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NCLM News & Political Report

Most policy-makers in Raleigh would agree that this week is an "all hands on deck" sort of week. Why? The legislature set Thursday, May 16, as "crossover," the date by which all non-finance/appropriations bills must advance through their originating chamber (and "cross over" to the other chamber) in order to remain viable after that date.

Therefore, crossover results in long days for legislators, lobbyists, state agency representatives, state boards, and interest groups, all of whom are anxious to see the bills they favor move forward and the bills they oppose remain blocked. Legislative committees, already cranking at full speed since bill filing deadlines last month, will meet even more frequently this week -- sometimes two and three times a day -- to clear out bills assigned to those committees. Meanwhile, each chamber will hold session long into the evenings and even early morning.

As you might expect, such a harried atmosphere leads to the passage of bills with less-than-optimal consideration. As always, the League Government Affairs team will be there throughout it all, working with legislators and other organizations to improve proposals throughout debate.

Continued Focus on Cities

This representation has proved more critical this session as legislators have continued to exert influence over local affairs in ways that have now caught the attention of national media. [Read our synopsis of the N.C. press coverage of this clash in these EcoLINC articles from March and April.] In the past two weeks, the following national media outlets have reported on the N.C. legislature's actions with respect to local governments, particularly cities:

One of the most prominent proposals cited as an example of legislative overreach into local affairs is the forced transfer of the Asheville water system, which will become law without the signature of Governor Pat McCrory, according to a statement released by the Governor last week. Another high-profile proposal still under consideration would limit the ability of local governments to pass ordinances affecting environmental programs. The League successfully worked with legislators to dial back the original provision, which would have applied to all local government ordinances. However, the current version still contains many unintended consequences -- read more about them and the possible path forward for this bill below in "Regulatory Reform Bills."

Looking Ahead

Meanwhile, in light of the frenetic legislative pace, the political party turnover that began in January, and the uncertainty regarding the makeup of state boards and commissions (read about this uncertainty in "Regulatory Reform Bills," below), regulatory action initiated in the executive branch has nearly stopped. Nowhere was this slowdown more evident than at this month's meeting of the N.C. Environmental Management Commission, where only two of the nine committees met. Typically, six to eight committees take up business at each meeting.

By the time the June edition of this newsletter reaches your inbox, the legislature will likely be close to adjournment, Raleigh political decision-makers and interest groups will take a collective breath and evaluate any new marching orders from the General Assembly, and regulatory action will resume. The League will be there to report it all to you.


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Water Supply Bills

This article will highlight two water supply bills of interest to cities and towns that received consideration in the past month. Read about previously-introduced water supply bills of note in the March and April editions of EcoLINC. Clicking on any bill title will take you to the League's bill tracking service, which includes bill summaries, the League's position and tracking level for the bill, and information on bill status pulled from the N.C. General Assembly website.

  • Inter-basin transfer. SB 341 Amend Interbasin Transfer Law, a multi-faceted bill that makes incremental changes to the state's interbasin transfer (IBT) laws, passed the Senate in early May and now awaits House action. An IBT occurs when water is transferred from one river basin to another. Municipalities often initiate IBTs by, for example, withdrawing drinking water from one basin and discharging it as wastewater into another basin. This proposal, a product of a water supply stakeholder group on which the League participates, spells out the process for modification of IBT certificates. It also applies a similar process for first-time IBT certificate requests to areas under the Central Coastal Plain Capacity Use Area -- an area in eastern North Carolina required to transition away from groundwater supplies toward surface water supplies -- thereby easing the transition for affected water systems. The League secured an important change from the introduced version of the bill so that the N.C. Environmental Management Commission may not initiate an IBT certificate modification on its own. Such authority would create extreme regulatory uncertainty for city and town certificate holders. Importantly, the bill also changes the definition for the threshold under which a withdrawer would need to seek a certificate, calculating the two million gallon/day limit on a monthly basis rather than a daily basis. This change addresses the technical limitations of calculating daily withdrawals.
  • Irrigation contractors installing backflow prevention devices. Irrigation contractors would be allowed to install and service backflow prevention assemblies under HB 662 Irrigation K'ors/Install Backflow Assemblies, which unanimously passed the House at the end of April. The bill proposes to modify the definition of an "irrigation system" to remove backflow assemblies from the list of exclusions contained in that definition, thereby opening up the service opportunity for licensed irrigation contractors. These devices protect drinking water systems from being contaminated by intersecting lines carrying non-potable water. An amendment to the original bill would require irrigation contractors to receive one hour of continuing education each year on installation of backflow prevention devices. The bill does not prohibit local governments from requiring further training on device installation specifically for their jurisdictions.

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Stormwater Bills

This article will highlight five stormwater bills of interest to cities and towns that received consideration in the past month. Read about previously-introduced stormwater bills of note in the March and April editions of EcoLINC. Clicking on any bill title will take you to the League's bill tracking service, which includes bill summaries, the League's position and tracking level for the bill, and information on bill status pulled from the N.C. General Assembly website.

  • Stormwater fast-track permitting. A substitute version of HB 480 Environmental Permitting Reform received approval by the House Environment Committee earlier this month and the House Committee on Regulatory Reform yesterday. This regulatory reform bill would create a fast-track permitting program for issuance of stormwater permits by the state and local governments. To do so, it directs the N.C. Environmental Management Commission to place into rules a set of minimum design criteria for various stormwater devices. If a device designer seals the design as complying with that criteria, the design would bypass state or local technical review and receive automatic approval. While the initial version of this bill also applied to the design of sedimentation and erosion control devices, the approved version removes that section. In addition, the latest version of the bill includes a provision to account for the extent to which a designer may be held liable for faulty designs, another request made by the League to improve the bill. The League thanks Rep. Chris Millis for addressing many of the League members' concerns with the original proposal. Note that while the language from the original version of the House bill was included in the Senate's omnibus regulatory reform package, SB 612 Regulatory Reform Act of 2013, the League anticipates fast-track stormwater permitting to continue being refined through consideration of the House proposal.
  • Definition of "impervious" excludes gravel. The Senate's omnibus regulatory reform bill, SB 612 Regulatory Reform Act of 2013, contained a stormwater provision added for the first time during the bill's committee discussion. This particular provision redefined "impervious surface" in state law to exclude gravel. In many circumstances, gravel surfaces become impacted and thereafter do not allow water to soak into the ground--functioning as impervious surface. League members, who are held accountable for water quality impacts of runoff coming from impervious surfaces, do not support this proposed redefinition of "impervious surface."
  • Jordan Lake Rules. The Senate Agriculture, Environment, and Natural Resources Committee has calendared HB 515 Nutrient Management Standards Reform Act for its first consideration today. Two Triad legislators introduced the bill, which would further modify the Jordan Lake Rules nutrient management strategy. These water quality rules, the first of their kind in the state, were implemented by the legislature in 2009 and have been subject to legislative revision every year since then. At the request of numerous cities and towns affected by the nutrient management strategy, the introduced version of this bill would make changes to certain stormwater-related provisions of the rules. However, the League expects the Senate committee to replace that version with significantly different substitute language when it takes up the bill.
  • Transfer environmental permits. A bill that would streamline development in the event of a change in ownership of the developing property passed the House unanimously in late April and now awaits Senate action. HB 279 Transfer Environmental Permits would allow the state or any local government operating a delegated sedimentation/erosion control program to transfer an approved sedimentation/erosion control plan, under certain conditions, including that there will be no substantial change or modification of the project covered by the plan that would affect any requirement of the plan.
  • Redevelopment option. A bill designed to assist local governments in encouraging redevelopment in areas with existing hard stormwater infrastructure in place unanimously passed the House two weeks ago. HB 894 Allocation of Excess Stormwater/Local Govt would allow local governments to determine the capacity of their stormwater pipes to accept additional stormwater flow from sites and then allocate that capacity to redevelopment sites. The bill allows this procedure to substitute for on-site stormwater retention requirements for these redeveloped sites.

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Wastewater Bills

This article will highlight one wastewater bill of interest to cities and towns that received consideration in the past month. Read about previously-introduced wastewater bills of note in the April edition of EcoLINC. Clicking on any bill title will take you to the League's bill tracking service, which includes bill summaries, the League's position and tracking level for the bill, and information on bill status pulled from the N.C. General Assembly website.

  • Land application of biosolids. Both chambers of the General Assembly have considered companion bills that contain a provision affecting the process of land application of biosolids. The House Environment Committee voted in favor of HB 458 Omnibus County Legislation in late April, while the Senate approved SB 372 Omnibus County Legislation last week. Both bills contain a number of identical provisions, one of which would require the state to give boards of county commissioners notice and opportunity to comment if land application of biosolids has been proposed in their county. Biosolids are a byproduct of wastewater treatment and are used as a highly effective fertilizer for crops. State agency staff have told the League that the bill would codify current practice of allowing boards of county commissioners the opportunity for notice and comment for proposed new land application sites for Class B biosolids. The League is not opposed to this specific proposal but would oppose any legislation giving local governments such as counties the ability to prevent the land application of biosolids. League members prioritized limiting regulation in that area to the state and federal governments as a regulatory advocacy goal.

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Utility Operations Bills

This article will highlight six utilities operations bills of interest to cities and towns that received consideration in the past month. Read about previously-introduced utility operations bills of note in the March and April editions of EcoLINC. Clicking on any bill title will take you to the League's bill tracking service, which includes bill summaries, the League's position and tracking level for the bill, and information on bill status pulled from the N.C. General Assembly website.

  • Underground Damage Prevention Act rewrite. A modified version of HB 476 Rewrite Underground Damage Prevention Act passed the House Public Utilities and Energy Committee earlier this month. The bill is a comprehensive overhaul of the state's underground digging laws, also known as the "811" laws named after the "call before you dig" phone number excavators must dial to notify utilities of planned digging activities. The version approved by the committee includes a new section assigning enforcement responsibility to the State Fire Marshal. The N.C. Utilities Commission would take responsibility for assessing penalties for violations of the laws. The bill represents the culmination of months of negotiations between representatives of the League, contractors and other excavators, and utilities with underground lines such as natural gas, electricity, and cable. The League supports this compromise legislation, which would require all cities and towns with underground utilities subject to the act to join the NC 811 notification center. However, the bill would exempt cities from the requirement to mark -- or provide a "locate" -- for all gravity-fed wastewater lines installed prior to the law's effective date, and all stormwater facilities. The bill heads next to the House Finance Committee, and because it has a financial component, is not subject to the crossover deadline discussed above. The League and other stakeholders continue to meet to reach agreement on how to pay for enforcement of the Act.
  • Eliminate transfers from water/sewer enterprise funds.
     through on his commitment to the League and converted HB 708 Study Public Enterprise Systems/Use of Funds from a set of requirements about how local governments can use water/sewer enterprise fund revenues to a study bill. Approved by the full House with only one dissenting vote, the bill now directs the Legislative Research Commission to study the proper use of enterprise revenue and make recommendations for improvement of requirements regarding such revenues. The recommendations would address accounting controls, requirements for monitoring of and proper funding for infrastructure maintenance and improvements, and improvement of local government public enterprise management.
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    Design-build and public-private partnerships. A bill that would give all local governments the ability to utilize the design-build construction method and public-private partnership financing received its first approval from the House Government Committee Thursday. The League supports HB 857 Public Contracts/Construction Methods/DB/P3, which sets out procedures for solicitation of design-build requests for qualifications as well as the requirements for public-private partnership project financing. The bill would allow these innovative tools for all non-transportation government projects. The League thanks primary sponsor Rep. Dean Arp for leading an extensive stakeholder process that included the League, and for responding to the concerns of all stakeholders. The bill next heads for review by the House Finance Committee.
  • Local bidder preference. A bill designed to authorize local governments to provide bidding preference on goods and services provided by local companies did not receive a favorable report in the House Government Committee two weeks ago, on a vote of 11-18. HB 284 Local Contracts/Local Bidder Preference was voted down on a bipartisan basis, with opposition members saying it was bad for business and would drive up costs to local government by creating an alternative to traditional low bid processes. The bill was chosen by League members in January as an NCLM Advocacy Goal.
  • Public Infrastructure Oversight Commission. SB 102 Public Infrastructure Oversight Commission made a reappearance this session, having failed to receive a committee hearing in the 2011-2012 biennium. Last month, the Senate Agriculture, Environment, and Natural Resources Committee held a discussion of the bill without taking a vote. Sponsor Sen. Fletcher Hartsell told the committee the bill represented a consolidation of the several state funding streams currently available for water and wastewater infrastructure. He said the proposal would also create efficiencies and better oversight of the state's infrastructure spending by concentrating decision-making over how that money is spent in the hands of a new legislative commission. Specifically, this bill would establish a legislative commission to examine public infrastructure issues in the state; make recommendations to the General Assembly on ways to promote coordinated local, regional, and state planning and investment in public infrastructure; inventory the assessments conducted by state and local agencies to develop a comprehensive statewide policy that includes both short-term and long-term solutions for meeting critical infrastructure needs; and identify dedicated sources of funding and methods to leverage private capital, including the creation of an infrastructure bank, to finance those needs.
  • Takeover of water/sewer systems by Local Government Commission. A House bill that would allow the Local Government Commission (LGC) to take control of local water and sewer systems in the event that the utilities meet certain criteria was unanimously approved by the House last month. HB 238 Maintaining Water & Sewer Fiscal Health would grant the LGC the authority to take over the operations of local government or public authority utility systems if those systems are found to have negative working capital, a quick ratio of less than 1.0, or a net loss of revenue in the system for three consecutive years. Before the Commission takes control of the utility, it must notify the system of its problems and find that the financial stability of the utility is threatened and that the utility has failed to make changes to correct its issues. The companion Senate bill, SB 207 Maintaining Water & Sewer Fiscal Health, passed the Senate in March. Therefore, for the proposal to receive full General Assembly approval, one legislative chamber must now choose to consider and vote for the other chamber's bill.

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Regulatory Reform Bills

This article will highlight four regulatory reform bills of interest to cities and towns that received consideration in the past month. Read about previously-introduced regulatory reform bills of note in the February, March and April editions of EcoLINC. Clicking on any bill title will take you to the League's bill tracking service, which includes bill summaries, the League's position and tracking level for the bill, and information on bill status pulled from the N.C. General Assembly website.

  • City environment ordinance-making restrictions. After a total of one hour of committee and floor debate, the Senate passed a sweeping regulatory reform bill at the beginning of the month. One provision in the bill would destroy the ability of cities and towns to protect property from flooding and to run other required environmental programs such as stormwater quality, pretreatment, sedimentation and erosion control, water supply protection, and drought response. One week after receiving its only committee hearing, SB 612 Regulatory Reform Act of 2013 passed the Senate on a 36-11 vote and moved to the House. While the League successfully worked with the Senate bill sponsors to narrow the restrictions on city ordinance-making and to add regulatory reforms requested by cities to the bill, the League remains strongly opposed to the provision preventing municipalities from enacting environmental regulations stricter than what is required by State or federal law. This blanket provision would lead to numerous unintended consequences and would eliminate cities' ability to respond to environmental threats to life and property, comply with state and federal permit conditions, and streamline local development procedures. The House could take up this bill at any time; however, House leaders have indicated that they will likely consider regulatory reforms in separate bills to be introduced later in the session. The League is working with those leaders to propose regulatory reforms that would streamline local government operations and allow local environmental programs to continue operating effectively. Statewide media reported extensively on this part of the Senate's overall regulatory reform package; a sampling of those articles includes:
  • Boards and commissions overhaul. In a surprise move, the House unanimously voted down a compromise proposal for SB 10 Government Reorganization and Efficiency Act at the end of April. The vote came as both legislative chambers considered a conference committee report on the bill; the Senate voted to support the compromise measure. The bill would overhaul several high-profile state boards and commissions, including one of top interest to municipalities, the N.C. Environmental Management Commission. The latest disagreement on this bill between the two chambers led Senate leaders to say they would not consider further negotiation on this bill. While the compromise proposal could be reconsidered at any time, on the heels of the Senate leaders' statements to the contrary, the House tried again to propose changes to state boards last week with HB 1011 Government Reorganization and Efficiency Act. (Read WRAL's report in "'Son of 10' resurfaces in House Rules.") The bill is nearly identical to the version that chamber voted down a week earlier, but it does not contain a few of the earlier proposal's controversial provisions. The House gave approval of this bill 68-43 Thursday, advancing the bill for Senate consideration. Read past accounts of this often-debated proposal in the February and March editions of EcoLINC.
  • No fiscal note for rule repeals. State agencies proposing to repeal an existing rule would no longer need to prepare a fiscal note on the repeal under the terms of HB 892 No Fiscal Note for Rule Repeal, which was approved unanimously by the House in late April. The bill would address a regulatory goal chosen by League members to streamline the process for repealing unnecessary, unduly burdensome, or inconsistent rules. The bill now heads to the Senate for consideration. In addition, the Senate's omnibus regulatory reform bill, SB 612 Regulatory Reform Act of 2013, contains the same language and has been approved by that chamber.
  • Administrative process. After receiving committee feedback to HB 74 Periodic Review and Expiration of Rules at the beginning of the legislative session, House bill sponsors took a few months to craft a more targeted approach to require a review of every rule in the state's administrative code. They introduced the new proposal Wednesday during a meeting of the House Committee on Regulatory Reform. After a half-hour of explanations, questions, and debate, the committee approved the proposal, which would call for a close examination of all state agency rules followed by cuts to or elimination of many of those rules. While the new language in this bill did represent a more defined approach to review of existing regulations, it would have an expansive reach, particularly for environmental rules. In this bill, the state Rules Review Commission and the N.C. General Assembly would gain a wider scope of authority to determine whether individual rules, which have already been approved in accordance with the state's administrative procedures, must undergo reapproval through rulemaking or expiration. The bill would have the likely effect of forcing a second rulemaking for nearly every environmental rule in the N.C. Administrative Code, a time-intensive process for the state environmental rulemaking boards and the agencies that support them. The new proposed process replaced original language in HB 74 Periodic Review and Expiration of Rules and came less than one week after the Senate signed off on a sweeping regulatory reform proposal of its own, detailed above in this article. The full House voted to approve this proposal 90-24 yesterday with less than twenty minutes of debate.

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National Stormwater Rulemaking Not Likely to Meet June Deadline

One of the first water quality rulemaking initiatives of the Obama Administration, the national post-construction stormwater rulemaking, will not likely meet its June deadline for proposal, according to U.S. Environmental Protection Agency (EPA) officials. In talks to various local government associations, including the National League of Cities and National Association of Clean Water Agencies, officials stated that they have delayed proposing the rule because they have had difficulty determining the costs and benefits of the rule.

As further evidence of a delay, the rule has not yet been submitted for review by the White House Office of Management and Budget (OMB). Review of rule packages by OMB -- especially high-profile rules such as this one -- typically takes months. EPA has not officially announced that it would not meet the expected June deadline.

The rule proposal is intended to set, for the first time, water quality discharge standards for sites after development, or "post-construction." While EPA has publicly tested many ideas related to this rulemaking over the past few years, officials have recently told interest groups that the rule would likely contain stricter stormwater retention standards for greenfield (or undeveloped) lands than on redevelopment sites. According to EPA officials, having two different standards would encourage redevelopment and reduce sprawl.

The post-construction standards most recently shared by EPA would require new construction to retain stormwater runoff from an 80th, 85th, or 90th percentile storm event for up to 24 hours after rainfall. Redevelopment would face an 85th, 90th, or 95th percentile standard, which would be easier to achieve. Officials indicated that the exact volume would likely vary depending on an area's climate and typical rainfall measurements. Details about this standard are available in this April EPA presentation.

The proposal will also likely contain provisions to encourage the use of green infrastructure techniques. In addition, the proposal will likely expand the areas required to adhere to new rules beyond cities and other densely-developed areas. However, EPA officials said the rules would not apply in areas of under 10,000 in population.

Contrary to earlier forecasting from EPA, officials now say the proposal will not include a requirement to retrofit existing development. Instead, officials say, existing development will receive upgrades to modern stormwater control standards at the point it is redeveloped.


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Regulatory Briefs

DWQ updated its application and review process for Authorization to Construct wastewater infrastructure permits, including new Minimum Design Criteria to allow fast-track wastewater infrastructure permits...EPA will not appeal a U.S. District Court decision invalidating its Virginia stormwater flow TMDL...DWQ officials told the EMC last week that they would recommend the Commission delay approval of model existing development programs for the Jordan and Falls nutrient strategies, which DWQ said would allow time to develop a system of stormwater control technique credits...The UNC Environmental Finance Center reported that half of N.C. utilities increased their water and/or wastewater rates last year, while 75 percent of utilities increased rates in the past two years...Meanwhile, a new white paper by the U.S. Conference of Mayors showed that nationwide, from 2001-2010, public spending on water and wastewater systems increased 60 percent, while GDP rose only 37 percent...The issue of water and sewer rate affordability for communities is a priority of the National League of Cities, which continued to work with EPA earlier this month toward a more flexibile definition of affordability...The EMC voted last week to remove a condition on the Charlotte-Mecklenburg Utilities Department's IBT certificate, allowing the utility to extend water lines to serve the Town of Mint Hill...In North Carolina, systems may now apply for fast-track Drinking Water State Revolving Fund loans at any time during the year so long as they waive the opportunity to compete for any principal forgivenes...EPA finalized guidance for its nonpoint source section 319 grants last month to require at least half of a state's funding go toward watershed-based projects.
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