Opinion ID: 2314437
Heading Depth: 1
Heading Rank: 9

Heading: Contracts Clause Protection

Text: The next issue is whether the contract and the relevant customer contracts that were entered into after September 26, 1988, but before the effective date of the County Plan, April 24 1991, are protected by the Contracts Clause. [19] DER argues that Empire and Danella were aware of the Act at the time of such contracting and that, under the law of contracts, the terms of the Act became part of all of the contracts. [20] The Contracts Clause does not operate to obliterate the police power of the States. Allied Structural Steel Co. v. Spannaus, 438 U.S. 234, 241, 98 S.Ct. 2716, 2720-21, 57 L.Ed.2d 727, 734 (1978). The prohibition against impairing the obligations of contracts should not be read literally; it requires the court to balance the impairment against the necessity of the regulation and the benefits to the public good. Keystone Bituminous Coal Association v. DeBenedictis, 480 U.S. 470, 502-503, 107 S.Ct. 1232, 1250-51, 94 L.Ed.2d 472, 499-500 (1987). [21] In Pennsylvania, statutes that are necessary for the general good of the public are constitutional under Article I, § 17 even if they incidentally affect existing contractual obligations. DePaul v. Kauffman, 441 Pa. 386, 398-99, 272 A.2d 500, 506-07 (1971). The laws that are in force at the time parties enter into a contract are merged with the other obligations that are specifically set forth in the agreement. Walsh v. School District of Philadelphia, 343 Pa. 178, 22 A.2d 909 (1941), cert. denied, 315 U.S. 823, 62 S.Ct. 916, 86 L.Ed. 1219 (1942). Statutes generally should not be applied retroactively to a contractual relationship where the application would alter existing obligations. First National Bank of Pennsylvania v. Flanagan, 515 Pa. 263, 270, 528 A.2d 134, 137 (1987). The language of section 506 permits the grandfathering until the date of a department-approved municipal waste management plan. Legally, such a plan had no effect until the Ordinance was passed and, at that point, the Act as well as the County Plan became directly applicable to the parties. While the enactment of the Act in 1988 notified parties that future waste contracts would be subject to and modified by county plans, the parties here could not anticipate, at the time of contracting, the specific changes that the County Plan would require. Here, the obligations of Danella and Empire would be altered by retroactive application of the County's Ordinance, since Empire is not a designated landfill but is required to keep a certain amount of space available for Danella's disposal purposes. Further, Danella relied on its contract with Empire when it entered customer contracts to collect and haul customers' waste for a fee based on its agreement with Empire. Hence, the Commonwealth Court did not err in concluding that the effective date of the implementing Ordinance is the date from which agreements of private parties should be subject to the Act and that contracts entered into before such date would be impaired for purposes of the Contracts Clause of both constitutions if the Ordinance were applied to them. The order of the Commonwealth Court is affirmed. ZAPPALA, J., did not participate in the consideration or decision of this case. NIX, Former C.J., did not participate in the decision of this case.