United Water Resources, Inc. v. North Jersey District Water Supply Commission

SUPREME COURT SYLLABUS
 

(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).

United Water Resources, Inc., et al. v. North Jersey District Water Supply Commission, et al. (A-42)
 

Argued September 8, 1997 -- Decided September 29, 1997

PER CURIAM
[N.B., The factual and procedural history of the case is derived from the opinion of the Appellate Division, a copy of which is attached to the Court's opinion.]

This appeal concerns the authority and power of the North Jersey District Water Supply Commission (Commission) to contract with the City of Bayonne to manage, operate, and maintain Bayonne's local water distribution system and to issue revenue bonds to effectuate that purpose. Bayonne owns and operates a water system for its residents. The water for the system is supplied by the Commission under a contract dated January 25, 1982. The water is transmitted through a facility known as Wanaque South. Bayonne and six other municipalities paid for the development and operation of Wanaque South.

In 1995, Bayonne issued a request for proposals (RFP) to obtain long-term services from a private firm to operate, maintain, and manage all or part of its water system. In response, United Water Resources, Inc., submitted a proposal on November 20, 1995. On the same date, the Commission submitted its own proposal, seeking to operate and maintain Bayonne's system under the Interlocal Services Act, N.J.S.A. 40:8A-1 to -11.
Bayonne rejected the proposal of United Water Resources and approved the Commission's proposal. The contract was executed on April 9, 1996. It was for twenty years, with two optional ten-year extensions.

On May 31, 1996, United Water Resources and Hugh A. Roarty, a Bayonne resident, filed suit contending that the Commission and Bayonne did not have the authority to enter into the contract. The trial court found for the Commission and Bayonne. On appeal, the Appellate Division reversed.

The Supreme Court granted the joint petition for certification of the Commission and Bayonne.

HELD: The nature and scope of the Bayonne water system proposal is not fairly within the enabling authority of the North Jersey District Water Supply Commission even if that is augmented by the Interlocal Services Act.

1. The Court cannot, through statutory construction, validate a contractual agreement that confers or expands governmental powers of public entities not otherwise delegated by the Legislature in accordance with statutory standards governing the exercise of such delegated powers. (p.2)

2. The Court commends to the Legislature the question of whether and to what extent beyond current statutory authorization a public entity authorized to contract with private companies for the provision of local governmental services should be permitted to enter into comparable contracts with other public entities for the mutual provision of such services. (p.2)

The judgment of the Appellate Division is AFFIRMED.

CHIEF JUSTICE PORITZ and JUSTICES HANDLER, O'HERN, GARIBALDI, STEIN, and COLEMAN join in the Court's opinion. JUSTICE POLLOCK did not participate.

SUPREME COURT OF NEW JERSEY
A- 42 September Term 1997

UNITED WATER RESOURCES, INC. and HUGH J. ROARTY,

Plaintiffs-Respondents,

v.

NORTH JERSEY DISTRICT WATER SUPPLY COMMISSION and THE CITY OF BAYONNE,

Defendants-Appellants.

Argued September 8, 1997 -- Decided September 29, 1997

On certification to the Superior Court, Appellate Division, whose opinion is reported at 295 N.J. Super. 305 (1996).

H. Curtis Meanor argued the cause for appellant North Jersey District Water Supply Commission (Podvey, Sachs, Meanor, Catenacci, Hildner & Cocoziello and Brach, Eichler, Rosenberg and Silver, attorneys; Mr. Meanor and Ralph J. Salerno, of counsel; Mr. Meanor and William C. Sandelands, on the briefs).

Joseph G. Nichols, Law Director, argued the cause for appellant The City of Bayonne.

Michael R. Cole argued the cause for respondent United Water Resources, Inc. (Riker, Danzig, Scherer, Hyland & Perretti, attorneys; Mr. Cole, Edward K. DeHope, and Deborah J. Sokol, on the briefs).

Rinaldo M. D'Argenio argued the cause for respondent Hugh J. Roarty (Alampi, Arturi & D'Argenio, attorneys).

Ezra D. Rosenberg submitted a brief on behalf of amicus curiae New Jersey-American Water Company, Inc. (Dechert Price & Rhoads, attorneys; Mr. Rosenberg, Gil C. Tily, and Sean Quinn, of counsel; Mr. Rosenberg and Bruce W. Clark, on the brief).

Benjamin Clarke submitted a brief on behalf of amicus curiae Passaic County Utilities Authority (Raymond P. Vivino, Special Counsel, attorney; Mr. Clarke and J.S. Lee Cohen of DeCotiis, Fitzpatrick & Gluck, on the brief).

PER CURIAM

This appeal concerns the authority and power of the North Jersey District Water Supply Commission (Commission) under its enabling legislation, N.J.S.A. 58:5-1 to -58, or the Interlocal Services Act, N.J.S.A. 40:8A-1 to -11 (ILSA), to contract with the City of Bayonne to manage, operate and maintain Bayonne's local water distribution system and to issue $30 million in revenue bonds to pay to Bayonne a $25 million project fee, retire a portion of Bayonne's debt relating to its water system and to make certain capital improvements to the system during the twenty-year term of the contract. The specifics of the proposed arrangement are more fully set forth in the Appellate Division opinion, 295 N.J. Super. 305 (1996).
We agree with the Appellate Division that the nature and scope of the undertaking proposed by the Commission is not fairly within its enabling authority even if that be augmented by ILSA. Important goals of efficiency and economies of scale in the provision of local governmental services are advanced by both the New Jersey Water Supply Public-Private Contracting Act, N.J.S.A. 58:26-19 to -27 (Public-Private Act) and ILSA. We acknowledge that under the authority granted by the Public-Private Act, Bayonne could have entered a substantially similar transaction

with a private water supplier. Bayonne believes that this transaction entered into with the Commission benefits its citizens more than a public-private partnership and that the goals of governmental economy and efficiency are equally served by allowing other public bodies, such as the Commission, to compete with public entities in contracting for the provision of such services.
The Court, however, cannot through statutory construction validate a contractual arrangement that confers or expands the governmental powers of public entities not otherwise delegated by the Legislature in accordance with statutory standards governing the exercise of such delegated powers. We commend to legislative resolution whether and to what extent beyond current statutory authorization a public entity authorized to contract with private companies for the provision of local governmental services should be permitted to enter into comparable contracts with other public entities for the mutual provision of such services.
The judgment of the Appellate Division is affirmed.

CHIEF JUSTICE PORITZ and JUSTICES HANDLER, O'HERN, GARIBALDI, STEIN, and COLEMAN join in the Court's opinion. JUSTICE POLLOCK did not participate.

SUPREME COURT OF NEW JERSEY
 

NO. A-42

SEPTEMBER TERM 1997
ON APPEAL FROM
ON CERTIFICATION TO Appellate Division, Superior Court

UNITED WATER RESOURCES, INC. and HUGH J. ROARTY,

Plaintiffs-Respondents,

v.

NORTH JERSEY DISTRICT WATER SUPPLY COMMISSION and THE CITY OF BAYONNE,

Defendants-Appellants.

DECIDED

September 29, 1997
Chief Justice Poritz PRESIDING
OPINION BY Per Curiam
CONCURRING OPINION BY DISSENTING OPINION BY
CHECKLIST
AFFIRM CHIEF JUSTICE PORITZ X JUSTICE HANDLER X JUSTICE POLLOCK ------------ ----------- ---------- JUSTICE O'HERN X JUSTICE GARIBALDI X JUSTICE STEIN X JUSTICE COLEMAN X TOTALS
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