City of Asheville v. State

• Citation: 665 S.E.2d 103
• Decision Date: 19 August 2008
• Docket Number: No. COA07-516.,COA07-516.
• Court: Court of Appeal of North Carolina (US)
• Parties: CITY OF ASHEVILLE, a municipal corporation, Plaintiff, v. Wake County STATE of North Carolina, and County of Buncombe, et al., Defendants.

665 S.E.2d 103

CITY OF ASHEVILLE, a municipal corporation, Plaintiff, v. Wake County STATE of North Carolina, and County of Buncombe, et al., Defendants.

No. COA07-516.

Court of Appeals of North Carolina.

August 19, 2008.

Appeal by plaintiff from order entered 2 February 2007 by Judge Howard E. Manning, Jr. in Wake County Superior Court. Heard in the Court of Appeals 4 February 2008.

Robert W. Oast, Jr., City Attorney for the City of Asheville, and Moore & Van Allen, PLLC, by Daniel G. Clodfelter, Mark A. Nebrig, T. Randolph Perkins, and Jeffrey M. Young, Morrisville, for plaintiff-appellant.

Roy Cooper, Attorney General, by Mark A. Davis, Special Deputy Attorney General, and W. Dale Talbert, Special Deputy Attorney General, for defendant-appellee State of North Carolina.

Long, Parker, Warren & Jones, P.A., by W. Scott Jones, and Robert B. Long, Jr., Asheville, for defendants-appellees Buncombe defendants.

Andrew L. Romanet, Jr., General Counsel, and Gregory F. Schwitzgebel, III, Senior Assistant General Counsel, for North Carolina League of Municipalities, amicus curiae.

MARTIN, Chief Judge.

Plaintiff City of Asheville ("Asheville") appeals from the trial court's 2 February 2007 order denying its motion for summary judgment, granting cross-motions for summary judgment by the State of North Carolina and the County of Buncombe with several affiliated officials and individuals (with the State of North Carolina, collectively "defendants"), and dismissing the action.

According to the parties' Amended Complaint and Answers, Asheville operates and at least partially owns a water treatment and distribution system for the treatment and supply of water for drinking, cooking, and cleaning purposes, and for the operation of sanitary disposal systems for individuals and entities within its corporate limits and for some individuals and entities outside of its corporate limits. According to the September 2005 certified Water System Management Plan from Asheville's Water Resources Department, Asheville operates this water distribution system as a public enterprise. The system "serves all of the City of Asheville, approximately 60% of Buncombe County and less than 1% of Henderson County. The major water supply is the City's watershed, which is comprised of 20,000 acres of mountainous forestland in eastern Buncombe County." "The water distribution system . . . is comprised of over 1,200 miles of transmission and service lines, 24 pump stations, 21 storage reservoirs, and associated equipment. [Asheville's] watershed, treatment plants, transmission and service lines, pumping stations and reservoir storage systems combine to make th[e] system one of the largest in North Carolina."

This case arises out of Asheville's desire to "determine the rates it would charge to supply water to customers located outside the Asheville city limits" unencumbered by any "restrictions . . . [or] requirements imposed on Asheville resulting from the passage and enforcement" of three session laws (collectively "the Sullivan Acts") enacted by the North Carolina General Assembly: (1) House Bill 931, Chapter 399 of the 1933 Public— Local Laws (hereinafter "Sullivan I"); (2) House Bill 1065, Session Law 2005-140 (hereinafter "Sullivan II"); and (3) House Bill 1064, Session Law 2005-139 (hereinafter "Sullivan III").

Sullivan I, captioned "An Act to Regulate Charges Made by the City of Asheville for Water Consumed in Buncombe County Water Districts," provides:

SECTION 1. That from and after the passage of this act it shall be unlawful for the City of Asheville or any of the governing authorities, agents, or employees thereof, to charge, exact, or collect from any resident of Buncombe County, whose property is now connected or may hereafter be connected with the main of any water district which has paid or issued bonds for the payment of the expense of laying such main, a rate for water consumed higher than that charged by the City of Asheville to persons residing within the corporate limits of said city.

SEC. 2. That the City of Asheville is hereby specifically authorized and empowered, through its officers, agents and employees, to cause any user of water who shall fail to pay promptly his water rent for any month to be cut off, and his right to further use of water from the city system to be discontinued until payment of any water rent arrearages.

SEC. 3. That it is the purpose and intent of this act to declare that persons residing outside of the corporate limits of the City of Asheville shall be entitled to the use of Asheville surplus water only, and the governing body of the City of Asheville is authorized and empowered to discontinue the supply of water to any districts, or persons, out of the corporate limits of the City of Asheville at any time that there may be a drought or other emergency, or at any time the governing body of the City of Asheville may deem that the city has use for all of its water supply.

SEC. 4. That it shall be the duty of the County Commissioners of Buncombe County and/or the trustees of the different water districts operating outside of the corporate limits of the City of Asheville, in Buncombe County, to maintain the water lines in proper repair in order that there may not be a waste of water by leakage.

Sullivan Act, ch. 399, 1933 N.C. Public— Local Laws 376.

Sullivan II, captioned "An Act Regarding Water Rates in Buncombe County," provides:

SECTION 1. From and after the effective date of this act, it shall be unlawful for the City of Asheville, or any of the governing authorities, agents, or employees thereof, to charge, exact, or collect from any water consumer in Buncombe County currently or hereafter connected to the waterlines currently maintained by the Asheville/Buncombe Water Authority, and replacements, extensions, and additions thereto a rate for water consumed higher than the rate charged for the same classification of water consumer residing or located within the corporate limits of the City of Asheville. Classification of water consumer as referred to herein means the type of facility to which the water is provided (e.g., single-family residence, multiple-family residence, retail, commercial, industrial) without regard to geographic location within Buncombe County.

SECTION 2. The City of Asheville may, through its officers, agents, and employees, cause any user of water who shall fail to pay promptly his water rent for any month to be cut off and his right to further use of water from the city system to be discontinued until payment of any water rent arrearages, all consistent with G.S. 160A-314(b).

SECTION 3. It shall be the duty of the Board of Commissioners of Buncombe County and/or the trustees of the different water districts operating outside of the corporate limits of the City of Asheville in Buncombe County to maintain the waterlines owned by the County of Buncombe and such water districts in proper repair in order that there may not be a waste of water by leakage.

SECTION 4. To the extent that the Sullivan Act (Chapter 399 of the Public—Local Laws of 1933) does not conflict with this act, it continues to apply.

Sullivan II, ch. 140, 2005 N.C. Sess. Laws 246-47.

Finally, Sullivan III, captioned "An Act Regarding the Operation of Public Enterprises by the City of Asheville" and enacted on the same day as Sullivan II, modified N.C.G.S. §§ 160A-312, 160A-31(a), and 160A-58.1(c). The only section of Sullivan III at issue in the present case modifies N.C.G.S. § 160A-312 to provide, in relevant part:

(a) A city shall have authority to acquire, construct, establish, enlarge, improve, maintain, own, operate, and contract for the operation of any or all of the public enterprises as defined in this Article to furnish services to the city and its citizens and other areas and their citizens located outside the corporate limits of the city. Subject to Part 2 of this Article, a city may acquire, construct, establish, enlarge, improve, maintain, own, and operate any public enterprise outside its corporate limits, within reasonable limitations.

(b) A city shall have full authority to protect and regulate any public enterprise system belonging to or operated by it by adequate and reasonable rules. The rules shall be adopted by ordinance, and shall comply with all of the following:

(1) The rules shall apply equally to the public enterprise system both within and outside the corporate limits of the city.

(2) The rules may not apply differing treatment within and outside the corporate limits of the city.

(3) The rules shall make access to public enterprise services available to the city and its citizens and other areas and their citizens located outside the corporate limits of the city equally.

(4) The rules may prioritize the continuation of the provision of services based on availability of excess capacity to provide the service.

(5) The rules may be enforced with the remedies available under any provision of law.

. . . .

(d) A city shall account for a public enterprise in a separate fund and may not transfer any money from that fund to another except for a capital project fund established for the construction or replacement of assets for that public enterprise. Obligations of the public enterprise may be paid out of the separate fund. Obligations shall not include any other fund or line item in the city's budget.

Sullivan III, ch. 139, 2005 N.C. Sess. Laws 243-44.

Our discussion of the issues involved in this case would not be complete without some historical background. The history of this case began over eighty years ago. Asheville's City Manager Gary W. Jackson, Asheville's Director of the Water Resources Department David Hanks, Buncombe County's representative in the State Senate Martin L. Nesbitt, Jr., Buncombe County's Finance Director Donna Clark, certified public accountant G. Edward Towson, II, and Buncombe County's Assistant County Manager and Director of Planning ...