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Paterson, City of v. Passaic County Bd. of Chosen Freeholders

Citation: 30 ELR 20658
No. No. A-19-99, 753 A.2d 661/(N.J., 06/22/2000)

The court holds that a local utilities authority was not authorized under the New Jersey Municipal and Counties Utilities Authorities Law (MCUAL) to charge prior users of the authority's waste disposal facilities an environmental investment credit (EIC). The authority imposed the EIC in order to liquidate debt previously incurred in order to finance the construction of solid waste disposal facilities. The authority incurred the debt in reliance on a solid waste regulatory system declared unconstitutional by federal courts. After the federal court decision, municipalities and commercial waste generators sought cheaper solid waste services outside of the state. In order to recoup the debt, the authority imposed the EIC on all prior users of the authority's waste disposal facilities.

The court first holds that the EIC is invalid under the MCUAL. The MCUAL's original purpose was to authorize the establishment and operation of county and municipal authorities to regulate water and sewer services. To this end, the MCUAL specifically authorizes connection charges to be imposed to recapture debt service costs, but only with respect to sewer and water services, not solid waste services. The only statutorily authorized revenue source for an authority providing solid waste services is the solid waste service charge, which pursuant to MCUAL is anticipated to provide sufficient revenue to cover expenses of operation, maintenance, and debt service. Further, according to the overarching statutory scheme that has been in effect since the MCUAL's enactment, the statutorily authorized service charges are to be imposed only on users. Therefore, to construe the MCUAL as authorizing the imposition of an EIC on non-users of the authority's solid waste services would be illogical, anomalous, and incongruent under the understanding and application of the MCUAL.

The full text of this decision is available from ELR (22 pp., ELR Order No. L-238).

Counsel for Plaintiffs
Sandra T. Ayres
Schwartz, Tobia, Stanziale, Becker, Rosensweig & Sedita
22 Crestmont Rd., Verona NJ 07044
(973) 746-6000

Counsel for Defendants
Benjamin Clarke
DeCotiis, Fitzpatrick & Gluck
90 Lake St., Ramsey NJ 07446
(201) 327-0333