City of Asheville v. State, 369 N.C. 80

Background

In 2013 the North Carolina General Assembly enacted an act (Ch. 50, later amended by Ch. 388) that would transfer by operation of law certain municipal water-system assets to a newly created metropolitan water and sewerage district; the statute’s criteria (county with a metro sewerage district + system serving >120,000) effectively targeted Asheville.
Asheville operated a large public water system serving ~124,000 customers (≈48,000 outside city limits) built and financed over decades; Buncombe County is served by a metropolitan sewerage district that had never provided water service.
Asheville sued the State seeking declaratory and injunctive relief, arguing the transfer provision is an unconstitutional local act barred by Article II, §24 of the N.C. Constitution and, alternatively, that it effected an uncompensated taking and violated other constitutional protections. A TRO enjoined enforcement.
The trial court granted summary judgment for Asheville, holding the transfer provision was a local act relating to health and sanitation and therefore void, and permanently enjoined enforcement. The Court of Appeals reversed in part, upholding the statute; the Supreme Court granted discretionary review.
The Supreme Court majority reversed the Court of Appeals and reinstated the trial court’s judgment, holding the statute is a prohibited local act that relates to health and sanitation under Article II, §24(1)(a).

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the statute is a local act barred by Art. II, §24	The act, though captioned general, in effect applies only to Asheville: classification is not reasonable and is a local act	The act is a general law to promote regional water/sewer governance; classification is reasonable and addresses regional governance	Held local: classification is a sham that singles out Asheville and lacks reasonable basis; therefore it is a local act
Whether the local act "relates to health and sanitation" (Art. II, §24(1)(a))	The statute’s stated purpose and practical effect (ensuring reliable, high‑quality drinking water and governance changes) materially relate to public health and sanitation	The act focuses on governance and service quality, not regulating health/sanitation; precedents (Reed) allow such governance measures	Held it does relate: purpose and practical effects (regulation of public water service and governance shifts) materially implicate public health and sanitation, so the local act is prohibited
Whether the legislature’s power under Art. VII, §1 to organize local government permits the transfer	Asheville argues Article VII power is subject to Article II §24 limits; the transfer cannot override the prohibition on local acts relating to health and sanitation	State (and dissent) argue legislature’s plenary authority to create and reorganize local governmental subdivisions includes creating/organizing metropolitan districts and transferring functions	Held Article VII authority is subject to Article II, §24; legislature may organize subdivisions but cannot enact a prohibited local law relating to health and sanitation
Whether Asheville’s other constitutional claims (takings, contracts) require resolution	City argued alternative relief (just compensation, contract clause protections) if statute otherwise valid	State argued statute did not effect a compensable taking and City waived alternative claims on appeal	Court did not reach merits of takings/contracts because it invalidated statute as a prohibited local act; also disavowed Court of Appeals’ waiver holding so those claims are preserved if needed later

Key Cases Cited

Glenn v. Bd. of Educ., 210 N.C. 525 (declares presumption of constitutionality and standard for invalidating legislative acts)
High Point Surplus Co. v. Pleasants, 264 N.C. 650 (discusses general vs. local law and classification principles)
McIntyre v. Clarkson, 254 N.C. 510 (sets out the reasonable-classification test for distinguishing general and local laws)
Williams v. Blue Cross Blue Shield of N.C., 357 N.C. 170 (considers practical effect and classification in Article II, §24 analysis)
City of New Bern v. New Bern-Craven Cty. Bd. of Educ., 338 N.C. 430 (invalidated local law that shifted enforcement of building/health-related code; governance shifts can implicate health/sanitation)
Reed v. Howerton Eng’g Co., 188 N.C. 39 (interpreted when creation of sanitary districts does not necessarily evidence intent to regulate health; discussed as precedent but limited by later cases)
Drysdale v. Prudden, 195 N.C. 722 (treated creation of a special sanitary district as a local act relating to health and sanitation)
Lamb v. Bd. of Educ., 235 N.C. 377 (statute imposing duties related to water/sewer for schools held to relate to health and sanitation)
Idol v. Street, 233 N.C. 730 (legislation creating joint city-county board of health was a prohibited local act relating to health)