73 Ohio St. 3d 590 | Ohio | 1995
Lead Opinion
In this case a county solid waste management district solicited proposals for construction of a solid waste disposal facility from private enterprises, in contemplation of thereafter negotiating and entering into a contract pursuant to which the successful bidders would agree to implement their proposals in consideration of the district designating them to be the sole legal recipients of all solid waste of enumerated types generated within the District. The primary legal issue we are called upon to resolve is whether Ohio’s competitive bidding law applicable to counties, as set forth in R.C. 307.86 et seq., bars a county solid waste management district from selecting providers of solid waste disposal through the use of an RFP-negotiation process.
We resolve this inquiry in the negative, as did the court of appeals. We further agree with the court of appeals that the District is under a legal obligation to deal in good faith with bidders participating in its RFP process and must comply with the terms and obligations it set forth in its RFP document. .The court of appeals erred, however, in holding that the District had voluntarily committed itself to strictly follow all provisions of Ohio’s competitive bid statutes as interpreted by case law, and further erred in reversing the trial court’s holding that Danis had failed to prove fraud or bad faith on the part of the District. We therefore remand this cause with instructions that the injunction entered in compliance with the judgment of the court of appeals be vacated.
Solid Waste Disposal Statutory Framework
Effective June 24, 1988, the General Assembly enacted Am.Sub.H.B.No. 592 (“H.B. 592”) (142 Ohio Laws, Part III, 4418), thereafter codified in, inter alia, R.C. Chapters 343 and 3734. H.B. 592 constituted comprehensive legislation establishing statewide solid and hazardous waste management policies and programs. It vested the Director of Environmental Protection with wide-ranging authority to adopt rules governing solid waste facilities and mandated each county to either create a county solid waste management district (“SWM district”) or participate in a joint county solid waste management district. Where a county SWM district is created, as in the case sub judice, the members of the county board of commissioners also serve as members of the board of directors of the SWM district. R.C. 3734.52(A). Each county SWM district is required to prepare and implement a ten-year county solid waste management plan which must be submitted to and approved by the Director. R.C. 3734.54(A). Thereafter, each district is responsible for implementing the plan in compliance with schedules contained in the approved plan. R.C. 3734.55(C)(4). In the event that a SWM district materially fails to implement its approved plan, the Director must issue an enforcement order directing the district to comply with the implementation schedule in the plan within a specified reasonable time. R.C. 3734.13(A) and
In addition, the statutory framework provides a method of private enforcement by which any person aggrieved or adversely affected by an alleged violation of R.C. Chapter 3734, including violations of approved SWM plans, may commence a legal action in the- court of common pleas in the county where the alleged violation occurred. R.C. 3734.101(A) and (E). Such an action is contingent, however, upon the potential plaintiff first giving the Director one hundred fifty days’ written notice of the alleged violation, during which time the Director is authorized to issue an enforcement order. In the event the Director issues an enforcement order within the one-hundred-fifty-day period, the contemplated private action is barred. R.C. 3734.101(B) and (C)(1).
H.B. 592 contemplated the inclusion of “flow-control provisions” in district SWM plans by which each district must “designate” the facility or facilities to which wastes generated within its boundaries must be taken. Such a designation is of value to solid waste disposal providers in that it ensures the receipt of a steady stream of solid waste, and thus guarantees the designated provider a stable revenue source. The legislation expressly prohibited the delivery of any solid wastes generated within a county to any facility other than those designated in the county’s SWM plan, providing, “[n]o person, municipal corporation, township, or other political subdivision shall deliver, or cause the delivery of, any solid wastes generated within a county or joint district to any solid waste transfer, disposal, recycling, or resource recovery facility other than the facility designated in the solid waste management plan or amended plan of the district approved under section 3734.55 or 3734.56 of the Revised Code.” Former R.C. 343.01(H)(2).
Danis contends that this action should be dismissed as moot in light of the decision of the Supreme Court of the United States in C & A Carbone, Inc. v. Clarkstown (1994), 511 U.S. -, 114 S.Ct. 1677, 128 L.Ed.2d 399. In Carbone the court invalidated a flow-control ordinance enacted by the town of Clarkstown, New York, as violative of the Commerce Clause of Section 8, Article I of the United States Constitution. Danis argues that R.C. 343.01(I)(2), formerly (H)(2), which authorizes SWM districts to adopt exclusive flow-control designations, is similarly unconstitutional. In effect, Danis argues that the appeal is moot in that, in light of Carbone, the District will be unable to legally comply with future contractual obligations to enforce a designation of the proposed OM-Ohio Edison incinerator as the sole repository of non-compostable, non-recyclable solid wastes generated within the District.
Initially, it may be noted that an injunction precluding execution of any contract between the District and OM has been issued by the common pleas court. So long as that injunction remains in effect, a real, justiciable controversy exists between the parties which is neither merely academic nor abstract. See State ex rel. Eliza Jennings, Inc. v. Noble (1990), 49 Ohio St.3d 71, 74, 551 N.E.2d 128, 131, citing Miner v. Witt (1910), 82 Ohio St. 237, 238-239, 92 N.E. 21, 22.
Secondly, we note that Danis did not raise constitutional issues concerning the District’s actions in the courts below, and we therefore deem any constitutional objections it might have raised based on the Commerce Clause of the United States Constitution to have been waived.
Thirdly, acceptance of Danis’s argument would result in an implicit finding by this court that the Clark County Solid Waste Management District could adopt no designation or flow-control resolution consistent with the Commerce Clause. It would be inappropriate for this court to make such an anticipatory ruling, particularly in light of long-established precedent that counties and municipalities may, within the exercise of their police power, designate approved facilities for disposal of solid waste to ensure the public health, cf., Peninsula Sanitation, Inc. v. Manistique (1994), 208 Mich.App. 34, 526 N.W.2d 607, and in light of the possibility that at some future time Carbone may be legislatively overruled by Congressional action. See Carbone, 511 U.S. at -, 114 S.Ct. at 1692, 128 L.Ed.2d at 420 (O’Connor, J., concurring).
Finally, even where appeals to this court might be deemed technically moot, this court may nevertheless hear them where, as here, the appeal contains issues of great public or general interest. Franchise Developers, Inc. v. Cincinnati (1987), 30 Ohio St.3d 28, 30 OBR 33, 505 N.E.2d 966.
Exhaustion of Administrative Remedies
The trial court refrained from adjudicating Danis’s contentions that the District’s actions violated the technical requirements of R.C. Chapter 3734 based on its finding that Danis failed to exhaust administrative remedies available to it under R.C. Chapters 3734 and 3745.
We therefore refuse to consider on this review any allegations of illegality based on the District’s alleged failure to act in accordance with its own ten-year OEPA-approved plan.
We similarly reject OM’s contention that the doctrine of primary administrative jurisdiction precludes this court from resolving the competitive bid issues Danis has presented pending final resolution of administrative appeals. In this case, although Danis did not pursue administrative remedies, the parties and the court of appeals all have acknowledged that persons not parties to the instant cause did pursue administrative challenges with the Director of Environmental Protection concerning the District’s proposed selection of the OM incinerator proposal, and that litigation resulting from that challenge continues at the time of the issuance of this opinion. We confine our review to substantive legal issues not falling within the administrative purview of the OEPA.
Purported Applicability of Competitive Bidding Statute
The court of appeals in this case recognized that “[n]egotiating material aspects of contracts after the bid opening is violative of the sanctity and integrity of competitive bidding.” Review of the District’s RFP makes it clear that the District chose a process which can only in the most general sense be deemed to be “competitive bidding.” See Yellow Cab of Cleveland, Inc. v. Greater Cleveland Regional Transit Auth. (1991), 72 Ohio App.3d 558, 561, 595 N.E.2d 508, 509 (“ ‘[T]he RFP method of procurement is not competitive bidding.’ ”) Certainly, the RFP process did not contemplate the execution of a contract based upon a simple acceptance by the District of the successful bidder’s original proposal. Rather, the RFP contemplated an award solely of the opportunity to further negotiate to reach a possible contract with the District. The RFP did not include architectural or engineering plans or “specifications” as that term is generally used in competitive bid law in the sense of reasonably definite required elements. See Black’s Law Dictionary (6 Ed.1990) 1399 (“specification,” as used in the law relating to construction contracts, defined as “a particular or detailed statement * * * of the various elements, materials, dimensions, etc. involved”). (Emphasis added.) Accord Thelander v. Cleveland (1981), 3 Ohio App.3d 86, 99, 3 OBR 100,
The issue, then, is whether the District could legally choose this method to meet its statutory duty to designate waste disposal facilities. We start with the premise that a public entity is not required to engage in competitive bidding in the absence of legislation requiring it. Shafer v. Streicher (1922), 105 Ohio St. 528, 534, 138 N.E. 65, 67. Danis has contended throughout the course of this litigation that the District falls within the scope of R.C. 307.86, which provided at the time this action was commenced:
“Anything to be purchased, leased, leased with an option or agreement to purchase, or constructed, including, but not limited to, any product, structure, construction, reconstruction, improvement, maintenance, repair, or service, except the services of an accountant, architect, attorney at law, physician, professional engineer, construction project manager, consultant, surveyor, or appraiser by or on behalf of the county or contracting authority, as defined in section 307.92 of the Revised Code, at a cost in excess of ten thousand dollars, except as otherwise provided * * *, shall be obtained through competitive bidding. * * *” (Emphasis added.) (144 Ohio Laws, Part II, 3261.)
In this case, a bidder responding to the District’s RFP sought to enter into a contract by which it would receive a “designation” in exchange for its agreement to build and operate a waste disposal facility for the use of residents of the District. The anticipated contract quite simply did not involve any monetary cost to the public or expenditure of public funds by the District. As then in effect, R.C. 307.86 applied only to contracts “at a cost in excess of ten thousand dollars,” and the court of appeals correctly held that the proposed contracts contemplated by the RFP process did not fall within the scope of the statute.
While this argument is not without some appeal, we conclude that the General Assembly has not enacted a competitive bidding requirement that reaches designations of privately owned and operated solid waste disposal facilities. It has instead chosen alternative methods by which to protect the public interest, i.e., by vesting the Ohio Environmental Protection Agency with extensive supervisory authority over both solid waste providers and solid waste management districts, and by including assurances in the statutory scheme that the public will have ample opportunity to become involved in the process by which districts make solid waste disposal decisions, including facility designations. See, e.g., R.C. 343.014, which statutorily requires SWM districts to provide opportunity for public input as to facility designations. Although that statute had not yet been enacted at the time of the events sub judice, the District nevertheless held public hearings following the opening of the bids submitted in response to the RFP at which members of the public had the opportunity to respond, comment and ask questions concerning the various proposals. One of the advertised public hearings attracted between seventy-five and one hundred citizens.
It is also true that the county itself may be presumed to be a future waste generator which will ultimately be required, as all residents of the District will be, to deposit future wastes at the designated facilities selected by the District, and to pay associated tip fees at that time. This fact does not, however, bring the designation selection process within the monetary mínimums of R.C. 307.86. Any future tip fees to be paid by the county will be payments made in consideration of
Since we hold that the statutory minimum monetary expenditure requirement of R.C. 307.86 is not met by a county solid waste management district’s designation process, we need not determine whether such a district constitutes a county “contracting authority” as defined in R.C. 307.92. Cf. 1992 Ohio Atty. Gen. Op. No. 92-060, at 2-246 to 2-247.
We thus hold that the selection of designated providers of solid waste disposal services by a county solid waste management district established pursuant to R.C. Chapters 343 and 3734 does not involve the expenditure of public funds falling within the minimum monetary limits of the county competitive bid statute, R.C. 307.86, and such a selection is not subject to the competitive bid requirements of that statute. We further hold that, in selecting designated providers of solid waste disposal services, a county solid waste management district established pursuant to R.C. Chapters 343 and 3734 may adopt a procedure by which it first issues a request for proposals to be followed by subsequent negotiation with successful respondents.
Limitation on Exercise of District Discretion
The District here chose to incorporate into its RFP negotiation process several components also required by statutory competitive bidding, e.g., sealed bids, bid bonds, performance bonds, public opening of bids. The court of appeals correctly recognized that the District was bound to adhere to these provisions, as well as other conditions and provisions it had itself set forth in the RFP, as a public authority or administrative agency may by its actions commit itself to follow rules it has itself established, including rules governing the evaluation of proposals where statutory competitive bidding is not required. Accord Waste Mgt., Inc. v. Wisconsin Solid Waste Recycling Auth. (1978), 84 Wis.2d 462, 477, 267 N.W.2d 659, 667, at fn. 4 (although not subject to competitive bid statutes, award of contract for design, construction and operation of a solid waste recycling facility was governed by proposal-negotiation rules set forth in RFP).
The court erred, however, in extrapolating from that premise the conclusion that the District was bound to the full panoply of statutory competitive bid requirements set forth in R.C. Chapter 307. To the contrary, the District was bound only by the provisions contained within the RFP itself, and in its RFP the District reserved for itself the right to “waive any and all informalities or irregularities in any Bid * * *.” The District did not commit itself to accept the “lowest and best” proposal but, rather, informed bidders that it would accept the
Whether or not these reservations of rights are consistent with the statutory competitive bidding requirements of R.C. 307.86 is irrelevant. Cf. State ex rel. Coleman v. Munger (1948), 84 Ohio App. 148, 152-153, 39 O.O. 170, 172, 83 N.E.2d 809, 811. Quite simply, the District was bound to follow the conditions it had set for itself in the RFP document, but was not required to follow the requirements of R.C. Chapter 307. The court of appeals thus erred in finding it impermissible for the District to, e.g., allow OM to “waive” a “put-or-pay” provision in its bid based on its finding that the waiver constituted a “material” or “substantial” variation from the original OM proposal.
Propriety of Granting Injunctive Relief
Courts should take “particular caution * * * in granting injunctions, especially in cases affecting a public interest where the court is asked to interfere with or suspend the operation of important works or control the action of another department of government.” Leaseway Distrib. Centers, Inc. v. Dept. of Adm. Serv. (1988), 49 Ohio App.3d 99, 106, 550 N.E.2d 955, 962; Dandino v. Hoover (1994), 70 Ohio St.3d 506, 639 N.E.2d 767. The issue whether to grant or deny an injunction is a matter solely within the discretion of the trial court and a reviewing court should not disturb the judgment of the trial court in the absence of a clear abuse of discretion. Garono v. State (1988), 37 Ohio St.3d 171, 173, 524 N.E.2d 496, 498.
The court of appeals found that Danis was entitled to injunctive relief in that it had submitted evidence sufficient to prove bad faith on the part of the District and in that the District had “conducted a fraudulent bidding procedure by having implicitly represented that it would consider all responsive bids in good faith when it had no intention of considering Danis’s bid in good faith.” We reverse this holding. We find, instead, that the record before the trial court justified a finding that the District substantially complied with the procedures it had announced in its RFP. When an award decision is based upon criteria expressly set forth in a bidding proposal, no abuse of discretion occurs. Kokosing Constr. Co. v. Dixon (1991), 72 Ohio App.3d 320, 325, 594 N.E.2d 675, 678.
It is true that Danis presented evidence that one District board member had indicated he would “help lead the fight against Danis,” and that prior to the date set for submission of proposals another board member had written a handwritten
The District argued in the court below that its selection of the OM-Ohio Edison proposal was based on its determination that the proposal would meet ecological and economic needs not addressed by the Danis proposal, which contemplated reliance on landfilling only. Testimony at the hearing established that the OM proposal was favored by one District board member based on his conclusion that (1) it was price competitive, (2) the technology “would serve the community well,” (3) the proposal resulted in waste reduction, and (4) the District would be benefited by the generation of electricity by the facility. The vote of the District board was unanimous in favor of the OM-Ohio Edison proposal. The trial court correctly refrained from substituting its discretion for that of the District as to which submitted proposals would be “in the best interest of the District,” a primary selection criterion established in the RFP.
We further acknowledge that the District failed to interview Danis concerning its proposal, while choosing to interview several other respondents, including OM. Danis had, however, been interviewed previously by District representatives in connection with a similar proposal it had submitted in response to an earlier RFP, and the District was aware of the quality of Danis’s operation of the contemporaneously operating Tremont City Landfill. The RFP clearly authorized the consideration of a bidder’s past record of performance in evaluation of its bid. In addition, all submitted proposals, including that submitted by Danis, were evaluated by the primary review committee, and its summary of the Danis proposal was included in the Committee report to the District board. Danis was fully advised by the RFP regarding the procedures the District would follow in making its designation selection.
To establish fraud or abuse of discretion Danis was required to prove that the District acted in bad faith or with an unreasonable, arbitrary or unconscionable attitude. Cedar Bay Constr., supra, 50 Ohio St.3d at 21-22, 552 N.E.2d at 205. The trial court’s finding that Danis failed to meet that burden of proof is not against the manifest weight of the evidence.
In sum, we conclude that the court of appeals erred in holding that the District failed to adhere to any duty required of it, or otherwise abused its discretion. In
Judgment reversed and original judgment of the trial court reinstated.
. In 1993, R.C. 343.01(H)(2) was renumbered (I)(2) (144 Ohio Laws, Part IV, 6259-6260), and later that year amended to state that, where a facility designation has been made by an SWM district in accordance with an approved plan, “no person * * * shall deliver * * * solid wastes generated within a county or joint district to any solid waste * * * facility other than the facility [so] designated in [newly enacted] section 343.013, 343.014 or 343.015 of the Revised Code, or in the initial or amended plan of the district prepared and ordered to be implemented under section 3734.521, 3734.55 or 3734.56 of the Revised Code, as applicable.” (Emphasis added.) Am.Sub.S.B. No. 153, 145 Ohio Laws-.
. R.C. 3734.101, at the time this action was commenced, provided in relevant part:
“(A) Except as provided in division (C) of this section, any person aggrieved or adversely affected by an alleged violation of this chapter or a rule, permit, license, variance, or order issued or adopted under it may commence a civil action on his own behalf against any person, the state, or a political subdivision that is alleged to be in violation of this chapter or a rule, permit, license, variance, or order issued or adopted under them. * * *
“(B) An action under division (A) of this section may be commenced no sooner than one hundred fifty days after the aggrieved or adversely affected person has given notice of the alleged violation to the director of environmental protection, the attorney general, and the alleged violator. Notice required under this division shaE be dehvered by certified mail and shaE describe in detaE the aEeged violation for which the action may be commenced.
“(C)(1) No action may be commenced under division (A) of this section if, within one hundred fifty days after the aggrieved or adversely affected person has given notice under division (B) of this section:
“(a) The director, with the written concurrence of the attorney general, has issued an administrative enforcement order requiring compHance by the aEeged violator with the particular provision of this chapter, rule, permit, license, variance, or order in question; or
“(b) The attorney general, prosecuting attorney of a county, or city director of law is prosecuting a civfl or criminal action in any court to require compliance by the aEeged violator with the particular provision of this chapter, rule, permit, Ecense, variance, or order in question.” (142 Ohio Laws, Part III, 4495-4496.) (Amended effective October 29, 1993 in 145 Ohio Laws -.)
R.C. 3745.08, as in effect when this action was commenced, provided, in part:
“(A) * * * [A]ny person who is or wiE be aggrieved or adversely affected by a violation which has occurred, is occurring, or wiE occur may file a [verified] complaint, * * * with the director of environmental protection, in accordance with the rules of the director adopted pursuant to Chapter 119. of the Revised Code, aEeging that another person has violated, is violating, or wiE violate any law, rule, standard, or order relating to * * * solid waste, * * * or, if the person is in possession of a vaEd * * * plan approval relating to * * * solid waste, that the person has violated, is violating, or wfll violate the conditions of the * * * plan approval. * * *
“(B) Upon receipt of a complaint authorized by this section, the director shall cause a prompt investigation to be conducted such as is reasonably necessary to determine whether a violation, as aEeged, has occurred, is occurring, or wiE occur. The investigation shaE include a discussion of the complaint with the aEeged violator. If, upon completion of the investigation, the director determines that a violation, as aEeged, has occurred, is occurring, or wül occur, he may enter such order as may be necessary, request the attorney general to commence appropriate legal proceedings, or, where he determines that prior violations have been terminated and that future violations of the same kind are unlikely to occur, he may dismiss the complaint. * * * ” (143 Ohio Laws, Part III, 4684-4685.) (Amended effective July 1, 1995, in 145 Ohio Laws-.)
. R.C. 307.86 contains numerous exceptions to the general requirement of county competitive bidding of contracts in excess of the monetary mínimums. None of those exceptions has, however, been asserted to be applicable to the cause sub judice.
. A “put or pay” provision may be described as a provision by which an SWM district agrees to compensate a solid waste disposal provider in the event that prescribed levels of anticipated waste do not eventuate, thereby reducing the provider’s expected revenues. An example of such a provision is described in Carbone, supra, 511 U.S. at -, 114 S.Ct. at 1693, 128 L.Ed.2d at 421.
Dissenting Opinion
dissenting. The math in this case adds up. The construction of this facility will cost over $150 million; there are approximately 148,000 citizens in Clark County. As I calculate it, this disposal plant will cost over $1,000 for every man, woman and child in the county, yet the majority holds that the awarding of this lucrative contract is exempt from competitive bidding.
The public’s funds are public funds. Whether they are spent directly or indirectly by elected officials is of no consequence for purposes of Ohio’s county competitive bidding statute, R.C. 307.86. The majority curiously labels the contract between the Clark County Solid Waste Management District (“District”) and Ogden Martin Systems, Inc. (“OM”) as a “designation,” rather than an expenditure, in order to circumvent the requirements of R.C. 307.86. The majority contends that the “anticipated contract quite simply did not involve any monetary cost to, or expenditure of, public funds by the District.” (Emphasis sic.) If there is any purpose to a public bidding statute, the logical and inescapable conclusion must be that when a solid waste management district obligates the citizens it represents to expend $150 million, the transaction is subject to the requirements of R.C. 307.86.
The “designation” of funds by the District falls within the purview of R.C. 307.86. R.C. 307.86 requires services purchased on behalf of a county or contracting authority in excess of $10,000 to be obtained through competitive bidding. The contract between the District and OM “designated” OM as the exclusive provider of solid waste disposal for a period of twenty-five years, during which time OM was to charge a pre-specified “tip fee” of $43.60 per ton. Waste estimates for Clark County indicate that the residential, industrial, and commercial sectors generate tens of thousands of tons of solid waste requiring disposal each year. Thus, although the District did not directly convey any public funds, the District arranged for OM to receive the benefit of millions of dollars of the public’s funds. Funds need not first be taken into the public treasury before they are regulated by R.C. 307.86.
To hold this transaction to be beyond the scope of R.C. 307.86 permits the public trust to be displaced by public deal making. I accordingly dissent.