The N.C. General Assembly seems to be increasingly tempted to intervene in the operation of local — and particularly municipal — water and sewer systems. Is this a good idea?
Last year, Senate Bill 382 tried to require the City of Durham to extend water service to a development project outside the city limits. Senate Bill 382 started legislative life as a tax bill, but in the last few days of the 2012 legislative session it became the vehicle for a House proposal to legislatively approve a water line extension for a specific development project. (Durham had refused the developer’s request for water service in part because of the high cost of extending a water line to the project.) Senate Bill 382 ultimately failed, but local conflicts over water service continue to tempt legislators to intervene.
This year, three western legislators have introduced a bill that would force the City of Asheville to turn its water system over to the Metropolitan Sewerage District of Buncombe County (MSD). You will not find any mention of the City of Asheville or the Metropolitan Sewerage District by name –the bill avoids naming the parties by using a generic description that happens to only apply to them — but House Bill 488 is the latest in a series of skirmishes over control of the Asheville water system. The history behind the Asheville water system conflict is long and complicated, but — as in Durham — some amount of the friction has to do with the relationship between water service and development.
One long-standing issue has to do with water rates for Asheville water system customers who live outside the city limits. Asheville is the only city in the state prohibited by law from charging water customers outside the city a higher rate — a common practice of other municipalities. (Higher rates may be used to recover higher costs of providing the service or to offset some of the additional taxes paid by in-town customers.) Just as friction over a development decision led to the Durham controversy, the history of the Asheville water system includes a thread of concern about the city’s ability to use water system decisions to influence development outside the city. Until last year, extension of water and sewer service gave cities a strong basis for forced annexation and fear of annexation seems to have created some of the tension between Asheville and surrounding areas. Although the annexation process has changed, cities like Durham and Asheville can still find themselves in conflict with developers and county officials over development conditions tied to extension of city services or (as in the Durham case) denial of service to a new development outside the city limits. In short, decisions about extension of water and sewer service touch two hot buttons — money and regulation of new development.
These conflicts have a very direct connection to environmental protection. Water and sewer systems are creatures of environmental and public health regulation; environmental protection programs fund water and sewer infrastructure in many North Carolina communities. Like many other cities, Asheville and Durham have the challenge of expanding water service to accommodate new development while also maintaining or replacing the aging infrastructure that serves existing residents. The land use regulations sometimes attached to extension of water and sewer service can provide a number of environmental protection benefits, but maintaining the fiscal health of a water system has its own environmental value. Decisions about when and how to extend water or sewer service can have significant financial implications; a financially strained system will have much more difficulty providing the maintenance needed to meet public health standards and avoid environmental damage.
To run a water or sewer system responsibly, local officials sometimes have to make controversial decisions about service, rates and financing. It becomes even harder to make a tough decision knowing the General Assembly may step in and reverse it. Forcing the transfer of infrastructure from a city without providing for compensation — as in the case of Asheville — particularly sends the wrong message to cities that need to invest in water or wastewater infrastructure. Legislation affecting the capital assets of a water or sewer system also carries the additional risk of undermining planning and financing for system improvements.
These bills raise another question — is it in the General Assembly’s power to force an extension of water and sewer service or to divest a city of its water system.? The answer isn’t clear to me. Local governments are subdivisions of the state — the General Assembly can change municipal boundaries and expand or contract the authority of cities. It is less clear that the General Assembly can directly intervene in decision-making about a water and sewer system without circumscribing local government authority. In 2012, Senate Bill 382 attempted to compel an expansion of the Durham water system without actually changing the law governing the City of Durham’s authority to operate a water system. House Bill 488 directs the City of Asheville to transfer ownership of its water infrastructure also without changing state laws authorizing cities to own and operate water and sewer utilities. (The sections of House Bill 488 that require the transfer of property from Asheville to the MSD do not amend existing statutes governing local government water and sewer systems. The sections of the bill that enact new statutes to cover the operation of metropolitan water and sewer districts allow, but do not require, transfers of property between cities or counties and a district.)
Article II, Section 24 of the N.C. Constitution prohibits the General Assembly from adopting a piece of legislation relating to “health, sanitation or the abatement of nuisances” that applies to only one local jurisdiction. Since water systems fall into all three categories, the Constitution seems on its face to prohibit the General Assembly from reaching down to make decisions related to an individual water system. Legislators frequently try to draft around the Constitutional restrictions on local acts by using language that appears to be generic, but in fact only describes a single city or county. At some point, the fiction simply becomes too strained.
For constitutional law junkies: Since state law treats cities as “persons” for many purposes, can city property be taken (even by the State) without compensation? Would the U.S. Supreme Court consider a city to be a “person” under the Fifth Amendment’s just compensation clause? A research project for another day.