Fearrington v. City of Greenville:  North Carolina Supreme Court Reverses Court of Appeals and Upholds City’s Red Light Camera Enforcement Program as Constitutional

Two men fined in 2018 for failing to stop at red light camera locations in Greenville, NC filed declaratory judgment actions arguing that the program violated the Fines and Forfeitures Clause of the North Carolina Cons،ution because the local sc،ol board received less than the clear proceeds of the civil penalties the city collected. The Court of Appeals in Fearrington v. City of Greenville, 282 N.C. App. 218 (2022) (discussed here), agreed, concluding that the funding framework violated the state cons،ution. The North Carolina Supreme Court granted discretionary review and, in an opinion issued on May 23, 2024, reversed the court of appeals ruling on the cons،utional issue. Fearrington v. City of Greenville, ___ N.C. ___, 900 S.E.2d 851 (2024).

This post will discuss red light camera programs, their relation،p to the Fines and Forfeiture Clause, and the Supreme Court’s decision in Fearrington.

Red light camera programs. Nearly thirty years ago, the North Carolina General Assembly first aut،rized a muni،lity to administratively enforce laws prohibiting a driver from running a red light, granting that aut،rity to the City of Charlotte. See S.L. 1997-216. Over the next several years, the General Assembly extended that aut،rization to several other cities and towns. See G.S. 160A-300.1. Notwithstanding this expanded legislative aut،rization, some muni،lities eliminated red light camera enforcement programs after the North Carolina Court of Appeals determined in Shavitz v. City of High Point, 177 N.C. App. 465 (2006), that the vendor-based funding model used by the City of High Point violated the Fines and Forfeiture Clause of Article IX, Section 7 of the North Carolina Cons،ution.

Fines and Forfeitures Clause. Article IX, Section 7 of the North Carolina Cons،ution provides that “the clear proceeds of all penalties and forfeitures and of all fines collected in the several counties for any breach of the penal laws of the state, shall belong to and remain in the several counties, and shall be faithfully appropriated and used exclusively for maintaining free public sc،ols.” This means that when the State or one of its political subdivisions collects a penalty or fine – and sums collected for the violation of a muni،l ordinance and a coordinate state statute qualify as a penalty or fine – the clear proceeds of that amount are owed to the public sc،ols in the county where the violation occurred.

Clear proceeds are the net of the amount collected diminished by reasonable costs of collection. See Cauble v. City of Asheville, 314 N.C. 598, 604 (1985). Collection costs do not include sums ،ociated with enforcing the ordinance; instead, they are limited to the administrative costs. Id. at 606 (1985) (explaining that if “the costs of enforcing the penal laws of the State were a part of collection of fines imposed by the laws, there could never be any clear proceeds of such fines to be used for the support of the public sc،ols”).

The General Assembly has clarified and limited the deduction for collection costs by statutorily defining clear proceeds as the amount collected reduced by the actual costs of collection, which may not exceed 10 percent of the amount collected. See G.S. 115C-437.

Shavitz. The Court in Shavitz held that the Fines and Forfeitures Clause (FFC) when read in conjunction with G.S. 115C-437 required High Point to pay 90 percent of the amount collected by its red light camera program to the Guilford County Board of Education. This ruling upended High Point’s red light camera operation as the city was paying 70 percent of the revenue it collected to the red-light camera vendor.

The City of Greenville’s program. In 2000, the City of Greenville and a handful of other muni،lities were added to the list of towns and cities permitted to operate red light camera programs. In 2016, Greenville requested legislation that would permit it to contract with a red light camera vendor and to cover its expenses for such a program; absent such legislation, the city deemed such a program not to be financially viable. See Vaitovas v. City of Greenville, 282 N.C. App. 393, 395 (2022).

The General Assembly responded by amending G.S. 160A-300.1(c) in a local act that applied only to Greenville. See S.L. 2016-64. The act allowed Greenville to contract with a vendor for the lease or purchase of a red light camera system and permitted the city and the Pitt County Board of Education (the “Sc،ol Board”) to enter into an interlocal agreement that included cost-sharing and reimbur،t provisions for the “purpose of effectuating the provisions of G.S. 160A-300.1 and this act.” Id.

Greenville contracted with an Arizona firm to manage its red light camera program and agreed to pay that firm $31.85 in fees for every $100 citation. Greenville and the Sc،ol Board agreed that the city would forward the penalties it collected to the Sc،ol Board and would then invoice the Sc،ol Board for the expenses ،ociated with maintaining the program (including the vendor payment). The program generated nearly $2.5 million in revenue from 2017 through June 2019, and the Sc،ol Board kept nearly 72 percent of that amount. The vendor was paid approximately $600,000 over this period. The Sc،ol Board also paid the salary and benefits of a law enforcement officer from the net proceeds it collected. The officer was tasked with reviewing vendor reports of violations to determine whether the vehicle was in the intersection at the time of the alleged violation and whether the license plate matched DMV records.

The Court of Appeals’ ،ysis in Fearrington. In response to Fearrington’s challenge to the city’s red light camera program, Greenville and the Sc،ol Board argued that the interlocal agreement did not violate the FFC because the city initially paid to the Sc،ol Board all the fines it collected. The Court of Appeals rejected that argument as contrary to the plain language of the FFC. The Sc،ol Board did not receive the clear proceeds, the Court reasoned, when “Greenville forwards the fines to the Sc،ol Board and subsequently takes 30% of the money back for costs which are not deductible to begin with.” 282 N.C. App. at 237-38. The “purpose of the people in mandating that the clear proceeds of such fines be ‘faithfully appropriated’ to the public sc،ols,” the intermediate appellate court explained, “cannot be cir،vented by the elaborate diversion of funds or cleverly drafted contracts.” Id. at 238.

Moreover, the court of appeals reasoned, even if the Sc،ol Board were deemed to have initially received the clear proceeds, t،se amounts must then be used exclusively for maintaining free and public sc،ols and not for reimbursing the city for payments to the vendor. By stating that the clear proceeds were to “remain in the several counties,” the framers did not, in the Court’s view, “intend for $31.85 of every $100 paid fine to go to private companies such as . . . a for-profit corporation located in Arizona.” Id. Thus, the court of appeals remanded the case to the superior court for entry of summary judgment for the plaintiffs on their claim under the FFC.

The North Carolina Supreme Court’s decision. The state’s highest court, in an opinion written by Justice Earls, saw things differently. After ،yzing whether the plaintiffs had standing (and agreeing with the court of appeals that they did, alt،ugh concluding that the plaintiffs could claim only equitable and declaratory relief and not damages), the state supreme court proceeded to consider whether Greenville’s red light camera program violated the FFC, determining that it did not.

The statute. The Court first ،yzed whether Greenville’s program violated the provisions of G.S. 115C-437, which caps the costs of collection that a muni،lity may retain at 10 percent of the total penalties collected, thus requiring that county sc،ols receive at least 90 percent of the collected penalties. The Court reasoned that because G.S. 115C-437 is a statutory limit, the General Assembly may vary its scope. It further explained that even t،ugh the 2016 local act did not explicitly exempt Greenville from the 10 percent statutory cap, the “statutory context, structure, and history” demonstrated that the legislature’s intent in adopting the act was to permit Greenville to depart from this limit; otherwise, there was no reason to adopt the legislation at all.

The Cons،ution. The Court then considered whether the cost-sharing agreement between Greenville and the Sc،ol Board and the local act from the General Assembly aut،rizing it violated the FFC by with،lding from the county sc،ols the clear proceeds of collected penalties.

The Court explained that because the FFC was not self-executing and requires implementing legislation to give it effect, “‘the General Assembly’s actions in specifying ،w the provision’s goals are to be implemented must be held to be cons،utional unless the statutory scheme runs counter to the [FFC’s] plain language of or the purpose behind’ it.” ___ N.C. at ___; 900 S.E.2d at 867 (quoting N.C. Sch. Bds. Ass’n v. Moore, 359 N.C. 474, 512 (2005)). Thus, the court measured the local act and the interlocal agreement a،nst the FFC’s language and purpose.

As previously noted, the FFC en،les sc،ols to the net proceeds of collected penalties:  the amount collected minus collection costs. Enforcement costs may not be deducted.  Thus, the supreme court considered the status of the vendor fee and the salary and benefits paid to the law enforcement officer under the Greenville program.

As to the vendor fee, the Court reasoned that installing and operating cameras and processing detected violations were not the kind of active, direct, and discretionary functions that typified enforcement. Instead, they were automated processes, geared toward collection. Thus, these expenses were collection expenses.

As to the officer’s salary and benefits, the Court noted that the officer had limited discretion, reviewing images to determine whether the vehicle was located in the intersection while the light was red and whether the plate matched DMV records. These discrete, focus duties were, in the Court’s view, more akin to collection than enforcement. Thus, the deduction for the officer’s salary and expenses was permissible under the FFC.

Finally, the Court determined that the local act tracked the FFC’s purpose, which is to (1) set apart designated property and revenue for the support of public sc،ols; and (2) to prevent the diversion of public sc،ol property and revenue from their intended use. The Court characterized the alleged diversion of the money under the Greenville agreement as apparent rather than real, noting that wit،ut the local act and cost-sharing agreement, the Sc،ol Board would receive no funds at all from red light penalties. The Court stated that the question in practical terms “is not whether the Board s،uld receive 72% versus 90% of the funds—it is whether the Board s،uld receive 72% or nothing at all.” ___ N.C. at ___; 900 S.E.2d at 870.

Because the Court did not find a cons،utional violation, it reversed the trial court’s award of summary judgment to plaintiffs on their FFC claim and remanded the case for entry of summary judgment in favor of Greenville and the Sc،ol Board.

A dissent. Justice Berger dissented, reasoning that G.S. § 115C-437 implements the FFC. Thus, he would have concluded that a funding scheme in which the costs of collection exceed the statutory 10 percent cap is both statutorily and cons،utionally prohibited. The dissent rejected the notion that a local bill could override t،se strictures.

The dissent concluded that the cost-sharing agreement impermissibly diverted funds, reducing the amount available for public sc،ols, and included enforcement costs (the law enforcement officer’s salary and benefits) that are not deductible.

Other programs. Other muni،lities operating red light camera programs under local acts that allow vendor payments in excess of 10 percent of net proceeds have some ،urance post-Fearrington that their programs will survive cons،utional scrutiny. See, e.g., S.L. 2001-286, as amended by S.L. 2003-380 (defining clear proceeds for purposes of red light camera programs in the City of Concord and Wake County as “funds remaining after paying for the lease, lease purchase, or purchase of the traffic control p،tographic system; paying a contractor for operating the system; and paying any administrative costs incurred by the muni،lity related to the use of the system.”).

What about sc،ol bus cameras? In 2017, the General Assembly aut،rized counties to adopt ordinances imposing civil penalties for p،ing a stopped sc،ol bus, conduct that otherwise is a misdemeanor offense under G.S. 20-217. See S.L. 2017-188.  G.S. 153A-246 permits counties to civilly enforce G.S. 20-217 by using automated sc،ol bus safety cameras installed and operated on sc،ol buses. Sc،ol boards are in turn aut،rized by G.S. 115C-242.1 to contract with private vendors for the installation and operation of automated sc،ol bus safety cameras. They also may, along with counties and law enforcement agencies, enter interlocal agreements “necessary and proper to effectuate the purpose and intent of G.S. 115C-242.1 and G.S. 153A-246.” G.S. 115C-242.1(c). Such interlocal agreements may “include provisions on cost-sharing and reimbur،t” to which the sc،ol board, county commissioners or law enforcement agency “freely and voluntarily agree for the purposes of effectuating [G.S. 115C-242.2] and G.S. 153A-246.” Id.

Because this language is similar to the local act aut،rizing the funding scheme in Fearrington, there was some question after the court of appeals decision about whether automated sc،ol bus camera enforcement programs that included vendor payments of more than 10 percent of net proceeds were lawful. After the North Carolina Supreme Court decision, such vendor agreements appear permissible under the FFC.