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E & E Hauling Inc. v. Forest Preserve District of Dupage County

decided: June 9, 1987.

E & E HAULING, INC., A/K/A AMERICAN ENVIRONMENTAL CONSTRUCTION, PLAINTIFF-COUNTER-DEFENDANT-APPELLEE,
v.
FOREST PRESERVE DISTRICT OF DUPAGE COUNTY, ILLINOIS, DEFENDANT-COUNTER-PLAINTIFF-APPELLANT



Appeal from the United States District Court for the Northern District of Illinois, Eastern Division, No. 85 C 6951, Milton I. Shadur, Judge.

Author: Cudahy

Before CUDAHY, EASTERBROOK and RIPPLE, Circuit Judges.

CUDAHY, Circuit Judge.

The defendant Forest Preserve District of DuPage County, Illinois (the "District") appeals from the district court's grant of summary judgment for the plaintiff, American Environmental Construction Company, formerly known as E & E Hauling, Inc. ("E & E"). The district court found that two ordinances enacted by the District were invalid because they were preempted by the Illinois Environmental Protection Act, Ill. Rev. Stat. ch. 111 1/2, paras. 1001-1052 (1985). We affirm in part and vacate the remand in part to allow the district court to consider whether any part of Ordinance Number 85-132 (the "Volume and Origin Ordinance") was authorized by prior agreement between the District and E & E and should therefore be held valid.

I.

E & E is an Illinois corporation in the business of waste disposal. The District is a non-home rule unit of local government. On June 1, 1974, the District and E & E entered into a contract (the "Agreement") whereby E & E contracted to construct a scenic and recreational hill development, using the techniques of sanitary landfill, on land owned by the District. The Agreement provided for an initial term of ten years, with E & E thereafter having successive two-year extension options for a total term not to exceed nineteen years.

The Agreement authorized E & E to charge user fees to persons who deposited waste at the sanitary landfill. The fees were based on the volume and density of the materials deposited, and the Agreement specifically stated that the fees were to be maintained at a level competitive with fees charged by comparable sanitary landfills in northeastern Illinois. In addition, the Agreement provided that E & E would pay a specified percentage of the user fees to the District. For the first ten years of the contract, the District was to receive ten percent of the fees; the percentage would thereafter increase by one percent every other year until the contract expired. E & E and the District have, by mutual consent, amended the Agreement at least eight times since 1974 to allow E & E to raise the user fees.

Neither the Agreement nor any amendment restricted the amount of waste E & E could accept for deposit in the landfill. The Agreement provided that "the work shall be expeditiously prosecuted by [E & E] so that the scenic and recreational hill development will be completed as quickly as possible." Agreement para. 8. In 1978, the District adopted an ordinance prohibiting the dumping of liquid and sludge waste at the landfill site. E & E sued the District. The suit ended in a settlement agreement pursuant to which the District enacted a new ordinance, Ordinance Number 0-667, with E & E's approval, limiting the amount of liquid and sludge waste that E & E could accept for deposit at the landfill.

In 1979, the State of Illinois initiated a suit against the District and E & E in connection with the operation of the landfill. In setting this litigation, the District agreed, among other things, to use part of its share of the user fees to establish a two million dollar environmental responsibility fund from which it would pay future legal liabilities arising from the landfill.

In April 1985, E & E again submitted to the District a request to increase the user fees in order to keep them competitive as required by the Agreement. On July 30, 1985, the District enacted three ordinances. The first, Ordinance Number 85-130, granted the rate increases requested by E & E and found that the new rates were competitive with those charged by other landfills in the area. The remaining two ordinances were enacted without E & E's consent, and they are the heart of the present controversy between the parties. Ordinance Number 85-131 (the "Compensation Ordinance") requires E & E to pay to the District sixty percent of the user fees collected above the fees that were charged prior to the increase granted by Ordinance Number 85-130. The increased revenues were to create a fund to pay for possible future environmental problems at the landfill and at a neighboring landfill. The third ordinance, Ordinance Number 85-132 (the "Volume and Origin Ordinance"), limits the maximum volume of waste E & E may accept in a twelve-month period and requires E & E to give preference to waste generated in DuPage County.

E & E filed this suit against the District alleging that the Compensation Ordinance and the Volume and Origin Ordinance: (1) impair the Agreement in violation of the Contract Clause of the United States and Illinois Constitutions, U.S. Const. art. I, § 10, cl. 1, Ill. Const. art. I, § 16; (2) are preempted by the Illinois Environmental Protection Act (the "IEPA"), Ill. Rev. Stat. ch. 111 1/2, paras. 1001-1052 (1985); (3) are beyond the powers of the District to enact; and (4) constitute a breach of the Agreement by the District. Subsequently, E & E moved for summary judgment on all but its breach-of-contract claim. The district court granted summary judgment for E & E and found that the ordinances were invalid on the ground that they were preempted by the IEPA. The court further found that its disposition of the preemption claim mooted E & E's contract clause and ultra vires claims, and carried with it a dismissal with prejudice of the District's counterclaim for a declaratory judgment that the ordinances are valid and enforceable. Finally, the court dismissed without prejudice E & E's pendent breach-of-contract claim as well as the District's state law counterclaims.*fn1 E & E Hauling, Inc. v. Forest Preserve District, 629 F. Supp. 973 (N.D. Ill. 1986).

II.

Before we review the district court's finding that the ordinances were invalid, we will briefly address the District's contention that the district court should have abstained from deciding the state law claims and instead should have decided the federal contract clause claim. The District did not argue in favor of abstention before the district court; the court addressed that possibility sua sponte and decided that abstaining would be inappropriate.

The district court acted properly in reaching the state law preemption claim. Courts should decide federal constitutional claims only when there is no other basis for deciding the case. See, e.g., Jean v. Nelson, 472 U.S. 846, 854, 86 L. Ed. 2d 664, 105 S. Ct. 2992 (1985); Hagans v. Lavine, 415 U.S. 528, 546-47, 39 L. Ed. 2d 577, 94 S. Ct. 1372 (1974); Siler v. Louisville & Nashville R.R. Co., 213 U.S. 175, 53 L. Ed. 753, ...


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