Dear Mr. Pitre,
As counsel for the St. Landry Parish Solid Waste Disposal District (hereinafter "District"), you have requested an opinion of this office as to whether the District is permitted to amend its existing garbage collection contract with a private company named IESI to reflect higher operating costs by IESI due to the increased cost of fuel. Pursuant to the existing contract, IESI charges the District a fixed rate for collection of all solid waste in the Parish of St. Landry. There are no provisions in the contract for fuel cost adjustments, except for the annual Consumer Price Index adjustment.
Due to the increasing cost of fuel, IESI recently requested that the District modify the original contract to allow IESI to collect higher pricing rates from the District. The original contract contains a general provision which allows IESI to petition the District for an increase in collection rates due to unusual circumstances. The language provides:
D. Provision for Unusual Rate Adjustments
. . . IESI may petition the District or the District may petition IESI for additional rate and price adjustments at reasonable time on the basis of unusual changes in its costs of operations, such as revised laws, ordinances, or regulations or changes in location of the solid waste disposal site.
Although the list of "unusual circumstances" in provision D is only illustrative, it does not appear to our office that an increase in the cost of fuel is an "unusual circumstance" that would allow the District to pay more than it is contractually obligated to.
You have also requested our office to determine in the event Section D of the contract referenced above is not applicable whether the District may legally *Page 2 amend the contract to provide for higher pricing rates to IESI due to the rising cost of fuel. This question must be addressed in light of Louisiana Constitution Article VII, Section 14(A) which provides, in pertinent part, the following:
Section 14. (A) Prohibited Uses. Except as otherwise provided by this constitution, the funds, credit, property, or things of value of the state or of any political subdivision shall not be loaned, pledged, or donated to or for any person, association, or corporation, public or private. . . .
Absent an escalation clause contained in the original contract, we know of no authority for the contract to now be amended so as to permit an increase in the contract price due to the increased cost of fuel. To do so would be a violation of Article VII, Section 14(A) of the Louisiana Constitution. See Atty. Gen. Op. Nos. 79-1101; 04-0303; 05-0445. We would recommend including an escalation clause in future contracts with IESI.
Accordingly, it is the opinion of this office that absent an escalation clause contained in the original contract, the District may not increase the contract amount or pay more in order that IESI render services they are already contractually obligated to perform. To do so would be a violation of Article VII, Section 14(A) of the Louisiana Constitution.
We trust this adequately responds to your request. However, if our office can be of further assistance, please do not hesitate to contact us.
Yours very truly,
JAMES D. "BUDDY" CALDWELL
Attorney General
By: __________________________
Lindsey K. Hunter
Assistant Attorney General
JDC/LKH/crt