Updated: Court upholds Asheville water system transfer

The state Court of Appeals on Tuesday upheld a 2013 law mandating transfer of the Asheville water system to the Metropolitan Sewerage District.

Reversing a trial court ruling, a three-member panel of the court unanimously ruled that the law does not violate the state Constitution. Mayor Esther Manheimer said the city will appeal the decision to the state Supreme Court and that the city will keep possession of the water system for at least the immediate future.

The case turns on whether the 2013 law requiring the transfer is a local act prohibited by the state Constitution, is a taking of the city's property contrary to law or exceeds the state's authority to take property without payment.

The city lost on each point.

"I felt we had a very strong case," Manheimer, an attorney, said. "I'm deeply disappointed, and I think this is a big loss for the citizens of Asheville but also for the citizens of North Carolina."

If the decision stands, it would reduce the ability of local governments across the state to manage their affairs, she said.

State Sen. Tom Apodaca and Rep. Chuck McGrady, two Henderson County Republican legislators who pushed for passage of the 2013 law, said they were pleased by the ruling.

"Essentially, the court recognized the legislature's power to organize and regulate its municipalities and other local governments," they said in a joint statement.

"The legislature decided that a regional solution for public water and sewer for large public systems was the best way to provide the highest quality water and sewer services," they said, noting that residents and officials in Asheville, Buncombe County and Henderson County have quarreled through the years over control of the system.

"One of our primary interests in this legislation was to establish a water and sewer district governed by a local entity whose representatives are selected from all areas served by the system, as opposed to being governed by Asheville's city council," the statement says.

The Asheville water system serves customers inside and outside the city limits, and city officials have in the past tried to charge non-city water customers more for service, as many other North Carolina municipalities do. MSD is governed by people appointed by several local governments.

Superior Court Judge Howard Manning ruled in June 2014 that the law is impermissible because it affects health and sanitation and non-navigable streams, two of the subjects on which the state Constitution says the General Assembly cannot make local laws.

The Court of Appeals disagreed Tuesday.

"The provisions in the (2013 law) appear to prioritize concerns regarding the governance over water and sewer systems and the quality of the services rendered" over regulating actual health or sanitation, Judge Chris Dillon wrote for the court.

Likewise, Dillon wrote, the fact that the city water system draws water from non-navigable streams is only incidental to the subject of the law and does not prohibit the General Assembly from transferring the system.

"There is nothing in the Water/Sewer Act which suggests that its purpose is to address some concern regarding a non-navigable stream," he wrote.

Manning also ruled that the transfer law violates a provision of the Constitution that says liberty or property rights cannot be denied "but by the law of the land" because, Manning said, there is no rational basis to treat Asheville differently from other municipalities in the case.

The Court of Appeals said that even if one assumes it was irrational for the legislature to single out Asheville that "does not render the legislation unconstitutional per se" and that the General Assembly provided several rational reasons for the law.

The court ruled Tuesday that Asheville does have standing to sue but that the legislature has broad powers to pass laws affecting cities and counties and does not have to pay Asheville compensation for the loss of the system.

The court's opinion says it does not touch the issue of whether it is good policy for the General Assembly to transfer the system.

"We are not to be concerned with the 'wisdom and expediency' of the legislation, but whether the General Assembly has the 'power' to enact it," the opinion reads.

The city has about a month to ask the state Supreme Court to take the Court of Appeals decision. The Supreme Court often turns down such requests, but Manheimer said the city is researching now whether it has an automatic right of appeal because it is a municipality.

Even if there is no automatic right to appeal, the Supreme Court would typically agree to consider such an important case, she said.

Former Rep. Tim Moffitt, of Buncombe County, a leading proponent of the law when he was in the General Assembly, could not be reached for comment.

Click here for the Court of Appeals opinion in the case.