ASSEMBLY, No. 2569

STATE OF NEW JERSEY

INTRODUCED DECEMBER 12, 1996

By Assemblywoman MYERS

An Act concerning the payment of stranded investment costs, and amending, supplementing and repealing parts of P.L.1985, c.38.

    Be It Enacted by the Senate and General Assembly of the State of New Jersey:

    1. (New section) The Legislature finds and declares that in response to the need to protect and enhance the quality of the State's environment, and to provide for the environmentally-sound disposal of solid waste, the Legislature in 1970 made a determination that these goals would be best achieved through the development of a comprehensive Statewide solid waste management strategy; that in furtherance of these environmental goals and policies, and to provide for a regulatory framework for the implementation thereof on a Statewide basis, the Legislature enacted the "Solid Waste Management Act," P.L.1970, c.39 (C.13:1E-1 et seq.), which designated every county and the Hackensack Meadowlands District as a solid waste management district for planning and implementation purposes and required each county, or a public authority designated by the governing body of the county, to develop, adopt and implement a district solid waste management plan for disposal of solid waste generated within its geographic boundaries.

    The Legislature further finds and declares that in furtherance of this State mandate, each county or public authority has entered into contracts, acquired real and personal property, incurred administrative and other operating expenses, and issued debt obligations, and the Department of Environmental Protection has issued waste flow orders directing constituent municipalities and local haulers to designated in-county solid waste facilities for processing or disposal, all in the service of district solid waste management plan implementation.

    The Legislature further finds and declares that the ability of each county or public authority to fulfill its lawful responsibilities with respect to district solid waste management plan implementation, including the ability to raise revenues sufficient to provide funds for payment of the costs of developing self-sufficient solid waste management systems, has been predicated on its legal authority to direct the flow of solid waste generated within the geographic boundaries of the county to designated solid waste facilities, thereby ensuring the economic viability of these facilities; and that waste flow control by counties and public authorities has been supported by statute, rules and regulations adopted by the Department of Environmental Protection, and franchises awarded by the Board of Public Utilities.

    The Legislature further finds and declares that in the case of C & A Carbone, Inc. v. Town of Clarkstown, N.Y. the U.S. Supreme Court has held that, without unambiguous congressional authorization, a state or local government's designation of the destination to which haulers must transport solid waste for processing or disposal is a violation of the Commerce Clause of the U.S. Constitution; that the Carbone decision has been reaffirmed by the Atlantic Coast Demolition & Recycling, Inc., et al. v. Board of Chosen Freeholders of Atlantic County et al. decision, which held that New Jersey's solid waste management system, including the Department of Environmental Protection's waste flow rules, interferes with interstate commerce, and that the State cannot direct municipalities or haulers to designated solid waste facilities in New Jersey due to the unconstitutional nature of New Jersey's solid waste management system, including the waste flow rules; and that the Atlantic Coast ruling on July 15, 1996 gives the State, counties and public authorities two years to implement a constitutionally acceptable system for solid waste management.

    The Legislature further finds and declares that counties and public authorities must be able, under all circumstances, to collect revenues sufficient to recover the environmental investment costs incurred in developing and implementing State-mandated district solid waste management plans through the construction and operation of capital-intensive resource recovery facilities for the environmentally-sound incineration of municipal solid waste.

    The Legislature therefore determines that it is the public policy of the State of New Jersey to furnish financial assistance to counties and public authorities for the payment of stranded investment costs by means of a grant program hereinafter established therefor.

    2. Section 2 of P.L.1985, c.38 (C.13:1E-137) is amended to read as follows:

    2. As used in [this amendatory and supplementary act] the provisions of P.L.1985, c.38 (C.13:1E-136 et seq.) and P.L. , c. (C.13:1E-168.1 et seq.):

    “Business concern” means any corporation, association, firm, partnership, sole proprietorship, trust or other form of commercial organization;

    “Commissioner” means the Commissioner of the Department of Environmental Protection;

    [a.] "Contract file" means a file established and maintained by a contracting unit, in which the contracting unit shall maintain a copy of its request for qualifications issued pursuant to section 19 of [this amendatory and supplementary act] P.L.1985, c.38 (C.13:1E-154), a list of vendors responding to its request for qualifications, a copy of its request for proposals issued pursuant to section 20 of [this amendatory and supplementary act] P.L.1985, c.38 (C.13:1E-155), a list of qualified vendors submitting proposals, and a document outlining the general criteria used by the contracting unit in selecting a proposal;

    [b.] "Contracting unit" means any county; any municipality; any bistate authority; or any board, commission, committee, authority or agency, which is not a State board, commission, committee, authority or agency, and which has administrative jurisdiction over any district other than a school district, project, or facility, included or operating in whole or in part, within the territorial boundaries of any county or municipality, which exercises functions which are appropriate for the exercise by one or more units of local government, and public authority which has statutory power to [make purchases and] enter into contracts or agreements [for the performance of any work or the furnishing or hiring of any materials or supplies usually required] for the design, financing, construction, operation, or maintenance, or any combination thereof, of a resource recovery facility;

    "Cost" means, in addition to the usual connotations thereof, any expenses related to the planning, acquisition, construction, operation and maintenance of resource recovery facilities, including debt service on bonds issued by public authorities to finance resource recovery facilities;

    [c.] "County" means any county of this State of whatever class;

    [d.] "Department" means the Department of Environmental Protection;

    [e.] "Director" means the Director of the Division of Taxation in the Department of Treasury;

    [f.] "District" means a solid waste management district as designated by section 10 of P.L.1975, c.326 (C.13:1E-19), except that, as used in the provisions of [this amendatory and supplementary act] sections 3 through 17 of P.L.1985, c.38 (C.13:1E-138 through 13:1E-152), "district" shall not include the Hackensack Meadowlands District;

    [g.] "District investment tax fund" means a District Resource Recovery Investment Tax Fund established pursuant to subsection a. of section 15 of [this amendatory and supplementary act] P.L.1985, c.38 (C.13:1E-150);

    [h.] "Division" means the Division of Taxation in the Department of Treasury;

    [i.] "Division of Local Government Services" means the Division of Local Government Services in the Department of Community Affairs;

    [j.] "Division of Rate Counsel" means the Division of Rate Counsel in the Department of the Public Advocate;]

    [k] "Franchise" means the exclusive right to control and provide for the disposal of solid waste, except for recyclable material whenever markets for those materials are available, within a district or districts as awarded by the Board of Public Utilities;

    [l.] "Independent public accountant" means a certified public accountant, a licensed public accountant or a registered municipal accountant;

    [m.] "Investment tax" means the resource recovery investment tax imposed pursuant to subsection b. of section 3 of [this amendatory and supplementary act] P.L.1985, c.38 (C.13:1E-138);

    [n.] "Investment tax fund" means the Resource Recovery Investment Tax Fund containing sub-accounts for each county established pursuant to the provisions of section 14 of [this amendatory and supplementary act] P.L.1985, c.38 (C.13:1E-149);

    [o.] "Out-of-district solid waste" means any solid waste accepted for disposal in a district which was generated outside the receiving district;

    [p.] "Person or party" means any individual, public or private corporation, company, partnership, firm, association, political subdivision of this State, or any State, bistate, or interstate agency or authority] “Person” means any individual or business concern;

    [q.] "Proposed contract" means a contract negotiated by a contracting unit pursuant to the provisions of [this amendatory and supplementary act] P.L.1985, c.38 (C.13:1E-136 et al.), or a substantial renegotiation of a contract previously approved pursuant to the provisions of [this amendatory and supplementary act] section 28 of P.L.1985, c.38 (C.13:1E-163) if the renegotiation is determined to be substantial by the department[, the Board of Public Utilities,] or the Division of Local Government Services;

    "Public authority" means any municipal or county utilities authority created pursuant to the "municipal and county utilities authorities law," P.L.1957, c.183 (C.40:14B-1 et seq.); county improvement authority created pursuant to the "county improvement authorities law," P.L.1960, c.183 (C.40:37A-44 et seq.); pollution control financing authority created pursuant to the "New Jersey Pollution Control Financing Law," P.L.1973, c.376 (C.40:37C-1 et seq.), or any other public body corporate and politic created for solid waste management purposes in any county, pursuant to the provisions of any law;

    [r.] "Qualified vendor" means any person or party financially qualified for, and technically and administratively capable of, undertaking the design, financing, construction, operation, or maintenance, or any combination thereof, of a resource recovery facility or of providing resource recovery services, as provided in section 19 of [this amendatory and supplementary act] P.L.1985, c.38 (C.13:1E-154);

    [s.] "Recyclable material" means those materials which would otherwise become solid waste, which may be collected, separated or processed and returned to the economic mainstream in the form of raw materials or products;

    [t.] "Recycling" means any process by which materials which would otherwise become solid waste are collected, separated or processed and returned to the economic mainstream in the form of raw materials or products;

    [u.] "Recycling facility" means a facility at which materials which would otherwise become solid waste are collected, separated or processed and returned to the economic mainstream in the form of raw materials or products;]

    [v.] "Resource recovery facility" means a solid waste facility constructed and operated for the incineration of solid waste for energy production and the recovery of metals and other materials for reuse; or a mechanized composting facility, or any other [solid waste] facility constructed or operated for the collection, separation, recycling, and recovery of metals, glass, paper, and other materials for reuse or for energy production;

    [w.] "Sanitary landfill facility" means a solid waste facility at which solid waste is deposited on or in the land as fill for the purpose of permanent disposal or storage for a period exceeding six months, except that it shall not include any waste facility approved for disposal of hazardous waste;

    [x.] "Services tax" means the solid waste services tax imposed pursuant to subsection a. of section 3 of [this amendatory and supplementary act] P.L.1985, c.38 (C.13:1E-138);

    [y.] "Services tax fund" means the Solid Waste Services Tax Fund established pursuant to section 12 of [this amendatory and supplementary act] P.L.1985, c.38 (C.13:1E-147);

    "Stranded investment costs" means the cost of stranded investments;

    "Stranded investments" means any resource recovery facility acquired, constructed or operated or to be acquired, constructed or operated by, or on behalf of, any person, public authority or county for, or with respect to, the implementation of a district solid waste management plan required pursuant to the provisions of the "Solid Waste Management Act," P.L.1970, c.39 (C.13:1E-1 et seq.) or any other act, which resource recovery facility has been financed, in whole or in part, through a zero interest State loan made from the "Resource Recovery and Solid Waste Disposal Facility Fund" established pursuant to section 14 of P.L.1985, c.330;

    “Stranded investment fund" means the Stranded Investment Cost Recovery Fund established pursuant to section 5 of P.L. , c. (C.13:1E-168.2);

    [z.] "Vendor" means any person or party proposing to undertake the design, financing, construction, operation, or maintenance, or any combination thereof, of a resource recovery facility or of providing resource recovery services;

    [aa.] "Waste importation tax" means the solid waste importation tax imposed pursuant to subsection c. of section 3 of [this amendatory and supplementary act] P.L.1985, c.38 (C.13:1E-138).

(cf: P.L.1985, c.38, s.2)

    3. Section 3 of P.L.1985, c.38 (C.13:1E-138) is amended to read as follows:

    3. a. There is levied upon the owner or operator of every sanitary landfill facility a solid waste services tax of $1.10 per ton on all solid waste accepted for disposal at the sanitary landfill facility. [The services tax shall be imposed on the owner or operator at the initial rate of $0.50 per ton of solids and $0.002 per gallon of liquids on all solid waste accepted for disposal at a sanitary landfill facility.]

    On [the first day of the first calendar year following the imposition of the services tax] January 1, 1998, and annually thereafter, the rate of the services tax shall be increased by $0.05 per ton [of solids] on all solid waste accepted for disposal at the sanitary landfill facility. No services tax shall be levied on the owner or operator of a sanitary landfill facility for the acceptance for disposal of the waste products resulting from the operation of a resource recovery facility.

    b. [(1) There is levied upon the owner or operator of every sanitary landfill facility a resource recovery investment tax. The investment tax shall be levied on the owner or operator at the initial rate of $1.00 per ton of solids and $0.004 per gallon of liquids on all solid waste accepted for disposal at a sanitary landfill facility. No investment tax shall be levied on the owner or operator of a sanitary landfill facility for the acceptance for disposal of the waste products resulting from the operation of a resource recovery facility.

    (2) Unless the rate is otherwise adjusted pursuant to section 11 of this amendatory and supplementary act, the rate of the investment tax shall be increased in accordance with the following schedule:

    (a) On the first day of the first calendar year following the imposition of the investment tax, the rate of the investment tax shall increase to $2.00 per ton of solids;

    (b) On the first day of the second calendar year following the imposition of the investment tax, the rate of the investment tax shall increase to $3.00 per ton of solids; and

    (c) On the first day of the third calendar year following the imposition of the investment tax, the rate of the investment tax shall increase to $4.00 per ton of solids.

    The investment tax shall no longer be levied on the owner or operator of a sanitary landfill on and after the first day of the 11th calendar year following the imposition of the investment tax.] (Deleted by amendment, P.L. , c. )

    c. [There is levied upon the owner or operator of every sanitary landfill facility which accepts out-of-district solid waste a solid waste importation tax. The waste importation tax shall be imposed on the owner or operator at the initial rate of $1.00 per ton of solids and $0.004 per gallon of liquids on all out-of-district solid waste accepted for disposal at a sanitary landfill facility. On the first day of the third calendar year following the imposition of the waste importation tax, the rate of the waste importation tax shall be increased to $4.00 per ton of solids, and annually thereafter the rate of the waste importation tax shall be increased by $2.00 per ton of solids. No waste importation tax shall be levied on the owner or operator of a sanitary landfill facility for the acceptance for disposal of the waste products resulting from the operation of a resource recovery facility.

    The waste importation tax shall no longer be levied on the owner or operator of a sanitary landfill facility which accepts out-of-district solid waste on or after the first day of the 11th calendar year following the imposition of the waste importation tax.] (Deleted by amendment, P.L. , c. )

    d. If any owner or operator of a sanitary landfill facility determines the quantity of solid waste accepted for disposal by a measure other than tons [or gallons], the taxes imposed pursuant to the provisions of this section shall be levied at an equivalent rate as determined by the director.

    e. No taxes shall be levied on the owner or operator of a sanitary landfill facility for the acceptance of solid waste generated exclusively by an agency of the federal government if a solid waste collector submits to the owner or operator an itemized invoice, signed and verified by an authorized officer of the federal agency, indicating the number of tons of solid waste to be disposed of, and a copy of the contract with the federal agency for the collection of solid waste with an effective date prior to [the effective date of this amendatory and supplementary act] May 1, 1985 . Taxes shall be levied on the owner or operator for acceptance of solid waste generated by a federal agency if the contract between the federal agency and the solid waste collector was entered into, or renewed, on or after [the effective date of this amendatory and supplementary act] May 1, 1985.

(cf: P.L.1985, c.38, s.3)

    4. Section 14 of P.L.1985, c.38 (13:1E-149) is amended to read as follows:

    14. a. The Resource Recovery Investment Tax Fund is established in the Department of Treasury. The investment tax fund shall contain sub-accounts for each county to be held by the State Treasurer and shall be the depository for revenues generated by the investment tax and the waste importation tax, and any interest earned thereon, and prior to the expiration of those taxes shall be disbursed pursuant to the provisions of this section.

    b. Prior to the disbursement of any moneys in the investment tax fund as provided hereunder, the cost of administration and collection of the taxes shall be paid to the director out of that fund, up to an amount not to exceed 2% of the total revenues deposited into the fund during the fiscal year.

    c. The director shall allocate the moneys in the investment tax fund as follows:

    (1) The investment tax revenues collected by the director resulting from the amount of solid waste generated from within each county shall be deposited in each county's sub-account;

    (2) The investment tax revenues collected by the director and not otherwise deposited in an investment tax fund sub-account pursuant to paragraph (1) of this subsection shall be deposited in the receiving county's sub-account; and

    (3) The waste importation tax revenues collected by the director resulting from the acceptance of out-of-district solid waste shall be deposited in the receiving county's sub-account, except that the waste importation tax revenues resulting from the disposal of out-of-district solid waste at sanitary landfill facilities operated and maintained by the Hackensack Meadowlands Development Commission shall be deposited in the sub-account of the county within which the sanitary landfill facility is located.

    d. Commencing on January 1, 1997, all moneys accruing to the investment tax fund, and any interest earned on the management of moneys in the investment tax fund, shall be paid by the director into the stranded investment fund.

(cf: P.L.1985, c.38, s.14)

    5. (New section) a. The Stranded Investment Cost Recovery Fund is established as a nonlapsing fund in the Department of Environmental Protection. The stranded investment fund shall be administered by the department and shall be the depository for those revenues paid by the director into the stranded investment fund from the Resource Recovery Investment Tax Fund pursuant to section 14 of P.L.1985, c.38 (C.13:1E-149), and for any interest earned thereon.

    b. The moneys in the stranded investment fund shall be utilized by the commissioner solely for the purpose of providing grants to counties and public authorities for the payment of stranded investment costs associated with the construction and operation of resource recovery facilities.

    c. Procedures for the review and approval of, and eligibility criteria for the awarding of grants shall be established by the commissioner pursuant to section 6 of P.L. , c. (C.13:1E-168.3)(pending in the Legislature as this bill).

    6. (New section) a. The commissioner shall for each fiscal year develop a priority system for providing grants to assist counties and public authorities in the payment of stranded investment costs and shall establish the ranking criteria and funding policies therefor. The commissioner shall set forth a priority list for funding for each fiscal year and shall include the aggregate amount of funds to be authorized for these purposes. Eligibility of a county or public authority for a grant to be included on the priority list shall be determined in accordance with the provisions of subsection b. of this section. The priority list shall include an explanation of the manner in which priorities were established. The priority system and priority list for the ensuing fiscal year shall be submitted to the Legislature on or before January 15 of each year.

    b. In order to be eligible for a grant, a county or public authority shall prepare a plan to reduce the solid waste charges received at the resource recovery facility for solid waste disposal. The plan shall include, but not necessarily be limited to, provisions concerning:

    (1) the assumption by the governing body of the county of some or all of the administrative costs of implementing its district solid waste management plan;

    (2) the proper delegation to municipalities of the costs of certain county solid waste services, including, but not limited to, recycling or household hazardous waste management, which are currently part of the solid waste charges received at the resource recovery facility for solid waste disposal;

    (3) the refinancing of debt to reduce the solid waste charges received at the resource recovery facility for solid waste disposal;

    (4) any other arrangements as may be necessary to reduce the solid waste charges received at the resource recovery facility for solid waste disposal; or

    (5) the prudent application of grant moneys to the plan prepared by the county or public authority to ensure the long-term competitiveness of the resource recovery facility as well as the payment of debt service obligations.

    No moneys shall be expended for grants during a fiscal year for any county or public authority unless the expenditure is authorized pursuant to an appropriations act.

    c. As part of the annual submission required by this section, the department shall provide a financial accounting of all expenditures made in the preceding year, and of all administrative expenses incurred by the department in administering the "Stranded Investment Cost Recovery Fund."

    7. (New section) a. The department shall adopt, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), any rules and regulations necessary to implement the provisions of P.L. , c. (C.13:1E-168.1 et seq.)(pending in the Legislature as this bill).

    b. The Division of Taxation shall adopt, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), any rules and regulations necessary to implement the provisions of P.L. , c. (C.13:1E-168.1 et seq.)(pending in the Legislature as this bill).

    8. The following are repealed:

    Section 11 of P.L.1985, c.38 (C.13:1E-146);

    Section 15 of P.L.1985, c.38 (C.13:1E-150);

    Section 16 of P.L.1985, c.38 (C.13:1E-151); and

    Section 17 of P.L.1985, c.38 (C.13:1E-152).

    9. This act shall take effect immediately.

STATEMENT

    This bill would revise the purposes for which moneys deposited in Resource Recovery Investment Tax Fund may be expended to provide funding for a program to provide grants to counties and authorities for the payment of stranded investment costs.

    P.L.1985, c.38 imposed a resource recovery investment tax upon all solid waste accepted for disposal at a registered sanitary landfill facility on or after May 1, 1985 to provide funds to the counties to subsidize the tipping fees charged at resource recovery incineration facilities. The resource recovery investment tax was imposed at an initial rate of $1.00 per ton in 1985 with a built-in escalator to increase the rate to $2.00 per ton on January 1, 1986, $3.00 per ton on January 1, 1987, and $4.00 per ton on January 1, 1988. The resource recovery investment tax generated $11.8 million in 1992, $10.5 million in 1993, $13.0 million in 1994, and approximately $14.0 million in 1995. The resource recovery investment tax expired on December 31, 1995.

    P.L.1985, c.38 also imposed a solid waste importation tax on the disposal of all "out-of-district" solid waste accepted for disposal at a registered sanitary landfill facility on or after May 1, 1985 to provide funds to several receiving counties to subsidize their respective solid waste management programs. "Out-of-district" solid waste refers to solid waste originating in a county that sends its solid waste to a regional facility in a "receiving" county for disposal under the terms of an interdistrict agreement. The solid waste importation tax was imposed at an initial rate of $1.00 per ton in 1985 with a built-in escalator to increase the rate to $4.00 per ton on January 1, 1988, and thereafter to increase the rate by $2.00 per ton on the first of January each year. The tax rate in 1995 was $18.00 per ton. The solid waste importation tax generated $3.9 million in 1992, $4.8 million in 1993, $7.3 million in 1994, and approximately $7.5 million in 1995. The solid waste importation tax expired on December 31, 1995. The revenues generated by the resource recovery investment tax and the solid waste importation tax have been deposited into a separate Resource Recovery Investment Tax Fund in the Department of Treasury.

    Under this legislation, the Director of the Division of Taxation would deposit the remaining funds in the Resource Recovery Investment Tax Fund into the Stranded Investment Cost Recovery Fund established pursuant to section 5 of the bill.

    The Stranded Investment Cost Recovery Fund would be administered by the Department of Environmental Protection. The moneys in the Stranded Investment Cost Recovery Fund would be utilized by the Commissioner of Environmental Protection solely for the purpose of providing grants to counties and public authorities for the payment of stranded investment costs associated with the construction and operation of resource recovery facilities.

    The Commissioner would for each fiscal year develop a priority system for providing grants to assist counties and public authorities in the payment of stranded investment costs and is required to establish the ranking criteria and funding policies therefor. The Commissioner must set forth a priority list for funding for each fiscal year and would include the aggregate amount of funds to be authorized for these purposes. Eligibility of a county or public authority for a grant to be included on the priority list would be determined in accordance with criteria set forth in the bill. The priority list would include an explanation of the manner in which priorities were established. The priority system and priority list for the ensuing fiscal year must be submitted to the Legislature on or before January 15 of each year.

    The bill provides that in order to be eligible for a grant, a county or public authority must prepare a plan to reduce the solid waste charges received at the resource recovery facility for solid waste disposal. The plan must include, but not necessarily be limited to, provisions concerning: (1) the assumption by the governing body of the county of some or all of the administrative costs of implementing its district solid waste management plan; (2) the proper delegation to municipalities of the costs of certain county solid waste services, including, but not limited to, recycling or household hazardous waste management, which are currently part of the solid waste charges received at the resource recovery facility for solid waste disposal; (3) the refinancing of debt to reduce the solid waste charges received at the resource recovery facility for solid waste disposal; (4) any other arrangements as may be necessary to reduce the solid waste charges received at the resource recovery facility for solid waste disposal; or (5) the prudent application of grant moneys to the plan prepared by the county or public authority to ensure the long-term competitiveness of the resource recovery facility as well as the payment of debt service obligations.

    No moneys could be expended for grants during a fiscal year for any county or public authority unless the expenditure is authorized pursuant to a legislative appropriations bill.

    The department must annually provide a financial accounting to the Legislature of all expenditures made in the preceding year, and of all administrative expenses incurred by the department in administering the Stranded Investment Cost Recovery Fund.

Revises purposes for which moneys deposited in Resource Recovery Investment Tax Fund may be expended.