ASSEMBLY, No. 2044
STATE OF NEW JERSEY
INTRODUCED MAY 30, 1996
By Assemblyman GIBSON
An Act concerning the deregulation of certain solid waste facilities, and amending P.L.1975, c.326, P.L.1981, c.221 and P.L.1990, c.113.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 18 of P.L.1975, c.326 (C.13:1E-27) is amended to read as follows:
18. Any solid waste facility constructed, acquired or operated pursuant to the provisions of the "Solid Waste Management Act," P.L.1970, c.39 (C.13:1E-1 et seq.) shall be deemed a public utility and shall be subject to such rules and regulations as may be adopted by the [Board of Public Utilities] Department of Environmental Protection in accordance with the provisions of the "Solid Waste Utility Control Act," P.L.1970, c.40 (C.48:13A-1 et seq.) and P.L.1991, c.381 (C.48:13A-7.1 et al.).
The provisions of this section shall not apply to any sanitary landfill facility or transfer station owned or operated by a county utilities authority created pursuant to the "municipal and county utilities authorities law," P.L.1957, c.183 (C.40:14B-1 et seq.).
(cf: P.L.1991, c.381, s.38)
2. Section 1 of P.L.1981, c.221 (C.48:13A-6.1) is amended to read as follows:
1. Notwithstanding the provision of any other law, rule or regulation to the contrary, no sanitary landfill facility shall commence or continue operation unless a tariff therefor has been filed and approved by the [Board of Public Utilities] Department of Environmental Protection pursuant to the "Solid Waste Utility Control Act [of 1970]" (P.L.1970, c.40, C.48:13A-1 et seq.) and P.L.1991, c.381 (C.48:13A-7.1 et al.). No sanitary landfill facility shall operate under any conditions contrary to those specifically set forth in its approved tariff.
This [act] section shall not apply to sanitary landfill facilities owned or operated by [an authority] a county utilities authority created [under] pursuant to the "municipal and county utilities authorities law," [P.L.1946, c.138 (C.40:14A-1 et seq.) or] P.L.1957, c.183 (C.40:14B-1 et seq.).
(cf: P.L.1981, c.221, s.1)
3. Section 2 of P.L.1990, c.113 (C.48:13A-6.2) is amended to read as follows:
2. a. The provisions of [P.L.1957, c.183 (C.40:14B-1 et seq.),]P.L.1985, c.38 (C.13:1E-136 et al.) or any other law, or any rules and regulations adopted pursuant thereto to the contrary notwithstanding, any transfer station constructed or operated in this State shall be deemed a public utility and shall be subject to the rate regulation and continuing jurisdiction of the [Board of Public Utilities] Department of Environmental Protection. No transfer station shall commence or continue solid waste transfer operations and no person may own or operate a transfer station in this State unless the person has:
(1) filed a registration statement and engineering design application and obtained approval thereof from the Department of Environmental Protection as required by section 5 of P.L.1970, c.39 (C.13:1E-5);
(2) obtained a certificate of public convenience and necessity from the [Board of Public Utilities] Department of Environmental Protection as required by section 7 of P.L.1970, c.40 (C.48:13A-6); and
(3) filed an initial tariff or lawfully negotiated contract for solid waste transfer operations and obtained approval thereof from the [Board of Public Utilities] Department of Environmental Protection, which tariff or contract shall include the formulas to be used to determine the charges, rates, or fees to be charged for the utilization of the transfer station, and the methodology or methodologies used to develop these formulas.
b. It shall remain the continuing responsibility of the owner or operator of every transfer station to file a revised tariff, or any proposed revisions to a lawfully negotiated contract for solid waste transfer operations, and obtain approval thereof from the [Board of Public Utilities] Department of Environmental Protection, whenever the owner or operator of a transfer station seeks to adjust the charges, rates, or fees charged for the utilization of the transfer station.
c. No adjustment to the charges, rates, or fees charged for the utilization of any transfer station operated in this State shall take effect prior to the approval thereof by the [Board of Public Utilities] Department of Environmental Protection.
The provisions of this section shall not apply to a transfer station owned or operated by a county utilities authority created pursuant to the "municipal and county utilities authorities law," P.L.1957, c.183 (C.40:14B-1 et seq.).
(cf: P.L.1990, c.113, s.2.
4. This act shall take effect immediately.
STATEMENT
This bill would exempt any sanitary landfill facility or transfer station owned or operated by a county utilities authority created under the "municipal and county utilities authorities law," P.L.1957, c.183 (C.40:14B-1 et seq.) from the rate regulation and jurisdiction of the Department of Environmental Protection as a public utility.
Solid waste disposal rates are set in several ways. Under the traditional public utility ratemaking formula, each owner or operator of a sanitary landfill facility or transfer station is required to file a tariff with the DEP setting forth the prices charged to residential, commercial and industrial customers. The DEP reviews the proposed rates (expressed as "tipping fees" received at the facility) to determine if the rates are just and reasonable. These rates are periodically adjusted through rate cases in which the facility owner-operator establishes a rate base and requests a tariff increase that provides an appropriate rate of return. The DEP sets just and reasonable rates by determining the fair value of utility property (i.e., the facility's rate base), examining utility expenses, and establishing a fair rate of return to investors commensurate with the risks associated with their involvement.
A typical contested rate case may take an entire year to resolve, and could cost the county utilities authority up to $500,000 in legal fees and expenses. If the owner-operator and the other parties to the proceeding have not settled beforehand, the matter is considered a "contested" rate case, and is referred to the Office of Administrative Law (OAL) to be heard by an OAL judge. An extensive schedule of hearings is set up so that all evidence may be heard. Once the OAL judge makes an initial decision and submits a recommended course of action for the DEP to follow, the DEP has 45 days in which to accept, reject, or modify the decision.
Generally, the DEP does not use the traditional ratemaking formula for developing a revenue requirement (tipping fee) for publicly-owned solid waste facilities. Rather, the DEP reviews the debt service costs of operating and maintaining the facility, which was financed, in most instances, through the issuance of revenue bonds.
The existing regulatory framework with respect to solid waste facilities is inconsistent, contradictory and confusing. For example, the provisions of P.L.1981, c.221 (C.48:13A-6.1) exempt sanitary landfill facilities operated by sewerage authorities or county utilities authorities from the rate regulation and regulatory scrutiny of the Board of Public Utilities. A transfer station and a sanitary landfill facility are indistinguishable from a regulatory perspective. Further, the "municipal and county utilities authorities law" authorizes county utilities authorities to "charge and collect solid waste service charges for the use or services of the solid waste system," while expressly providing that a county utilities authority "shall not be subject to regulation as to its service charges by any other officer, board, agency, commission or other officer of the State."
This bill recognizes that transfer stations and sanitary landfill facilities operated by county utilities authorities should not be subject to burdensome, ineffectual and unduly costly DEP regulatory treatment as a public utility. The operations of a county utilities authority-owned transfer station or landfill, which have been subject to competitive public bidding, could remain outside of the economic regulatory jurisdiction of the DEP without risk to the public interest. Finally, the bill establishes the primacy of the current rate regulation exemption set forth in the "municipal and county utilities authorities law."
Exempts any sanitary landfill facility or transfer station owned or operated by a county utilities authority from DEP rate regulation as a public utility.