Eminent Domain & Taking Issues

North Carolina Trial Court Rules Unconstitutional State Law Transferring Ownership of City’s Water System

Last summer, we blogged here about the dispute between the North Carolina General Assembly — okay, the “State” — and the City of Asheville over the State’s efforts to transfer ownership and operation of the City’s water system to the hands of a Metropolitan Water and Sewerage District.  By sale?  No.  By state law.

You can view Session Law 2013-50, which we’ll call the “Water Act”, here.  

Not much has happened from a practical standpoint since we last blogged–the State and the City have agreed to extend the TRO issued by the Wake County Superior Court, which prevented the application of the law, pending some litigation steps.  However, much has happened since we last blogged from a litigation standpoint–pleadings have been amended, discovery has taken place (and been disputed), and dispositive motions have been filed and argued before the Superior Court.

Yesterday, the Wake County Superior Court issued a final ruling in the City’s favor.  Essentially, the Court concluded as a matter of law that (1) the Water Act is a local act running afoul of the North Carolina Constitution, (2) the Water Act runs afoul of the North Carolina Constitution and its guarantees to equal protection of the law, (3) the Water Act is not a valid exercise of the sovereign powers to condemn or take property, (4) in the alternative to conclusion (3), in the event the Water Act is a valid exercise of the sovereign taking power, the City is entitled to just compensation in excess of one hundred million dollars ($100,000,000.00).

You can view the Court’s ruling here.  The Court anticipates the State’s appeal: “This procedure makes good sense because this case, no matter what the outcome, will be appealed to the appellate division”. We’re not so sure, however.  The State had its day in Court.

In the meantime, we’ll keep pace with the flow.

“Wonder Twins power, activate!”  
“Form of, municipal water system!”  
“Form of, legislative fiat transferring ownership of that water system!” 

Mike Thelen practices in Womble, Carlyle’s Real Estate Litigation and Land Use practice group. He regularly represents a wide variety of clients, from local governments to businesses, in land use and land development matters in both state and federal venues throughout North Carolina.

Follow the North Carolina Land Use Litigator on Twitter at @nclanduselaw and “like” us on Facebook here.

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