The City of Raleigh made a $12,500 appropriation to the Raleigh-Durham Airport Authority and conditioned the grant on the Authority signing a nondiscrimination agreement. Can a city use a funding appropriation to impose policy conditions on a separately governed regional airport authority?

Plain-English summary

The attorney for the Raleigh-Durham Airport Authority asked the AG a structural local-government question. The City of Raleigh had appropriated $12,500 to the Authority. A municipal ordinance made the grant subject to a condition: the Authority had to execute a nondiscrimination agreement with the City covering airport operations. The Authority's counsel was concerned that signing such an agreement would amount to contracting away the Authority's statutory operational independence. The question to the AG: can a city use a funding condition to impose substantive policy obligations on a separately governed regional airport authority?

The AG said no.

The opinion traces the Authority's legal structure and the limits on municipal power.

The Authority's structure. The Raleigh-Durham Airport Authority was created by Chapter 168 of the 1939 Session Laws as amended. Four governmental units (the cities of Raleigh and Durham and the counties of Wake and Durham) each appointed two members to the Authority's board. The Authority was authorized to operate the airport and make rules and regulations necessary for that purpose. The local governments could appropriate money to the Authority. But operational control rested with the eight-member Authority board, not with the individual appointing governments.

The doctrine on quasi-municipal corporations. Airport Authority v. Johnson, 226 N.C. 1, is the controlling NC Supreme Court authority on the legal nature of an airport authority. The court there characterized the Greensboro-High Point Airport Authority as "neither a private corporation nor a political territorial subdivision" but a "quasi-municipal corporation" of a type going back at least to McCulloch v. Maryland. The point of the quasi-municipal form was to perform governmental functions through a body with special personnel, skill, and care, insulated from the political turmoil of the appointing municipalities. The opinion quoted at length from Johnson to make the point: the General Assembly can give a quasi-municipal authority "such powers and call upon them to perform such functions as the Legislature may deem best," and can give the appointing municipality "only such control as it may consider advisable" where the functions involve "great detail and complexity, and demand close attention and skilled personnel."

The control mechanism in the Raleigh-Durham Authority's enabling legislation was the appointing power. Raleigh appointed two of the eight directors. That was Raleigh's lever. Anything beyond that (direct policy control, ordinance-imposed conditions, contract demands) was outside the statutory scheme.

The municipal-powers doctrine. North Carolina follows Dillon's Rule for municipal powers. A city has no inherent police power; it can exercise only powers expressly conferred by the General Assembly or necessarily implied from those expressly conferred. Town of Conover v. Jolly, 277 N.C. 439, supports the rule. A municipal ordinance has no extraterritorial effect unless the General Assembly has specifically authorized it. Smith v. Winston-Salem, 247 N.C. 349, is the leading authority. A city cannot project its ordinances beyond its territorial limits without legislative grant. State v. Furio, 267 N.C. 353, applies the principle.

The application. The AG identified no statutory grant authorizing the City of Raleigh to control or set the policies of the Airport Authority other than through the appointment of two directors. Nor did the AG find any authority for Raleigh to project its ordinances beyond its territorial limits to reach the Authority (which operates an airport that physically sits outside Raleigh's city limits). Without such a grant, the conditional ordinance was unauthorized as applied to the Authority. Raleigh could fund or not fund the Authority; it could not use the funding power to coerce policy concessions the Authority's statutory framework left to the Authority board.

The AG also noted, almost in passing, that the federal-aid provisions the Authority was required to comply with already included nondiscrimination requirements. The substantive policy goal Raleigh was trying to achieve was already accomplished through other regulatory channels. The opinion does not say Raleigh's policy goal was wrong; it says the mechanism Raleigh chose (an ordinance-imposed condition on a funding appropriation) was unauthorized.

Currency note

This opinion was issued in 1979. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

The Raleigh-Durham Airport Authority's enabling legislation has been amended multiple times since 1979, and the structure of regional airport authorities in North Carolina has evolved. The general municipal-powers doctrine described here (Dillon's Rule, no extraterritorial effect of ordinances without legislative grant) remains foundational NC local-government law, though the General Assembly has expanded municipal authority in various directions over the decades (most notably through the Local Government Act and various enabling statutes for cooperative arrangements). Federal nondiscrimination requirements for federally-funded airports have also been substantially expanded since 1979 through the Federal Aviation Administration and Department of Transportation regulatory frameworks. Anyone with a current question about a city's authority to attach conditions to appropriations to regional authorities should consult current statutes, current federal regulations, and the current charter of the specific authority involved.

Historical context: what the AG concluded

The opinion is a substantial piece of local-government law, and it is worth working through the layers.

The Raleigh-Durham Airport Authority's statutory framework. Chapter 168 of the 1939 Session Laws created the Authority as a joint enterprise of four governmental units. The Authority was given operational responsibility for the airport (then a much smaller facility serving the Raleigh-Durham area); the appointing units provided funding through appropriations. The board structure (eight members, two from each appointing unit) was a balanced governance structure designed to keep any one appointing unit from dominating Authority decisions.

The Johnson case. Airport Authority v. Johnson, 226 N.C. 1, was the NC Supreme Court's 1946 decision on the Greensboro-High Point Airport Authority. The court there had to characterize what kind of legal entity the Authority was. It was not a private corporation (it served a governmental purpose and was created by special legislation). It was not an ordinary municipality or county (it had no territorial sovereignty). The court used the term "quasi-municipal corporation" to describe the hybrid. Quasi-municipal corporations had been recognized in American jurisprudence at least since the Marshall Court (McCulloch v. Maryland) and were commonly used to perform specialized governmental functions.

The court's important doctrinal point was that the General Assembly had wide discretion in structuring quasi-municipal authorities. The legislature could give them broad operational powers or narrow ones; the legislature could give the connected municipalities broad control or narrow control. The Authority's powers and limits were defined by its enabling legislation, not by the general statutes governing municipalities. As the Johnson opinion put it, the legislature could create "a more or less autonomous agency, giving to the municipality only such control as it may consider advisable" for functions that involve "great detail and complexity, and demand close attention and skilled personnel."

The court also explained why this structure made sense. Airports (and similar specialized infrastructure) require continuity of skilled management. Direct municipal control through changing city councils and political majorities would disrupt operations. The quasi-municipal authority insulates the function from political turmoil while preserving democratic accountability through the appointing power.

The 1979 AG opinion's application. The AG reviewed the Raleigh-Durham Authority's enabling legislation and found the same structural pattern as in Johnson. The appointing power was Raleigh's only lever. The enabling legislation did not give Raleigh any general authority to control Authority policy or operations.

A city ordinance attempting to control Authority policy faced two related problems. First, it was outside the city's express or implied powers as defined by its charter and the general municipal law. Second, even if the city had such power as a general matter, applying it to the Authority (which is not a city instrumentality but a separately governed quasi-municipal corporation) was an attempt at extraterritorial control, which requires specific legislative authorization.

The municipal-powers principle. Town of Conover v. Jolly, 277 N.C. 439, 443, supplies the modern statement of Dillon's Rule in NC: "A city or town in this State has no inherent police power. It may exercise only such powers as are expressly conferred upon it by the General Assembly or as are necessarily implied from those expressly so conferred." Smith v. Winston-Salem, 247 N.C. 349, 354, adds the extraterritoriality limitation: "Neither city charter nor ordinance enacted pursuant thereto has extraterritorial effect unless authorized by legislative grant." State v. Furio, 267 N.C. 353, 356, applies the rule: "In the absence of the grant of such power a city or town may not, by its ordinance, prohibit acts outside its territorial limits." And Smith v. Winston-Salem, 247 N.C. at 354, supplies the construction rule: "Any fair, reasonable doubt concerning the existence of power is resolved by the courts against the corporation, and the power is denied."

The conditional-appropriation question. The AG opinion does not address whether Raleigh could simply choose not to fund the Authority. Raleigh presumably retained the discretion to appropriate or not appropriate money. The opinion addresses only the conditional appropriation. The distinction matters: a city can decide to spend or not spend its own money on a separately governed entity, but the city cannot use the spending power to circumvent the statutory structure of the entity's governance.

The doctrine here is sometimes called the "unconstitutional conditions" doctrine in federal constitutional law: the government cannot achieve indirectly through conditions on a benefit what it cannot achieve directly through regulation. The 1979 AG opinion does not use that label, but it is the same idea applied at the state-municipal level. Raleigh cannot impose policy conditions through a funding appropriation when the underlying authority to impose those policy conditions is absent.

The federal-aid wrinkle. The opinion's last sentence is worth noticing: "It is noted that the Federal-aid provisions, with which the Airport Authority is required to comply, appear to encompass the purpose sought to be accomplished by the Raleigh Municipal Ordinance." Federally funded airports were already subject to federal nondiscrimination requirements (Title VI of the Civil Rights Act of 1964, the Civil Rights Restoration Act, FAA grant conditions, and so on). The substantive policy goal Raleigh was trying to achieve was already accomplished through other channels. The AG opinion does not turn on this point but flags it as suggesting that the conditional ordinance was unnecessary even on the merits, in addition to being unauthorized as a matter of municipal power.

For an airport authority general counsel facing a similar funding-condition demand from any appointing municipality, the operational takeaways in 1979 were: examine the Authority's enabling legislation to identify the appointing-unit's authorized levers (typically board appointments and appropriations); reject conditions that go beyond those statutory levers; if the conditioning municipality persists, the Authority can decline the conditioned appropriation; the policy goal of the condition may already be covered by federal or state regulatory requirements.

Common questions

What is a quasi-municipal corporation?

A hybrid entity created by special legislation to perform a specific governmental function, with characteristics partly governmental and partly corporate. Airport authorities, port authorities, transit authorities, water and sewer authorities, and similar bodies typically fit the category. They are not private corporations (their purpose is governmental) and not ordinary municipalities (they have no territorial sovereignty), but a third form designed to allow specialized operational management of governmental functions.

Why was the Raleigh-Durham Airport set up as an Authority rather than just operated by a city or county?

The airport served a multi-county region (Wake and Durham counties, the cities of Raleigh and Durham). Operating it through any single municipal or county government would have privileged one constituency over the others. The Authority structure spread the appointing power across the four governmental units, balancing the interests of the region.

How does Raleigh get to influence Authority decisions?

By appointing two of the eight board members. That is the lever the enabling legislation grants. Anything beyond that (direct ordinance-imposed control, conditioned funding) was outside the statutory framework.

What is Dillon's Rule?

The traditional American doctrine that cities and towns are creatures of state legislative power and possess only those powers expressly granted, necessarily implied, or essential to declared purposes. North Carolina is a Dillon's Rule state. The doctrine constrains municipal authority and requires specific legislative authorization for novel municipal actions.

What does extraterritorial effect mean?

The reach of an ordinance beyond the city's territorial limits. By default in NC, city ordinances apply only within the city's boundaries. Extraterritorial reach (e.g., extraterritorial planning jurisdiction in a defined ring outside the city) requires specific legislative authorization. Smith v. Winston-Salem is the leading authority.

Why can't Raleigh just not fund the Authority?

The opinion does not address that, but the answer is presumably that Raleigh can decide whether to appropriate money. What Raleigh cannot do is use the funding power as a lever to impose policy conditions. The distinction is between exercising spending discretion (permissible) and using spending to coerce structural changes (impermissible).

What was the federal-aid wrinkle?

The Authority was a federally funded airport and was already subject to federal nondiscrimination requirements (Title VI, FAA grant conditions, etc.). The substantive policy goal of Raleigh's ordinance was already accomplished through other channels. The AG opinion does not turn on this point, but it flags that the ordinance was unnecessary even on the merits.

Could Raleigh have a nondiscrimination policy that applies to its own operations?

Yes. Raleigh has full authority to set its own internal personnel and operational nondiscrimination policies. The opinion is about whether Raleigh can impose such policies on a separately governed regional authority through a conditional appropriation. That is what the opinion says Raleigh cannot do.

Is this doctrine specific to airport authorities?

The principles generalize. Any quasi-municipal corporation created by special legislation with board appointments by multiple governmental units would face the same analysis. The appointing units' authority is what the enabling legislation grants; conditional appropriations cannot expand that authority.

Background and statutory framework

The opinion is grounded in the Authority's enabling legislation and in foundational NC local-government doctrine.

Chapter 168 of the 1939 Session Laws (as amended). The enabling legislation for the Raleigh-Durham Airport Authority. Authorized creation of the Authority; established the eight-member governing board (two appointees each from the cities of Raleigh and Durham and the counties of Wake and Durham); empowered the Authority to operate the airport and make necessary rules; authorized the appointing governmental units to appropriate money to support Authority operations.

The case law foundation. Airport Authority v. Johnson, 226 N.C. 1, is the NC Supreme Court's foundational treatment of the quasi-municipal airport authority structure. The court characterized airport authorities as quasi-municipal corporations performing specialized governmental functions through bodies with special personnel, skill, and care. The General Assembly was free to give appointing municipalities limited or broad control as the General Assembly deemed best for the function involved.

The municipal-powers doctrine. Four cases supply the doctrinal framework. Town of Conover v. Jolly, 277 N.C. 439, 443, articulates the Dillon's Rule baseline: no inherent police power; only powers expressly conferred or necessarily implied. Smith v. Winston-Salem, 247 N.C. 349, 354, adds two important rules: ordinances have no extraterritorial effect without legislative grant; doubts about municipal power are resolved against the municipality. State v. Furio, 267 N.C. 353, 356, applies the no-extraterritorial-effect rule.

The interaction. The Authority's enabling legislation gives Raleigh a specific, limited control mechanism (appointment of two board members). The municipal-powers doctrine prevents Raleigh from claiming additional powers not in the enabling legislation or the city's charter. The conditional ordinance attempts to do what the enabling legislation did not authorize, and what the city's charter does not extend to reach. The AG concludes the ordinance is therefore unauthorized as applied to the Authority.

Citations

• Chapter 168 of the 1939 Session Laws (as amended) (Raleigh-Durham Airport Authority enabling legislation; four-unit appointment structure; Authority operational powers; local appropriation authority)
• Airport Authority v. Johnson, 226 N.C. 1 (Greensboro-High Point Airport Authority case; airport authorities are quasi-municipal corporations; General Assembly may give appointing municipality only such control as deemed advisable)
• Town of Conover v. Jolly, 277 N.C. 439 (NC municipalities have no inherent police power; powers limited to those expressly conferred or necessarily implied)
• Smith v. Winston-Salem, 247 N.C. 349 (no extraterritorial effect of city ordinances without legislative grant; doubts about municipal power resolved against the municipality)
• State v. Furio, 267 N.C. 353 (city cannot by ordinance prohibit acts outside its territorial limits absent statutory grant)

Source

• Landing page: https://ncdoj.gov/opinions/extra-territorial-jurisdiction-nondiscrimination-agreement/

Original opinion text

Requested By: Charles H. Young, Attorney for the Raleigh-Durham Airport Authority

Question: Is the City of Raleigh authorized to require the Raleigh-Durham Airport Authority to enter into a nondiscrimination agreement relating to the operation of the airport as a condition for receiving payments for direct operation of the airport pursuant to statutory authority setting up the airport authority?

Conclusion: No. The Airport Authority is governed by the members of the authority, and the City of Raleigh has no authority to determine the policies or control the airport except in the manner as provided by statute by appointing two of its members.

The Raleigh-Durham Airport Authority was established pursuant to Chapter 168 of the 1939 Session Laws, as amended. The laws authorize the cities of Raleigh and Durham and the counties of Wake and Durham each to appoint two members of the Airport Authority. The Authority is authorized to operate and make rules and regulations necessary for the operation of the airport. The local governments are authorized to appropriate money necessary for the operation of the airport authority.

The City of Raleigh made an appropriation of $12,500 to the Raleigh-Durham Airport Authority. A municipal ordinance makes such a grant or appropriation subject to a condition that the Raleigh-Durham Airport Authority execute a nondiscrimination agreement providing that the Authority will not discriminate in the operation of the airport. The attorney for the Raleigh-Durham Airport Authority advised the Authority that in his opinion the Authority cannot properly contract away the legal authority of the members of the Authority to control and direct the operation of the airport by entering into a separate agreement with the City of Raleigh. He advised that there is no specific statutory authority authorizing the Airport Authority to contract with anyone of the four governmental units with respect to the manner in which the airport shall be operated. He requested an opinion of this Office as to the propriety of the entering into the agreement.

The status of the Greensboro-High Point Airport Authority was discussed in the case of Airport Authority v. Johnson, 226 N.C. 1. As the purpose of the two authorities is the same and the statutes setting up the Raleigh-Durham Authority are similar, excerpts from that case are set out as we feel they are applicable to the present situation.

"The plaintiff Airport Authority is neither a private corporation nor a political territorial subdivision. It is 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." 226 N.C. at 9.

"In considering questions concerning the powers conferred on the quasi-municipal corporation and the control over it exercised by the municipality with which it is connected, it must be remembered that counties, cities and towns drive practically all their powers from the Legislature, through appropriate statutory law, rather than constitutional grants; and the Legislature, in implementing their functions or in creating a separate corporate agency to serve a particular governmental purpose, is not bound by the limitations of the general statute under which the municipalities are formed or the special charters and laws delimiting their authority. It may give to these specially created agencies such powers and call upon them to perform such functions as the Legislature may deem best." 226 N.C. at 9, 10.

"In so far as constitutional restrictions are concerned, the General Assembly may distribute the functions of a municipality as it may deem best, the only limitation being its own sound judgment in creating a unified and efficient government. By the exercise of the same sound judgment and legislative discretion, it may, as it has attempted here to do, create a more or less antonomous agency, giving to the municipality only such control as it may consider advisable where the particular functions as to be performed involve great detail and complexity, and demand close attention and skilled personnel. Perhaps in no other way could continuity and efficiency in the service be secured against political changes and petty directives." 226 N.C. at 10. (Emphasis added)

"In the type of corporation we have here control is ordinarily given, as it is here, by a representative directorate chosen by the governing bodies concerned, with such other provisions in the Act as will insure to the municipality the integrity of the operations and their continued employment in aid of the public purpose being promoted." 226 N.C. 16 10. (Emphasis added)

We have reviewed the Session Laws setting up the Raleigh-Durham Airport Authority and providing for its operation by the members of the Authority which are appointed by the four governmental units. These Session Laws make no provision for the control of the airport by the City of Raleigh except through the appointment of two members of the Authority.

We believe that the City of Raleigh has no authority to determine the policy of the Airport Authority by such an ordinance. A city or town in this State has no inherent police power. It may exercise only such powers as are expressly conferred upon it by the General Assembly or as are necessarily implied from those expressly so conferred. Town of Conover v. Jolly, 277 N.C. 439, 443. A municipal corporation, city or town, is an agency created by the State to assist in the civil government of a designated territory and the people embraced within these limits. Its charter is the legislative description of the power to be exercised and the boundaries within which these powers may be exercised. Neither city charter nor ordinance enacted pursuant thereto has extraterritorial effect unless authorized by legislative grant. Smith v. Winston-Salem, 247 N.C. 349, 354. In the absence of the grant of such power a city or town may not, by its ordinance, prohibit acts outside its territorial limits. State v. Furio, 267 N.C. 353, 356. Any fair, reasonable doubt concerning the existence of power is resolved by the courts against the corporation, and the power is denied. Smith v. Winston-Salem, 247 N.C. 349, 354.

No grant of authority has been brought to our attention for the City of Raleigh to control or set the policies of the Airport Authority except by the appointment of two directors, nor do we find any authority for the municipality to project beyond the territorial limits of the city the effect of such an ordinance as the one in question. Therefore, this Office is of the opinion that the Raleigh City Ordinance in question, if applied to the Raleigh-Durham Airport Authority, is not authorized. It is noted that the Federal-aid provisions, with which the Airport Authority is required to comply, appear to encompass the purpose sought to be accomplished by the Raleigh Municipal Ordinance...

Rufus L. Edmisten
Attorney General

Eugene A. Smith
Special Deputy Attorney General