The Atlantic County Utilities Authority has taken over responsibility for a landfill underneath Egg Harbor Township’s municipal golf course in an unusual deal that will stabilize trash rates for Atlantic County residents while freeing funds for other projects.

The state-approved deal allowed the ACUA to withdraw $21 million from a fund established to oversee Pinelands Park Landfill following its closing to help pay off the authority’s outstanding bonds.

Approval followed a private consultant’s study that argued the ACUA needed only about $15.8 million — not the $46 million that had been set aside — to maintain the landfill closing fund. Those funds are money paid by ratepayers and controlled by the state since the 1980s to ensure that closed landfills are properly maintained and the public is protected.

Removing the authority’s debt will free up millions of dollars for use in other areas and avert future trash fee increases, ACUA officials said recently.

The deal was unprecedented in New Jersey, since the state Department of Environmental Protection has never seen a utility assume responsibility for a landfill and never approved a request to allow an operator to withdraw money from a landfill closing fund, DEP spokesman Bob Considine said.

“I personally think this is without precedent,” agreed Mark Swyka, a consultant hired by the authority to make the case to state regulators. He congratulated the “entrepreneurial” and “out-of-the-box thinking” shown by the ACUA.

But some environmentalists questioned the wisdom of draining down post-closing funds.

“That’s sort of a sleight-of-hand,” said Jeff Tittel, director of the New Jersey chapter of the Sierra Club. “That money should be going to close landfills, not to pay off debt.”

Rick Dovey, the ACUA’s executive director, stressed that the older landfill remained safe, with $25 million in the closing account as well as $30 million in insurance to handle emergencies.

Instead of paying for bonds, Dovey said the utility would replace older computers and equipment as well as upgrade the system used to weigh trash trucks and compute fees. Other changes include improvements to the systems that handle landfill gas and a new pipeline to handle the 20,000 gallons of the fluid the decaying landfill creates daily.

The fluid, called leachate, is currently collected in tanks and trucked to the ACUA’s wastewater treatment plant. The utility plans to connect a pipe to the Ocean Heights Avenue sewer line, saving transportation costs.

Egg Harbor Township Mayor James “Sonny” McCullough praised the deal as beneficial to the ACUA and the township, saying the new ownership means a better working relationship and the ability for problems to be resolved more quickly. McCullough also is president of the Egg Harbor Township Golf Corp., which oversees McCullough’s Emerald Golf Links on top of the landfill.

“When it’s local, it’s local,” McCullough said. “A lot of times, when something came up, they had to make a long-distance call. I think it’s going to be best for everybody.”

Pinelands Park operated from the mid-1950s until August 1990, when it was closed on orders of the state Board of Public Utilities and the DEP. State law requires landfills to be cared for and closely monitored for 30 years after they close.

The state began requiring more money and heightened scrutiny after leaking hazardous waste from North Jersey landfills and Price’s Pit in Pleasantville made headlines in the 1980s, Considine said. Price’s Pit, off Saw Mill Road, is in midst of a multimillion-dollar remediation.

When Pinelands Park closed, the ACUA began shipping county waste to Pennsylvania, among other places. It opened up the first part of the Howard “Fritz” Haneman Environmental Park, adjacent to the Garden State Parkway and Delilah Road, in 1991 and began taking municipal waste in 2000.

Current trash fees are $66.09 per ton, with $1 per ton going to state-mandated closing funds, held in escrow by the DEP. Every other year, Dovey said, the authority commissioned engineering analyses and contributed to an alternative fund if needed. Dovey said the Haneman closing fund held $2.6 million, and the alternative fund held $4.8 million.

In 1992, the authority sold $89.5 million in bonds to pay off previous debt and expand the Haneman landfill, and the ACUA spent about $8 million a year on repayment.

The state initially provided about $5.6 million each year, Dovey said. But he said the state reduced its contribution three years ago and stopped paying by July 2011.

The ACUA eyed the closing fund, which held $46 million by June 2012. If it did not tap the fund, Dovey said the authority would have to “make up $8 million by increasing tip fees, which would have been an increase of about $30 a ton, which is ridiculous.”

The ACUA hired Cornerstone Environmental of Middletown, N.Y., in late 2010 to look at the financial and environmental obligations and risks.

Swyka, a partner at Cornerstone, said he told the DEP last year that the ACUA had the staff and the ability to properly manage the closed landfill. He said he also believed the ACUA could handle certain matters, such as the fluid coming from the decaying trash, more efficiently. The company’s engineers said in a report that the ACUA only needed about $15.8 million to maintain the facility.

Considine said the DEP approved the transfer of ownership and withdrawal of $21 million from the escrow account Nov. 13, 2012. It did so, he said, after a review and assurances from the ACUA that it would take on all responsibilities of ownership and follow all federal and state regulations for an environmentally sound closing.

Dovey said their argument was simple: “We said (to state regulators), ‘Listen, you’re reneging on your promise. We understand you’re reneging on your promise, but we have this idea and this approach that seems to make sense.’”

Contact Derek Harper:

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