City of Asheville v. State of N. Carolina
City of Asheville v. State of N. Carolina
Opinion
*250 The City of Asheville ("Asheville") commenced this action against the State of North Carolina, challenging the constitutionality of certain legislation enacted by our General Assembly in 2013. A provision in this legislation requires Asheville to cede ownership and control of its public water system to *94 another political subdivision. The trial court entered an *251 order enjoining this involuntary transfer, concluding that the legislation violated the North Carolina Constitution.
We affirm the trial court's conclusion that Asheville has standing to challenge the authority of the General Assembly in this matter. We reverse the court's conclusions regarding the legislation's constitutionality and its injunction and remand the matter for further proceedings consistent with this opinion.
I. Background
The General Assembly has empowered municipalities to own and operate public water systems and public sewer systems and to serve customers both inside and outside of their corporate limits. N.C. Gen.Stat. § 160A-312.
Asheville is a municipality which owns and operates a public water system (the "Asheville Water System"). Asheville, however, does not operate a public sewer system. Rather, the public sewer system is owned and operated by a metropolitan sewerage district (an "MSD"). 1 Like a municipality, an MSD is a type of political subdivision authorized by the General Assembly. N.C. Gen.Stat. § 162A-64 et seq.
The relationship between Asheville and its water customers living outside of its corporate limits has historically been quite litigious, with many disputes resolved through legislation from our General Assembly.
See
Candler v. City of Asheville,
In 2013, our General Assembly enacted legislation (the "Water/Sewer Act") which withdraws from Asheville the authority to own and operate the Asheville Water System and transfers the System to the Buncombe County MSD as follows:
The Water/Sewer Act creates a new type of political subdivision known as a metropolitan water and sewerage district (an "MWSD"), empowered to run both a public water system and a public sewer system within a defined jurisdiction. An MWSD may be formed either voluntarily or by operation of law. An MWSD is formed voluntarily when two or more political subdivisions ( e.g., cities and MSD's) consent to *252 form an MWSD to consolidate the governance of the public water and sewer systems in their region. N.C. Gen.Stat. § 162A-85.2.
A provision in the Water/Sewer Act (the "Transfer Provision")-the provision which is at the heart of this litigation-allows for the formation of an MWSD by operation of law. This provision states that the public
water
system belonging to a municipality or other political subdivision which meets certain criteria
and
which happens to operate in the same county that an MSD operates a public
sewer
system
must be transferred
to that MSD, upon which the MSD converts to an MWSD.
See
Though the Transfer Provision does not expressly reference Asheville by name, the only public water system which currently meets all of the Transfer Provision's criteria for a forced transfer to an MSD is the Asheville Water System.
_________________________
Asheville commenced this action, challenging the legality of the Transfer Provision on several grounds. The State moved to dismiss, contending that Asheville lacked standing to challenge the General Assembly's authority to enact the legislation. Also, both parties filed cross motions for summary judgment.
Following a hearing, the trial court entered an order recognizing Asheville's standing. The trial court enjoined the application of the Transfer Provision, concluding that it violated our state constitution on three grounds.
The State timely appealed.
*95 II. Standard of Review
As this case involves the interpretation of a state statute and our state Constitution, our review is
de novo. See
In re Vogler,
II. Asheville's Standing
The trial court concluded that Asheville has standing to challenge the authority of the General Assembly to enact the Transfer Provision. We agree.
Our Supreme Court has expressly held that "municipalities [have] standing to test the constitutionality of acts of the General Assembly."
Town of Spruce Pine v. Avery County,
*253
of Educ.,
In challenging Asheville's standing, the State cites
In re
Appeal of Martin,
IV. Constitutionality of the Water/Sewer Act
The trial court held that the Transfer Provision was invalid under our North Carolina Constitution based on three separate grounds:
(1) the Transfer Provision is a "local law" relating to "health," "sanitation" and "non-navigable streams," in violation of Article II, Section 24 ;
(2) the Transfer Provision violates Asheville's rights under the "law of the land" clause found in Article I, Section 19 ; and
(3) the Transfer Provision constitutes an unlawful taking of Asheville's property without just compensation in violation of Article I, Sections 19 and 35.
We disagree and hold that the Transfer Provision does not violate these constitutional provisions. 2
*254 A. The General Assembly has plenary power regarding the political subdivisions in our State, except as restricted by the state and federal constitutions.
The plenary police power of the State is "vested in and derived from the people,"
N.C. Const. Article I, § 2 ;
and "an act of the people
through their representatives in the legislature
is valid unless prohibited by [the State] Constitution."
State ex rel. Martin v. Preston,
The General Assembly's power includes the authority to organize and regulate the powers of our State's municipalities and other political subdivisions.
See N.C. Const. art. VII, § 1
(recognizing that the General Assembly
*96
has the power to regulate our towns and cities "except as [ ] prohibited by [our state] Constitution"). Our Supreme Court has repeatedly recognized this power. For example, in two cases in which Asheville was a party, the Court stated that the powers of a municipality "may be changed, modified, diminished, or enlarged [by the General Assembly, only] subject to the constitutional limitations,"
Candler v. City of Asheville,
Here, the General Assembly has sought to exercise its power over political subdivisions by enacting the Transfer Provision, which (1) creates a new political subdivision in Buncombe County (an MWSD), (2) withdraws from Asheville authority to own and operate a public water system, and (3) transfers Asheville's water system to the MWSD, all without Asheville's consent and without compensation to Asheville.
Early last century, our Supreme Court recognized our General Assembly's power to withdraw from the City of Charlotte its authority *255 to operate its public water system and to transfer this system to a new political subdivision:
It is clear that the Legislature may, in aid of municipal government or for the purpose of discharging any municipal functions, or for any proper purpose, create municipal boards and confer upon them such powers and duties as in its judgment may seem best.... The Legislature has frequently exercised the power conferred by the Constitution by establishing boards of health in towns and cities, school boards and such others as may be deemed wise as additional government agencies. We do not understand that this power is questioned, or that the title to the [public water system] purchased by [Charlotte] did not pass to and vest in the board of water commissioners established by the act [of the Legislature].
Brockenbrough v. Board of Water Comm'rs.,
There is no prohibition ... against the creation by the Legislature of every conceivable description of corporate authority and to endow them with all the faculties and attributes of other pre-existing corporate authority. Thus, for example, there is nothing in the Constitution of this State to prevent the Legislature from placing the police department of [a municipality] or its fire department or its waterworks under the control of an authority which may be constituted for such purpose.
Brockenbrough,
Accordingly, unless prohibited by some provision in the state or federal constitutions, our General Assembly has the power to create a new political subdivision, to withdraw from Asheville authority to own and operate a public water system, and to transfer Asheville's water system to the new political subdivision.
*256 B. The three constitutional restrictions on the General Assembly's power cited by the trial court do not apply to the enactment of the Transfer Provision.
Asheville argues that the trial court correctly concluded that the Transfer Provision violates our state constitution. In our de novo review of the trial court's conclusions, we are guided by the following:
*97
Our courts have the power to declare an act of the General Assembly unconstitutional.
See
Hart,
We must not declare legislation to be unconstitutional unless "the violation is
plain and clear,
"
Hart,
We are not to be concerned with the "wisdom and expediency" of the legislation, but whether the General Assembly has the "power" to enact it.
In re Denial,
And, finally, the burden in this case rests with Asheville to show beyond a reasonable doubt that the Transfer Provision violates some constitutional provision.
We now address the three constitutional grounds relied upon by the trial court in striking down the Transfer Provision.
1. Article II, Section 24 -Prohibition against certain types of local laws.
Asheville argues, and the trial court concluded, that the Transfer Provision violates Article II, Section 24(1)(a) and (e) of our state constitution, which prevents the General Assembly from enacting certain types of local laws. We disagree.
Taking effect in 1917, Article II, Section 24 restricts the otherwise plenary power of our General Assembly to enact so-called "local" laws, by declaring void any "local" law concerning any of 14 "prohibited subjects"
*257 enumerated in that provision. N.C. Const. art. II, § 24 (1)(a)-(n). Therefore, a law violates this constitutional provision only if it is deemed "local" and if it falls within the ambit of one of the 14 " prohibited subjects."
In the present case, the trial court held that the Transfer Provision is a local law and that it falls within the ambit of two "prohibited subjects": Laws "relating to health [or] sanitation" and laws "relating to non-navigable streams[.]" N.C. Const. art. II, § 24 (1)(a), (e).
Our Supreme Court has stated that a law is either "general" or "local," but there is "no exact rule or formula" which can be universally applied to make the distinction.
Williams v. Blue Cross,
Seven years ago, our Court grappled with this issue in a case involving these same parties and a constitutional challenge of three statutes regulating the Asheville Water System.
City of Asheville v. State of North Carolina,
In the 2008 case, Asheville argued that every law which concerns a water or sewer system "
necessarily
relate[s] to health and sanitation" within the ambit of
Article II, Section 24(1)(a).
City of Asheville,
Rather, we concluded that our Supreme Court precedent instructs that a local law is not deemed to be one "relating to health [or] sanitation"
unless
(1) the law plainly "state[s] that
its purpose is to regulate
[this prohibited subject],"
or
(2) the reviewing court is able to determine "that the purpose of the act is to regulate [this prohibited subject
*98
after] careful perusal of the entire act".
Id.
at 33,
Whereas, regional water and sewer systems provide reliable, cost-effective, high-quality water and sewer services to a wide range of residential and institutional customers; and
Whereas, in an effort to ensure that the citizens and businesses of North Carolina are provided with the highest quality services, the State recognizes the value of regional solutions for public water and sewer for large public systems; Now, therefore,
The General Assembly of North Carolina enacts....
We next peruse the entire Water/Sewer Act to determine whether it is plain and clear that the Act's purpose is to regulate health or sanitation. We find that there are no provisions in the Act which "contemplate[ ] ... prioritizing the [Asheville Water System's] health or sanitary condition[.]"
See
City of Asheville,
Following this same analysis, we hold that the Water/Sewer Act does not fall within the ambit of the phrase "relating to non-navigable streams." The mere implication in legislation of a public water system which happens to derive water from a non-navigable stream "does not necessitate a conclusion that [the legislation] relates to [non-navigable streams] in violation of the Constitution."
City of Asheville,
*259 Asheville cites five cases from our Supreme Court to argue that the Transfer Provision is a law "relating to health [or] sanitation," which we now address:
The most compelling of these case is
Drysdale v. Prudden,
We read
Drysdale
in conjunction with
Reed, supra.
Like
Drysdale, Reed
is a 1920's case in which our Supreme Court addresses the constitutionality of a statute creating sanitary districts.
Reed,
In any event, both cases provide insight on the issue as to whether a law is "local" or "general," and, admittedly, the Court's conclusion in
Drysdale
on this issue is more consistent with recent holdings from that Court, while the conclusion on the issue reached in
Reed
-that a law is "general" if it applies throughout one entire county-appears to be somewhat of an outlier. However,
Reed
is more instructive than
Drysdale
in determining whether an act "relat[es] to health [or] sanitation."
Id.
at 44,
The other cases cited by Asheville do not mandate that we reach a contrary result in the present case. Three of these cases are distinguishable because they deal with legislation that empowers a political
*260
subdivision with authority
to enforce health regulations
in a county.
See
City of New Bern v. Bd. of Educ.,
The fifth case cited by Asheville,
Lamb v. Bd. of Educ.,
is also not controlling.
2. Article I, Section 19-"Law of the Land" Clause/Equal Protection
Asheville argues, and the trial court concluded, that the Transfer Provision violated the "law of the land" clause contained in Article I, Section 19 because there is no "rational basis" in treating Asheville differently from other municipalities operating public water systems and because there is no "rational basis" in transferring Asheville's water system to another political subdivision. We disagree.
The trial court cites
Asbury v. Albemarle,
Our holding here is not at odds with
Asbury.
The Transfer Provision does not
compel
Asheville to operate a water system nor does it seek to interfere with Asheville's
discretion
in running a water system. Rather, the General Assembly is exercising its power to
withdraw
from Asheville its authority to own and operate a public water system.
See
Candler,
Asheville contends, and the trial court agreed, that the General Assembly had no "rational" basis for
singling out
Asheville in the Transfer Provision. Assuming that the Transfer Provision has this effect, we believe that the fact that the General Assembly irrationally singles out one municipality in legislation merely means that the legislation is a "local" law; it does not render the legislation unconstitutional,
per se. See
City of New Bern v. New Bern-Craven County Bd. of Educ.,
We are persuaded by decisions from the United States Supreme Court holding that municipalities do not have Fourteenth Amendment rights concerning acts of the legislature,
Ysursa v. Pocatello Educ. Assoc.,
Finally, the trial court concludes that the Transfer Provision violates the "law of the land" clause because there is no rational basis between the purpose of the Act (to ensure that citizens and businesses are provided with the highest quality of services) and requiring the involuntary transfer of the Asheville Water System to an MWSD. The trial court lists reasons why it believes that the Transfer Provision will not accomplish a legitimate purpose. However, the State suggests a number of rational bases for the Transfer Provision. For instance, the Transfer Provision was included to provide better governance of the Asheville Water System, a system which has had a contentious history with customers residing outside Asheville's city limits: The Transfer Provision allows the Asheville Water System to be governed by a political subdivision whose representatives are selected from all areas served by the System, as opposed to being governed by Asheville's city council, which is chosen only by those living within Asheville's city limits. It is not our role to second-guess "the wisdom [or] expediency" of the Transfer Provision,
*101
as long as there is some rational basis in that provision to accomplish some valid public purpose.
See
In re Denial,
Accordingly, we reverse the conclusion of the trial court that the Transfer Provision violates the "law of the land" clause in our state constitution.
3. Article I, Sections 19 and 35 -Taking of Asheville's Property
Asheville argues, and the trial court held, that the Transfer Provision exceeded the State's authority to take property, or, in the alternative, to take property without paying just compensation in violation of Article I, Sections 19 and 35 of our state constitution. We disagree.
Article I, Section 19 of our state constitution states that no person shall be "deprived of ... property, but by the law of the land," and Article I, *263 Section 35 states that "[a] frequent recurrence to fundamental principles is absolutely necessary to preserve the blessings of liberty."
The trial court concluded that the Transfer Provision violates the above cited sections in two respects: First, the Transfer Provision was "not a valid exercise of the sovereign power of the [General Assembly] to take or condemn property for a public use" because the transfer of Asheville's water system to the MSD would not result in any "change in the existing uses or purposes currently served by the [system]"; and second, even if the General Assembly had the power to "condemn" Asheville's water system, it deprived Asheville of its constitutional right to receive "just compensation."
On the first issue, we note that our Supreme Court has recognized the authority of our General Assembly to divest a city of its authority to operate a public water system and transfer the authority and assets thereof to a different political subdivision.
See
Brockenbrough,
Our United States Supreme Court has held that there is no constitutional prohibition against a State withdrawing from a municipality the authority to own and operate a public water system and transferring the municipality's system to another political subdivision "without compensation" to the municipality or "without the consent" of the municipality's citizens:
The diversion of waters from the sources of supply for the use of the inhabitants of the State is a proper and legitimate function of the State. This function ... may be performed directly [by the State]; or it may be delegated to bodies politic created for that purpose, or to the municipalities of the State....
.... The State, therefore, at its pleasure may modify or withdraw all such powers, may take without compensation such property, hold it itself, or vest it in other agencies.... All this may be done, conditionally or unconditionally, with or without the consent of the citizens, or even against their protest.
Trenton v. New Jersey,
Our holding today is consistent with holdings from around the United States. As the treatise McQuillan on Municipal Corporations recognizes, "it is generally held that transferring property and authority by act of the legislature from [a city] to another where the property is still devoted to its original purpose, does not invade the vested rights of the city." McQuillan, sec. 4.133, Vol. 2. Indeed, the Minnesota Supreme Court has stated:
"[a]s to property held in a proprietary or private capacity, in trust for the benefit of township inhabitants for certain designated purposes, the legislature may provide for the transfer thereof from the officers of such municipality to different trustees, with or without consent of the municipality and without compensation to it.
*102
Bridgie v. Koochiching,
The Commonwealth has absolute control over such agencies and may add to or subtract from the duties to be performed by them, or may abolish them and take property with which the duties were performed without compensating the agency thereof.
Chester County v. Commonwealth,
None of the cases cited by Asheville in its argument address the situation where the General Assembly acts to take the property of a municipality used to carry on a proprietary function and transfers it to another political subdivision to carry out the same function. For instance,
State Hwy. Comm'n v. Greensboro Bd. of Educ.,
*265 Accordingly, we hold that the Transfer Provision does not constitute an unlawful taking without just compensation.
V. Conclusion
In conclusion:
We affirm the portion of the trial court's order denying the State's motion to dismiss, rejecting the State's argument that Asheville lacked standing or capacity to challenge the validity of the Transfer Provision.
We reverse the trial court's grant of summary judgment for Asheville on its first claim for relief, which declared that the Transfer Provision constitutes a local act relating to health, sanitation or non-navigable streams in violation of Article II, Sections 24(1)(a) and (e) of our state constitution. Specifically, we hold that, assuming it is a local act, it does not "relate to" health, sanitation, or non-navigable streams within the meaning of our state constitution. We also reverse the trial court's denial of the State's motion for summary judgment on this claim, and direct the court on remand to enter summary judgment in favor of the State on this claim.
We reverse the trial court's grant of summary judgment for Asheville on its second claim for relief, which declared that the Transfer Provision violates the "law of the land" clause in Article I, Section 19 of our state constitution. We also reverse the trial court's denial of the State's motion for summary judgment on this claim, and direct the court on remand to enter summary judgment in favor of the State on this claim.
We reverse the trial court's grant of summary judgment for Asheville on its third claim for relief, which declared that the Transfer Provision violates Article I, Sections 19 and 35 of our state constitution, as an invalid exercise of power to take or condemn property. We also reverse the trial court's grant of summary judgment on Asheville's sixth claim for relief, which, in the alternative to the injunction, awarded Asheville money damages for the taking of the Asheville Water System. We also reverse the trial court's denial of the State's motion for summary judgment on these claims, and direct the court on remand to enter summary judgment in favor of the State on these claims.
We reverse the trial court's order enjoining the enforcement of the Transfer Provision.
We do not reach any conclusion regarding Asheville's fourth and fifth claims for relief, in which Asheville contends that the enforcement of the Transfer Provision would impermissibly impair obligations of contract *266 in violation of our state and federal constitutions and in violation of N.C. Gen.Stat. § 159-93. The trial court made no rulings on these claims, and Asheville did not take advantage *103 of Rule 10(c) of our Rules of Appellate Procedure, which allows an appellee to propose issues which form "an alternate basis in law for supporting the order[.]" Therefore, any argument by Asheville based on these claims for relief are waived.
AFFIRMED IN PART, REVERSED AND REMANDED IN PART.
Judges CALABRIA and ELMORE concur.
This MSD, known as the Metropolitan Sewerage District of Buncombe County, is the nominal defendant in this action.
The trial court refused to rule on a fourth basis in support of the injunction, namely, that the Transfer Provision unlawfully impairs Asheville's contractual obligations with its bondholders who provided financing for its public water system, in violation of Article I, Section 10 of the United States Constitution; Article I, Section 19 of the North Carolina Constitution ; and N.C. Gen.Stat. § 159-93. However, Asheville has not presented any argument regarding this fourth ground as "an alternative basis in law for supporting the [injunction]," N.C. R.App. P. 10(c), and, therefore, it is not preserved.
Reference
- Full Case Name
- CITY OF ASHEVILLE, a Municipal Corporation, Plaintiff, v. STATE of North Carolina and the Metropolitan Sewerage District of Buncombe County, North Carolina, Defendants.
- Cited By
- 3 cases
- Status
- Published