Judge Charles Henry issued an order on the H2GO case siding with Leland and ruling the transfer of assets to the Town of Belville was illegal

Update 2:30 p.m. — This article has been updated to include a statement about the lawsuit from the Town of Belville, which did not immediately comment for the original story.

BRUNSWICK COUNTY — The controversial transfer of about $60 million in assets from Brunswick Regional Water and Sewer H2GO to the Town of Belville was illegal, according to Judge Charles Henry’s recently-filed order.

Belville no longer owns, in any capacity, H2GO’s assets. H2GO’s assets remain with H2GO, according to Henry’s order. In a press release Monday afternoon, Belville’s spokesperson said the town is considering an appeal of the decision.

Related: Where things stand: New evidence presented in Brunswick County hearing, H2GO case nearing an end

After the November 2017 election, H2GO’s outgoing majority board voted to transfer all of its assets on Nov. 28 to the Town of Belville. Belville quickly accepted the transfer, with no public hearings on the matter, in under 14 hours.

On Dec. 1, after Belville accepted the assets, the Town of Leland filed a temporary restraining order against H2GO, Belville, H2GO chairman William Browning, vice chairman Ron Jenkins and secretary Carl Antos over the sale – now ruled illegal – of its assets.

Browning, Jenkins, and Antos all voted in favor of the transfer to “save” H2GO’s long-planned $35 million reverse osmosis plant. In prior actions, Leland opposed the plant’s construction and completion. H2GO’s incoming majority board was opposed to constructing the plant, of which the sanitary district had already spent about $9 million.

Leland’s temporary restraining order was the first legal move in the costly lawsuit between the three political bodies. Superior Court Judge Thomas Lock’s preliminary injunction — which essentially froze assets as they were — remains in place.

Judge Henry’s order comes over a month since the three parties’ last appearance in Brunswick County Superior Court on Feb. 28. Henry waived the scheduled April 15 trial date and released a 68-page order Monday. (Port City Daily will run an analysis of the order later this week.)

Leland’s comments

H2GO’s November 2017 transfer to Belville was “unprecedented and patently illegal abuse of power that disempowered the freeholders,” according to Leland’s release Monday. Since the contested transfer, Leland has been relatively quiet outside the courtroom.

The town addressed its stance Monday and shared its view of the events:

“The Town of Leland had no choice but to file a lawsuit against the prior H2GO Board and Town of Belville Board of Commissioners because that unlawful transaction would have placed control of water and sewer within Leland in the hands of a competitor that opposes Leland’s growth and economic expansion, and would have risked ownership and operation of the water and sewer systems by an unqualified entity,” Leland’s release Monday states.

“This is a strong decision in Leland’s favor and a good decision for all North Carolina citizens,” Joe Dowdy, Leland’s lead attorney on the case, said in the release. “It prevents the illegal H2GO-Belville transfer from becoming a blueprint for other local governments to give themselves away to avoid the results of an election and the laws addressing how those local governments must conduct business.”

Mayor Brenda Bozeman also weighed in on the case:

“The Sanitary District and Belville commissioners did not follow the processes and procedures laid out in N.C. General Statutes when making their decision and, in doing so, effectively subverted the will of thousands of Leland citizens and disenfranchised hundreds of voters. This decision upholds our democracy. We may disagree on the issues or how to solve a problem, but we have to go through the lawful process of resolving those disagreements and finding the solutions.  Our opponents didn’t do that here, as the court recognized. I truly appreciate their patience and courage as Town leadership stood up against a threat to Leland’s interests, our people’s well-being, and the principle of representative government.”

Belville’s take

Mike McGill, Belville’s spokesperson, commented on both the decision and Leland’s position on the case. Because Judge Henry dismissed several of Leland’s claims in the case, McGill said Belville is considering a possible appeal.

Read McGill’s full statement below:

“While we are disappointed with the Order, we will continue to advocate for the protection of the health and welfare of our citizens.  We are reviewing the ruling for a possible appeal because several aspects of the plaintiffs’ case were dismissed.  

It must be noted that the decision does not provide an opinion on the construction of the groundwater reverse osmosis plant. In fact, the court found that “there is a legitimate public debate and concern in the communities of northeastern Brunswick County over the quality of the water distributed to the citizens through the H2GO system. Both the conveyance agreement and the Belville resolution recited, and the defendant contends, that GenX, and other unregulated contaminants, potentially harmful to humans, have been detected in water drawn from the River. …These findings, conclusions of law, and orders by the court are not meant to resolve those important issues.

It also must be noted that Leland’s press release today does not make any reference to providing its citizens with safe, clean drinking water. In fact, it cites the desire to prevent control of water and sewer from “a competitor that opposes Leland’s growth and economic expansion” as the main purpose for its lawsuit.

Leland’s lawsuit has never been about making sure their citizens have safe, clean drinking water. It’s always been about power and control. 

As the process moves forward, we remind everyone that Leland and H2GO’s current board continues to imperil their customers’ health and well-being through their actions. By continuing to block the construction of the groundwater RO plant, they are preventing the only customers they are sworn to serve from receiving contaminant-free drinking water in just one year’s time and without a rate increase.”

Port City Daily has also requested a response from Brian Edes, H2GO’s attorney.

Send tips and comments to Johanna Ferebee at johanna@localvoicemedia.com