City of Asheville v. State

IN THE SUPREME COURT OF NORTH CAROLINA

No. 391PA15

Filed 21 December 2016

CITY OF ASHEVILLE, a municipal corporation

v.
STATE OF NORTH CAROLINA and the METROPOLITAN SEWERAGE
DISTRICT OF BUNCOMBE COUNTY

On discretionary review pursuant to N.C.G.S. § 7A-31 and on appeal of right

of a substantial constitutional question pursuant to N.C.G.S. § 7A-30(1) from a

unanimous decision of the Court of Appeals, ___ N.C. App. ___, 777 S.E.2d 92 (2015),

affirming in part and reversing and remanding in part a summary judgment order

entered on 9 June 2014, as clarified by means of a consent order entered on 3 July

2014, both by Judge Howard E. Manning, Jr. in Superior Court, Wake County. Heard

in the Supreme Court on 17 May 2016 in session in the Old Burke County Courthouse

in the City of Morganton pursuant to N.C.G.S. § 7A-10(a).

Ellis & Winters LLP, by Matthew W. Sawchak, Paul M. Cox, and Emily E.
Erixson; Campbell Shatley, PLLC, by Robert F. Orr; Long, Parker, Warren,
Anderson & Payne, P.A., by Robert B. Long, Jr.; and City of Asheville City
Attorney’s Office, by Robin T. Currin, for plaintiff-appellant.

Roy Cooper, Attorney General, by I. Faison Hicks, Special Deputy Attorney
General, for defendant-appellee State of North Carolina.

Cauley Pridgen, P.A., by James P. Cauley, III and Gabriel Du Sablon, for City
of Wilson, amicus curiae.

Allegra Collins Law, by Allegra Collins, and Alexandra Davis, for International
Municipal Lawyers Association, amicus curiae.
 CITY OF ASHEVILLE V. STATE

Opinion of the Court

Kimberly S. Hibbard, General Counsel, and Gregory F. Schwitzgebel III,
Associate General Counsel, for North Carolina League of Municipalities,
amicus curiae.

ERVIN, Justice.

In 2013, the General Assembly enacted legislation that effectively required the

City of Asheville to involuntarily transfer the assets that it uses to operate a public

water system to a newly created metropolitan water and sewerage district. See Act

of May 2, 2013, ch. 50, 2013 N.C. Sess. Laws 118, amended by Act of July 22, 2013,

ch. 388, secs. 4-5, 2013 N.C. Sess. Laws 1605, 1618. Following the enactment of this

legislation, the City sought a declaratory judgment and injunctive relief in Superior

Court, Wake County. The trial court concluded that this involuntary transfer

violated various provisions of the North Carolina Constitution, declared the relevant

statutory provisions to be void and unenforceable, and permanently enjoined the

State from enforcing the legislation. On appeal, the Court of Appeals reversed the

trial court’s order, in part, and directed the trial court to enter summary judgment in

favor of the State. City of Asheville v. State, ___ N.C. App. ___, ___, 777 S.E.2d 92,

102 (2015). In view of our determination that the legislation in question constitutes

a prohibited “[l]ocal . . . act . . . [r]elating to health[ and] sanitation” in violation of

Article II, Section 24(1)(a) of the North Carolina Constitution, we reverse the Court

of Appeals’ decision. N.C. Const. art. II, § 24(1)(a).

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 CITY OF ASHEVILLE V. STATE

Opinion of the Court

The City is a municipal corporation that is authorized, among other things, to

own and acquire property. N.C.G.S. §§ 160A-1(2), -11 (2015). Pursuant to N.C.G.S.

§§ 160A-311(2) and 160A-312, along with Chapter 399 of the 1933 Public-Local Laws,

Chapter 140 of the 2005 Session Laws, and Chapter 139 of the 2005 Session Laws

(the last three of which are referred to collectively as “the Sullivan Acts” and

individually as “Sullivan I,” “Sullivan II,” and “Sullivan III,” respectively, see City of

Asheville v. State, 192 N.C. App. 1, 4-5, 665 S.E.2d 103, 109 (2008) (Asheville I),

appeal dismissed & disc. rev. denied, 363 N.C. 123, 672 S.E.2d 685 (2009)), the City

owns and operates a system for the supply, treatment, and distribution of water and

for the operation of sanitary disposal systems serving individuals and entities both

within and outside of its corporate limits.1 See N.C.G.S. §§ 160A-311(2), -312 (2015);

Act of Apr. 28, 1933 (Sullivan I), ch. 399, 1933 N.C. Pub.-Local Laws 376 (captioned

“An Act to Regulate Charges Made by the City of Asheville for Water Consumed in

Buncombe County Water Districts”); Act of June 29, 2005 (Sullivan III), ch. 139, 2005

N.C. Sess. Laws 243 (captioned “An Act Regarding the Operation of Public

Enterprises by the City of Asheville”); Act of June 29, 2005 (Sullivan II), ch. 140, 2005

N.C. Sess. Laws 244 (captioned “An Act Regarding Water Rates in Buncombe

1 As of June 2014, the City’s water system consisted of a sizeable watershed; two
impoundments; three water treatment plants; 29 treated water storage reservoirs; 1,661
miles of transmission and distribution lines; at least 40 pump stations; and certain intangible
assets, including, but not limited to, approximately 147 trained and certified employees,
numerous licenses, wholesale water supply contracts, contracts for the supply of goods and
services, and revenue accounts containing more than $2,218,000.00 that are held for the
purpose of ensuring repayment of outstanding bonded indebtedness.

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 CITY OF ASHEVILLE V. STATE

Opinion of the Court

County”). As of 29 August 2013, the City provided water service to approximately

124,000 customers, approximately 48,000 of whom received service outside the City’s

municipal limits. The City’s water system has been built and maintained over the

course of the past century using a combination of taxes, service fees, connection

charges, bonded indebtedness, federal and state grants, contributions from

Buncombe County, and donations from property owners and developers.2

Customers in Buncombe County served by the City’s water system receive

sewer service from the Metropolitan Sewerage District of Buncombe County,3 a

political subdivision that is authorized, among other things, to own, operate, and

maintain a system for the treatment and disposal of sewerage in its assigned service

area. See N.C.G.S. §§ 162A-65(8), -69 (2015). The Metropolitan Sewerage District

has never provided water service to any customer.

In May 2013, House Bill 488, which is entitled “An Act to Promote the

Provision of Regional Water and Sewer Services by Transferring Ownership and

Operation of Certain Public Water and Sewer Systems to a Metropolitan Water and

Sewerage District,” became law. Ch. 50, 2013 N.C. Sess. Laws 118. According to

Section 2 of the legislation, two or more political subdivisions are authorized to

Although some of the assets of Asheville’s water system were, at one time, owned by
2

Buncombe County, the County conveyed its interest in those assets to the City on 15 May
2012.

3 Although the Metropolitan Sewerage District has been joined as a party defendant
in this case, it has not taken a position with respect to the merits of any of the claims asserted
in the City’s pleadings.

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 CITY OF ASHEVILLE V. STATE

Opinion of the Court

voluntarily establish a new type of entity, to be known as a “metropolitan water and

sewerage district,” which is “authorized and empowered” to “exercise any power of a

Metropolitan Water District under G.S. 162A-36, except subdivision (9) of that

section”; to “exercise any power of a Metropolitan Sewer District under G.S. 162A-69,

except subdivision (9) of that section”; and “[t]o do all acts and things necessary or

convenient to carry out the powers granted by” the newly created Article 5A. Id., sec.

2, at 119-24. Pursuant to Section 1(a) of the legislation, “[a]ll assets, real and

personal, tangible and intangible, and all outstanding debts of any public water

system” meeting certain statutorily specified criteria “are by operation of law

transferred to the metropolitan sewerage district operating in the county where the

public water system is located” regardless of whether the municipality in question

consents to the required transfer.4 Id., sec. 1(a), at 118-19. Finally, Section 5.5 of the

legislation provides that no metropolitan sewerage district can be created in any

county which currently lacks such an entity without the consent of all the affected

political subdivisions in the proposed district, id., sec. 5.5, at 125, a provision that has

the effect of preventing any involuntary transfers of the type required by Section 1 in

the future.

4 The first six sentences of Chapter 50 of the 2013 North Carolina Session Laws are
titled Sections 1(a) through 1(f). Chapter 388 of the 2013 Session Laws added Section 1(g).
The parties regularly referred to these seven sections as simply “Section 1.”

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 CITY OF ASHEVILLE V. STATE

Opinion of the Court

On 14 May 2013, the City filed a complaint and a motion seeking temporary,

preliminary, and permanent injunctive relief in which the City alleged that the

involuntary transfer provisions of the legislation, which were specifically designed to

apply to the City and to no other municipality in North Carolina, constituted an

invalid local act “[r]elating to health, sanitation, and the abatement of nuisances”

prohibited by Article II, Section 24(1)(a) of the North Carolina Constitution and

“[r]elating to non-navigable streams” prohibited by Article II, Section 24(1)(e) of the

North Carolina Constitution; violated the City’s due process and equal protection

rights as guaranteed by Article I, Section 19 of the North Carolina Constitution;

worked an unlawful taking of the City’s property in violation of Article I, Sections 19

and 35 of the North Carolina Constitution; impaired the City’s contracts with the

holders of the bonds that had been issued to finance the construction of the City’s

water system in violation of Article I, Section 10 of the United States Constitution;

impaired the City’s obligations to its bondholders under N.C.G.S. § 159-93; and, in

the alternative, took the City’s property without just compensation in violation of

Article I, Sections 19 and 35 of the North Carolina Constitution. Based upon these

claims, the City sought a declaration that Section 1 of the legislation is

unconstitutional; asked that the enforcement of Section 1 of the legislation be

temporarily restrained and preliminarily and permanently enjoined; and requested

that, in the alternative, the City be awarded monetary damages sufficient to

indemnify the City from any loss that might result from the enactment of the

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Opinion of the Court

legislation. On 14 May 2013, Judge Donald W. Stephens entered a temporary

restraining order precluding the implementation or enforcement of Section 1 of the

legislation.5

On 23 August 2013, the Governor signed Chapter 388 of the 2013 Session

Laws, which had been enacted by the General Assembly on 22 July 2013 and which

amended Section 1 of the Act in two ways. Ch. 388, secs. 4-5, 2013 N.C. Sess. Laws

at 1618. More specifically, the newly enacted legislation repealed Section 1(a)(2) of

Chapter 50 of the 2013 Session Laws so as to effectively eliminate one of the original

criteria necessary to trigger an involuntary transfer of a covered municipality’s water

system, id., sec. 4, at 1618 (stating that “Section 1(a)(2) of S.L. 2013-50 is repealed”),

and added a new exemption from the existing involuntary transfer requirement, id.,

sec. 5, at 1618 (amending “S.L. 2013-50 . . . by adding a new section” 1.(g)). As a

result, the trial court entered a consent order providing, among other things, that the

parties would be allowed to amend their pleadings to reflect these modifications to

the legislation.

On 2 October 2013, the City filed an amended complaint in which it asserted

the same substantive claims that had been raised in its initial pleading.6 On 7

November 2013, the State filed a responsive pleading in which it alleged, among other

5 The enforcement of Section 1 of the legislation has been enjoined throughout the
course of this litigation.
6 The City predicated its amended impairment of contract claim upon both Article I,

Section 10 of the United States Constitution and Article I, Section 19 of the North Carolina
Constitution.

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Opinion of the Court

things, that the City lacked the capacity and standing to bring its claims against the

State and denied the material allegations of the City’s complaint. On 27 February

2014, the State and the City filed motions seeking summary judgment in their favor.

On 9 June 2014, the trial court entered an order finding that there were no genuine

issues of material fact and determining that the legislation (1) “was specifically

drafted and amended to apply only to Asheville and the Asheville Water System,”

making it “a local act which relates to health and sanitation in violation of Article II,

Section 24(1)(a) of the North Carolina Constitution” and “a local act relating to non-

navigable streams . . . in violation of Article II, Section 24(1)(e) of the North Carolina

Constitution”; (2) “is contrary to the law of the land in violation of Article I, Section

19 of the North Carolina Constitution as the means utilized to achieve what the

legislation sought to obtain bears no relation, rational basis or otherwise, to the Act’s

stated purpose”; and (3) “is not a valid exercise of the sovereign power of the

legislative branch of government (or the State of North Carolina) to take or condemn

property for a public use” in violation of Article I, Sections 19 and 35 of the North

Carolina Constitution. In the alternative, the trial court further determined that, in

the event that the General Assembly had the authority to order the involuntary

transfer of the City’s water system, “Asheville, as the owner of the Asheville Water

System, is entitled to be paid just compensation.” In light of these determinations,

the trial court permanently enjoined enforcement of the legislation. As a result of its

decision to grant the relief that had been requested by the City on other grounds, the

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Opinion of the Court

trial court “decline[d] to address” the claims that the City asserted pursuant to the

state and federal contract clauses.7 On 3 July 2014, the trial court entered a consent

order indicating that it had declined to rule on the claims that the City had asserted

pursuant to the contract clauses and N.C.G.S. § 159-93 on the grounds that they had

“been rendered moot by the Court’s ruling on the other claims.” The State noted an

appeal to the Court of Appeals from the trial court’s orders.

Before the Court of Appeals, the State argued that the trial court had erred

by concluding (1) that the City had the capacity and standing to bring its claims

against the State; (2) that the Act is a “local[ ] . . . act” “[r]elating to health[ and]

sanitation,” N.C. Const. art. II, § 24(1)(a), and “non-navigable streams,” id. art. II,

§ 24(1)(e); (3) that Section 1 of the legislation violated the City’s state equal protection

and substantive due process rights; and (4) that Section 1 of the legislation effected

an unlawful taking of the City’s property and, alternatively, that the City would be

entitled to just compensation in the event that the involuntary transfer of its water

system was lawful. In response, the City asserted (1) that it “unquestionably has

standing to challenge the constitutionality” of the Act; (2) that Section 1 of the

legislation is an unconstitutional “local act” “relating to health and sanitation” in

violation of Article II, Section 24(1)(a) and “relating to non-navigable streams” in

violation of Article II, Section 24(1)(e); (3) that, although the Court of Appeals “need

7Although the trial court did not directly reference the City’s claim pursuant to
N.C.G.S. § 159-93, it did not address this claim either.

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 CITY OF ASHEVILLE V. STATE

Opinion of the Court

not reach the[se] issue[s,]” the legislation “violates both the takings element . . . and

the due process and equal protection elements of” Article I, Section 19 of the North

Carolina Constitution; and (4) that, if the Court of Appeals were to reverse the trial

court, the City’s bond-related claims “would remain for consideration” before the trial

court.

After determining that the City had standing to challenge the constitutionality

of the legislation “because it ha[d] not accepted any benefit from” the Act, City of

Asheville, ___ N.C. App. at ___, 777 S.E.2d at 95 (citing Town of Spruce Pine v. Avery

County, 346 N.C. 787, 790, 488 S.E.2d 144, 146 (1997)),8 the Court of Appeals held

that the trial court had erred by invalidating the legislation, id. at ___, 777 S.E.2d at

102. After assuming for purposes of argument that the legislation “constitute[d] a

‘local law,’ ” the court held that “it is not plain and clear and beyond reasonable doubt”

that Section 1 “falls within the ambit of” Article II, Section 24(1)(a) or Article II,

Section 24(1)(e) of the North Carolina Constitution. Id. at ___, 777 S.E.2d at 97.

Instead, the legislation “appear[s] to prioritize concerns regarding the governance

over water and sewer systems and the quality of the services rendered.” Id. at ___,

777 S.E.2d at 98 (citing ch. 50, sec. 2, 2013 N.C. Sess. Laws at 119-24 (codified at

Article 5A in N.C.G.S. Chapter 162A)).9 In addition, the Court of Appeals concluded

The State has not sought review of the Court of Appeals’ decision with respect to the
8

standing issue.
9 On the basis of a similar analysis, the Court of Appeals concluded that “[t]here is

nothing in the . . . Act which suggests that its purpose is to address some concern regarding

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Opinion of the Court

that the legislation did not violate the City’s right to equal protection under the state

constitution, id. at ___, 777 S.E.2d at 99-101, effectuate a taking of Asheville’s water

system for an invalid purpose, id. at ___, 777 S.E.2d at 101, or result in a valid taking

for which the City was entitled to just compensation, id. at ___, 777 S.E.2d at 101-

02.10 Finally, with respect to the claims that the City had asserted pursuant to the

contract clauses and N.C.G.S. § 159-93, the Court of Appeals stated that, because the

City had not argued that those claims constituted “an alternative basis in law for

supporting” the relief sought, it had waived the right to assert those claims in the

future. Id. at ___, 777 S.E.2d at 95 n.2 (quoting N.C. R. App. P. 10(c)); id. at ___, 777

S.E.2d at 102-03. As a result, the Court of Appeals reversed, in part, the trial court’s

order and remanded the case to the trial court for the entry of summary judgment in

the State’s favor. Id. at ___, 777 S.E.2d at 102. After the City unsuccessfully sought

rehearing of the Court of Appeals’ decision with respect to, among other things, the

claims that the City had asserted in reliance upon the contract clauses and N.C.G.S.

§ 159-93, this Court retained jurisdiction over the City’s notice of appeal and allowed

the City’s petition for discretionary review.

In seeking relief from this Court, the City argues that the Court of Appeals

erred (1) by concluding that Section 1 of the legislation is not an unconstitutional

a non-navigable stream.” Id. at ___, 777 S.E.2d at 98. The City has not requested review of
this aspect of the Court of Appeals’ decision.

10 The City has not sought review by this Court of the Court of Appeals’ decision to
reject its due process and equal protection claims.

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 CITY OF ASHEVILLE V. STATE

Opinion of the Court

local act relating to health and sanitation prohibited by Article II, Section 24(1)(a) of

the North Carolina Constitution; (2) in holding that Section 1 of the legislation does

not effectuate a taking for which Asheville is entitled to compensation pursuant to

Article I, Section 19 of the North Carolina Constitution; and (3) by appearing to hold

that the City had abandoned any right to assert its claims pursuant to the contract

clauses and N.C.G.S. § 159-93 on remand by failing to raise them on appeal pursuant

to Rule 10(c) of the North Carolina Rules of Appellate Procedure. For the reasons set

forth below, the Court of Appeals’ decision is reversed.11

It is well settled in this State that the courts have
the power, and it is their duty in proper cases, to declare
an act of the General Assembly unconstitutional—but it
must be plainly and clearly the case. If there is any
reasonable doubt, it will be resolved in favor of the lawful
exercise of their powers by the representatives of the
people.

Glenn v. Bd. of Educ., 210 N.C. 525, 529-30, 187 S.E. 781, 784 (1936). In determining

“the constitutionality of a legislative act it is not for this Court to judge its wisdom

and expediency. These matters are the province of the General Assembly.” Adams

11 Although we need not reach the issue of whether the Court of Appeals erred by
apparently holding that the City had waived the right to have the claims that it had asserted
pursuant to the contract clauses and N.C.G.S. § 159-93 considered on remand by failing to
assert those claims as an alternative basis for upholding the trial court’s order pursuant to
Rule 10(c) of the North Carolina Rules of Appellate Procedure, we disavow that holding in
order to avoid confusion in subsequent cases. Simply put, nothing in the relevant provisions
of the North Carolina Rules of Appellate Procedure or any of our prior cases requires an
appellee to challenge legal decisions that the trial court declined to make on the grounds that
the case could be fully resolved on some other basis on appeal pursuant to Rule 10(c) of the
North Carolina Rules of Appellate Procedure at the risk of losing the right to assert those
claims at a later time.

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Opinion of the Court

v. N.C. Dep’t of Nat. & Econ. Res., 295 N.C. 683, 690, 249 S.E.2d 402, 406 (1978). On

the other hand, “ ‘[i]f there is a conflict between a statute and the Constitution, this

Court must determine the rights and liabilities or duties of the litigants before it in

accordance with the Constitution, because the Constitution is the superior rule of law

in that situation.’ ” Id. at 690, 249 S.E.2d at 406 (quoting Nicholson v. State Educ.

Assistance Auth., 275 N.C. 439, 447, 168 S.E.2d 401, 406 (1969) (citation omitted)).

Article II, Section 24 of the North Carolina Constitution, which expressly

forbids the General Assembly from “enact[ing] any local, private, or special act or

resolution” concerning fourteen “[p]rohibited subjects,” N.C. Const. art. II, § 24(1), “is

the fundamental law of the State and may not be ignored,” High Point Surplus Co. v.

Pleasants, 264 N.C. 650, 656, 142 S.E.2d 697, 702 (1965). More specifically, Article

II, Section 24 of the North Carolina Constitution provides that:

(1) Prohibited subjects. – The General Assembly
shall not enact any local, private, or special act or
resolution:

(a) Relating to health, sanitation, and the abatement
of nuisances;

....

(3) Prohibited acts void. – Any local, private, or
special act or resolution enacted in violation of the
provisions of this Section shall be void.

N.C. Const. art. II, § 24(1)(a), (3). Although the General Assembly shall not “enact

any local, private, or special act” regarding any of the fourteen prohibited subjects

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Opinion of the Court

listed in Article II, Section 24(1) “by the partial repeal of a general law,” id. art. II, §

24(2), it “may . . . repeal local, private, or special laws enacted by it,” id., and “enact

general laws regulating the matters set out” in the relevant constitutional provision,

id. art. II, § 24(4).

As the history of Article II, Section 24 of the North Carolina Constitution12

demonstrates:

The organic law of the State was originally drafted
and promulgated by a convention which met at Halifax in
December, 1776. During the ensuing 140 years, the
Legislature of North Carolina possessed virtually
unlimited constitutional power to enact local, private, and
special statutes. This legislative power was exercised with
much liberality, and produced a plethora of local, private,
and special enactments. As an inevitable consequence, the
law of the State was frequently one thing in one locality,
and quite different things in other localities. To minimize
the resultant confusion, the people of North Carolina
amended their Constitution at the general election of 1916
so as to deprive their Legislature of the power to enact
local, private, or special acts or resolutions relating to
many of the most common subjects of legislation.

....

In thus amending their organic law, the people were
motivated by the desire that the General Assembly should
legislate for North Carolina in respect to the subjects
specified as a single united commonwealth rather than as
a conglomeration of innumerable discordant communities.
To prevent this laudable desire from degenerating into a
mere pious hope, they decreed in emphatic and express
terms that “any local, private, or special act or resolution

At the time of its original adoption, the language now contained in Article II, Section
12

24 appeared in Article II, Section 29.

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Opinion of the Court

passed in violation of the provisions of this section shall be
void [. . . .]”

Williams v. Blue Cross Blue Shield of N.C., 357 N.C. 170, 185-86, 581 S.E.2d 415,

426-27 (2003) (quoting Idol v. Street, 233 N.C. 730, 732-33, 65 S.E.2d 313, 314-15

(1951) (first alteration in original) (quoting N.C. Const. of 1868, art. II, § 29 (1917)

(now art. II, § 24(3)))).

It was the purpose of the amendment to free the General
Assembly from the enormous amount of petty detail which
had been occupying its attention, to enable it to devote
more time and attention to general legislation of statewide
interest and concern, to strengthen local self-government
by providing for the delegation of local matters by general
laws to local authorities, and to require uniform and
coordinated action under general laws on matters related
to the welfare of the whole State.

High Point Surplus Co., 264 N.C. at 656, 142 S.E.2d at 702. We are called upon to

evaluate the constitutionality of Section 1 of the legislation against this historical

backdrop.

“The first issue [that must be resolved in this case] is whether the Act is a local

act prohibited by Article II, section 24 of the Constitution or is a general law which

the General Assembly has the power to enact.” Adams, 295 N.C. at 690, 249 S.E.2d

at 406. “A statute is either ‘general’ or ‘local’; there is no middle ground.” High Point

Surplus Co., 264 N.C. at 656, 142 S.E.2d at 702. “[N]o exact rule or formula capable

of constant application can be devised for determining in every case whether a law is

local, private or special or whether [it is] general.” McIntyre v. Clarkson, 254 N.C.

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Opinion of the Court

510, 517, 119 S.E.2d 888, 893 (1961). The primary test that this Court has employed

for the purpose of differentiating between general and local acts for the past half-

century has been the “reasonable classification” test adopted in McIntyre, id. at 517-

19, 525-26, 119 S.E.2d at 893-95, 898-99. See, e.g., Williams, 357 N.C. at 183-85, 581

S.E.2d at 425-26; City of New Bern v. New Bern–Craven Cty. Bd. of Educ., 338 N.C.

430, 435-37, 450 S.E.2d 735, 738-39 (1994); Adams, 295 N.C. at 690-91, 249 S.E.2d at

406-07; Treasure City of Fayetteville, Inc. v. Clark, 261 N.C. 130, 133, 134 S.E.2d 97,

99 (1964). In applying this test, we must remember that “the number of counties

included or excluded [from the ambit of an act] is not necessarily determinative.”

High Point Surplus Co., 264 N.C. at 656, 142 S.E.2d at 702.

Conceivably, a statute may be local if it excludes only one
county. On the other hand, it may be general if it includes
only one or a few counties. It is a matter of classification.
For the purposes of legislating, the General Assembly may
and does classify conditions, persons, places and things,
and classification does not render a statute “local” if the
classification is reasonable and based on rational difference
of situation or condition; “[u]niversality is immaterial so
long as those affected are reasonably different from those
excluded and for the purpose of the [act] there is a logical
basis for treating them in a different manner.” A law is
local “where, by force of an inherent limitation, it
arbitrarily separates some places from others upon which,
but for such limitation, it would operate, [ ] where it
embraces less than the entire class of places to which such
legislation would be necessary or appropriate having
regard to the purpose for which the legislation was
designed, and where [the] classification does not rest on
circumstances distinguishing the places included from
those excluded.”

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Opinion of the Court

Id. at 656-57, 142 S.E.2d at 702 (first alteration in original) (quoting McIntyre, 254

N.C. at 518, 119 S.E.2d at 894) (citations omitted)). Put another way, a local law

“discriminates between different localities without any real, proper, or reasonable

basis or necessity―a necessity springing from manifest peculiarities clearly

distinguishing those of one class from each of the other classes, and imperatively

demanding legislation for each class separately that would be useless or detrimental

to the others.” McIntyre, 254 N.C. at 518, 119 S.E.2d at 894 (quoting 50 Am. Jur.

Statutes § 8, at 25 (1944) (footnotes omitted)).

On the other hand, a law is general “ ‘if it applies to and
operates uniformly on all the members of any class of
persons, places or things requiring legislation peculiar to
itself in matters covered by the law.’ [ ] Classification must
be reasonable and germane to the law. It must be based on
a reasonable and tangible distinction and operate the same
on all parts of the [S]tate under the same conditions and
circumstances. Classification must not be discriminatory,
arbitrary or capricious.”

High Point Surplus Co., 264 N.C. at 657, 142 S.E.2d at 702-03 (quoting McIntyre, 254

N.C. at 519, 119 S.E.2d at 894) (citation omitted)). As noted by a leading scholar cited

with regularity by this Court, e.g., Adams, 295 N.C. at 690-91, 249 S.E.2d at 407:

In barest outline, a statutory classification is held to be
“reasonable” if it satisfies the following five tests: (1) the
classification must be based upon substantial distinctions
which make one class really different from another; (2) the
classification adopted must be germane to the purpose of
the law; (3) the classification must not be based upon
existing circumstances only; (4) to whatever class a law
may apply, it must apply equally to each member thereof;

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Opinion of the Court

and (5) if the classification meets these requirements, the
number of members in a class is wholly immaterial.

Joseph S. Ferrell, Local Legislation in the North Carolina General Assembly, 45 N.C.

L. Rev. 340, 391-92 (1967) [hereinafter Ferrell, Local Legislation] (footnotes omitted).

The reasonable classification test utilized to distinguish between general and local

legislation is not equivalent to the rational basis test utilized in due process and equal

protection cases. See id. at 391-92 (footnotes omitted).

In Town of Emerald Isle v. State, 320 N.C. 640, 360 S.E.2d 756 (1987), this

Court articulated a different test for determining whether an act is general or local

that focused on “the extent to which the act in question affects the general public

interests and concerns,” id. at 651, 360 S.E.2d at 763 (applying this test to legislation

that provided for a specific public pedestrian beach access point and related facilities

at Bogue Inlet in Carteret County), which we have not utilized in any subsequent

case. We “departed from the reasonable classification method of analysis” in Town of

Emerald Isle because it was “ ‘ill-suited to the question presented [there], since by

definition a particular public pedestrian beach access facility must rest in but one

location.’ ” City of New Bern, 338 N.C. at 436, 450 S.E.2d at 739 (quoting Town of

Emerald Isle, 320 N.C. at 650, 360 S.E.2d at 762). The City contends that the

legislation is a local law under either test while the State advances the opposite

contention. We find the City’s argument persuasive.

The legislation states that:

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Opinion of the Court

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,

Ch. 50, pmbl., 2013 N.C. Sess. Laws at 118. Simply put, the General Assembly stated

that large, public regional water and sewer systems will better ensure that North

Carolina citizens have access to higher quality, cost-effective water and sewer

services and that the creation of regional water and sewer systems should be

encouraged for that reason. In view of the fact that the stated purpose of the

legislation contains no indication that it was site-specific in nature, we conclude that

the reasonable classification test should be utilized in determining whether the

legislation is local or general in nature. See, e.g., Williams, 357 N.C. at 184-85, 581

S.E.2d at 426 (applying the “reasonable classification” test on the grounds that, while

“the enabling legislation and the Ordinance allowing for the creation of a

comprehensive civil rights ordinance apply only to Orange County, this legislation is

not site-specific as in Emerald Isle because ‘[s]uch a legislated change could be

effected as easily in [Orange County] as in any other [county] in the state’ ”

(alterations in original) (quoting City of New Bern, 338 N.C. at 436, 450 S.E.2d at

739)).

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Opinion of the Court

According to Section 1 of the legislation, as amended, the involuntary transfer

of a municipal water system to a metropolitan water and sewerage system is required

if, and only if, (1) “[t]he public water system is owned and operated by a municipality

located in a county where a metropolitan sewerage district is operating” and (2) “[t]he

public water system serves a population of greater than 120,000 people.” Ch. 50, sec.

1(a), 2013 N.C. Sess. Laws at 118-19, as amended by Ch. 388, sec. 4, 2013 N.C. Sess.

Laws at 1618. In other words, the involuntary transfer provisions of Section 1 do not

apply to any municipality that operates a water system unless that municipality

serves more than 120,000 customers and is located in a county in which a

metropolitan sewerage district provides sewer service pursuant to Article 5 of

Chapter 162A of the North Carolina General Statutes, N.C.G.S. §§ 162A-64 to -81

(2015). Although the legislation appears to create a class of municipalities to which

the involuntary transfer provisions of Section 1 apply, an examination of the criteria

delineating the composition of that class demonstrates that the involuntary transfer

provision has been crafted in such a manner that it does not and will not apply to any

municipality other than the City.

According to the undisputed record evidence, there are only three metropolitan

sewerage districts presently operating in North Carolina: the Metropolitan Sewerage

District of Buncombe County, the Contentnea Metropolitan Sewerage District in Pitt

County, and the Bay River Metropolitan Sewerage District in Pamlico County. The

only municipal water system located in a county served by one of these three

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Opinion of the Court

metropolitan sewerage districts that has over 120,000 customers is that owned and

operated by the City. Although existing population growth trends create some

possibility that the water system operated by the City of Greenville could reach the

120,000 person threshold in the foreseeable future,13 the General Assembly took

affirmative action to eliminate any risk that Greenville would ever have to

involuntarily transfer its water system to the Contentnea Metropolitan Sewerage

District.

As originally enacted, the legislation contained a third criterion that had to be

met before an involuntary transfer was required, which was that “[t]he public water

system has not been issued a certificate for an interbasin transfer.” Ch. 50, sec.

1(a)(2), 2013 N.C. Sess. Laws at 119. In view of the fact that Greenville possessed an

interbasin transfer certificate, it was exempt from the involuntary transfer

requirement contained in the original version of the legislation. Although the

enactment of Chapter 388, Section 4 of the 2013 Session Laws eliminated the

interbasin transfer certificate exception from the involuntary transfer provision of

the legislation, Section 5 of Chapter 388 of the 2013 Session Laws added Section 1(g),

which provides that, “[f]or purposes of this section, a public water system shall not

include any system that is operated simultaneously with a sewer system by the same

13 The record clearly establishes that none of the municipal water systems located in
the territory in which the Bay River Metropolitan Sewerage District operates have any
prospect of serving the requisite number of customers in the foreseeable future.

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Opinion of the Court

public body, in conjunction with the provision of other utility services for its

customers,” to the legislation. Ch. 388, sec. 5, 2013 N.C. Sess. Laws at 1618. In view

of the fact that Greenville provides both sewer and water service to its customers in

conjunction with a system for the supply of electricity and natural gas, the enactment

of Section 1(g) had the effect of preserving Greenville’s exception from the involuntary

transfer requirement.

In addition, we note that Section 5.5 of the legislation prohibits the creation of

any new metropolitan sewerage districts without the consent of all relevant local

governmental entities. Ch. 50, sec. 5.5, 2013 N.C. Sess. Laws at 125. The inclusion

of Section 5.5 ensured that all of the other municipalities that currently operate water

systems that serve more than 120,000 customers, such as Charlotte, Durham,

Fayetteville, Greensboro, and Winston-Salem, or will operate such systems in the

future will never be subjected to the involuntary transfer provisions of the legislation.

Thus, the undisputed record evidence clearly shows that the City is the only entity

that will ever be required to involuntarily transfer its water system to a metropolitan

sewerage district under the legislation.

Although the fact that the City is the only municipality that will ever be subject

to the involuntary transfer provisions of the legislation does not, standing alone,

mean that the legislation is, per se, a “local” act, see High Point Surplus Co., 264 N.C.

at 656, 142 S.E.2d at 702 (stating that a statute “may be general if it includes only

one or a few counties”), it does, however, indicate the existence of a serious question

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Opinion of the Court

concerning the extent to which the classification contained in the legislation is

“reasonable and germane to the law” and “based on a reasonable and tangible

distinction,” id. at 657, 142 S.E.2d at 702 (quoting McIntyre, 254 N.C. at 519, 119

S.E.2d 894 (citation omitted)). Nothing in the legislation in any way explains why

every other municipality in North Carolina except the City should have the right to

decide for itself whether to transfer its water system to a metropolitan water and

sewerage district. Moreover, nothing in the legislation does anything to explain why

the benefits that the General Assembly expects to result from the creation of

metropolitan water and sewerage districts should not be made available to the

customers of every large municipal water system in North Carolina. The total

absence of any justification for singling out the City’s water system from other large

municipally owned systems and the steps taken during the drafting process to ensure

that the involuntary transfer provisions of the legislation did not apply to any

municipality except the City demonstrate that the involuntary transfer provisions

were never intended to apply to any municipal water system except that owned by

the City. As a result, given the absence of any reasonable relationship between the

stated justification underlying the legislation and the classification adopted by the

General Assembly for the purpose of achieving its stated goal, the legislation is,

without doubt, a local rather than a general law. See, e.g., Treasure City of

Fayetteville, 261 N.C. at 133-36, 134 S.E.2d at 99-101 (holding that a statute

prohibiting sales of certain goods on Sunday that did not apply to all or portions of

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Opinion of the Court

twenty-nine counties for the stated reason that the excluded territories were resort

or tourist areas was a local, rather than a general, act given that the legislation did

not apply to all of North Carolina’s resort and tourist areas and given that some of

the goods and services whose sale was prohibited by the legislation were of primary

interest to permanent residents rather than tourists); see also Ferrell, Local

Legislation 394 (noting the Court’s holding that the statutory provision at issue in

Treasure City was a local act given that the classification embodied in the challenged

legislation was “a sham”).

In spite of the absence of “any real, proper, or reasonable basis or . . . necessity

springing from manifest peculiarities clearly distinguishing . . . and imperatively

demanding” the involuntary transfer of the City’s water system to a metropolitan

water and sewerage district in the face of an apparent determination that similar

treatment would be “useless or detrimental to [every] other[ ]” North Carolina

municipality, McIntyre, 254 N.C. at 518, 119 S.E.2d at 894 (quoting 50 Am. Jur.

Statutes § 8, at 25 (1944) (footnotes omitted)), the State hypothesizes that the General

Assembly’s decision to treat the City differently than all other North Carolina

municipalities might hinge upon the “unique facts” and history of the “Asheville-

Buncombe-Henderson region,” which the State claims to consist of a “prolonged

history of conflict between” the City and residents of Buncombe and Henderson

Counties who are dependent on the City’s water system that has been “characterized

by charges of discrimination and the misuse of public monies and other resources”

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Opinion of the Court

and has “engendered a toxically high level of public distrust and cynicism concerning

local government in that region which itself makes sound democratic governance

there difficult to achieve.” More specifically, the State asserts, as a purely

hypothetical matter, that the General Assembly “could have” singled out the City’s

water system for involuntary transfer due to “fundamental and serious governance

problems” that affect extraterritorial customers located in portions of Buncombe

County outside the City’s municipal limits and in Henderson County. In addition,

the State hypothesizes that, given the area’s status as a tourist destination, the

General Assembly “could reasonably have concluded” that an involuntary transfer of

the City’s water system would prevent the “atmosphere of conflict in this region” from

“tarnish[ing] . . . this region in the eyes of the public generally” and “threaten[ing],

among other things, the vitality of a local tourist industry which is enormous and is

of tremendous importance to all the citizens of this State.” We do not find this

argument persuasive.

At the outset, we note that this aspect of the State’s defense of the legislation

seems rooted in the rational basis test employed in the due process and equal

protection context. See, e.g., In re R.L.C., 361 N.C. 287, 295, 643 S.E.2d 920, 924

(noting that, in the context of an as-applied due process challenge, evaluating

“whether the law in question is rationally related to a legitimate government

purpose” does not require “courts to determine the actual goal or purpose of the

government action at issue” and allows the reviewing court to uphold the legislation

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Opinion of the Court

on the basis of “any conceivable legitimate purpose” (citations omitted)), cert. denied,

552 U.S. 1024, 128 S. Ct. 615, 169 L. Ed. 2d 396 (2007). However, nothing in our

Article II, Section 24 jurisprudence suggests that we should focus on a hypothetical,

rather than the actual, justification for the challenged legislation in determining

whether it should be deemed general or local in nature. Furthermore, a decision to

approve the use of the hypothetical purpose approach suggested by the State would

deprive Article II, Section 24 of the North Carolina Constitution of any meaningful

effect by rendering it indistinguishable from the substantive due process provisions

of Article I, Section 19 of the North Carolina Constitution. Cf. District of Columbia

v. Heller, 554 U.S. 570, 628 n.27, 171 L. Ed. 2d 637, 679 n.27, 128 S. Ct. 2783, 2818

n.27 (2008) (rejecting such a result under the federal constitution and, more

specifically, stating that, “[i]f all that was required to overcome the right to keep and

bear arms was a rational basis, the Second Amendment would be redundant with the

separate constitutional prohibitions on irrational laws, and would have no effect”).

As a result, we will focus our analysis upon the extent, if any, to which there is record

support for the State’s argument to the effect that the legislation is a general, rather

than a local, act.

Although the State has directed the Court’s attention to “[t]he documented

historical record” reflected in this Court’s decision in Candler v. City of Asheville, 247

N.C. 398, 101 S.E.2d 470 (1958), and the Court of Appeals’ 2008 decision in City of

Asheville, these materials provide no support for the State’s argument that the

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Opinion of the Court

legislation is a general, rather than a local, law. Instead, we explicitly stated in

Candler that “[t]here is nothing on this record which tends to show that the rate or

rates to be charged” to extraterritorial customers “are unjust and confiscatory.” Id.

at 410, 101 S.E.2d at 479. Although the Court of Appeals did note the existence of

“ample support in the record to justify the Legislature’s findings that Asheville and

Buncombe County have experienced a ‘complicated pattern of dealings’ with respect

to the development and maintenance of its water distribution system” in Asheville I,

192 N.C. App. at 31-32, 665 S.E.2d at 125 (quoting Sullivan II, ch. 140, 2005 N.C.

Sess. Laws at 246), the court also stated that (1) it was “not clear from the record that

this history is one of ‘manifest peculiarities clearly distinguishing’ Asheville and

Buncombe County from other municipalities and counties across the State,” id. at 32,

665 S.E.2d at 125 (quoting McIntyre, 254 N.C. at 518, 119 S.E.2d at 894); (2) it was

“not persuaded that the history of the development of the [Asheville] water

distribution system” justified a decision to treat the City as unique for legislative

classification purposes, id. at 32, 665 S.E.2d at 126; and (3) the statutory provisions

at issue in Asheville I appeared to “embrace[ ] less than the entire class of places to

which such legislation would be necessary or appropriate having regard to the

purpose for which the legislation was designed,” id. at 32, 665 S.E.2d at 126

(alteration in original) (quoting Williams, 357 N.C. at 184, 581 S.E.2d at 426 (quoting

McIntyre, 254 N.C. at 518, 119 S.E.2d at 894)). Based upon these determinations,

the court in Asheville I held that the challenged statutory provisions were “local acts.”

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Opinion of the Court

Id. at 32, 665 S.E.2d at 126. Moreover, the State conceded during oral argument that

the present record contains no support for any assertion that the City continued to

engage in abusive or discriminatory behavior after 2008. Finally, even if the

legislation is intended to ensure the availability of better water service at a lower cost

in Buncombe County by fostering the creation of a large, regional water and sewer

system, the classification upon which the legislation relies “embraces less than the

entire class of places to which such legislation would be necessary or appropriate

having regard to the purpose for which the legislation was designed,” Williams, 357

N.C. at 184, 581 S.E.2d at 426 (quoting McIntyre, 254 N.C. at 518, 119 S.E.2d at 894),

given that none of the other public water systems owned and operated by Buncombe

County municipalities receiving service from the Metropolitan Sewerage District,

including Biltmore Forest, Black Mountain, Montreat, Weaverville, and Woodfin, are

subject to the statute’s involuntary transfer provision despite the fact that several of

those municipalities charge higher rates to extraterritorial customers than to

municipal residents and given that the Town of Hendersonville, which is located in

Henderson County, owns and operates a municipal water system that charges higher

rates to extraterritorial customers than to municipal residents as well. Thus, for all

these reasons, the State’s effort to establish that the legislation is a general, rather

than a local, act necessarily fails.

Having determined that Section 1 of the Act is a local law, we must next

consider whether the legislation “[r]elat[es] to health[ and] sanitation.” N.C. Const.

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Opinion of the Court

art. II, § 24(1)(a). In answering this question in the negative, the Court of Appeals

began by noting that, in the 2008 City of Asheville case, it had concluded that “the

mere implication of water or a water system in a legislative enactment does not

necessitate a conclusion that it relates to health and sanitation in violation of the

Constitution,” id. at ___, 777 S.E.2d at 97 (quoting Asheville I, 192 N.C. App. at 37,

665 S.E.2d at 129); that this Court’s precedent “instructs” that a local law does not

relate 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 after] careful perusal of

the entire act,’ ” id. at ___, 777 S.E.2d at 97-98 (second and third alterations in

original) (quoting Asheville I, 192 N.C. App. at 33, 665 S.E.2d at 126 (first alteration

in original) (citing and quoting Reed v. Howerton Eng’g Co., 188 N.C. 39, 44, 123 S.E.

479, 481 (1924))); and “that the best indications of the General Assembly’s purpose

are ‘the language of the statute, the spirit of the act, and what the act seeks to

accomplish,’ ” id. at ___, 777 S.E.2d at 98 (quoting Asheville I, 192 N.C. App. at 37,

665 S.E.2d at 129 (quoting State ex rel. Comm’r of Ins. v. N.C. Rate Bureau, 300 N.C.

381, 399, 269 S.E.2d 547, 561 (1980))). As a result, the Court of Appeals “first look[ed]

to see if the . . . Act expressly states that its purpose is to regulate health or

sanitation” and answered that question in the negative on the theory that the Act’s

“stated purpose,” as reflected in its preamble, “is to address concerns regarding the

quality of the service provided to the customers of public water and sewer systems.”

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Opinion of the Court

Id. at ___, 777 S.E.2d at 98. Secondly, the Court of Appeals “peruse[d] the entire . . .

Act to determine whether it is plain and clear that the Act’s purpose is to regulate

health or sanitation” and determined that “there are no provisions in the Act which

‘contemplate[ ] . . . prioritizing the [Asheville Water System’s] health or sanitary

condition[.]’ ” Id. at ___, 777 S.E.2d at 98 (alterations in original) (quoting Asheville

I, 192 N.C. App. at 36-37, 665 S.E.2d at 128). On the contrary, the fact that Section

2 of the legislation “allows for the ‘denial or discontinuance of [water and sewer]

service,’ by [a metropolitan water and sewerage district] based on a customer’s non-

payment,” id. at ___, 777 S.E.2d at 98 (first alteration in original) (quoting Ch. 50,

sec. 2, 2013 N.C. Sess. Laws at 122 (codified at N.C.G.S. § 162A-85.13(c))), “belies

Asheville’s argument that the purpose of the Act relates to health and sanitation,” id.

at ___, 777 S.E.2d at 98 (citing Asheville I, 192 N.C. App. at 35, 665 S.E.2d at 127).

As a result, the Court of Appeals concluded that the legislation “appear[s] to prioritize

concerns regarding the governance over water and sewer systems and the quality of

the services rendered,” id. at ___, 777 S.E.2d at 98 (citing Ch. 50, sec. 2, 2013 N.C.

Sess. Laws at 119-24), rather than health and sanitation.

In making this determination, the Court of Appeals distinguished several cases

upon which the City relied before finding this Court’s decision in Reed v. Howerton

Engineering Co. controlling with respect to the health and sanitation issue. Id. at

___, 777 S.E.2d at 98-99. After noting that our decision in Drysdale v. Prudden, 195

N.C. 722, 143 S.E. 530 (1928), was “[t]he most compelling of” the cases cited in

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Opinion of the Court

support of the City’s position, the Court of Appeals stated that this Court “base[d] its

ruling [in Drysdale] on the fact that the act [was] a local law” and did not make “any

determination regarding which of the 14 ‘prohibited subjects’ was implicated by the

act” at issue in that case, City of Asheville, ___ N.C. App. at ___, 777 S.E.2d at 98. In

addition, the Court of Appeals distinguished City of New Bern, 338 N.C. at 437-38,

450 S.E.2d at 739-40, Idol, 233 N.C. at 733, 65 S.E.2d at 315, and Sams v. Board of

County Commissioners, 217 N.C. 284, 285, 7 S.E.2d 540, 541 (1940), on the grounds

that they “deal[t] with legislation that empowers a political subdivision with

authority to enforce health regulations in a county” while the legislation at issue in

this case “does not empower anyone to enforce health regulations” or “impose any

health regulations on the Asheville Water System,” City of Asheville, ___ N.C. App.

at ___, 777 S.E.2d at 99. Moreover, the Court of Appeals pointed to our decision in

Reed, which rejected a challenge to legislation that “created sewer districts in

Buncombe County,” “because the language in the act did not suggest [that health or

sanitation was] the act’s purpose” and because the challenged act “merely sought to

create political subdivisions through which sanitary sewer service could be provided.”

Id. at ___, 777 S.E.2d at 98-99 (citing Reed, 188 N.C. at 42-45, 123 S.E. at 479-82).

Finally, the Court of Appeals concluded that our decision in Lamb v. Board of

Education, 235 N.C. 377, 70 S.E.2d 201 (1952), which invalidated a statute that

“imposed a duty on the Randolph County Board of Education to provide ‘a sewerage

system and an adequate water supply’ for its schools” because it “relat[ed] to health

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Opinion of the Court

and sanitation” given “that ‘its sole purpose’ was to make sure that school children in

Randolph County had access to ‘healthful conditions’ while at school,” did not support

the City’s position given the directness with which the statute addressed health and

sanitation issues.14 City of Asheville, ___ N.C. App. at ___, 777 S.E.2d at 99 (quoting

Lamb, 235 N.C. at 379, 70 S.E.2d at 203). Thus, the Court of Appeals concluded that

its decision was fully consistent with this Court’s precedent concerning the proper

application of Article II, Section 24(a)(1) of the North Carolina Constitution.

The City claims that the Court of Appeals utilized an overly narrow

construction of Article II, Section 24 of the North Carolina Constitution that

conflicted with its purpose, ignored the distinction between “[r]elating to” and

“regulat[ing],” and employed a “ ‘regulation’ standard” stemming from our decision

in Reed in preference to the approach utilized in our more recent decisions. In

addition, the City asserts that the Court of Appeals’ decision conflicts with three lines

of decisions from this Court, including (1) a line of decisions, such as Drysdale, City

of New Bern, and Lamb, that hold that water and sewer services are inherently

14 As the City points out, the law at issue in Lamb did not require the County Board
of Education to provide water and sewer services to public school children and to ensure the
provision of healthful conditions for Randolph County school children. Instead, the law
“purport[ed] to limit the power of the County Board of Education to provide for sanitation
and healthful conditions in the schools by means of a sewerage system and an adequate water
supply,” Lamb, 235 N.C. at 379, 70 S.E.2d at 203, by prohibiting the County Board of
Education “from expending ‘in excess of two thousand dollars ($2,000.00) under any one
project or contract for the purpose of extending any public or private water or sewer system
so that such extended system will serve any public school in Randolph County’ ” absent
approval by a majority of voters at a special election, id. at 379, 70 S.E.2d at 203 (quoting Act
of Apr. 14, 1951, ch. 1075, sec. 1, 1951 N.C. Sess. Laws 1079)

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Opinion of the Court

related to health and sanitation; (2) a line of cases, such as City of New Bern, Idol,

Board of Health v. Board of Commissioners, 220 N.C. 140, 16 S.E.2d 677 (1941), and

Sams, that hold that local laws addressing the governance of health-related services

relate to health and sanitation; and (3) a line of cases, such as City of New Bern and

Williams, that indicate that the “practical effect” of challenged legislation must be

considered in determining whether the act involves one of the prohibited subjects

specified in Article II, Section 24(1). On the other hand, the State contends that the

analysis employed by the Court of Appeals is firmly grounded in our decision in Reed,

which remains good law, and that Lamb merely establishes that an act involving

water and sewer services relates to health and sanitation if it does nothing other than

to prescribe the manner in which sewer and water service is provided. In addition,

the State contends that the Court of Appeals’ decision, rather than impermissibly

narrowing the term “[r]elating to,” correctly focused upon the purpose of the Act,

which, in the State’s view, was intended to work a change in the governance of the

City’s water system. Once again, we find the City’s argument persuasive.

In concluding that the legislation is not unconstitutional because it does not

“expressly state[ ] that its purpose is to regulate health or sanitation” and because “it

is [not] plain and clear,” when viewing the Act as a whole, that its “purpose is to

regulate health or sanitation,” the Court of Appeals placed principal reliance upon

our decision in Reed. City of Asheville, ___ N.C. App. at ___, 777 S.E.2d at 98. In

Reed, we considered whether legislation that established a procedure pursuant to

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Opinion of the Court

which the Buncombe County Board of Commissioners could create sanitary districts

for the purpose of providing water and sewer service in rural areas of the county was

a local act relating to health, sanitation, and the abatement of nuisances. 188 N.C.

at 40-41, 44, 123 S.E. at 479-80, 481. Although this Court upheld the legislation

because it was not a local law and did not relate to health and sanitation because it

did “not state that its purpose [was] to regulate sanitary matters, or to regulate health

or abate nuisances” and was, instead, intended “to provide districts in Buncombe

County wherein sanitary sewers or sanitary measures may be provided in rural

districts,” id. at 44, 123 S.E. at 481, the second of these two holdings was substantially

limited four years later in Drysdale, 195 N.C. at 726-28, 143 S.E. at 532-33, in which

this Court invalidated a statute that created a single, special sanitary district in

Henderson County as an impermissible local act.15 In reaching this result, Drysdale

distinguished Reed on the grounds that the legislation at issue in that case “applied

generally to the entire county of Buncombe.” Drysdale, 195 N.C. at 728, 143 S.E. at

533. While the State contends that this Court’s decision in Town of Kenilworth v.

Hyder, 197 N.C. 85, 147 S.E. 736 (1929), treats the “health and sanitation” holding in

Reed “with unambiguous approval,” we decline to read Hyder that expansively given

15 In spite of the fact that the Court of Appeals expressed uncertainty about the
prohibited subject to which the statute at issue in Drysdale “related,” it is clear from our
opinion that the statute in question was deemed to impermissibly relate to health and
sanitation, which is how subsequent opinions of this Court have understood that decision.
E.g., Gaskill v. Costlow, 270 N.C. 686, 688, 155 S.E.2d 148, 149 (1967); Sams, 217 N.C. at
285, 7 S.E.2d at 541.

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Opinion of the Court

that it did not utilize the regulation standard employed in Reed; looked to Reed for

the primary purpose of noting that the relevant sanitary district had been established

pursuant to the legislation that had been challenged in that earlier case; and stated,

in essence, that, since the legislation at issue in Hyder was little more than a

continuation of the legislation at issue in Reed and since the legislation at issue in

Reed had been upheld by this Court, there was “no convincing reason” for concluding

that the legislation at issue in Hyder constituted a prohibited local act. Id. at 89, 147

S.E. at 738 (citations omitted). As a result, Reed provides no basis for a determination

that the legislation does not relate to health and sanitation.

In addition, while the stated purpose of the legislation is undoubtedly relevant

to the determination of whether a local law violates Article II, Section 24(a), our

recent precedent clearly indicates that the practical effect of the legislation is

pertinent to, and perhaps determinative of, the required constitutional inquiry. E.g.,

Williams, 357 N.C. at 189, 581 S.E.2d at 429 (concluding that, while “the record

demonstrates that . . . the intent of the enabling legislation and the Ordinance

[enacted pursuant to the authority granted by the challenged legislation] is to

prohibit discrimination in the workplace, the effect of these enactments is to govern

the labor practices of [certain businesses] in Orange County”); City of New Bern, 338

N.C. at 434-42, 450 S.E.2d at 737-42 (concluding that the challenged legislation,

which shifted the responsibility for enforcing the State Building Code with respect to

certain buildings from the City of New Bern to Craven County, constituted

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Opinion of the Court

unconstitutional local acts related to health and sanitation). As a result, the

approach adopted by the Court of Appeals for determining whether the legislation

constituted an impermissible local law relating to health and sanitation departs from

that required by our precedents, properly understood.

Admittedly, this Court has not, to date, clearly indicated when a local act does

and does not “relate” to a prohibited subject for purposes of Article II, Section 24.

Although “related” can be defined as “[c]onnected in some way; having a relationship

to or with something else,” Related, Black’s Law Dictionary (10th ed. 2014), we cannot

conclude that the existence of a tangential or incidental connection between the

challenged legislation and health and sanitation is sufficient to trigger the

prohibition worked by Article II, Section 24(1)(a) of the North Carolina Constitution.

On the other hand, we recognize that, as a purely textual matter, “relating to” is not

equivalent to “regulating.” Compare N.C. Const. art. II, § 24(1)(a) (“[r]elating to

health, sanitation, and the abatement of nuisances”), with id. art. II, § 24(1)(j)

(“[r]egulating labor, trade, mining, or manufacturing”); see generally Williams, 357

N.C. at 189, 581 S.E.2d at 429 (defining “regulate” as “ ‘to govern or direct according

to rule[,] . . . to bring under [ ] control of law or constituted authority’ ” (quoting State

v. Gulledge, 208 N.C. 204, 208, 179 S.E. 883, 886 (1935) (ellipsis in original), (quoted

in Cheape v. Town of Chapel Hill, 320 N.C. 549, 559, 359 S.E.2d 792, 798 (1987)

(applying that definition of “regulate” to Article II, Section 24(1)(j))). As a result, in

light of the relevant constitutional language and the import of our prior decisions

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Opinion of the Court

interpreting and applying the prohibition set out in Article II, Section 24 of the North

Carolina Constitution, the ultimate issue that we must decide in this case is whether,

in light of its stated purpose and practical effect, the legislation has a material, but

not exclusive or predominant, connection to issues involving health, sanitation, and

the abatement of nuisances.

In view of the fact that “[p]ure water is the very life of a people,” Drysdale, 195

N.C. at 732, 143 S.E. at 535, and the broad interpretation that this Court has given

to Article II, Section 24(1)(a) since Reed,16 we have no hesitation in concluding that

the legislation impermissibly relates to health and sanitation. As an initial matter,

we note that the stated purpose of the legislation is to “provide reliable, cost-effective,

high-quality water and sewer services” to affected customers. Ch. 50, pmbl., 2013

N.C. Sess. Laws at 118. Although the State contends that the purpose-related

language contained in the legislation implicates issues such as customer service

rather than the healthfulness of the water that is provided to customers for cooking,

cleaning, and personal consumption, the substantiality of the relationship between

16 The only time that this Court has rejected a claim that a local law impermissibly
“related to” health and sanitation after Reed occurred in Piedmont Ford Truck Sale, Inc. v.
City of Greensboro, 324 N.C. 499, 380 S.E.2d 107 (1989), in which we held that a local act
obligating the City of Greensboro to provide solid waste collection to newly annexed areas did
not relate to health and sanitation given that the “effect” of the local act was to make a
general law of statewide application applicable to an annexation being effectuated by the
adoption of a local act and given that the challenged legislation did not “subject the annexed
area to a different treatment than” would have been the case if Greensboro “had annexed the
area under the general annexation law.” Id. at 505, 380 S.E.2d at 111.

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Opinion of the Court

the purity of the water that customers receive and the quality of service provided to

water customers is beyond serious dispute. Thus, the stated purpose for the

enactment of the legislation demonstrates the existence of a material connection

between the reason for its enactment and issues involving public health and

sanitation.17

An analysis of the practical effect of the legislation reinforces the strength of

the connection between the issues addressed in the legislation and public health and

sanitation. As an initial matter, we note that the City, in the course of operating its

water system, is required to ensure compliance with the North Carolina Drinking

Water Act, N.C.G.S. §§ 130A-311 to -329 (2015), which appears in a chapter of the

General Statutes entitled “Public Health” (Chapter 130A) and which is intended “to

regulate water systems within the State which supply drinking water that may affect

the public health,” id. § 130A-312. In view of the fact that the City’s water system is

a “public water system” for purposes of the North Carolina Drinking Water Act, see

17 Although the Court of Appeals reasoned, in reliance upon its 2008 decision in
Asheville I, that a provision in the legislation at issue here allowing for the discontinuance of
water and sewer services by a metropolitan water and sewerage district for nonpayment
“belies [the City’s] argument that the purpose of the [legislation] relates to health and
sanitation,” City of Asheville, ___ N.C. App. at ___, 777 S.E.2d at 98, we do not find this
argument persuasive. A careful analysis of the Sullivan Acts reveals that each of them was
intended to address economic, rather than health and sanitation, issues given that they
prohibited the City from charging higher extraterritorial rates, required the City to place
funds derived from its water system in a separate account, and precluded the City from
transferring monies derived from the operation of the water system to any fund that was not
related to the operation and maintenance of the system. Asheville I, 192 N.C. App. at 36-39,
665 S.E.2d at 127-30.

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Opinion of the Court

id. § 130A-313(10), the City must show compliance with the North Carolina Drinking

Water Act and related regulations in order to obtain approval from the North

Carolina Department of Environmental Quality for the construction, alteration, and

additions to water system facilities, see id. § 130A-317 (c), (d); Asheville, N.C., Code

of Ordinances, ch. 21 (2016). In addition, the City is required to ensure that its water

treatment operators are certified pursuant to N.C.G.S. §§ 90A-20 to 90A-32 in order

to “protect the public health and to conserve and protect the water resources of the

State.” N.C.G.S. § 90A-20 (2015). Finally, the City is required to provide annual

reports concerning the source and quality of the water that it provides to its

customers, including the existence of any identified risks to human health stemming

from consumption of the water provided by its system. See 40 C.F.R. §§ 141.151–.155

(2016). As a result, consistent with its stated purpose, the legislation has material

health and sanitation effects.

The fact that the legislation changes the governance of the City’s water system

does not operate to remove it from the prohibition worked by Article II, Section

24(1)(a) of the North Carolina Constitution. As we have clearly held, a local act that

shifts responsibility for enforcing health and safety regulations from one entity to

another clearly relates to health and sanitation. E.g., City of New Bern, 338 N.C. at

440, 450 S.E.2d at 741 (invalidating local legislation that shifted responsibility for

enforcing the State Building Code with respect to certain buildings from the City of

New Bern to Craven County given that “the Building Code Council’s stated purposes

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Opinion of the Court

for the different inspections under the Code evince an intent to protect the health of

the general public,” that “[t]he Code regulates plumbing in an effort to maintain

sanitary conditions,” and that “enforcement of the fire regulations protects lives from

fire, explosion and health hazards”); see also Idol, 233 N.C. at 733, 65 S.E.2d at 315

(finding it clear “beyond peradventure” that legislation authorizing the consolidation

of the Winston-Salem and Forsyth County health departments and providing for the

appointment of a joint city-county board for administering the public health laws in

the affected jurisdictions was a prohibited “local act relating to health”); Bd. of Health

v. Bd. of Comm’rs, 220 N.C. at 143, 16 S.E.2d at 679 (emphasizing this Court’s

“commit[ment] to the proposition that a law affecting the selection of officers to whom

is given the duty of administering the health laws is a law ‘relating to health’ ” in the

course of invalidating a local law requiring that the county health officer appointed

by the county board of health be confirmed by the Nash County Board of

Commissioners) (citing Sams, 217 N.C. 284, 7 S.E.2d at 540)). As a result, given the

fact that the legislation works a change in the governance of the City’s water system,

our prior decisions reinforce, rather than undercut, our conclusion that the legislation

impermissibly relates to health and sanitation in violation of Article II, Section

24(1)(a) of the North Carolina Constitution.

As the State and our dissenting colleague note, Article VII, Section 1 of the

North Carolina Constitution provides, in pertinent part, that

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Opinion of the Court

[t]he General Assembly shall provide for the
organization and government and the fixing of boundaries
of counties, cities and towns, and other governmental
subdivisions, and, except as otherwise prohibited by this
Constitution, may give such powers and duties to counties,
cities and towns, and other governmental subdivisions as
it may deem advisable.

N.C. Const. art. VII, § 1. Although North Carolina is not a home rule jurisdiction,

and although our constitution, consistent with the language of this provision, gives

the General Assembly exceedingly broad authority over the “powers and duties”

delegated to local governments, id., that authority is subject to limitations imposed

by other constitutional provisions.18 Aside from the fact that the legislation does not

actually prohibit the City from operating a water system, the General Assembly’s

authority over the “powers and duties” delegated to local governments is expressly

subject to the limitations set out in Article II, Section 24, which “is the fundamental

law of the State and may not be ignored.” High Point Surplus Co., 264 N.C. at 656,

18 The legislation cannot be properly understood as nothing more than an exercise of
the General Assembly’s plenary authority to create new units of local government. Instead
of simply creating a new unit of local government, the General Assembly took a number of
actions in the legislation, including creating the Metropolitan Water and Sewerage District
through a repurposing of the Metropolitan Sewerage District and effectively eliminating the
City’s ability to operate its existing water system. In similar instances, such as Idol, 233
N.C. at 733, 65 S.E.2d at 315, which involved legislation creating a joint city-county board of
health, and Sams, 217 N.C. at 285-86, 7 S.E.2d at 541, which involved legislation creating a
county board of health, this Court invalidated the challenged legislation as impermissible
local laws relating to health and sanitation even though the legislation at issue in those cases
involved the creation of new units of local government like the one at issue here.

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Opinion of the Court

142 S.E.2d at 702. As a result,19 for all these reasons, we reverse the Court of Appeals’

decision and instruct that court to reinstate the trial court’s order granting summary

judgment in favor of the City.20

REVERSED.

Justice NEWBY dissenting.

Throughout our history, when communities needed a governmental provision

of water and sewer services, the General Assembly, by local act, would grant a local

government unit the authority to act. Here the majority’s holding ignores this

historic constitutional understanding of the plenary authority of the General

19In view of our conclusion that the legislation is an unconstitutional local law relating
to health and sanitation, we need not address the City’s challenge to the Court of Appeals’
holding that the legislation did not result in a compensable taking and express no opinion
concerning its correctness.

20 Although the General Assembly has, in the past, enacted legislation authorizing
various units of local government to operate systems for the provision of water service, we do
not believe that our decision in this case in any way impairs the ability of the affected units
of local government to operate their water systems in a lawful manner. Aside from the fact
that we do not know whether such legislation could be properly characterized as local, rather
than general, in nature or relates to health and sanitation under the test that we have
deemed appropriate in this case and the fact that the legislation in question appears to have
allowed the initial provision of water service rather than requiring the reallocation of the
responsibility for providing water and sewer service from one entity of local government to
another, the current effect of any such legislation would be to allow the affected unit of local
government to do what has otherwise been authorized by general legislation, an outcome
which this Court held did not result in a violation of Article II, Section 24 in Piedmont Ford
Truck Sale, 324 N.C. at 502, 380 S.E.2d at 111.

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Newby, J., dissenting

Assembly to oversee local government subdivisions and create new ones when

necessary. Our history and our constitution recognize this plenary authority is

necessary because the General Assembly is uniquely situated to oversee local

government and address changing needs. Now the Court brings uncertainty as to

whether there are any lawfully established water or sewer districts in North

Carolina. Even assuming the legislation at issue is a local act, the legislature first

gave the City of Asheville, and countless other municipalities across our State, its

water district by local act. If it is unlawful to modify that district by local act, then it

was unlawful to establish it by local act initially. The majority’s complicated analysis

casts this Court in the ill-suited role of legislating which local governmental

authorities shall govern various water and sewer services. Because the General

Assembly exercises its plenary authority in creating a water and sewer district, its

action is constitutional. Accordingly, I respectfully dissent.

This Court presumes that legislation is constitutional absent an express

constitutional prohibition on the legislature’s otherwise plenary police power and

until its unconstitutionality is plainly and clearly demonstrated beyond a reasonable

doubt. E.g., Hart v. State, 368 N.C. 122, 126, 774 S.E.2d 281, 284 (2015); see also

Kornegay v. City of Goldsboro, 180 N.C. 441, 445, 105 S.E. 187, 189 (1920) (“[C]ourts

always presume[,] in the first place[,] that the act is constitutional . . . [and] that the

Legislature acted with integrity and with an honest purpose to keep within the

restrictions and limitations laid down by the Constitution.” (quoting Lowery v. Bd. of

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 CITY OF ASHEVILLE V. STATE

Newby, J., dissenting

Graded Sch. Trs., 140 N.C. 33, 40, 52 S.E. 267, 269 (1905)). The presumptive

constitutional power of the General Assembly to act is consistent with the principle

that a restriction on the General Assembly is in fact a restriction on the people. See

Baker v. Martin, 330 N.C. 331, 336-37, 410 S.E.2d 887, 890 (1991). Thus, this Court

is powerless to review an act of the people through the General Assembly for its

political propriety so long as it reasonably relates to the need sought to be remedied

and falls within legislative discretion. Greensboro-High Point Airport Auth. v.

Johnson, 226 N.C. 1, 8, 36 S.E.2d 803, 809 (1946).

The General Assembly has long enjoyed plenary power to create political

subdivisions of local government,21 and this authority has been reaffirmed with each

adoption of our state constitution. N.C. Const. art. VII, § 1; N.C. Const. of 1868,

Amends. of 1875, art. VII, § 14 (“The General Assembly shall have full power by

statute to modify, change, or abrogate any and all of the provisions” pertaining to

municipalities.); id., art. VIII, § 4 (“It shall be the duty of the Legislature to provide

21 Before its express inclusion in the 1868 state constitution, this Court recognized the
General Assembly’s historic duty and plenary power to create and abolish political
subdivisions of local government. See, e.g., White v. Comm’rs of Chowan Cty., 90 N.C. 437,
438 (1884) (County subdivisions “are indeed a necessary part and parcel of the subordinate
instrumentalities employed in carrying out the general policy of the state in the
administration of government . . . [and their functions] may be enlarged, abridged, or
modified at the will of the legislature . . . [as] they are intended only to be essential aids and
political agencies.”); see also Lilly v. Taylor, 88 N.C. 489, 494-95 (1883) (affirming the
legislature’s creation and subsequent repeal of the charter of the Town of Fayetteville); Mills
v. Williams, 33 N.C. (11 Ired.) 558, 563-64 (1850) (upholding the legislature’s “power to create
and abolish” Polk County).

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Newby, J., dissenting

for the organization of cities, towns and incorporated villages . . . .”); see also Report

of the North Carolina State Constitution Study Commission 143 (1968) [hereinafter

1968 Constitution Commission Report] (recognizing “the General Assembly[’s] full

power to revise or abolish the form and powers of county and township governments”).

The General Assembly creates governmental subdivisions to facilitate local

self-government, dividing governing authority between local governmental units that

may otherwise compete for jurisdiction. See Hailey v. City of Winston-Salem, 196

N.C. 17, 22, 144 S.E. 377, 380 (1928) (“When a new governmental agency is

established by the Legislature, such as a municipal corporation, it takes control of all

the affairs over which it is given authority, to the exclusion of other governmental

agencies.”). Local governmental subdivisions are “parts and parcels of the State,

organized for the convenience of local self-government,” People ex rel. Van Bokkelen

v. Canaday, 73 N.C. 198, 222 (1875), which the General Assembly may create,

organize, abolish, arrange, and rearrange to meet local needs. See also Town of Boone

v. State, ___ N.C. ___, ___, ___ S.E.2d ___, ___ (2016) (No. 93A15-2); Holmes v. City of

Fayetteville, 197 N.C. 740, 746, 150 S.E. 624, 627 (1929) (recognizing municipalities

as “mere instrumentalities of the State for the more convenient administration of

local government”), appeal dismissed per curiam, 281 U.S. 700, 50 S. Ct. 353, 74 L.

Ed. 1126 (1930).

Moreover, the legislature can create “separate corporate agenc[ies] to serve [ ]

particular governmental purposes” and “call upon them to perform such functions as

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Newby, J., dissenting

the Legislature may deem best.” Johnson, 226 N.C. at 9-10, 36 S.E.2d at 809 (citing

Brockenbrough v. Bd. of Water Comm’rs, 134 N.C. 1, 17, 46 S.E. 28, 33 (1903)). “A

municipality acting in its governmental capacity is an agency of the State for the

better government of those residing within its corporate limits . . . .” Candler v. City

of Asheville, 247 N.C. 398, 406, 101 S.E.2d 470, 476 (1958); see also McCormac v.

Commr’s of Robeson Cty., 90 N.C. 441, 444 (1884) (“[I]t is within the power and is the

province of the legislature to . . . invest the inhabitants . . . with corporate functions,

more or less extensive and varied in their character, for the purposes of

government . . . .”). The General Assembly is the political body designated to oversee

local government and to make necessary modifications as local conditions change. In

organizing local government, and making necessary modifications, the General

Assembly must weigh competing local interests and needs. Ultimately, the

legislature alone must determine the propriety of changes in local government by

exercising its political judgment.

This broad historic power of the General Assembly, acknowledged by our case

law, has remained unchanged and is now expressly incorporated into Article VII,

Section 1 of our current constitution, adopted in 1971:

The General Assembly shall provide for the
organization and government and the fixing of boundaries
of counties, cities and towns, and other governmental
subdivisions, and, except as otherwise prohibited by this
Constitution, may give such powers and duties to counties,
cities and towns, and other governmental subdivisions as
it may deem advisable.

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Newby, J., dissenting

N.C. Const. art. VII, § 1. As such, Article VII, Section 1 “is not a delegation of power

to the General Assembly” but “a general description” and “merely a recognition” of

“the General Assembly’s power to provide for the organization and powers of local

government,” 1968 Constitution Commission Report 85, as affirmed in the 1875

amendment, which “gave the General Assembly full power to revise or abolish the

form and powers of county and township governments,” id. at 143.

By its plain meaning, the text of the first clause, “[t]he General Assembly shall

provide for the organization and government and the fixing of boundaries of counties,

cities and towns, and other governmental subdivisions,” mandates the statutory

creation and structuring of local governmental subdivisions. See State v. Webb, 358

N.C. 92, 97, 591 S.E.2d 505, 510-11 (2004) (The constitution is construed for its plain

meaning.); see also Dunn v. Pac. Emp’rs Ins. Co., 332 N.C. 129, 134, 418 S.E.2d 645,

648 (1992) (Ordinary rules of grammar apply.). “Organization” means something

“put together into an orderly, functional, [and] structured whole.” Organize, The

American Heritage Dictionary 926 (new coll. ed. 1979). “Government” is defined as

“[t]he act or process of governing; especially, the administration of public policy in a

political unit; political jurisdiction.” Government, id. at 570. The “fixing of

boundaries” means establishing borders or limits. See Fix and Boundary, id. at 497,

156. “Other governmental subdivisions” includes a “special-purpose district or

authority,” Local Government, Black’s Law Dictionary (10th ed. 2014), such as an

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Newby, J., dissenting

administrative water district, operated in compliance with principles, rules, and

regulations, see id. (listing examples of local government units). Thus, the plain

meaning of the phrase “organization and government and the fixing of boundaries”

embraces the creation, expansion, retraction, and dissolution of all forms of local

government, including “other governmental subdivisions.”22

Our case law has historically treated “other governmental subdivisions”

similarly to traditional political subdivisions. See Town of Saluda v. Polk County,

207 N.C. 180, 186, 176 S.E. 298, 301-02 (1934) (“[T]he legislature alone can create,

directly or indirectly, counties, townships, school districts, road districts, and the like

subdivisions, . . . to effectuate the purposes of the government . . . . Such organizations

are intended to be instrumentalities and agencies employed to aid in the

administration of the government, and are always under the control of the power that

created them, unless the same shall be restricted by some constitutional limitation.”

(quoting McCormac, 90 N.C. at 444-45)); see also N.C.G.S. § 162A-65 (2015) (defining

“political subdivision” for purposes of water and sewer authorities as “any county,

city, town, incorporated village, sanitary district, water district, sewer district,

special purpose district or other political subdivision,” id. § 162A-65(a)(8), and

“governing body” as “the board, commission, council or other body . . . of a political

22See Town of Boone, ___ N.C. at ___, ___ S.E.2d at ___ (Ervin, J., concurring in result)
(“[T]he plain language in which the provision in question is couched suggests to me that
‘organization and government’ refers to the creation of units of local government and the
manner in which those units of local government are governed . . . .”).

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Newby, J., dissenting

subdivision in which the general legislative powers . . . of such political subdivision

are exercised,” id. § 162A-65(a)(6)). As such, the text of the first clause of Article VII,

Section 1 contemplates the legislative creation of local governmental subdivisions,

along with counties, cities, and towns, without constitutional limitation.

The second clause of Article VII, Section 1 concerns the authority of the

General Assembly to confer specific “powers and duties” on local governmental units.

Unlike the first clause, the second clause in Article VII, Section 1 includes an express

limitation; namely, it prohibits any legislative delegation of “powers and duties” to

local governmental units that is “otherwise prohibited by this Constitution.” Only

under the second clause, then, is the General Assembly’s authority over local

governments expressly subject to limitations imposed by other constitutional

provisions, including the constraints on local acts listed in Article II, Section 24 first

adopted in 1917. For example, under the Article II, Section 24 prohibition on certain

local acts, the General Assembly cannot grant to one county the power to enact local

employment legislation, see Williams v. Blue Cross Blue Shield of N.C., 357 N.C. 170,

191, 581 S.E.2d 415, 430 (2003), or remove a city’s power to enforce certain ordinances

regarding specific properties within its municipal limits, see City of New Bern v. New

Bern–Craven Cty. Bd. of Educ., 338 N.C. 430, 442, 450 S.E.2d 735, 742 (1994).23 See

also Town of Boone, ___ N.C. at ___, ___ S.E.2d at ___.

23This approach of conducting an Article II, Section 24 analysis only when the
challenged statute specifies a specific “power” or “duty” is consistent with our prior decisions.

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Newby, J., dissenting

The question before this Court is whether the legislation at issue, Act of May

2, 2013, ch. 50, 2013 N.C. Sess. Laws 118 (the District Act), which creates a new

regional district to govern water and sewer services within certain areas of Buncombe

and Henderson Counties, is an exercise of the General Assembly’s plenary authority

to “provide for the organization and government and the fixing of boundaries” of local

government under the first clause of Article VII, Section 1 or whether it confers

specific “powers and duties” on a local governmental unit under the second clause. If

the General Assembly’s action creating the regional water and sewer district arises

under its plenary authority recognized in the first clause of Article VII, Section 1, the

In Piedmont Ford Truck Sale, Inc. v. City of Greensboro, the plaintiffs challenged a local act
annexing certain land to the City of Greensboro. 324 N.C. 499, 501, 380 S.E.2d 107, 108
(1989). While the annexation clearly arose under the authority to “fix the boundaries of
cities” acknowledged in Article VII, Section 1, id. at 503, 380 S.E.2d at 110, because the act
also contained a specific “provision regarding solid waste collection,” the plaintiffs argued the
statute violated Article II, Section 24, id. at 504, 380 S.E.2d at 110. Because the statute
specified a particular “power,” this Court conducted an analysis under Article II. Id. at 504-
06, 380 S.E.2d at 110-11. When viewed as a whole, the explicit grant of power was a “small
part” of the legislation, id. at 506, 380 S.E.2d at 111, and this Court concluded that “[t]he
provision . . . regarding solid waste collection” did not violate Article II, Section 24, id. at 506,
380 S.E.2d at 111. See also, e.g., Lamb v. Bd. of Educ., 235 N.C. 377, 379-80, 70 S.E.2d 201,
203 (1952) (concluding that an act expressly restricting certain express powers of the
Randolph County Board of Education violated the Article II limitations on local acts); Idol v.
Street, 233 N.C. 730, 733, 65 S.E.2d 313, 315 (1951) (concluding that an act that “confer[red]
power upon the Board of Aldermen of the City of Winston-Salem and the Board of
Commissioners of Forsyth County” to, inter alia, “name a joint city-county board of health,”
which varied from general law, “[wa]s a local act relating to health” in violation of the Article
II limitations on local acts); Bd. of Health v. Bd. of Comm’rs, 220 N.C. 140, 143-44, 16 S.E.2d
677, 678-79 (1941) (concluding that an act removing from the Nash County Board of Health
the power to appoint a county health officer was a local act relating to health in violation of
the Article II limitations on local acts).

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Newby, J., dissenting

analysis ends, and there is no need to address the application of the second clause

and any restrictions imposed by Article II, Section 24.

As admitted by the City, the District Act creates a new political subdivision.

Moreover, the statutory text of the District Act provides for the organization and

government of that new political subdivision. The stated purpose of the District Act

is to enhance services to users by creating a regional water and sewer system to

“provide reliable, cost-effective, high-quality water and sewer services.” Ch. 50, 2013

N.C. Sess. Laws at 118 (emphasis added). Creating this type of local governmental

subdivision to enhance water and sewer services falls squarely within the

legislature’s plenary power as described in the first clause of Article VII, Section 1,

and thus the District Act is constitutional.

Initially established by local act in 1883, the City’s public water “system

currently serves approximately 124,000 customers, some 48,000 of whom are located

outside Asheville’s city limits” in portions of Buncombe and Henderson Counties. See

N.C.G.S. § 160A-312(a) (2015) (authorizing a city to operate a water supply and

distribution system inside and “outside its corporate limits, within reasonable

limitations”). In 2013 the General Assembly created a new local governmental

subdivision to provide regional water and sewer services to the City and those

portions of Buncombe and Henderson Counties. Ch. 50, 2013 N.C. Sess. Laws 118

(captioned “An Act to Promote the Provision of Regional Water and Sewer Services

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by Transferring Ownership and Operation of Certain Public Water and Sewer

Systems to a Metropolitan Water and Sewerage District.”).

The “transfer provision” regionalizes water and sewer services by combining

the City’s public water system with the Metropolitan Sewerage District operating in

the same county to form a new governmental subdivision. The transfer provision

provides in part: “All assets, real and personal, tangible and intangible, and all

outstanding debts . . . are by operation of law transferred to the metropolitan

sewerage district operating in the county where the public water system is located,

to be operated as a Metropolitan Water and Sewerage District . . . .” Id., sec. 1(a), at

118. All assets and all outstanding debts of both the City’s water system and the

Metropolitan Sewerage District transfer to the new regional district. Id., sec. 1(b)-

(c), (f), at 119.24 The transfer between the City and the Metropolitan Sewerage

24 “All necessary permits for operation” are also “transferred to the Metropolitan
Water and Sewerage District . . . to ensure that no current and paid customer loses services
due to the regionalization of water and sewer services.” Id., sec. 1(e), at 119. Moreover, the
General Trust Indenture, which governs the bonds issued and secured by a pledge of “[a]ll
Net Revenues of the Water System,” contemplates a transfer “to another political subdivision
or public agency in the State authorized by law to own and operate such systems.” The
trustee allows a transfer “if such political subdivision . . . assumes all of the obligations of the
City under this Indenture” and if the transfer does not produce a “material adverse effect on
the ability of the Water System to produce Revenues,” on the bond rating, or with regard to
tax treatment. These revenue bonds do not rely upon the City’s taxing power. See also Ch.
50, sec. 2, 2013 N.C. Sess. Laws, at 122 (requiring that the rates and fees “pledged to the
payment of revenue bonds” be sufficient to maintain the system).

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District occurs by operation of law25 because both systems operate in the same county

and meet certain criteria. See id., sec. 1(a)-(f), at 118-19.

By its terms and stated purpose, the District Act creates a regional governance

solution for water and sewer systems and defines a “metropolitan water and sewerage

district” as a political subdivision and deems it “a public body . . . exercising . . .

essential governmental functions to provide for the preservation and promotion of the

public health and welfare.” Id., sec. 2, at 121.26 The newly created regional district

combines the authority of the previously separate water and sewer districts “[t]o do

all acts and things necessary or convenient to carry out the powers granted by this

Article.” Id. at 122. Overall, the regional district operates with the same power as a

city in enforcing its ordinances, and the district board may not privatize its water and

sewer services. See id.

Likewise, the District Act amends N.C.G.S. § 162A-85.3 to provide for the

organization and governance of metropolitan water and sewerage districts like the

one created here, including a governing board with regional representation. Id. at

25 Governing bodies of other political subdivisions may establish regional systems by
joint resolution. See Ch. 50, sec. 5.5, 2013 N.C. Sess. Laws, at 125 (requiring consent from
county commissioners and all municipal governing boards affected before creation of district).
26 The District Act amended the definitions of “unit of local government” and
“municipality” to include “metropolitan water and sewerage districts” and added
“metropolitan water and sewerage districts” to the list of political subdivisions that may
borrow money and issue bonds. Ch. 50, sec. 2, 2013 N.C. Sess. Laws, at 119-20; see also
N.C.G.S. § 159-44(4) (2015) (defining a “unit of local government”); id. § 159-48(e) (2015)
(borrowing and bond issuing); id. § 159-81(1) (2015) (defining a “municipality”); id. § 159-
81(3) (2015) (revenue-bond issuing).

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120-21.27 The District Act requires the regional district board to work with local

municipalities under its jurisdiction for the benefit of the district.28 The district board

performs administrative tasks such as fixing rates, fees, rents, and other charges for

the services furnished or to be furnished by the district water and sewer system. See

id. at 122 (“Such rates, fees, and charges may not apply differing treatment within

and outside the corporate limits of any city or county within the jurisdiction of the

district board” and “shall not be subject to supervision or regulation by any . . . agency

of the State or of any political subdivision.”). In sum, as admitted by the City, the act

27 Generally, the District Act requires that the apportionment of members on the
district board be representative of the area serviced while considering population. See Ch.
50, sec. 2, 2013 N.C. Sess. Laws, at 120 (two from each county served); id. (one from each
municipality served); id. (two from each municipality served with a population greater than
200,000); id. (one from each county served with a population greater than 200,000); id. (“One
individual from a list submitted by the governing body of a county in which a watershed
serving the district board is located in a municipality not served by the district . . . .”); id., at
121 (“One individual by the governing body of any elected water and sewer district wholly
contained within the boundaries of the district.”). “[T]he district board may expand to include
other political subdivisions if” the additional political subdivision “become[s] a participant in
the district board.” Id.
The District Act also sets terms for members and provides procedures for meetings,
removal of members, filling vacancies on the district board, and the election and
compensation of officers. Id. Until all appointments are made, the district board of the
County’s metropolitan sewerage district “shall function as the district board of the
Metropolitan Water and Sewerage District.” Id., sec. 1(d), at 119.
28 The District Act outlines the permissible authority for the local governing bodies
within the regional district’s jurisdiction. See, e.g., Ch. 50, sec. 2, 2013 N.C. Sess. Laws, at
122-23 (regulating the transfer of jurisdiction from smaller systems to the regional district
system for the benefit of the district, contracting with the district, revising rates or collecting
taxes to pay obligations to the district, and submitting to its electors agreements with the
district). When possible, the district board must coordinate with the local municipalities
when constructing any system improvements. Id. at 123.

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creates a new “governmental subdivision” and provides for the “organization and

government” thereof.

The broad constitutional authority acknowledged in the text of the first clause

of Article VII, Section 1 clearly affirms the legislature’s ability to create and organize

political subdivisions to meet changing needs, resolve disputes between local

governments, and provide new governance solutions. The General Assembly’s

constitutional authority to do so remains even if its solution combines, divides, or

regionalizes the political power of preexisting subdivisions that once governed local

issues. Here it seems the General Assembly, in its discretion and in accordance with

the District Act’s stated purpose, finds regional governance over certain water

systems will ensure high quality water and sewer services.

The role of the legislature is to balance the weight to be
afforded to disparate interests and to forge a workable
compromise among those interests. The role of the Court
is not to sit as a super legislature and second-guess the
balance struck by the elected officials . . . [but] only to
measure the balance struck by the legislature against the
required minimum standards of the constitution.

Henry v. Edmisten, 315 N.C. 474, 491, 340 S.E.2d 720, 731 (1986). The General

Assembly’s policy decision here falls within legislative discretion and, as an exercise

of legislative authority under the first clause of Article VII, Section 1, does not

implicate the constitutional constraints described in Article II, Section 24.

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Assuming the District Act is a local act29 as held by the majority, notably the

legislature first created a water district for Asheville by local act.30 When creating

29 The statutory definition of “local act” in reference to cities and towns “means an act
of the General Assembly applying to one or more specific cities by name, or to all cities within
one or more specifically named counties.” N.C.G.S. § 160A-1(5) (2015). The District Act does
not refer to the City of Asheville by name.
30In 1883 the General Assembly appointed the Asheville Committee on Permanent
Improvements as trustee to oversee a $20,000 fund provided for “water supply.” Act of Feb.
28, 1883, ch. 66, sec. 2, 1883 N.C. Priv. [Sess.] Laws 752, 753. The legislature followed suit
with other municipalities and subdivisions. E.g., Act of Mar. 11, 1889, ch. 219, sec. 105, 1889
N.C. Priv. [Sess.] Laws 899, 924 (appointing the Board of Alderman for City of Greensboro to
manage and regulate “water-works” which “may be established, or land on which water-pipes
are run to and from said works”); id. sec. 107, at 924 (same for “system of sewerage”); Act of
Dec. 20, 1815, ch. XVII, sec. II, 1815 N.C. [Sess.] Laws 18, 18 (empowering and appointing
City of Charlotte board of commissioners to “erect pumps or wells”).
The General Assembly revised the charter of the City of Asheville to provide for its
water authority in 1901, conferring upon the Board of Alderman the power “[t]o provide a
sufficient supply of pure water for said city, fix charges and rates therefor, and prescribe
rules and regulations governing the use of same,” Act of Mar. 13, 1901, ch. 100, sec. 30, 1901
N.C. Priv. [Sess.] Laws 222, 232, which included “construction, operation, repair and control
of such water-works,” id., sec. 66, at 259. The legislature designated a separate subdivision
of government, the Board of Health, to take “general charge and supervision of . . . the
healthfulness of the water supply.” Id., sec. 32, at 234. In 1923 the General Assembly revised
the charter and restructured the local government, empowering a Board of Commissioners
to “build and construct” waterworks and sewerage systems, Act of Jan. 26, 1923, ch. 16, sec.
306, 1923 N.C. Priv. [Sess.] Laws 88, 154, both within the City limits and beyond, id., sec.
353, at 167, as well as a Commissioner of Public Works to supervise the systems, id., sec. 25,
at 96.
In 1931 the legislature revised the charter again, which remains the charter today,
subject to various amendments. Act of Mar. 30, 1931, ch. 121, 1931 N.C. Priv. [Sess.] Laws
154. Under this charter, the General Assembly created a Department of Finance to take
charge of “the supervision and control of and over the water system and supply,” id., sec. 32,
at 161, and to “collect for the use of water,” id. at 163; see also Act of Apr. 6, 1951, ch. 618,
1951 N.C. Sess. Laws 554, 554 (allowing “the City of Asheville, Buncombe County and
political units therein to contract” for the water system).
In 1981 the legislature expressly repealed these charter provisions related to the
supervision and control of the water system, Act of Feb. 16, 1981, ch. 27, sec. 3, 1981 N.C.
Sess. Laws 13, 14, removing control from the Department of Finance and appointing a new

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Newby, J., dissenting

and organizing political subdivisions under its plenary power as recognized in the

first clause of Article VII, Section 1, the legislature often must address the local needs

and competing political pressures of a geographic area. See Town of Boone, ___ N.C.

at ___, ___ S.E.2d at ___. If, as the majority declares, creating and organizing a new

water and sewer district is unconstitutional, would not the original act establishing

Asheville’s water district also be unconstitutional? The need to organize water and/or

sewer systems arose in localities across the state at different times. The General

Assembly authorized various units of local government or created new ones to meet

those needs as they arose or changed. Under the majority’s reasoning, all of the

locally legislated and similarly empowered districts would have been illegally

created.31 If the creation of a local governmental subdivision, as in the District Act,

political subdivision to handle the authority. In 1981 the City and Buncombe County then
entered into a comprehensive local agreement that established, inter alia, an agency to
administer the jointly-owned water supply and distribution systems.
31 See, e.g., Act of June 29, 1967, ch. 1019, sec. 1, 1967 N.C. Sess. Laws 1463, 1463
(permitting the Town of Taylorsville and Alexander County to purchase a water system); Act
of Apr. 5, 1951, ch. 550, secs. 1, 2, 1951 N.C. Sess. Laws 461, 461 (appointing Town of Dunn
as new entity to acquire, build, manage, and operate the “water and sewerage system” for
the “unincorporated village of Erwin in Harnett County”); Act of Apr. 5, 1947, ch. 1040, sec.
3, 1947 N.C. Sess. Laws 1519, 1520 (creating a “Board of Power, Water and Airport
Commissioners of the City of High Point . . . to construct, to improve, [and] to better . . . [the]
water system”); Act of Jan. 30, 1945, ch. 24, sec. 1, 1945 N.C. Sess. Laws 37, 37 (moving all
water-related property from the Board of Water Commissioners to the City of Charlotte, a
separate corporation); Act of Jan. 18, 1939, ch. 1, sec. 1, 1939 N.C. Pub.-Local [Sess.] Laws
11, 11 (establishing “sanitary districts” in Forsyth County); Act of May 3, 1935, ch. 418, sec.
1, 1935 N.C. Pub.-Local [Sess.] Laws 378, 378 (establishing joint water and sewer systems
for Haywood County municipalities); Act of Jan. 26, 1923, ch. 1, sec. 1, 1923 N.C. Priv. [Sess.]
Laws 1, 1 (extending the “waterworks system” for the Town of Lenoir); Act of Jan. 1, 1917,
ch. 71, sec. 2, 1917 N.C. Priv. [Sess.] Laws 134, 134 (establishing a separate entity, the Board

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Newby, J., dissenting

is scrutinized under the second clause of Article VII, Section 1, all such water and

sewer districts would receive the same review if challenged, and would be struck

down as prohibited local acts. Moreover, the majority, in contravention of our

heightened standard for reviewing the constitutionality of legislative acts, presumes

the legislature enacted the District Act in bad faith and that its enactment will result

in poor local governance. See Kornegay, 180 N.C. at 445, 105 S.E. at 189 (presuming

“the Legislature acted with integrity and with an honest purpose to keep within the

restrictions and limitations laid down by the Constitution”).

The General Assembly is the only body politic with the oversight and authority

to create and organize local political subdivisions in its discretion. It alone has the

ability to resolve local governance disputes such as those undergirding the litigious

past of the water system at issue.

Spanning almost a century, legislation and litigation chronicle the strained

relationship between the City of Asheville’s water system and its County water

customers. See Act of Apr. 28, 1933 (Sullivan I), ch. 399, 1933 N.C. Pub.-Local [Sess.]

Laws 376 (captioned “An Act to Regulate Charges Made by the City of Asheville for

Water Consumed in Buncombe County Water Districts”); Candler, 247 N.C. at 411,

101 S.E.2d at 479 (recognizing the legislature’s power to prevent by statute the City

of Water Commissioners, to “provide for the better management and proper operation of the
. . . water-works system of the city of Durham”).

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of Asheville from charging certain county residents higher rates than it charged to

city residents). After several amendments and reinstatements of the joint agreement

between the City and the County that was first established in 1981, that agreement

ended in 2004, ultimately leaving the City with ownership and control of the water

system. Again, it seems the parties soon after resorted to the legislature and the

courts. See Act of June 29, 2005 (Sullivan II), ch. 140, 2005 N.C. Sess. Laws 244

(captioned “An Act Regarding Water Rates in Buncombe County”); Act of June 29,

2005 (Sullivan III), ch. 130, 2005 N.C. Sess. Laws 243 (captioned “An Act Regarding

the Operation of Public Enterprises by the City of Asheville”); City of Asheville v.

State, 192 N.C. App. 1, 36-37, 665 S.E.2d 103, 128 (2008) (finding that a local act

addressing equitable rates “principally contemplate[d]” and “relate[d] only to matters

which are purely economic in nature . . . rather than prioritizing the system’s health

or sanitary conditions”), appeal dismissed and disc. rev. denied, 363 N.C. 123, 672

S.E.2d 685 (2009). The plenary power of the General allows it, not the courts, to craft

a resolution of this matter.

As acknowledged in the first clause of Article VII, Section 1, the General

Assembly has plenary authority to establish new subdivisions of local government.

The General Assembly alone can consider the local competing interests and craft a

solution. Such legislative action is not conditioned upon first providing a majority of

this Court with satisfactory justification. Johnson, 226 N.C. at 8, 36 S.E.2d at 809

(“We have no power to review a statute with respect to its political propriety as long

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Newby, J., dissenting

as it is within the legislative discretion and has a reasonable relation to the end

sought to be accomplished.”). The majority’s holding that a new political subdivision

addressing regional problems with the water system violates Article II, Section 24

simply because the legislation involves a water system erases the General Assembly’s

historic authority to establish convenient local governmental units acknowledged by

the first clause of Article VII, Section 1. The General Assembly’s creating a new local

governmental subdivision does not offend the state constitution. This Court should

not weigh the wisdom or expediency of a legislative act. Accordingly, I respectfully

dissent.

Chief Justice MARTIN joins in this dissenting opinion.

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