Date: September 28, 2006
The Southeastern Public Service Authority has won much needed reprieve on two fronts. First, a Circuit judge dismissed both counts of a lawsuit brought by the City of Chesapeake that sought to extricate it from its contract with the authority. Then Wachovia Bank agreed to lend the authority as much as $22 million, money that the authority was having trouble raising largely as a result of the lawsuit. Without the interim financing the authority was faced with having to nearly double the rates charged to its other members. The Wachovia deal is expected to close in the next few weeks.
The Judge's ruling affirms the legitimacy of SPSA's contracts with its members. Circuit Judge V. Thomas Forehand wrote that Chesapeake's complaint failed to state a cause of action and that "The Use and Support Agreement neither deprives the City of its ability to protect the public health, safety and welfare, nor illegally barters away Chesapeake's legislative powers." The ruling is a setback for the City of Chesapeake which was using the lawsuit to protest the agency's involvement in plans to receive out-of-state waste, primarily from New York City.
Chesapeake Circuit Court Judge Thomas Forehand has granted SPSA's demurrers to Counts I and II of Chesapeake's complaint, the counts asking that Chesapeake be allowed to end its relationship with SPSA: "The Court is of the opinion that Count I of the Complaint fails to state a cause of action, because the Use and Support Agreement entered into between SPSA and Chesapeake clearly falls within "the plain, obvious, and rational meaning" of the term "written obligations" found in Chapter 596 of the 2000 Acts of Assembly.
The Court further stated: "Chesapeake utilized its discretionary authority in exercising the granted power to contract for the collection and disposal of waste by electing to become a member of SPSA at its inception and by entering into the Use and Support Agreement with SPSA some twenty-three years ago. The Court is of the opinion that Count II of the Complaint fails to state a cause of action, in that nothing in the method selected by Chesapeake in exercising the granted power is unreasonable and the Use and Support Agreement neither deprives the City of its ability to protect the public health, safety and welfare, nor illegally barters away Chesapeake's legislative powers."
The Court granted both demurrers with prejudice meaning that these claims are dismissed and cannot be re-filed. The Court further denied Chesapeake's motion for a preliminary injunction to prevent SPSA from entering a contract with Covanta.