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Commission Approves Rules for Hydraulic Fracturing

The N.C. Mining & Energy Commission (MEC) has approved rules regarding the management and development of onshore oil and gas exploration, including several affecting municipalities. The regulatory package now goes to the N.C. Rules Review Commission and will ultimately be reviewed by the General Assembly. The League participated extensively in the MEC's oil and gas rulemaking process over the past two years, serving on numerous workgroups and submitting comments on the proposed rules. The League's comments focused on proposed regulations related to water withdrawals, wastewater disposal, baseline water supply testing, setbacks, local government preemption, and reimbursement for infrastructure costs.

Noteworthy from the report was that the MEC received over 6,900 comments in opposition to the rules containing language that would preempt local government authority. However, the report  noted that S.L. 2014-4 prohibited local governments from exercising full regulatory authority over these activities, if that exercise of authority had the effect of prohibiting hydraulic fracturing. The report went on to state that the 2014 law mandated that the MEC establish procedures to determine whether and to what extent local government ordinances were preempted by the State.

In addition, the report stated that the MEC received over 4,980 comments requesting the addition of impact fees to provide for cost recovery for local communities. But it also clarified that the MEC lacked the statutory authority to implement such a fee. However, in discussions, MEC Chair Dr. Vikram Rao noted plans to make a variety of requests of the legislature, which could include legislation related to impact fees. These fees will be necessary to ensure that local governments are provided critical reimbursements for any damage to infrastructure, such as harm to roads.

Other changes to the rules that were of specific interest to cities and towns included a requirement that each permit application be reviewed by the county and municipality in which the proposed permit is located, and the addition of a setback distance of 1,500 feet to protect municipal water supplies. Another rule would clarify that any variances for setbacks must provide for equal or greater protection of public health, safety and the environment. Read media coverage of the commission's actions here and here. Contact: Sarah Collins


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Study Committee Examines Ride and Lodging Sharing Industries

The Revenue Laws Study Committee heard presentations and received public comments on the topics of ride and lodging sharing on Tuesday. The public hearing was the result of a directive for a review called for in HB 272 DOT/DMV Changes #2. The issue of how to regulate ride-sharing operators came to the General Assembly's attention after companies like Lyft and Uber recently began offering car rides through mobile application platforms in the state. Similarly, lodging-sharing programs like Airbnb and HomeAway, which allow homeowners to offer short-term rentals of their homes on the Internet, have also seen a recent surge of popularity in the state, particularly in tourist areas.

While cities have long had statutory authority to regulate and license taxis beyond state-imposed license plate and insurance requirements, ride-sharing operators are not subject to any of the same requirements, despite being engaged in the same business. Similarly, lodging-sharing rentals are not subject to the same health inspections, permit requirements and sanitation rules as hotels and other traditional lodging properties. Several speakers raised unfair competition issues, while Committee Co-Chair Senator Bill Rabon explained that the state may be missing out on tax revenue on these emerging industries, both in terms of uncollected sales and occupancy taxes as well as unreported income tax from the operators.

This summer, the League created a working group of municipal attorney stakeholders on these issues, including Charlotte attorney Thomas Powers, who addressed the committee on Tuesday. Powers cited municipal public safety concerns arising from ride-sharing companies' substandard background checks and insurance policies. At the conclusion of the meeting, Committee Co-Chair Representative Julia Howard implied that although her committee was likely done studying the issue, she would not be surprised if legislation on the issues appeared during the 2015 long session of the General Assembly. Contact: Whitney Christensen


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League Seeks Changes to "Waters of the U.S." Proposed Rule

The League has submitted public comments seeking more clarity in a proposed rule change that could affect the jurisdictional reach of the Clean Water Act. The U.S. Environmental Protection Agency and the U.S. Army Corps of Engineers have proposed a rule to clarify the jurisdictional reach of the federal law and those bodies of water considered "waters of the U.S." The League, in its comments, stated that the proposed rule's vagueness left many terms open for interpretation and therefore undermined the purpose of the rulemaking. The League requested that man-made ditches and other aspects of Municipal Separate Storm Sewer Systems (MS4s) be categorically excluded from the definition of “waters of the U.S."

Jurisdiction is an important issue to cities because it triggers CWA regulatory actions, such as permitting, that apply to projects that cities undertake such as road-building and construction of water, wastewater, and stormwater infrastructure. In addition, if a municipal project impacts jurisdictional waters, the city must undertake mitigation measures to compensate for any disturbances to those waters. Finally, cities often implement programs when overseeing development practices at the local level that depend on jurisdictional determinations for disturbed waters. Contact: Sarah Collins


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Economic Disclosures to Go Back Online

The State Ethics Commission will begin putting public officials' economic disclosure statements back online in 2015. The statements of economic interest, filed by thousands of elected and appointed state officials, are public records and had been posted online earlier this year. The State Ethics Commission decided to take the forms off of its website after judicial officials complained that they could allow criminals to easily find their home addresses and other personal information.

The commission will post new forms that leave off some personal information. Local government officials who are members of Metropolitan Planning Organizations and Rural Planning Organizations are among those who are required to file the economic disclosures. Read more about the decision to put the forms back online here.


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Register to Attend Regional Meeting on Future of Municipal Finance

There is still time to register to attend next month's regional meeting on the future of municipal finance to be held in Southport on Dec. 3. The meeting will be the first in a series of meetings, A Path Forward: Vibrant Cities Today and Tomorrow, and will include a presentation from League staff, a panel discussion of officials from the region and reception to follow. Read more about the meeting in last week's LINC'ed IN or go here to register to attend.
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New Development Review Requirements Kick In Dec. 1

New requirements for certain local government development plan review procedures become effective December 1. The requirements, included in last session's omnibus regulatory reform bill (scroll to Section 29, pg. 22), were motivated by a professional engineers' group, which sought to standardize some aspects of plan review and use of the title "engineer."

To know if the requirements apply to a specific development plan review process, first answer YES to BOTH of these questions:

  1. Is the review being conducted pursuant to a program approved by or delegated by the N.C. Department of Environment and Natural Resources (DENR) or the N.C. Department of Health and Human Services?
  2. As a result of the review, will the local government grant a permit, license, or approval to that member of the public?

Examples of program areas that must follow the new requirements (detailed below) include those that review sedimentation/erosion control, stormwater, and water/sewer designs. Notably, review of transportation designs is NOT subject to these new requirements.

If a local government's programs fall under the description above, the law requires them to make the following adjustments to the plan review process by December 1:

  1. Identify "required" vs. "suggested" changes. The new law requires plan reviewers in these areas to distinguish between plan changes that are required by a statutory or other legal authority and those that the reviewer offers as suggestions for improvement. The law directs plan reviewers to specifically identify the legal authority for any required changes when communicating with the plan submitter.
  2. Disputes involving a Professional Engineer (PE). The new law specifies a procedure for local governments to follow when a PE seals a submitted plan, yet the plan reviewer requires changes with which that PE disagrees. For these cases, the local government must establish a procedure whereby the plan reviewer's supervisor OR the approving/delegating state agency can provide further review and oversight of the plan details. As an additional requirement, if the first local government reviewer was not a PE, then the submitting PE may request that a PE conduct the secondary, "escalated" plan review. If the local government does not employ a PE, the new law makes allowances for the submitting party to pay for an outside PE of the local government's choice.
  3. Disputes involving changes that are "required." The new law also directs local governments to establish an informal internal process to address disputes when a plan reviewer identifies a change to the plans as being "required" under a specific, identified legal authority.
  4. Job titles. The new law prohibits local governments from including the word "engineer" in the job titles of employees conducting plan reviews subject to this law unless that employee is a PE. If the employee does not hold a PE license, then the local government must remove the word "engineer" from that employee's job title. However, in recognition of unintended consequences of this new requirement, during negotiations, the League was successful in securing an allowance for local governments to retain the word "engineer" in job titles for these positions for human resources purposes. For example, an employee without a PE may hold a position called "Civil Engineer I" for job advertisement, recruitment and classification purposes, yet when that employee communicates with the public, the title that appears on the employee's business cards, emails, and other correspondence may state, "Stormwater Plan Review Technician."

The new law also directs these programs to report to the Environmental Review Commission, a legislative oversight committee, in January. The League is working with DENR, the N.C. Association of County Commissioners, and legislative staff on a reporting template and guidance, which will be distributed once finalized next month. Contact: Erin Wynia


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House Republicans Set to Determine Speaker Nominee

As House Republicans prepared to meet on Saturday, six candidates were continuing to seek the caucus nomination for the House Speaker's post. With the GOP enjoying a 74-46 advantage in the House, the nominee would become the likely replacement for current Speaker and U.S. Sen.-elect Thom Tillis. House Rules Committee Chairman Tim Moore of Shelby and Rep. Leo Daughtry of Smithfield were still considered the favorites by most political insiders. Other candidates who have publicly acknowledged their intent to seek the post are Reps. John Blust of Greensboro, Justin Burr of Albemarle, Bryan Holloway of King, and Mitchell Setzer of Catawba. The House Republican Caucus planned to meet in Randolph County to decide its nominee. Read earlier coverage  from LINC'ed IN here, or read this latest update from WRAL-TV in Raleigh.
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Election Recount Confirms Senate Win for Alexander

Republican John Alexander was declared the winner in the state Senate District 15 race this week following a recount showing him maintaining his lead over Democrat Tom Bradshaw. The recount results for the Senate district, which covers a portion of Wake County, decided the final legislative contest from this year's elections. Bradshaw, a former Raleigh mayor, was able to request a recount because Alexander's margin of victory was less than 1 percent. Read more about the recount results here.
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Appeals Court Upholds Video Sweepstakes Convictions

The North Carolina Court of Appeals, in a unanimous decision, has upheld the criminal convictions of two people for violating the state's ban on video sweepstakes. The unanimous decision means that there is no automatic right of appeal to the state Supreme Court, which earlier upheld the state ban in a ruling in a civil case involving the games. Video sweepstakes operators have claimed that changes to the games have kept them legal. Tuesday's ruling would appear to be a significant legal blow to their argument. Police in several cities and towns have shut down the operations in the wake of the 2012 Supreme Court ruling. Read more about the decision here.
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Regional Wastewater Project Dedicated

Communities in western Wake County this week dedicated a regional wastewater system more than 10 years and $280 million in the making. The Western Wake Regional Wastewater Management Facilities is a system that will provide additional wastewater treatment capacity for businesses and residents in RTP South, Apex, Cary and Morrisville. Cary Mayor Harold Weinbrecht said that he envisions the project benefiting the area for decades to come. It is expected to impact a significant portion of those living in southwestern Wake County, as well as a portion of residents in Chatham County. It will also return clean water to the Cape Fear River and downstream users in Sanford, Fayetteville and Wilmington.