WidenI77 v. NC Dep't of Transp.

IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA16-818
Filed: 2 May 2017
Mecklenburg County, No. 15 CVS 1076
WIDENI77, Plaintiff
v.
NORTH CAROLINA DEPARTMENT OF TRANSPORTATION, and I-77 MOBILITY
PARTNERS LLC, and STATE OF NORTH CAROLINA, Defendants
Appeal by plaintiff from order entered 24 February 2016 by Judge W. Osmond
Smith III in Mecklenburg County Superior Court. Heard in the Court of Appeals
8 February 2017.
Arnold & Smith, PLLC, by Paul A. Tharp and Matthew R. Arnold, for plaintiff.
Attorney General Joshua H. Stein, by Special Deputy Attorney General Scott T.
Slusser, for the North Carolina Department of Transportation and the State of
North Carolina.
Gibson, Dunn & Crutcher LLP, by Mitchell A. Karlan and Jerilin Buzzetta, and
Parker Poe Adams & Bernstein LLP, by Michael G. Adams and Morgan H.
Rogers, for I-77 Mobility Partners LLC.
CALABRIA, Judge.
WidenI77 (“plaintiff”) appeals from an order granting summary judgment in
favor of the North Carolina Department of Transportation (“NCDOT”), I-77 Mobility
Partners LLC (“Mobility”), and the State of North Carolina (“State”) (collectively
referred to as “defendants”) and dismissing plaintiff’s claims with prejudice. For the
reasons stated herein, we affirm the order of the trial court.
WIDENI77 V. NC DEP’T OF TRANSP.
Opinion of the Court
I. Background
On 26 June 2014, NCDOT and Mobility, a Delaware limited liability company,
entered into a comprehensive agreement (the “Comprehensive Agreement”) for the I-
77 HOT Lanes Project (the “Project”). The I-77 corridor is “one of the most congested
corridors in the [S]tate” and the Project offered a “comprehensive congestion
management solution for approximately [twenty-six] miles of the I-77 corridor
through the use of HOV3+ policy and managed lanes and supports future expansion
of transit.” The Comprehensive Agreement was a product of the State’s “desires to
facilitate private sector investment and participation in the development of the
State’s transportation system via public-private partnership agreements[]” pursuant
to N.C. Gen. Stat. § 136-18(39) et seq. (“the P3 Statute”).
The P3 Statute provides, in pertinent part, that the NCDOT is vested with the
power to
enter into partnership agreements with private entities,
and authorized political subdivisions to finance, by tolls,
contracts, and other financing methods authorized by law,
the cost of acquiring, constructing, equipping, maintaining,
and operating transportation infrastructure in this State,
and to plan, design, develop, acquire, construct, equip,
maintain, and operate transportation infrastructure in this
State.
N.C. Gen. Stat. § 136-18(39) (2015).
-2-
WIDENI77 V. NC DEP’T OF TRANSP.
Opinion of the Court
Through the Comprehensive Agreement, NCDOT granted Mobility “the
exclusive right, and [Mobility] accepts the obligation, to finance, develop, design,
construct, operate and maintain the Project[.]” This included the exclusive right to
impose tolls and incidental charges upon the users of the High Occupancy Toll
(“HOT”) lanes; to establish, modify, and adjust the rate of such tolls and incidental
charges in accordance with law; and to enforce and collect the tolls and incidental
charges from the users of the HOT lanes in accordance with the terms and conditions
of the Comprehensive Agreement.
On 20 January 2015, plaintiff filed a “Complaint for Declaratory Judgment and
Preliminary and Permanent Injunctive Relief.” Plaintiff sought a declaration as to
the constitutionality of the P3 Statute and the Comprehensive Agreement between
the NCDOT and Mobility. Plaintiff’s arguments included the following, inter alia:
the General Assembly unconstitutionally delegated authority to the NCDOT to set
toll rates without adequate standards and safeguards for which to exercise that
power, to contract with Mobility and allow an unlimited rate of return on investment,
and to contract with Mobility and allow the NCDOT and the State to compensate
Mobility for its tax liabilities; violation of taxing power; violation of the public purpose
doctrine; violation of due process; contrary to public policy; lack of authority; illegal
contract; and motion for preliminary and permanent injunction.
-3-
WIDENI77 V. NC DEP’T OF TRANSP.
Opinion of the Court
On 9 March 2015, the trial court entered an order finding that plaintiff “ha[d]
not shown a sufficient likelihood of success on the merits to justify granting a
preliminary injunction” and denying plaintiff’s motion for a preliminary injunction.
On 15 June 2015, Mobility filed a motion for summary judgment. On
19 June 2015, the State and the NCDOT filed a motion for summary judgment. On
13 November 2015, plaintiff filed a motion for summary judgment.
On 24 February 2016, the trial court entered an order concluding as follows:
4. As to the Motions for Summary Judgment filed by each
party, it should be noted that it is not within the
province, function or duty of the Court to determine the
desirability or wisdom of the legislation or the contract
at issue. These policy decisions are within the purview
of the legislature and the North Carolina Department
of Transportation. The subject legislation is not
unconstitutional as applied, nor is the contract
unlawful.
5. As to the Motions for Summary Judgment filed by each
party, there is no genuine issue as to any material fact,
that Defendants are entitled to a judgment as a matter
of law, and that Plaintiff is not entitled to judgment as
a matter of law.
Accordingly, the trial court granted defendants’ motions for summary judgment and
denied plaintiff’s motion for summary judgment. Plaintiff’s claims were dismissed
with prejudice.
On 22 March 2016, plaintiff filed notice of appeal.
II. Standard of Review
-4-
WIDENI77 V. NC DEP’T OF TRANSP.
Opinion of the Court
“Our standard of review of an appeal from summary judgment is de novo[.]” In
re Will of Jones, 362 N.C. 569, 573, 669 S.E.2d 572, 576 (2008) (citation omitted). “In
ruling on a motion for summary judgment the evidence is viewed in the light most
favorable to the non-moving party.” Hinson v. Hinson, 80 N.C. App. 561, 563, 343
S.E.2d 266, 268 (1986) (citation omitted). Rule 56 of the North Carolina Rules of Civil
Procedure provides that summary judgment shall be granted “if the pleadings,
depositions, answers to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any material fact and that
any party is entitled to a judgment as a matter of law.” N.C. Gen. Stat. § 1A-1, Rule
56(c) (2015).
The showing required for summary judgment may be
accomplished by proving an essential element of the
opposing party’s claim does not exist, cannot be proven at
trial, or would be barred by an affirmative defense . . . or
by showing through discovery that the opposing party
cannot produce evidence to support an essential element of
her claim[.]
Dobson v. Harris, 352 N.C. 77, 83, 530 S.E.2d 829, 835 (2000).
III. Discussion
On appeal, plaintiff argues that the trial court erred by: (A) concluding that
the North Carolina General Assembly’s delegation of power to the NCDOT and
NCDOT’s arrangement with Mobility did not constitute an unconstitutional
delegation of power; (B) concluding that the expenditure by the NCDOT and the State
-5-
WIDENI77 V. NC DEP’T OF TRANSP.
Opinion of the Court
served a public purpose and was constitutional under Article V, Section 2(1) of the
North Carolina Constitution; (C) concluding that the Comprehensive Agreement did
not violate the Turnpike Statute; and (D) concluding that the North Carolina General
Assembly did not unconstitutionally delegate its authority to tax to the NCDOT in
violation of Article I, Section 8 and Article II, Section 23 of the North Carolina
Constitution and the Due Process Clause of the United States Constitution. We
address each argument in turn.
A. Delegation of Power
Plaintiff argues that the trial court erred by concluding that the General
Assembly’s delegation of power to the NCDOT and NCDOT’s arrangement with
Mobility did not constitute an unconstitutional delegation of power. Specifically,
plaintiff contends that the General Assembly’s delegation of power pursuant to the
P3 Statute “features an absolute, unfettered, unlimited, unilateral and therefore
unconstitutional delegation of authority to an agency and private company.” Plaintiff
maintains that the P3 Statute grants unto Mobility the absolute authority to set toll
rates without any meaningful input or control by the NCDOT or General Assembly.
We are not convinced by plaintiff’s arguments.
“It is well settled in this State that the courts have the power, and it is their
duty in proper cases, to declare an act of the General Assembly unconstitutional - but
it must be plainly and clearly the case. If there is any reasonable doubt, it will be
-6-
WIDENI77 V. NC DEP’T OF TRANSP.
Opinion of the Court
resolved in favor of the lawful exercise of their powers by the representatives of the
people.” McIntyre v. Clarkson, 254 N.C. 510, 515, 119 S.E.2d 888, 892 (1961) (citation
omitted). “In passing upon the constitutionality of a legislative act it is not for this
Court to judge its wisdom and expediency. These matters are the province of the
General Assembly. Rather, it is the Court’s duty to determine whether the legislative
act in question exceeds constitutional limitation or prohibition.” Adams v. N.C. Dep’t
of Natural & Econ. Res., 295 N.C. 683, 690, 249 S.E.2d 402, 406 (1978).
In our determination of whether the P3 Statute violates the rule that the
General Assembly cannot delegate its power to legislate, we are directed by Adams.
Although this Court noted in Adams that the legislature
may not abdicate its power to make laws [or] delegate its
supreme legislative power to any . . . coordinate branch or
to any agency which it may create, we also concluded that
strict adherence to ideal notions of the non-delegation
doctrine would unduly hamper the General Assembly in
the exercise of its constitutionally vested powers[.]
Conner v. N.C. Council of State, 365 N.C. 242, 250-51, 716 S.E.2d 836, 842 (2011)
(citations and internal quotation marks omitted) (emphasis in original).
[T]he constitutional inhibition against delegating
legislative authority does not preclude the legislature from
transferring adjudicative and rule-making powers to
administrative bodies provided such transfers are
accompanied by adequate guiding standards to govern the
exercise of the delegated powers.
....
In the search for adequate guiding standards the primary
-7-
WIDENI77 V. NC DEP’T OF TRANSP.
Opinion of the Court
sources of legislative guidance are declarations by the
General Assembly of the legislative goals and policies
which an agency is to apply when exercising its delegated
powers. We have noted that such declarations need be only
as specific as the circumstances permit. When there is an
obvious need for expertise in the achievement of legislative
goals the General Assembly is not required to lay down a
detailed agenda covering every conceivable problem which
might arise in the implementation of the legislation. It is
enough if general policies and standards have been
articulated which are sufficient to provide direction to an
administrative body possessing the expertise to adapt the
legislative goals to varying circumstances.
Additionally, in determining whether a particular
delegation of authority is supported by adequate guiding
standards it is permissible to consider whether the
authority vested in the agency is subject to procedural
safeguards. A key purpose of the adequate guiding
standards test is to insure that the decision-making by the
agency is not arbitrary and unreasoned.
Adams, 295 N.C. at 697-98, 249 S.E.2d at 410-11 (internal citations and quotation
marks omitted).
In the case sub judice, the P3 Statute provides as follows, in pertinent part:
The said Department of Transportation is vested with the
following powers:
....
(39) To enter into partnership agreements with private
entities . . . to finance, by tolls, contracts, and other
financing methods authorized by law, the cost of acquiring,
constructing, equipping, maintaining, and operating
transportation infrastructure in this State, and to plan,
design, develop, acquire, construct, equip, maintain, and
operate transportation infrastructure in this State. An
-8-
WIDENI77 V. NC DEP’T OF TRANSP.
Opinion of the Court
agreement entered into under this subdivision requires the
concurrence of the Board of Transportation. The
Department shall report to the Chairs of the Joint
Legislative Transportation Oversight Committee, the
Chairs of the House of Representatives Appropriations
Subcommittee on Transportation, and the Chairs of the
Senate Appropriations Committee on the Department of
Transportation, at the same time it notifies the Board of
Transportation of any proposed agreement under this
subdivision. . . .
....
(39a) a. The Department of Transportation . . . may
enter into up to three agreements with a private entity as
provided under subdivision (39) of this section for which
the provisions of this section apply.
b. A private entity or its contractors must
provide performance and payment security in the form and
in the amount determined by the Department of
Transportation. . . .
....
d. Article 6H of Chapter 136 of the General
Statutes shall apply to the Department of Transportation
and to projects undertaken by the Department of
Transportation under subdivision (39) of this section. The
Department may assign its authority under [Article 6H of
Chapter 136 of the General Statutes] to fix, revise, charge,
retain, enforce, and collect tolls and fees to the private
entity.
e. Any contract under this subdivision or under
Article 6H of this Chapter for the development,
construction, maintenance, or operation of a project shall
provide for revenue sharing, if applicable, between the
private party and the Department, and revenues derived
from such project may be used as set forth in G.S. 136-
-9-
WIDENI77 V. NC DEP’T OF TRANSP.
Opinion of the Court
89.188(a), notwithstanding the provisions of G.S. 136-
89.188(d). . . .
....
f. Agreements entered into under this subdivision
shall comply with the following additional provisions:
1. The Department shall solicit proposals for
agreements.
2. Agreement shall be limited to no more than 50
years from the date of the beginning of
operations on the toll facility.
3. Notwithstanding the provisions of G.S. 136-
89.183(a)(5), all initial tolls or fees to be charged
by a private entity shall be reviewed by the
Turnpike Authority Board. Prior to setting toll
rates, either a set rate or a minimum and
maximum rate set by the private entity, the
private entity shall hold a public hearing on the
toll rates, including an explanation of the toll
setting methodology, in accordance with
guidelines for the hearing developed by the
Department. After tolls go into effect, the
private entity shall report to the Turnpike
Authority Board 30 days prior to any increase in
toll rates or change in the toll setting
methodology by the private entity from the
previous toll rates or toll setting methodology
last reported to the Turnpike Authority Board.
....
6. The Turnpike Authority annual report under
G.S. 136-89.193 shall include reporting on all
revenue collections associated with projects
subject to this subdivision under the Turnpike
Authority.
7. The Department shall develop standards for
entering into comprehensive agreements with
- 10 -
WIDENI77 V. NC DEP’T OF TRANSP.
Opinion of the Court
private entities under the authority of this
subdivision and report those standards to the
Joint Legislative Transportation Oversight
Committee on or before October 1, 2013.
N.C. Gen. Stat. §§ 136-18(39), (39a)(a)-(b), (39a)(d)-(e), and (39a)(f) (2015).
Guided by the principles stated in Adams, we hold that the legislative goals
and policies set forth in the P3 Statute, combined with its procedural safeguards, are
sufficient to withstand a constitutional challenge.
We are mindful that “there [exists] a strong presumption that enactments of
the General Assembly are constitutional.” Town of Spruce Pine v. Avery County, 346
N.C. 787, 792, 488 S.E.2d 144, 147 (1997).
The General Assembly has provided that it is the policy that:
[t]he [NCDOT] shall develop and maintain a statewide
system of roads, highways, and other transportation
systems commensurate with the needs of the State as a
whole and it shall not sacrifice the general statewide
interest to the purely local desires of any particular area.
N.C. Gen. Stat. § 136-44.1 (2015). Article 6H of Chapter 136 of the General Statutes,
applied to the NCDOT and to projects undertaken by the NCDOT under the P3
Statute pursuant to N.C. Gen. Stat. § 136-18(39a)(d), states that:
The General Assembly finds that the existing State road
system is becoming increasingly congested and
overburdened with traffic in many areas of the State; that
the sharp surge of vehicle miles traveled is overwhelming
the State’s ability to build and pay for adequate road
improvements; and that an adequate answer to this
challenge will require the State to be innovative and utilize
- 11 -
WIDENI77 V. NC DEP’T OF TRANSP.
Opinion of the Court
several new approaches to transportation improvements in
North Carolina.
Toll funding of highway and bridge construction is feasible
in North Carolina and can contribute to addressing the
critical transportation needs of the State. A toll program
can speed the implementation of needed transportation
improvements by funding some projects with tolls.
N.C. Gen. Stat. § 136-89.180 (2015).
It is clear that achievement of this stated legislative policy and the fixing,
revising, charging, retaining, enforcing, and collecting of tolls require expertise. It
would be impractical to require the General Assembly to provide a “detailed agenda
covering every conceivable problem which might arise in the implementation of the
legislation.” Adams, 295 N.C. at 698, 249 S.E.2d at 411; see Bring v. North Carolina
State Bar, 348 N.C. 655, 659, 501 S.E.2d 907, 910 (1998) (stating that “[i]t is not
practical for the General Assembly to micromanage the making of rules for the Board
[of Law Examiners] such as what law schools are to be approved. The directions given
by the legislature are as specific as the circumstances require”). Our Supreme Court
has previously stated that “[a]s a practical matter tolls require little legislative
regulation. If they are unreasonably high, motorists will boycott the turnpike; if they
are unreasonably low, the bondholders will register their objections in some
appropriate manner.” N.C. Turnpike Authority v. Pine Island, Inc., 265 N.C. 109,
115, 143 S.E.2d 319, 324 (1965).
- 12 -
WIDENI77 V. NC DEP’T OF TRANSP.
Opinion of the Court
Here, the General Assembly has enacted specific guiding standards within the
P3 Statute to govern the NCDOT’s exercise of the delegated powers. For example,
the following standards, inter alia, exist to provide direction to the NCDOT for the
Project: the NCDOT may assign its authority to fix, revise, charge, retain, enforce,
and collect tolls and fees to the private entity under N.C. Gen. Stat. § 136-18(39a)(d);
the private entity or its contractors must provide performance and payment security
in the form and in the amount determined by the NCDOT under N.C. Gen. Stat. §
136-18(39a)(b); any contract under the P3 Statute shall provide for revenue sharing,
if applicable, between the private party and the NCDOT pursuant to N.C. Gen. Stat.
§ 136-18(39a)(e); the NCDOT must solicit proposals for agreements under N.C. Gen.
Stat. § 136-18(39a)(f)(1); the agreement shall be limited to no more than fifty years
under N.C. Gen. Stat. § 136-18(39a)(f)(2); and the NCDOT shall develop standards
for entering into comprehensive agreements with private entities under the P3
Statute and report those standards to the Joint Legislative Transportation Oversight
Committee pursuant to N.C. Gen. Stat. § 136-18(39a)(f)(7). Considering the
preceding guidelines, we hold that the directions given by the General Assembly are
as specific as the circumstances require.
Furthermore, we hold that there are adequate procedural safeguards in the P3
Statute to ensure adherence to the legislative standards. N.C. Gen. Stat. § 136-
18(39a)(f)(3) provides that all initial tolls or fees to be charged by a private entity
- 13 -
WIDENI77 V. NC DEP’T OF TRANSP.
Opinion of the Court
shall be reviewed by the Turnpike Authority Board. Prior to setting toll rates, the
private entity must hold a public hearing on the toll rates, including an explanation
of the toll setting methodology, in accordance with hearing guidelines developed by
the NCDOT. N.C. Gen. Stat. § 136-18(39a)(f)(3). After the tolls go into effect, Mobility
must report to the Turnpike Authority Board thirty days prior to any increase in toll
rates or change in the toll setting methodology from the previous toll rates or toll
setting methodology last reported to the Turnpike Authority Board. Id. N.C. Gen.
Stat. § 136-18(39a)(f)(5) also states that sixty days prior to the signing of a concession
agreement subject to the P3 Statute, the NCDOT must report to the Joint Legislative
Oversight Committee, providing such things as a description of the project, number
of years the tolls will be in place, and demonstrated ability of the project team to
deliver the project. N.C. Gen. Stat. § 136-18(39a)(f)(5). These procedural safeguards,
inter alia, ensure that the NCDOT carries out the Project consistent with the policies
of the General Assembly.
Based on the foregoing, we conclude that there are adequate guiding standards
and procedural safeguards in place to regulate the exercise of authority for this
Project. Accordingly, we hold that the trial court did not err by concluding that the
General Assembly’s delegation of power to the NCDOT constituted a constitutional
delegation of power.
B. Public Purpose
- 14 -
WIDENI77 V. NC DEP’T OF TRANSP.
Opinion of the Court
Plaintiff’s second argument on appeal is that the trial court erred by concluding
that the Project’s expenditures constituted a public purpose pursuant to Article V,
Section 2(1) of the North Carolina Constitution. Plaintiff relies on the holding in
Foster v. North Carolina Medical Care Commission, 283 N.C. 110, 195 S.E.2d 517
(1973), for his contentions.
Article V, Section 2(1) of the North Carolina Constitution provides that “[t]he
power of taxation shall be exercised in a just and equitable manner, for public
purposes only, and shall never be surrendered, suspended, or contracted away.
Although the constitutional language speaks of the ‘power of taxation,’ the limitation
has not been confined to government use of tax revenues.” Madison Cablevision, Inc.
v. City of Morganton, 325 N.C. 634, 643, 386 S.E.2d 200, 205 (1989).
“The initial responsibility for determining what is and what is not a public
purpose rests with the legislature; its determinations are entitled to great weight.”
Id. at 644-45, 386 S.E.2d at 206. “[T]he presumption favors constitutionality.
Reasonable doubt must be resolved in favor of the validity of the act.” Maready v.
City of Winston-Salem, 342 N.C. 708, 714, 467 S.E.2d 615, 619 (1996) (citations
omitted).
The General Assembly’s adoption of the P3 Statute leaves no doubt that our
legislature has determined that the NCDOT’s partnership agreements with private
entities to finance the cost of acquiring, constructing, equipping, maintaining, and
- 15 -
WIDENI77 V. NC DEP’T OF TRANSP.
Opinion of the Court
operating transportation infrastructure in this State is a public purpose within the
meaning of Article V, Section 2(1) of the North Carolina Constitution. However, “[i]t
is the duty and prerogative of this Court to make the ultimate determination of
whether the activity or enterprise is for a purpose forbidden by the Constitution of
the state.” Madison Cablevision, 325 N.C. at 645, 386 S.E.2d at 206.
Our Supreme Court has stated that:
[a] slide-rule definition to determine public purpose for all
time cannot be formulated; the concept expands with the
population, economy, scientific knowledge, and changing
conditions. As people are brought closer together in
congested areas, the public welfare requires governmental
operation of facilities which were once considered
exclusively private enterprises and necessitates the
expenditure of tax funds for purposes which, in an earlier
day, were not classified as public. Often public and private
interests are so co-mingled that it is difficult to determine
which predominates. It is clear, however, that for a use to
be public its benefits must be in common and not for
particular persons, interests, or estates; the ultimate net
gain or advantage must be the public’s as
contradistinguished from that of an individual or private
entity.
Martin v. North Carolina Housing Corp., 277 N.C. 29, 43, 175 S.E.2d 665, 672-73
(1970) (internal citations and quotation marks omitted). Our Courts
ha[ve] not specifically defined public purpose but rather
ha[ve] expressly declined to confine public purpose by
judicial definition[, leaving] each case to be determined by
its own peculiar circumstances as from time to time it
arises. Two guiding principles have been established for
determining [whether a government expenditure] is for a
public purpose: (1) it involves a reasonable connection with
- 16 -
WIDENI77 V. NC DEP’T OF TRANSP.
Opinion of the Court
the convenience and necessity of the particular
municipality, and (2) the activity benefits the public
generally, as opposed to special interests or persons[.]
Madison Cablevision, 325 N.C. at 646, 386 S.E.2d at 207 (internal citations and
quotation marks omitted). We apply these foregoing principles to the present case.
As to the first prong of this test, “whether an activity is within the appropriate
scope of governmental involvement and is reasonably related to communal needs may
be evaluated by determining how similar the activity is to others which this Court
has held to be within the permissible realm of governmental action.” Maready, 342
N.C. at 722, 467 S.E.2d at 624.
Numerous cases demonstrate the spectrum of facilities and activities which
have been deemed to constitute a public purpose. Aid to railroad: Wood v.
Commissioners of Oxford, 97 N.C. 227, 2 S.E. 653 (1887); Airport facilities:
Greensboro-High Point Airport Auth. v. Johnson, 226 N.C. 1, 36 S.E.2d 803 (1946);
Port Terminal Facilities: Webb v. Port Comm’n of Morehead City, 205 N.C. 663, 172
S.E. 377 (1934); Railway Terminal Facilities: Hudson v. City of Greensboro, 185 N.C.
502, 117 S.E. 629 (1923); Air Cargo Facilities: Piedmont Triad Airport Auth. v.
Urbine, 354 N.C. 336, 554 S.E.2d 331 (2001). These cases establish that providing
public transportation infrastructure has long been held to be within the permissible
scope of governmental action.
As to the second prong of the Madison Cablevision test,
- 17 -
WIDENI77 V. NC DEP’T OF TRANSP.
Opinion of the Court
activities are considered constitutional so long as they
primarily benefit the public and not a private party: It is
not necessary, in order that a use may be regarded as
public, that it should be for the use and benefit of every
citizen in the community. Moreover, an expenditure does
not lose its public purpose merely because it involves a
private actor. Generally, if an act will promote the welfare
of a state or a local government and its citizens, it is for a
public purpose.
Peacock v. Shinn, 139 N.C. App. 487, 493-94, 533 S.E.2d 842, 847 (2000) (internal
citations and quotation marks omitted) (emphasis in original).
Keeping these principals in mind, the expenditure in the present case clearly
serves a public purpose. The General Assembly recognized that the State’s road
system was becoming increasingly congested and overburdened with traffic. The
legislature sought to alleviate the transportation needs of the State by authorizing
the NCDOT to enter into agreements with private entities to finance transportation
infrastructure in this State pursuant to the P3 Statute. The expenditure the P3
Statute authorizes should “provide immediate travel time reliability along I-77 from
Uptown Charlotte to the Lake Norman area[,]” a stated purpose of the Project.
Although Mobility will finance, construct, operate, and maintain the Project, gaining
incidental private benefit, the government expenditure primarily benefits the public.
Mobility’s involvement as a private actor and the possibility that not every citizen in
the community may use the Project’s toll lanes do not negate the public purpose of
the expenditure.
- 18 -
WIDENI77 V. NC DEP’T OF TRANSP.
Opinion of the Court
Plaintiff cites to the holding in Foster and argues that the facts before us are
“more constitutionally troubling[.]” In Foster, the North Carolina Medical Care
Commission Hospital Facilities Act, enacted in 1971 and found in N.C. Gen. Stat. §§
131-138 to 131-162, was challenged. Foster, 283 N.C. at 113-14, 195 S.E.2d at 520.
The act in question vested in the North Carolina Medical Care Commission the
authority to effectuate a plan to issue revenue bonds to finance construction of public
and private hospital facilities. Id. at 115-16, 195 S.E.2d at 521-22. The Foster Court
noted that while it was “well settled that the expenditure of tax funds for the
construction of a hospital, to be owned and operated by the State, a county, a city,
town or other political subdivision of the State, is an expenditure for a public
purpose[,]” it also recognized that “[i]t does not necessarily follow . . . that the
construction and operation of the privately owned hospital is for a public purpose,
within the meaning of the constitutional limitation upon the use of tax funds.” Id. at
125, 195 S.E.2d at 527. The Court reasoned that “[w]hile the Act now before us
provides for ownership of the acquired property by a public agency until the bonds
issued to finance the contemplated construction are retired, the Act has no purpose
separate and apart from the operation by and ultimate conveyance of the hospital
facility to the lessee thereof.” Id. at 127, 195 S.E.2d at 528. Accordingly, the Court
held that “the expenditure of public funds raised by taxation to finance, or facilitate
the financing of, the construction of a hospital facility to be privately operated,
- 19 -
WIDENI77 V. NC DEP’T OF TRANSP.
Opinion of the Court
managed and controlled is not an expenditure for a public purpose” and was
prohibited by Article V, Section 2(1) of the North Carolina Constitution. Id. at 127,
195 S.E.2d at 528-29.
We find Foster distinguishable. In Foster, the North Carolina Supreme Court
held that there was no purpose separate from the operation by and ultimate
conveyance of the hospital facility to the lessee. Once the bonds were paid, the North
Carolina Medical Care Commission was to convey title to such facility to the lessee,
a private entity. Here, the Project is to provide travel time reliability and Mobility’s
private benefit is incidental to the public purpose. Under Article 2 of the
Comprehensive Agreement, all of the infrastructure constructed by Mobility will be
owned by the State. Mobility has “no fee title, leasehold estate, possessory interest,
permit, easement or other real property interest of any kind in or to the Project or the
Project Right of Way” and Mobility’s property interests are “limited to contract rights
constituting intangible personal property (and not real estate interests).”
Furthermore, the Comprehensive Agreement limits Mobility’s role in the Project to
fifty years.
For the reasons stated above, we hold that the trial court did not err by
concluding that the Project’s expenditures constituted a public purpose pursuant to
Article V, Section 2(1) of the North Carolina Constitution.
C. Turnpike Statute
- 20 -
WIDENI77 V. NC DEP’T OF TRANSP.
Opinion of the Court
Plaintiff’s third argument on appeal is that the trial court erred by failing to
conclude that the Comprehensive Agreement violated the Turnpike Statute.
First, plaintiff contends that Mobility’s design plan for the Project violates N.C.
Gen. Stat. § 136-89.199 by reducing the number of existing non-toll general purpose
lanes from four to three.
N.C. Gen. Stat. § 136-89.199 provides as follows:
Notwithstanding any other provision of this Article, the
Authority may designate one or more lanes of any highway,
or portion thereof, within the State, including lanes that
may previously have been designated as HOV lanes under
G.S. 20-146.2, as high-occupancy toll (HOT) or other type
of managed lanes; provided, however, that such
designation shall not reduce the number of existing non-toll
general purpose lanes. In making such designations, the
Authority shall specify the high-occupancy requirement or
other conditions for use of such lanes, which may include
restricting vehicle types, access controls, or the payment of
tolls for vehicles that do not meet the high-occupancy
requirements or conditions for use.
N.C. Gen. Stat. § 136-89.199 (2015) (emphasis added).
A review of the Comprehensive Agreement establishes that plaintiff’s
argument fails. The Comprehensive Agreement explicitly states that the Project will
not reduce the number of existing non-toll general purpose lanes.
Developer shall design and construct the Project to provide
at a minimum the same number of Existing General
Purpose Lanes within the Existing ROW as of the Proposal
Due Date. Developer shall not eliminate, reduce the width
of or otherwise permanently restrict access to existing
ramps and loops.
- 21 -
WIDENI77 V. NC DEP’T OF TRANSP.
Opinion of the Court
Next, plaintiff argues that the Comprehensive Agreement violates N.C. Gen.
Stat. § 136-89.183(5) and is therefore void for illegality. Plaintiff contends that while
N.C. Gen. Stat. § 136-89.183(5) requires review by the Board of Transportation, Joint
Legislative Transportation Oversight Committee, and Joint Legislative Commission
on Governmental Operations thirty days prior to the effective date of any toll or fee,
the Comprehensive Agreement fails to require the same. Plaintiff’s argument is
misplaced.
N.C. Gen. Stat. § 136-89.183(a)(5) gives the Turnpike Authority power “[t]o fix,
revise, charge, retain, enforce, and collect tolls and fees for the use of Turnpike
Projects” and requires that “[t]hirty days prior to the effective date of any toll or fee
. . . the Authority shall submit a description of the proposed toll or fee to the Board of
Transportation, the Joint Legislative Transportation Oversight Committee and the
Joint Legislative Commission on Governmental Operations for review.” However,
N.C. Gen. Stat. § 136-89.183(a)(5) is not applicable to this case. The P3 Statute
unambiguously states that:
Notwithstanding the provisions of G.S. 136-89.183(a)(5), all
initial tolls or fees to be charged by a private entity shall
be reviewed by the Turnpike Authority Board. Prior to
setting toll rates, either a set rate or a minimum and
maximum rate set by the private entity, the private entity
shall hold a public hearing on the toll rates, including an
explanation of the toll setting methodology, in accordance
with guidelines for the hearing developed by the
Department.
- 22 -
WIDENI77 V. NC DEP’T OF TRANSP.
Opinion of the Court
N.C. Gen. Stat. § 136-18(39a)(f)(3) (emphasis added). Thus, while N.C. Gen. Stat. §
136-89.183(a)(5) may apply to some tolls of the North Carolina Turnpike Authority,
it does not apply to the Project at issue in this case.
Accordingly, we reject plaintiff’s argument that the trial court erred by failing
to conclude that the Comprehensive Agreement violated the Turnpike Statute.
D. Authority to Tax
In its last argument on appeal, plaintiff asserts that the trial court erred by
failing to conclude that the General Assembly unconstitutionally delegated its
authority to tax to the NCDOT, in violation of Article I, Section 8 and Article II,
Section 23 of the North Carolina Constitution and the Due Process Clause of the
United States Constitution. Specifically, plaintiff argues that while the North
Carolina Constitution “forbids the delegation by the General Assembly to a non-
elected body the power to impose or forgive taxes[,]” the legislature has granted unto
Mobility the authority to impose and collect taxes. Furthermore, plaintiff contends
that it was “denied due process in the manner in which these tax liabilities were
imposed upon it[.]”
Plaintiff’s entire argument is premised on an issue that has already been
decided by our Supreme Court. In North Carolina Turnpike Authority, the Supreme
Court stated that:
Tolls are not taxes. A person uses a toll road at his option;
- 23 -
WIDENI77 V. NC DEP’T OF TRANSP.
Opinion of the Court
if he does not use it, he pays no toll. Taxes are levied for
the support of government, and their amount is regulated
by its necessities. Tolls are the compensation for the use of
another’s property or improvements made, and their
amount is determined by the cost of the property or
improvements.
North Carolina Turnpike Authority, 265 N.C. at 116-17, 143 S.E.2d at 325 (citations
and quotation marks omitted). Because tolls do not constitute a tax within the
meaning of the Constitution, the limitations of Article I, Section 8 and Article II,
Section 23 of the North Carolina Constitution do not apply and plaintiff’s due process
argument is similarly without merit.
IV. Conclusion
For the reasons stated above, we affirm the order of the trial court, granting
summary judgment in favor of defendants.
AFFIRMED.
Judges McCULLOUGH and INMAN concur.
Judge Douglas McCullough concurred in this opinion prior to 24 April 2017.
- 24 -