unspecifiable services . . .
and professional services.
[Letter from Mary T. Shiel, Deputy Director,
Division of Solid Waste Management, and Barry
Skokowski, Sr., Director, Division of Local
Government Services, to Public Officials 1-2
(Apr. 1988) (emphasis added) (Joint Advisory
Opinion Letter).]
Where agency interpretation coincides with the original enactment of a regulatory statute that the agency is charged with enforcing, the case for deference to the agency is strong. See, e.g., Newark Fireman's Mut. Benevolent Ass'n v. Newark, 90 N.J. 44, 55 (1982); New Jersey Guild of Hearing Aid Dispensers v. Long, 75 N.J. 544, 575 (1978); Waste Management of Central Jersey, Inc. v. DEPE, 278 N.J. Super. 56, 64 (App. Div. 1994); In re Freshwater Wetlands Protection Act Rules, 238 N.J. Super. 516, 527 (App. Div. 1989). The agencies issued the joint letter within a year of the bidding exemption's enactment, responding to a "great deal of confusion [which] exist[ed] regarding contracting for various recycling services," Joint Advisory Opinion Letter, supra, at 1, and that statutory interpretation was not challenged until the present litigation was initiated, six years following the letter's issuance. Additionally, the DEP administrator who signed the 1988 joint advisory opinion letter played an active role in the legislative process itself. Mary T. Shiel, then Deputy Director of the DSWM, attended the four public hearings held by the Senate Energy and Environment Committee in 1985 and 1986. Shiel testified before the committee and was described by the committee chairman as a source to whom questions concerning the legislation could be addressed. See Establishment of Mandatory Statewide Recycling Program: Hearings on S-1478 Before the Senate Energy and Environment Committee (Apr. 15, 1986) 1-3, 8-14 and (February 13, 1986) 6-15. Federal precedent suggests that where an agency has been actively involved in the
legislative process, the case for agency deference increases in
weight. See, e.g., Frank Diehl Farms v. Secretary of Labor,
696 F.2d 1325, 1329-30 (11th Cir. 1983); see also Norwegian Nitrogen
Prods. Co. v. United States,
288 U.S. 295, 315,
53 S. Ct. 350,
358,
77 L. Ed. 796, 807 (1933) ("The practice has particular
weight when it involves a contemporary construction of a statute
by the men charged with setting its machinery in motion, of
making its parts work efficiently and smoothly while they are yet
untried and new."). Finally, we note that the interpretation
provided by the agencies effectuates both the public policy of
the LPCL and the Recycling Act by supporting a competitive
process for the collection of recyclables, and allowing
negotiated contracts for the disposition of recycled products.
An agency's interpretation will prevail unless it is "plainly
unreasonable," see Merin, supra, 126 N.J. at 436, or fails to
further the legislative purpose of the statute that it is
interpreting, see GE Solid State, Inc. v. Director, Div. of
Taxation,
132 N.J. 298, 306-07 (1993).
III
We conclude that had the Legislature intended to exempt the curbside collection of solid waste for eventual recycling from the public-bidding requirement of the LPCL, it would have explicitly done so. To interpret consistently the related definitional sections of the LPCL and the Recycling Act is
appropriate because they were enacted as part of the same
legislation. The definition of "marketing" in the LPCL is
virtually identical to that included in the Recycling Act, the
only difference being that the Recycling Act refers to
disposition and the LPCL refers to marketing. Both definitions
appear to apply only to the post-collection aspect of a recycling
contract, suggesting that the public-bidding exemption contained
in the LPCL should be construed as referring only to those
aspects of a recycling contract necessarily relating to the sale
of recovered recyclable materials.
The legislative history supports that conclusion. Since
1989, the Legislature has considered N.J.S.A. 40A:11-5(1) and
changes concerning definitions applicable to recycling
exceptions, declining on several occasions to change the
definition section. Additionally, during the same time period,
when enacting solid waste legislation the Legislature reiterated
its longstanding concern about competition in the solid waste
collection industry, emphasizing the continuing need for
supervision of the industry because of the impact of anti-competitive forces. See N.J.S.A. 48:13A-7.2.
Contrary to the Appellate Division's conclusion, we find
that the joint advisory opinion letter is entitled to substantial
deference. The administrative agencies charged with the
enforcement of the Recycling Act and the LPCL agreed that
competitive bidding was required for the collection of goods that
would eventually be recycled and marketed. That interpretation
of the statute effectuates the Legislature's intent in exempting
from public bidding the marketing of recycled recovered
materials, which implicated an unknown market that might benefit
from a more flexible negotiating process, in contrast to the
traditional collection phase, which required continued
supervision to ensure a healthy competitive process. Given the
overwhelming public policy favoring competitive bidding in the
garbage collection industry, we conclude that the subparagraph
(s) exception from the LPCL does not apply to the curbside
collection of recyclable materials. If we have misread the
legislative intent, the Legislature may amend the statute to
explicitly provide such an exemption.
In view of our determination that the procurement process
engaged in by the County violated the LPCL, the Court must
consider the disposition of MCIA's five-year contract, which has
effectively two-and-a-half years until its completion. We
acknowledge, as did the Appellate Division, that the County
engaged in a competitive negotiation process resulting in a
substantial savings to the County. As noted, the difference in
price between the two final proposals was approximately $260,000.
We are impressed that the negotiation process was constructively
and fairly conducted.
We recognize that it may be inequitable to require re-bidding of the contract because of the relationship among the
collection phase of the contract, WMNJ's correlative obligations
to market the recyclables and guarantee the County a base price
for all recyclable material, and the fluctuation in the market
value of recyclables. Because the MCIA engaged in extended
negotiations for the County, we find the inference unavoidable
that the price negotiated for the collection phase was influenced
by the guaranteed price to be paid to the County as well as the
uncertainty of the compensation to be realized by WMNJ from the
recycling phase, and the five-year contract term that afforded
WMNJ some protection against short-term market volatility.
Although ordinarily we would order the collection phase of the
contract to be re-bid, see Meadowbrook Carting, supra, 138 N.J.
at 325-26; Terminal Constr. Corp., supra, 67 N.J. at 410, we
recognize that in this unique instance that remedy would be
unfair to WMNJ who relied in good faith on MCIA's determination
that bidding was not required, and may be prejudicial to County
taxpayers who probably would be required to bear an increased
cost because of the prospect that the re-bidding process would
divide the responsibility for collection and disposal of
recyclables between two contractors.
Accordingly, the contract may remain in effect until its
termination date. Any subsequent contracts for the collection of
recyclables must be procured in compliance with the LPCL bidding
requirement.
IV
We reverse the judgment of the Appellate Division that
exempted from public bidding the collection phase of the
contract. We remand the matter to the Law Division for entry of
a judgment consistent with this opinion.
CHIEF JUSTICE PORITZ and JUSTICES HANDLER, POLLOCK, O'HERN, GARIBALDI and COLEMAN join in JUSTICE STEIN's opinion.
NO. A-104 SEPTEMBER TERM 1996
ON APPEAL FROM
ON CERTIFICATION TO Appellate Division, Superior Court
NATIONAL WASTE RECYCLING,
INC. and JOHN GRYWALSKI,
Plaintiffs,
and
DEPARTMENT OF ENVIRONMENTAL
PROTECTION AND DIVISION OF
LOCAL GOVERNMENT SERVICES,
Intervenors-Appellants,
v.
THE MIDDLESEX COUNTY IMPROVEMENT
AUTHORITY and WASTE MANAGEMENT OF
NORTH JERSEY, INC.,
Defendants-Respondents.
DECIDED July 17, 1997
Chief Justice Poritz PRESIDING
OPINION BY Justice Stein
CONCURRING OPINION BY
DISSENTING OPINION BY