Public Transportation Authorities

Subject:

Public Transportation Authorities

Requested By:

David D. King, Director Public Transportation North Carolina Department of Transportation

Question:

Does a County Which Establishes a Public Transportation Authority Pursuant to Article 25 of Chapter 160-A of the General Statutes Retain Any Liability With Respect to Contracts and Torts of the Authority?

Conclusion:

Yes.

The North Carolina Public Transportation Authorities Act (Article 25 of Chapter 160A of the General Statutes) authorizes a municipality (defined to include any county, city or town) to create a transportation authority for the purpose of providing an adequate and convenient public transportation system for the municipality. G.S. 160A-579 sets forth the general powers of such a transportation authority, and those powers include the right to sue and be sued and the right to purchase, hold, and sell property, both real and personal.

The Act provides that any public transportation authority created thereunder is fiscally accountable to the municipality that creates it. Funds for the operation of the transportation authority are provided by the municipality, and in addition, in order for a transportation authority to enter into and perform contracts with other units of local government, the authority must have specific authorization from the governing body of the municipality.

The governing body of the municipality has the authority to terminate the public transportation authority which it has created at any time. G.S. 160A-585 specifies:

"In the event of such termination, all properties and assets of the authority shall automatically become the property of the municipality and the municipality shall succeed to all rights, obligations and liabilities of the authority."

A review of all the statutes contained in Article 25 of Chapter 160A of the General Statutes relating to public transportation authorities leaves no doubt that the legislature intended that such a transportation authority could perform for a municipality all things necessary for the construction, maintenance, and management of public transportation facilities which the municipality itself could have done.

A public transportation authority is neither a private corporation nor a political territorial subdivision, but instead it is a quasi-municipal corporation "of a type known since McCulloch v. Maryland, 4 Wheat., 316, and commonly used in this and other states to perform ancillary functions in government more easily and perfectly by devoting to them, because of their character, special personnel, skill and care." Greensboro-High Point Airport Authority v. Johnson, 226 NC 1, 36 SE2d 803 (1945). In Airport Authority v. Johnson, supra, the case involved a statute which expressly created the Greensboro-High Point Airport Authority as a body politic and corporate with power to "purchase, acquire, establish, construct, own, control, lease, equip, improve, maintain, operate and regulate airports or landing fields within Guilford County; . . . to sue and be sued; to acquire by purchase lands for construction and maintenance and operation of airports . . . to make contracts and hold personal property. . . ." The issue in the case involved the right of Guilford County, the City of Greensboro and the City of High Point to make appropriations of public funds to the Airport Authority. In order to resolve this issue, the Supreme Court considered whether or not the Airport Authority was a separate corporation or merely the agent of the cities of Greensboro and High Point. The Supreme Court held that the Airport Authority was not a separate entity, but served as an agent of the municipalities. Cited in Eddy v. City of Arkadelphia, 303 F.2d 473 (1962).

In accordance with the previous decision of the North Carolina Supreme Court in a similar instance, it is clear that while a public transportation authority created pursuant to Article 25 of Chapter 106A has rights granted to it as a body corporate and politic, such an authority remains, in the context of the Article, an agency of the municipality which created it. Such an agency relationship between the authority and the creating municipality would subject the municipality to liability arising out of contracts and torts of the Authority.

RUFUS L. EDMISTEN Attorney General

Thomas H. Davis, Jr. Assistant Attorney General