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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CITY OF ASHEVILLE V. STATE
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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CITY OF ASHEVILLE V. STATE
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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CITY OF ASHEVILLE V. STATE
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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CITY OF ASHEVILLE V. STATE
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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CITY OF ASHEVILLE V. STATE
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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CITY OF ASHEVILLE V. STATE
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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CITY OF ASHEVILLE V. STATE
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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CITY OF ASHEVILLE V. STATE
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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CITY OF ASHEVILLE V. STATE
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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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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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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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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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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Combined Opinion