BY MIKE FUHRMAN
The City of Statesville and Iredell Water Corporation appear close to resolving a multi-million dollar lawsuit related to Iredell Water’s allegations that the city has been illegally encroaching on the water provider’s service area for nearly four decades.
The lawsuit, filed by Iredell Water in U.S. District Court on September 2, 2021, accuses the City of Statesville of encroaching on Iredell Water’s “federally protected service area” since 1985 via annexation. The lawsuit also claims the city has been using annexations to provide water service to those areas in violation of federal law.
Iredell Water is seeking more than $10 million in damages.
The two sides have been negotiating a potential settlement, which now appears to be imminent.
“The City of Statesville and Iredell Water Corporation have been involved in a lawsuit for some time and are near a mutual resolution of the boundary issues raised,” city officials said in a statement Monday. “A settlement agreement is expected to be on the agenda for the June 19, 2023 City Council meeting for Council approval.”
Details of the proposed settlement have not been released.
According to the lawsuit, Iredell Water claims that its service territory is protected by federal law, which cannot be usurped by any state law or local ordinance.
“Statesville has, despite being warned in writing, continued to expand its water service within Iredell’s water service area, to provide water service in competition with Iredell,” the lawsuit asserts. “Statesville’s actions … have curtailed, restricted and limited water service provided or made available by Iredell, and therefore constitute violations of Iredell’s federal rights.”
In addition, the city has interfered with Iredell Water’s operations “by threatening to withhold municipal fire flow services if the developer or landowner does not agree to obtain non-fire flow water from Statesville,” Iredell Water contends. Those practices also violate the protections provided Iredell Water by federal law, according to the lawsuit.
Iredell Water has estimated its losses “caused by past water sales made by Statesville” in violation of federal law at more than $10 million.
In addition to financial damages, the lawsuit also asks the court to issue an injunction for existing violations and threatened violations under federal law and/or from selling water and providing water supply services in competition with Iredell Water.
Finally, the lawsuit asks the court to convey all water lines, mains, meters, tanks, pump stations and other facilities owned by the City of Statesville and used to provide water service to customers in Iredell Water’s service area to Iredell Water.
Attorneys for the city, in court filings, have denied any wrongdoing.