Stanley v. Department of Conservation & Develop.

Annotate this Case

199 S.E.2d 641 (1973)

284 N.C. 15

John H. STANLEY on behalf of himself and all others of the same or like class v. The DEPARTMENT OF CONSERVATION AND DEVELOPMENT of the State of North Carolina and the Northampton Pollution Abatement and Industrial Facilities Financing Authority. Charles M. EDWARDS, on behalf of himself and all others of the same or like class v. The DEPARTMENT OF CONSERVATION AND DEVELOPMENT of the State of North Carolina and the Halifax County Pollution Abatement and Industrial Facilities Financing Authority. Charles Ray HENDERSON, on behalf of himself and all others of the same or like class v. The DEPARTMENT OF CONSERVATION AND DEVELOPMENT of the State of North Carolina and the Jones County Pollution Abatement and Industrial Facilities Financing Authority.

Nos. 80-82.

Supreme Court of North Carolina.

October 10, 1973.

*649 Taylor, Brinson & Aycock, Tarboro, for petitioners.

Atty. Gen. Robert Morgan; Chief Deputy Atty. Gen. Harry W. McGalliard, Raleigh, for defendant, Department of Conservation and Development.

*650 Felton Turner, Jr., Jackson, for defendant, Northampton County Pollution Abatement and Industrial Facilities Financing Authority.

Rom B. Parker, Jr., Enfield, for defendant, Halifax County Pollution Abatement and Industrial Facilities Financing Authority.

James R. Hood, Trenton, for defendant, Jones County Pollution Abatement and Industrial Facilities Financing Authority.

SHARP, Justice:

The first question we consider is whether the petitioners, as taxpayers, have standing to challenge the constitutionality of the Act.

The Halifax, Jones, and Northampton Authorities have not spentnor do they contemplate spendingany funds derived from taxation. As yet they have issued no bonds. However, they were created solely for the purpose of issuing tax-exempt revenue bonds to finance the projects specified in the Act and, ifand whenthere is a "successful resolution" of the constitutional questions with respect to their power to issue such bonds, they propose to issue them immediately.

Under our decisions "[o]nly those persons may call into question the validity of a statute who have been injuriously affected thereby in their persons, property or constitutional rights." Canteen Service v. Johnson, 256 N.C. 155, 166, 123 S.E.2d 582, 589 (1962). See also Nicholson v. Education Assistance Authority, 275 N.C. 439, 168 S.E.2d 401 (1969); In Re Assessment of Sales Tax, 259 N.C. 589, 131 S.E.2d 441 (1963); Carringer v. Alverson, 254 N.C. 204, 118 S.E.2d 408 (1961); James v. Denny, 214 N.C. 470, 199 S.E. 617 (1938). The rationale of this rule is that only one with a genuine grievance, one personally injured by a statute, can be trusted to battle the issue. "The `gist of the question of standing' is whether the party seeking relief has `alleged such a personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of issues upon which the court so largely depends for illumination of difficult constitutional questions.'" Flast v. Cohen, 392 U.S. 83, 99, 88 S. Ct. 1942, 1952, 20 L. Ed. 2d 947, 961 (1968).

All parties to these proceedings, anxious to have resolved the legal questions which will determine the validity of the bonds, have requested the Court, "in the public interest," to decide the constitutional questions which have been raised. They also stipulate that each petitioner is, within the meaning of G.S. § 143-307, a party aggrieved by the Board's action in approving the issuance of the bonds and that each has standing to obtain judicial review of the Board's action. Standing, however, like jurisdiction, cannot be conferred by stipulation. When, as here, the facts with reference to a party's relation to a controversy are admitted, whether the party has standing to attack the constitutionality of a statute is a question of law, which may not be settled by the parties. Nicholson v. Education Assistance Authority, supra; Carringer v. Alverson, supra. Whenever it appears that no genuine controversy between the parties exists, the Court will dismiss the action ex mero motu. Bizzell v. Insurance Co., 248 N.C. 294, 103 S.E.2d 348 (1958).

In this case, however, we hold that the petitioners have standing to assail the constitutionality of the Act and that a genuine controversy between them is ripe for decision. See Lide v. Mears, 231 N.C. 111, 56 S.E.2d 404 (1949).

Petitioners have alleged, inter alia, that in G.S. § 159A-8 the Act unconstitutionally purports to authorize the issuance of bonds which are exempt from all taxes except inheritance and gift taxes. If this purported exemption is unconstitutional petitioners will be injured unless its invalidity is judicially declared for the exemption of any property from its fair share of the public *651 burden, to that extent, increases the burden imposed upon all other taxable property. "A taxpayer injuriously affected by a statute may generally attack its validity. Thus, he may attack a statute which. . . exempts persons or property from taxation, or imposes on him in its enforcement an additional financial burden, however slight." 16 C.J.S. Constitutional Law § 80, at 247-248 (1956).

In Price v. Philadelphia Parking Authority, 422 Pa. 317, 221 A.2d 138 (1966) it was held that the exemption of property from taxation reduces the tax base and has the same effect upon a taxpayer as the unlawful expenditure of tax funds even though he is unable to establish any injury other than his interest as a taxpayer. See also Village of Moyie Springs v. Aurora Mfg. Co., 82 Idaho 337, 353 P.2d 767 (1960). In Martin v. Housing Corp., 277 N.C. 29, 175 S.E.2d 665 (1970), and in Webb v. Port Commission, 205 N.C. 663, 172 S.E. 377 (1934), this Court, without discussion, permitted taxpayers, as such, to attack the constitutionality of acts which exempted certain revenue bonds from taxation.

Ordinarily, the interest rate on tax-free revenue bonds of a state agency is appreciably lower than that of the bonds of a private corporation, for their tax-exempt feature makes possible a more favorable sale. Education Assistance Authority v. Bank, 276 N.C. 576, 174 S.E.2d 551 (1970). Indeed, the tax advantage is the primary appeal which such bonds have for investors. Mitchell v. Financing Authority, 273 N.C. 137, 159 S.E.2d 745 (1968). If, therefore, the bonds which the Authorities propose to issue cannot constitutionally be made tax exempt the only reason for the method of corporate financing provided by the Act vanishes. In recognition of this fact Albemarle's contract with each of the Authorities provides: "The CORPORATION and the AUTHORITY reiterate and agree that the implementation and legal effectiveness of this Agreement are wholly dependent and conditioned upon the successful resolution of the legal questions hereinbefore mentioned. . . ."

It is quite clear, therefore, that pending a definitive decision from this Court, these Authorities are effectively stymied, for it cannot be known whether they are bodies corporate or, in effect, nonentities. We concur in the view that the public interest requires that we now decide whether the Act is constitutional in whole or in part. Smith v. County of Mecklenburg, 280 N.C. 497, 187 S.E.2d 67 (1972).

The provisions of G.S. § 159A-21 also make an immediate decision appropriate. This section provides that if the Board's approval of the bonds is not challenged by the procedure outlined in G.S. § 143-309 within thirty days after notice of such approval has been published, an authority's power to issue the bonds and the legality thereof shall be conclusively presumed, "and no court shall have authority to inquire into such matters." Since petitioners instituted this proceeding for judicial review within the prescribed time the question whether they could thereafter have contested the tax exemption which G.S. § 159A-8 purported to give these bonds is not before us. Manifestly, however, in the face of the limitation imposed by G.S. § 159A-21, any taxpayer who desired to contest the exemption might reasonably apprehend that he would lose his right to do so if he waited until the bonds had been issued and sold, or offered for sale. Cf. Harper v. Schooler, 258 S.C. 486, 189 S.E.2d 284 (1972). For this reason, all other considerations aside, we think it would be inappropriate to hold that the question is not ripe for decision.

Both factual and procedural differences distinguish these three petitions for review of the Board's administrative approval of the Authorities' proposed bond issues from the case of Nicholson v. Education Authority, supra. In Nicholson, an action for a mandatory injunction, the plaintiff taxpayer sought to nullify all prior transactions between the defendant State Education *652 Assistance Authority (Education Authority) and all others and to enjoin the issuance of a second series of bonds which it proposed to issue. Its first series of bonds in the amount of $3,000,000 had been sold at a private sale. This Court held that, on the basis of Nicholson's allegations, which showed no threat of immediate irremediable injury to him, he was not entitled to injunctive relief. The opinion did not specifically discuss the question of the plaintiff's right as a taxpayer to contest in that action the constitutionality of the tax exemption which G.S. § 116-209.13 (1971 Supp.) conferred upon the bonds of the Education Authority. We note that the act creating the Education Authority contained no such limitation upon a taxpayer's right to contest the legality of the bonds as does G.S. § 159A-21. We also note that, in a properly constituted action for a declaratory judgment (G.S. § 1-253 et seq.), this Court has since passed upon the constitutionality of the act creating the Education Authority and the validity of its bonds. Education Assistance Authority v. Bank, supra.

We proceed, therefore, to the decisive questions raised by petitioner-appellants' assignments of error in cases numbered 80 and 81: (1) Are the Northampton and Halifax Authorities, created under the Act to finance pollution abatement and control facilities for a private industry by the issuance of revenue bonds, established for a public purpose and (2) do the provisions of the Act (G.S. § 159A-8) which purport to exempt such bonds from taxation violate N.C.Const. art. V, §§ 2(1) and 2(3)? These questions are, in fact, but one.

Under the Act each of the three Authorities is denominated a "political subdivision and body corporate and politic of the State," that is, a municipal corporation. The term municipal refers not only to cities and towns; ". . . when applied to corporations, the words `political', `municipal', and `public' are used interchangeably." Smith v. School Trustees, 141 N.C. 143, 150, 53 S.E. 524, 527 (1906); Wells v. Housing Authority, 213 N.C. 744, 750, 197 S.E. 693, 697 (1938). If a legislative enactment comprehends a public purpose, the agency created under it may function as a municipal corporation; otherwise, not. Southern Assembly v. Palmer, 166 N.C. 75, 82 S.E. 18 (1914); Lee v. Poston, 233 N.C. 546, 64 S.E.2d 835 (1951); Coastal Highway v. Turnpike Authority, 237 N.C. 52, 74 S.E.2d 310 (1952); Powell v. Housing Authority, 251 N.C. 812, 112 S.E.2d 386 (1959); Redevelopment Commission v. Guilford County, 274 N.C. 585, 164 S.E.2d 476 (1968); 5 Strong's N.C. Index 2d, Municipal Corporations § 1 (1968).

A municipal corporation, however, even with legislative sanction, cannot engage in a private enterprise or assume any function which is not in a legal sense public in nature. Keeter v. Lake Lure, 264 N.C. 252, 264, 141 S.E.2d 634, 643 (1965); Nash v. Tarboro, 227 N.C. 283, 285, 42 S.E.2d 209, 211 (1947). See Dennis v. Raleigh, 253 N.C. 400, 116 S.E.2d 923 (1960). Any authority created under the Act is created for a special purpose and unless that purpose is public it cannot issue taxexempt revenue bonds. N.C.Const. art. V, §§ 2(1) and 2(3) (1971) (formerly art. V, § 3). See Martin v. Housing Corp., supra 277 N.C. at 57-58, 175 S.E.2d at 681-682 (1970); Education Assistance Authority v. Bank, supra 276 N.C. at 588-589, 174 S.E.2d at 560; Mecklenburg County v. Insurance Co., 210 N.C. 171, 185 S.E. 654 (1936); Webb v. Port Commission, supra; 49 N.C.L.Rev. 830 (1971). See also Odd Fellows v. Swain, 217 N.C. 632, 637-638, 9 S.E.2d 365, 368 (1940). "The reason municipal property is granted immunity from taxation is, that it is supposed to be dedicated to a public use." Nash v. Tarboro, supra 227 N.C. at 289, 42 S.E.2d at 214. See Warrenton v. Warren County, 215 N. C. 342, 2 S.E.2d 463 (1939). It is for the same reason that the bonds of a municipal corporation are exempt from taxation.

"Since the tax-exempt feature makes possible a more favorable sale of *653 revenue bonds and thereby contributes substantially to the accomplishment of the public purpose for which they are issued," this Court holds that the General Assembly may exempt them from taxation by the State or any of its subdivisions. Education Assistance Authority v. Bank, supra 276 N.C. at 589, 174 S.E.2d at 560; Martin v. Housing Corp., supra 277 N.C. at 57, 175 S.E.2d at 681. The rationale for this exemption is stated in Pullen v. Corporation Commission, 152 N.C. 548, 558, 68 S.E. 155, 159 (1910).

Patently the Act was designed to enable industrial polluters to finance at the lowest interest rate obtainable, the pollution abatement and control facilities which the law is belatedly requiring of them. As noted earlier, if it be held that the Authorities cannot constitutionally issue tax-free revenue bonds for that purpose the Act fails, for it has no other objective.

We note that since 1 January 1969 the interest on industrial development bonds of a political subdivision of a State is excluded from gross income under Section 103(a)(1) of the Internal Revenue Code, 26 U.S.C.A. § 103(a)(1) (1967), only in the instances specified in Code Section 103(c), 26 U.S.C.A. § 103(c) (1973 supp.). Prima facie, however, if the Northampton and Halifax Authorities are held to be municipal corporations, their revenue bonds would be excluded from gross income under Code Section 103(c)(4)(F). Semble, at the election of the Jones Authority, its bonds could also be made tax exempt under Code Section 103(c)(6)(D).

Because the concept of public purpose must expand to meet the necessities of changed times and conditions, this Court has not attempted to confine public purpose by judicial definition but has "left each case to be determined by its own peculiar circumstances as from time to time it arises." Keeter v. Lake Lure, supra 264 N.C. at 264, 141 S.E.2d at 643. Our reports contain extensive philosophizing and many decisions on the subject. Most recently we have considered the question whether a purpose was public or private in Foster v. Medical Care Comm., 283 N.C. 110, 195 S.E.2d 517 (1973); Martin v. Housing Corp., supra; Redevelopment Comm. v. Guilford County, supra; Mitchell v. Financing Authority, supra. These decisions, and the cases on which they are based, establish the following principles:

(1) An activity cannot be for a public purpose unless it is properly the "business of government," and it is not a function of government either to engage in private business itself or to aid particular business ventures. See Note, 49 N.C.L. Rev. 830, 833 (1971). It is only when private enterprise has demonstrated its inability or unwillingness to meet a public necessity that government is permitted to invade the private sector. In Martin v. Housing Corp., supra, and Wells v. Housing Authority, supra, revenue bonds issued by two public housing agencies for the purpose of providing housing for low-income tenants were held to be for a public purpose. Governmental activity in that field was not an intrusion upon private enterprise, which had eschewed the field. Further, the primary benefits passed directly from the public agency to the public and not to a private intermediary.

(2) Aid to a private concern by the use of public money or by tax-exempt revenue-bond financing is not justified by the incidental advantage to the public which results from the promotion and prosperity of private enterprises.

(3) In determining what is a public purpose the courts look not only to the end sought to be attained but also "to the means to be used." Turner v. Reidsville, 224 N.C. 42, 44, 29 S.E.2d 211, 213 (1944). See Wells v. Housing Authority, supra. Direct assistance to a private entity may not be the means used to effect a public purpose. "It is the essential character of the direct object of the expenditure which must determine its validity, and not *654 the . . . degree to which the general advantage of the community, and thus the public welfare, may be ultimately benefited by their promotion." 63 Am.Jur.2d Public Funds § 59 (1972).

In Foster v. Medical Care Comm., supra, it was held that tax funds could not be used to finance a nonprofit hospital albeit "the primary purpose of a nonprofit privately owned hospital is the same as that of a publicly owned hospital for the treatment of like diseases and injuries." The rationale was that such aid would violate the constitutional proscription that "tax revenues may not be used for private individuals or corporations, no matter how benevolent." Also implicit in the Foster decision is recognition of the fact that the Medical Care Commission would have had no control over a private hospital and no authority to regulate its rates in the public interest. See City and County of San Francisco v. Ross, 270 P.2d 488 (Cal.App. 1954).

The Court has not heretofore considered whether the abatement of pollution created by a private industry may be accomplished by means of State aid to the industrial polluter in the form of tax-free revenue bond financing. However, in Mitchell v. Financing Authority, supra, we considered the constitutionality of the Industrial Facilities' Financing Act, Chapter 535, N.C. Sess.Laws (1967) (the Mitchell Enactment), which the legislature enacted for the purpose of attracting industry to the State. Petitioner correctly states that any consideration of the constitutionality of the Pollution Abatement and Industrial Facilities Act (the Act) must begin with Mitchell v. Financing Authority, supra.

The Mitchell Enactment created the Industrial Financing Authority and authorized it to issue tax-free revenue bonds in order to provide sites and facilities for lease to private industries. These industries, by rental payments to the Financing Authority, would retire the bonds and thereby acquire the property. After exploring the arguments for and against such State aid to private industry we held that the Financing Authority's primary function, "to acquire sites and to construct and equip facilities for private industry, is not for a public use or purpose," and that the Financing Authority could not expend the tax funds appropriated for its organization. Id. 273 N.C. at 159, 159 S.E.2d at 761.

The defendants in cases Nos. 80 and 81, in support of their contention that Mitchell does not control decision in these cases, point to the following differences between the Mitchell Enactment and the Act: (1) The aims of the Act are limited (a) to providing "needed assistance" anywhere in the State for the abatement of pollution, a grave public hazard, and (b) to increasing employment and income in "distressed areas"; (2) the Halifax and Northampton Authorities propose to issue bonds only for pollution abatement, an objective which (they argue) the court should determine to be a public purpose "regardless of the result reached concerning the industrial facilities' portion of the Act"; and (3) no expenditure of tax funds is involved here.

In addition to the foregoing, as petitioners point out for the purpose of attacking the Act, in G.S. § 159A-20 the Act specifically provides that no authority created under its provisions "shall have any right or power to acquire any property through the exercise of eminent domain or any proceeding in the nature of eminent domain." The Mitchell Enactment contained no such provision.

We consider these specified differences in reverse order.

In Mitchell v. Financing Authority, after noting that the term public purpose is generally used in the same sense in the law of taxation and eminent domain, we pointed out (1) that were we to hold the Industrial Facilities Financing Authority served a public purpose when it acquired a site and constructed thereon a manufacturing plant for lease to a private enterprise, we would *655 thereby authorize the legislature to give the Financing Authority the power to condemn private property for any project which it decided to undertake; and (2) that the power of eminent domain could not constitutionally be exercised in behalf of a private interest. Id. at 158-159, 159 S.E.2d at 760. See Redevelopment Commission v. Bank, 252 N.C. 595, 603, 114 S.E.2d 688, 694 (1960). In Foster v. Medical Care Commission, supra, we pointed out that "if the General Assembly may authorize a State agency to expend public money for the purpose of aiding in the construction of a hospital facility to be leased to and ultimately conveyed to a private agency, it may also authorize the acquisition of a site for such facility by exercise of the power of eminent domain." Id. 283 N.C. at 126, 195 S.E.2d at 528. See 49 N.C.L.Rev. 830.

Obviously, if we hold the creation of an authority for the purpose of issuing tax-exempt revenue bonds to provide funds for the construction of pollution control and abatement (or other) facilities for lease and ultimate conveyance to a private industry to be for a public purpose, any subsequent legislature could repeal G.S. § 159A-20 at will and authorize the condemnation of private property for such a project. The consequences of such a decision cannot be ignored. See Mitchell v. Financing Authority, supra 273 N.C. at 158-159, 159 S.E.2d at 760.

The legislative findings and declarations contained in G.S. § 159A-2(b)(1) (2), are that pollution control financing as authorized by the Act is for a public purpose in all areas of the State and that industrial facilities financing to provide job opportunities and better wages in counties which are "distressed areas" as defined by the Act is for a public purpose in these areas. Such a legislative declaration, of course, carries great weight. However, it is not conclusive upon the court. See Foster v. Medical Care Commission, supra, 283 N.C. at 125, 195 S.E.2d at 527; Mitchell v. Financing Authority, supra, 273 N.C. at 144, 159 S.E.2d at 750. Petitioners suggest that the General Assembly's positive denial of the right of eminent domain to the authorities indicates a lack of confidence in its own declaration.

That the Act appropriates no public funds for the organization and work of the county pollution control authorities, and that these appeals involve no expenditure of tax funds, does not exempt the cases from the rationale of Mitchell v. Financing Authority. The public purpose requirement determines not only the projects for which the legislature may authorize the expenditure of tax money but also those which it may empower the created authorities to undertake and to finance by the issuance of tax-exempt revenue bonds.

Does the State serve a public purpose when it assists a private industry in financing the abatement and control of the pollution the industry creates? Beyond any doubt air and water pollution have become two of modern society's most urgent problems, and noise pollution is likewise a major modern evil. Such pollution knows no boundaries, for it cannot be contained in the area where it occurs. 61 Am.Jur.2d, Pollution Control, §§ 19-30, 53-60, 100 (1972). Regardless of where it occurs, the abatement and control of environmental pollution are immediately necessary to the public health, safety, and general welfare; and, in the exercise of the State's police power, the legislature has plenary authority to abate and control pollution of all kinds. Taylor v. Racing Asso., 241 N.C. 80, 93, 84 S.E.2d 390, 400 (1954). See also Shelby v. Power Co., 155 N.C. 196, 71 S.E. 218 (1911); Durham v. Cotton Mills, 141 N.C. 615, 54 S.E. 453 (1906); 61 Am.Jur.2d Pollution Control, § 69 (1972). For examples of the legislature's exercise of the State's police power to control pollution see, inter alia, the following statutes: N. C.Gen.Stats. ch. 143, Art. 21 (Supp. 3C, 1971); ch. 130, Art. 13 (1964), as amended, (Supp. 3B, 1971); ch. 113A (Supp. 3A, *656 1971); G.S. § 14-382 (1919); G.S. § 20-128 (1937); G.S. § 20-128.1 (1971); G.S. § 75A-6(O) (1971); G.S. § 75A-10(c) (1965); G.S. § 113-265 (1971); G.S. § 160A-185 (1971); G.S. § 160A-193 (1971).

The power of the State to regulate private institutions and industries under its police power, however, is more extensive than the authority to accomplish the same purpose by use of its taxing power. Foster v. Medical Care Comm., supra 283 N.C. at 126, 195 S.E.2d at 528. It does not follow, therefore, that because the State has power to order an industry to abate a nuisance or cease operations it may constitutionally assist the industry in financing the abatement.

Pulp and paper mills are recognized to be among the major industrial pollutants, 61 Am.Jur.2d Pollution Control, § 20 (1972), and Albemarle is no exception. In their briefs defendants pose this question with reference to the pollution which Albemarle is creating: "Does the public in common benefit from the elimination of the dumping of tons of solid waste every day into the Roanoke River, the reduction of odors emitted into the air, the drastic reduction of suspended solids in the air, the elimination of the necessity to breathe air containing various sulphur compounds, the control of slime bacteria in the Roanoke River, the elimination from the air of chemicals so strong that they cause the paint to come off houses and cars, and the general improvement and cleaning up of the total environment?"

To ask this question is, of course, to answer it. Certainly the elimination of the terrible condition described above will benefit all the people. Furthermore, they are entitled to its elimination, and the State is now using its police power to abate the nuisance and halt the damage to the environment which this pollution has caused.

It is stipulated that Albemarle's air and water pollution emissions are and have been in violation of the laws and regulations of the State; that it is and has been operating under temporary, conditional permits; and that if Albemarle is to continue its operations it must reduce its air and water emission to the legal limits. See G.S. § 143-215.2(b); G.S. § 143-215.6 (1967). There is no finding that Albemarle is unable to provide the required facilities at its own expense and without outside assistance. Indeed, upon the argument of these cases, defendants conceded that Albemarle is able to correct the pollution it creates and that construction of the necessary facilities is in progress.

It is recognized that the net result of revenue bond financing such as the Act authorizes "is that the municipality lends its tax-free bond issuing power to the private corporation or organization so that the interest on what would otherwise be a private bond issue becomes free of income tax and a low interest rate on borrowed money is obtained." 64 Am.Jur.2d, Public Securities and Obligations § 109 (1972). See Mitchell v. Financing Authority, supra 273 N.C. at 146, 159 S.E.2d at 751-752. Thus the Act would permit the Authorities to do indirectly for Albemarle that which the constitution forbids Albemarle to do for itself, that is, to issue tax-free revenue bonds to finance construction of an integral part of its plant. The cost of such construction is just one of the many expenses which a manufacturing enterprise must take into account in fixing the price of its product.

The conclusion is inescapable that Albemarle is the only direct beneficiary of the tax-exempt revenue bonds which the Halifax and Northampton Authorities propose to issue and that the benefit to the public is only incidental or secondary. It cannot be said that a benefit results to the public when the State assists a private industry in financing facilities the law requires the industry to construct without such aid. See Price v. Philadelphia Parking Authority, supra. This is especially true when, as here, the industry is able to *657 do its own financing. Opinion of the Justices, 359 Mass. ___, 268 N.E.2d 149 (1971).

Were the State to aid Albemarle by tax-free revenue bond financing, to that extent it would subsidize a particular pulp and paper mill which is in competition with other and unsubsidized pulp and paper mills, a violation of N.C.Const. art. V, § 2(1). We take judicial notice that competing pulp and paper mills are located in different counties in widely separated parts of this State. Under the Act the governing body of a county creates a Pollution Abatement and Industrial Facilities Financing Authority in the exercise of its own discretion. Obviously, therefore, the Act does not purport to give any assurance that all competing private industries (tax-payers in the same classification) would receive the same benefits from the Act. Moreover, once any industrial polluter receives the subsidy provided by tax-free revenue bond financing, all otherschemical producers, iron and steel mills, petroleum refineries, smelters, energy producing utilities, et ceterawould be equally entitled to the same subsidy. Incidentally, it can reasonably be anticipated that, were all their demands to be met, industrial revenue bonds would flood the bond market to the detriment of old fashioned municipal bonds backed by the full faith and credit of the municipality seeking to finance schools, sewerage disposal systems, fire equipment and other public ventures.

Pollution control facilities are single-purpose facilities, useful only to the industry for which they would be acquired and to which they would be leased. If that industry were to become insolvent or, for any reason, default in its rental payments and guarantee of the bonds which an authority had issued to finance the facilities, those bonds would soon be in default. A few such defaults would certainly adversely affect the revenue-bond market and, almost certainly, also the credit rating of the county whose governing body had created the defaulting authority. These economic dangers demonstrate the wisdom of N.C. Const. art. V, § 2(1).

The only benefit which could inure to the public from State aid to an industry under mandate to abate its pollution would be the general benefit to the community's economy from the retention of the industry in the event the industry was unable or unwilling to comply with the State's mandate without State aid, and the alternative was to cease operations. Undeniably the consequences of any wholesale lay-off or substantial unemployment for whatever cause is detrimental to a community.

The arguments for and against State aid to private industry for the purpose of attracting or retaining it in the State, and the question whether such aid was for a public purpose, were both fully examined and considered in Mitchell v. Financing Authority, supra. Notwithstanding its recognition that every legitimate business in a community promotes the public good, this Court held in Mitchell that the function of the Industrial Development Financing Authority, to acquire sites and to construct and equip facilities for private industry by the issuance of revenue bonds, was not for a public purpose and the expenditure of tax funds appropriated to enable the Financing Authority to commence operation was not constitutionally permissible. By the same token State aid to a private industry in the form of tax-exempt revenue bond financing is equally unconstitutional.

The basic facts in each of the three cases which we now consider raise the same question of public purpose which we decided in Mitchell v. Financing Authority. In cases Nos. 80 and 81, the Halifax and Northampton Authorities seek to aid Albemarle, an established industry, in financing the pollution control and abatement facilities which the law is requiring it to install to continue operations; in case No. 82, the Jones Authority seeks to acquire a new industry by financing for Albemarle the construction *658 of a dimension lumber mill. In these three cases the Halifax, Northampton, and Jones Authorities seekas did the Financing Authority under the Mitchell Enactmentto promote the economic welfare and increase the resources of their respective areas by direct aid to private industry.

In our view restricting State aid to private industry (1) to financing pollution control facilities in any area and (2) to constructing industrial facilities in counties which are distressed areas as defined by G.S. § 159A-3(6a) does not differentiate the purpose of the Act from that of the Industrial Financing Act, which we held unconstitutional in Mitchell v. Financing Authority. As heretofore pointed out, the cost of financing pollution abatement and control facilities is merely a part of the expense of plant construction. In Mitchell v. Financing Authority, supra, and in Foster v. Medical Care Comm., supra, we held (1) that direct State aid to a private enterprise for plant and hospital construction is not for a public purpose, and (2) that the stimulation of a depressed economy cannot be accomplished, or attempted, by direct State aid to a private industry, even though incidental benefits result to the area from such assistance. The Act's specifications for "distressed areas" does not take these cases out of the Mitchell rationale. See Mitchell v. Financing Authority, supra, 273 N.C. at 156-157, 159 S.E.2d at 758-759.

Since the State may not directly aid a private industry by the exemption of its bonds for plant construction from taxation, it may not indirectly accomplish the same purpose by authorizing the creation of an authority to issue its tax-exempt revenue bonds for that same purpose. We hold, therefore, that the creation of the Halifax, Northampton, and Jones County Authorities for the purpose of financing pollution abatement and control facilities or industrial facilities for private industry by the issuance of tax-exempt revenue bonds is not for a public purpose and that the Act which purports to authorize such financing violates N.C.Const. art. V, § 2(1). This ruling makes it unnecessary to decide whether the Act violates any other provisions of the Constitution or to consider petitioners' appeal in case No. 82.

In cases Nos. 80 and 81 the judgments of the court below are reversed, and the cases are remanded to the Superior Court of Wake County for entry of judgment in accordance with plaintiff's prayer for relief. In case No. 82 the judgment of the court is affirmed.

Cases Nos. 80 and 81, reversed and remanded.

Case No. 82, affirmed.