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Grab-bag Regulatory Bill Creates Rifts, Municipal Concerns

A decision in the House this week to toss out a kitchen-sink piece of legislation described as the 2014 Regulatory Reform Act, with several provisions affecting municipalities, did not sit well with the rank-and-file. It is the time of year in the legislature when omnibus bills show up, but in this case, the pushback from Republicans against chamber leaders put SB493 in peril. Even the chamber's Majority Leader, Rep. Edgar Starnes, became a critic. "Here we are with a bill that's called regulatory reform and it adds regulations." Other critics characterized it as legislation filled with ideas that could not stand on their own or survive earlier debates as separate legislation. 

The legislation, which appeared as the House was prepared to consider changes to a separate Senate regulatory reform bill, SB38, had cities and towns in the cross-hairs on several fronts. There were ethics requirements for some elected municipal officials in some cities, a repeal of protest petitions, changes to potential legal awards in condemnation cases, and potential penalties for building inspectors. A provision affecting billboard regulation was dropped during committee debate. (Details of the provisions affecting municipalities are outlined in separate pieces below.)  

The billboard-related provision was not the only one to go as the bill made its way through two committees. The bill, in which an older piece of unrelated Senate-written legislation was stripped and replaced, was pared down from 46 pages to 32 pages by the time it made it to the House floor. But it didn't go so well there either. House leaders decided to put off floor debate on the measure until next week, after initially considering a vote on Thursday, the same day that the legislation rolled out. More than a few legislators complained about the process, leading to the decision. Contact: Scott Mooneyham


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SB493: Billboards

Dooming an objectionable billboards measure even before it received a single vote of approval, House Finance Committee members removed the measure during the first committee discussion of the chamber's regulatory reform proposal Wednesday. With the vote, Committee members unanimously agreed not advance a provision (Section 2.3) that would have required issuance of permits for tree and vegetation removal around billboards, regardless of whether the applicant met the standards for permit issuance under current law. Further, the committee struck another measure that would have allowed any nonconforming billboard to remain in use, so long as the square footage of the sign did not increase. Together, these two provisions would have effectively removed most of the authority State and local governments retained to regulate billboards and preserve public safety and the appearance of their communities. The votes stood in contrast to House members' support of a similar provision initially proposed for last year's regulatory reform package. The League thanks Committee members for recognizing the troublesome nature of these provisions, and especially thanks Rep. Becky Carney for sponsoring the amendment to remove them from the bill before it advanced. Contact: Erin Wynia
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SB493: Ethics

One of the provisions in the 32-page, grab-bag House regulatory  reform bill would require the members of municipal governing boards with populations over 75,000 to begin filing economic disclosure forms. The requirement, based on the last U.S. Census count, would apply to elected officials in 12 cities: Charlotte, Raleigh, Greensboro, Winston-Salem, Durham, Fayetteville, Cary, Wilmington, High Point, Greenville, Asheville and Concord. SB493 2014 Regulatory Reform Act would also restrict how elected municipal officials in those cities can appear in advertisements, prohibiting them from using their official titles in advertising that advances their private interest and prohibiting their appearances in most public service announcements. The League is continuing to work with legislators to address concerns about the proposed restrictions, and immediately notified members in the affected cities even as the provision was first appearing in the revised bill.  

League Executive Director Paul Meyer has been making the point with legislators, and intends to continue making the point, that the last-minute provision may not be appropriate or achieve any intended purposes. "Other than a simple drafting error, we have no idea why singling out large city officials is an appropriate response to addressing presumed concerns over ethics among locally elected officials," Meyer said. "By and large, our cities have avoided corruption scandals. Municipal elected officials have proven time and time again that they are dedicated, hard-working public servants whose primary interest is bettering their communities and improving service for residents."

Meyer notes that the provision could have unintended consequences. They may include prohibiting mayors and other locally elected officials from promoting local festivals and other events because of the ad restrictions. Based on the timing of the filing requirement, and because the provision doesn't track with current state law that requires candidates for state office to file the statements of economic interest, the legislation may also result in an unfair disadvantage for incumbent municipal office-holders when they seek re-election. Contact: Scott Mooneyham


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SB493: Protest Petitions

A repeal of protest petitions is among the changes that is included the omnibus regulatory bill considered by the House this week. The provision in SB493 2014 Regulatory Reform Act would repeal current law that allows property owners affected by or adjacent to proposed zoning changes to file protest petitions and force a three-fourths vote by municipal boards in order to proceed with the amended zoning. The current law forces those super-majority votes when either 20 percent of the affected property owners  or five percent of those living along the entire buffer of the property proposed for change sign onto a petition. Legislative supporters of the change call the current law antiquated. The League's core principles on land use are not specific on the issue, and last year, the League remained neutral as the House passed a similar measure that the Senate failed to act on. League Executive Director Paul Meyer has solicited input from the League's Board of Directors regarding the proposal as the House continues to consider the larger bill. Contact: Scott Mooneyham     
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SB493: DOT Condemnation

Plaintiff's attorneys in quick-take condemnation cases would likely win bigger paydays at the expense of taxpayers under a provision included in the House regulatory reform package introduced Wednesday. The State and local governments use these condemnation procedures to more quickly bring online public infrastructure such as roads, water and sewer, and airport projects, saving project costs. Section 2.2 of the bill would rewrite current statutes in such a way that would encourage plaintiff's attorneys to bring cases to trial, likely delaying projects while running up legal fees. The League opposed this provision, which was identical to a bill that cleared the House last session. Contact: Erin Wynia
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SB493: Building Inspectors

Local building inspectors would risk charges of "willful misconduct, gross negligence, or gross incompetence" under an amendment added to the House regulatory reform package in committee hearings Wednesday. Sponsored by Rep. Mark Brody, the new language (Section 2.22) would impose personal liability on building inspectors when they were performing aspects of their job, an unprecedented level of culpability that does not exist elsewhere in state law. Of most concern, the provision would hold building inspectors to this standard of conduct if they enforced a requirement that was "more stringent than or otherwise exceeds" a state building code requirement. This standard is not defined elsewhere in state law. The League opposed holding local government officials to this standard of personal liability while doing their jobs, and the League also opposed making these same officials liable without defined legal standards.

That amendment brought to four the total number of building inspection provisions in the bill. The other three amendments advanced by House committee members included: (1) a clarifying modification intended to ensure adherence to limits on the number of building inspections a local government may perform; those limits were passed into law last year (Section 2.13); (2) a study, to be conducted by the N.C. Building Code Council, that would examine local building inspection authority and recommend legislation to ensure that local officials did not "disregard or independently require" changes to previously-approved construction plans (Section 2.16); and (3) a provision directing the N.C. Building Code Council to develop rules that would govern how builders requested approval of alternative building materials, designs, or methods (Section 2.21). Contact: Erin Wynia


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Cities See Wins in Key Court Cases

Following on the heels of the Asheville water case reported last week, three more rulings by North Carolina courts, including two decisions from the state Supreme Court, have significant implications for municipal government. In the two Supreme Court rulings, the League and its legal staff played an important role, weighing in with friend of the court briefs. Two of the cases represented notable wins for local government, while a third had mixed findings. In a case originating in Wilson County, the Supreme Court ruled that an injury claim was barred by governmental immunity because the County's operation of a leased building was found to be governmental in nature, rather than a proprietary function. Immunity does not apply to proprietary functions. 

The plaintiff was injured when falling while walking down steps as he left the building. He had contended that his claim should not be barred because he was paying his water bill at the time, a proprietary function of government. The court, though, said that governmental immunity turned on the purpose of the building, and not why the plaintiff was visiting. Because the building served a number of functions, including holding county commissioners meetings, it was seen to be governmental in nature, and so the immunity applied. The unanimous ruling of the court overturned an N.C. Court of Appeals decision.

In another ruling from the Supreme Court, a Chapel Hill towing ordinance was largely upheld while the Town's ordinance barring the operation of cell phones while driving was found to be invalid. The ruling stemmed from a lawsuit brought by a towing company, which sought to have both ordinances declared invalid. The court found that major portions of the ordinance were allowed under general police power statutes that give municipalities the power to regulate "in the name of health, safety or welfare." It declined to rule on whether a state law applied to only certain localities was an unconstitutional local act. The justices did conclude that the Town could not cap the fees that towing companies charge vehicles towed from private lots, and ruled that the state has sole authority to regulate cell phone use on streets and highways.

In the third case, a Superior Court judge denied a petition requesting that the City of Durham pay attorney's fees in a long-running case that originally involved a property owner's protest of a building permit issued to an adjoining property owner. The claim for attorney's fees was based on the contention that the city had acted outside its scope. The N.C. Court of Appeals, a year earlier, had denied attorney's fees for the same plaintiff, rejecting a claim that the City is a state agency and therefore subject to a law that allows recovery of legal fees in some disputes involving state agencies. Contact: Kim Hibbard


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Improved Back-up PSAP Legislation Proceeds to House

Primary Public Safety Answering Points (PSAPs) would not have to build new facilities to comply with a bill requiring that they have back-up capabilities after the legislation was amended and approved by the Senate on Tuesday. SB797 911 Board/Back-up PSAP originally would have required all of North Carolina's primary Public Safety Answering Points (PSAPs) to build new facilities or arrange for existing PSAPs to serve as back-up PSAPs in the event of a system outage. The amendment, which was crafted by the League and introduced by Senator Andrew Brock, specified that PSAPs would not have to construct new facilities in order to comply with the legislation and also would allow PSAPs to use any existing back-up capabilities they have in place to comply with the statute, regardless of whether they are stand alone facilities. We thank Senator Brock,Senator Chad Barefoot and Representative Jason Saine for all of their assistance in improving this bill to facilitate PSAP compliance. The legislation now proceeds to the House. Previous League coverage can be viewed here. Contact: Whitney Christensen


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Anti-Pension Spiking Measure Wins House Approval

House Bill 1195 Fiscal Integrity/Pension-Spiking Prevention passed the House on Wednesday and has now been sent to the Senate. The bill reflects a collaborative effort between the League, the Association of County Commissioners and the Treasurer's Office to protect the fiscal integrity of the Local Government Employees Retirement System by minimizing the impacts of significant, late career pay increases on the system. The League thanks Representative Jeff Collins and Representative Stephen Ross for their leadership on this issue. Previous League coverage can be found here. Contact: Whitney Christensen
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Water Law Reforms Advance in House, Senate

Both the House and Senate advanced bills this week that would change aspects of the state's water laws, including one that would achieve a League advocacy goal of expanding uses of reclaimed water. Reclaimed water is a highly-treated and highly-regulated wastewater product that is safely reused for numerous purposes, including irrigation. SB 163 Reclaimed Water as a Source Water, introduced this week as substitute language and unanimously passed yesterday by the House, would achieve the League's goal by expanding the use of reclaimed water to allow recycling it to public water supplies, under eleven specific conditions. The House Environment Committee also advanced a bill that would direct a study of the state's interbasin transfer laws, a recommendation of an interim study committee that was originally suggested by the League. That bill also included new language directing further study of the contentious ecological flows issue (background on the regulatory effects on local governments of previous ecological flows legislation). Finally, the Senate unanimously approved brand-new language in HB 894 Source Water Protection Planning that would require all public water supply systems to develop a source water protection plan. Contact: Erin Wynia


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Commission Issues Order Regarding Street Lights

The NC Utilities Commission (NCUC) issued its order Wednesday regarding the public street lighting issues related to the Duke Energy Carolinas (DEC) rate case and noted its appreciation of the cooperation of DEC and municipalities. This order was a result of the League’s intervention last Fall in the DEC rate case – the goal of which was to reduce the financial burden that an increase in investor-owned utilities' electricity rates would bring upon municipal governments served by the utility. As for street lighting, the League argued for an LED rate schedule that would make it financially feasible for municipalities to swap out old streetlight technologies for more energy-efficient technologies such as LED. The NCUC order addressed the following:

  • LED replacements of HPS and MH lighting
  • LED customer ownership option/LED variable rate component
  • Disclosure of DEC’s energy consumption and cost data
  • Meetings of DEC with municipal customers.

The League's continued involvement in this issue is supported by the 100-plus members of the Municipal Energy Group. Similar future efforts will be supported by the Regulatory Technical Assistance Fund (REG-TAF), a voluntary joint action program the League recently organized in response to member feedback. For more information on REG-TAF and how to participate, click here. Contact: Sarah Collins


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Moped Registration Bill Rolls Through House

Legislation to require moped owners to register the vehicles  moved through the House Transportation and House Finance Committees, and was then approved by the full House this week. House members, though, decided to drop the original bill's  insurance requirement and instead study the issue. The NC Association of Chiefs of Police's Fred Baggett and the League's Whitney Christensen spoke in support of the bill in the Transportation Committee Tuesday, citing the increased use of mopeds in the commission of crimes and the resulting need for law enforcement to be able to track their owners through vehicle registrations. We thank Representatives Phillip Shepard, Rayne Brown and Christopher Millis for their work on this important issue. Contact: Whitney Christensen
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House Continues Support of Local Environment Ordinance Authority

Following the Senate's lead, the House omnibus environmental amendments bill debated this week included League-supported measures that restored local authority to enact environment ordinances and pass ordinances to regulate fertilizer use, under certain conditions. Introduced in committee Wednesday and given final approval yesterday with overwhelming House support, the bill would repeal a current de facto moratorium on local government environment ordinances. League members provided extensive feedback to legislators studying the issue this past interim, resulting in the repeal recommendation approved yesterday by the House. The Senate passed an identical provision in its regulatory reform bill earlier this session, and in the same package, included League-requested language to allow local regulation of fertilizer use when necessary for a local government to comply with federal and state water quality mandates. In a related move, the Senate Judiciary II Committee further tweaked that fertilizer provision yesterday to add clarifying changes, adding the language into HB 366 Forest Service Tech./Clarify'g Changes. Contact: Erin Wynia


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Support Wavers for Fayetteville Red-Light Camera Bill

Legislation that would allow Fayetteville to pay for a red-light camera system with proceeds from fines moved through House committees this week, but one Fayetteville legislator raised questions about whether the bill is constitutional. HB 1151 Fayetteville Red Light Changes was reported without prejudice from the House Government Committee and is now before the House Finance Committee. Fayetteville had operated a red-light camera program in the past, but dropped it after the N.C. Court of Appeals ruled in 2006 that a similar program in High Point was unconstituitional. The bill would try to model the Fayetteville program after others that have not been scuttled by court rulings. But Rep. Rick Glazier told The Fayetteville Observer that he still questions the legislation's constitutionality. Contact: Scott Mooneyham
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Lawmakers Take Action on Bills Impacting Cities and Towns

In addition to the other priority issues covered in this week's Bulletin, legislators took action on a number of other bills the League has been tracking and working on. Below is a brief look at some of those bills, along with links to past League coverage of the issue where appropriate.


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Historic Preservation Tax Credits Hang in Budget Balance

With House and Senate budget negotiators now named and trying to work out a budget deal, the future of the state's historic preservation tax credits could be decided in the next few days. Led by Rep. Dean Arp, Republicans and Democrats in the House last week decided by a wide margin to include a modified version of the tax credits in that chamber's budget plan. The extension of the tax credits, which are scheduled to expire on Jan. 1, were not in the original House budget plan. They did not make it, in any form, into the Senate's version of the budget. Extension of the tax credits was a top priority that League members took up with legislators on Town Hall Day. 

Despite that bipartisan support in the House, media coverage this week indicated that the Senate may still have reservations about continuing the tax credits. But that media coverage, encouraged by League efforts, also demonstrated that the message was getting out regarding how critical the tax credits are to preservation and rehabilitation efforts in cities and towns around the state. It included a lengthy letter from Rocky Mount Mayor David Combs to The News & Observer of Raleigh discussing how important the tax credits have been for specific projects in his community. With budget negotiations underway and the legislative session at a critical juncture, it is important to keep up the good work. Your efforts are making a difference on this key issue! Contact: Scott Mooneyham


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Justice and Privacy Bills Clear House Committee

Two law enforcement bills received favorable reports from the House Judiciary Subcommittee C on Wednesday. A proposed committee substitute of SB 78 Law Enforcement/DA Privacy would require cities and counties to create processes whereby law enforcement officers, certain judicial branch officials and prosecuting attorneys could request to have their personal information removed from local government websites. For previous League coverage of this issue, click here. SB 594 Omnibus Justice Amendments, which features provisions that raise the penalty for threatening certain government officials and increases the criminal penalty for committing graffiti vandalism, also cleared the committee on Wednesday. That provision also showed up separately in the House's omnibus regulatory bill, SB493 2014 Regulatory Reform Act. Contact: Whitney Christensen
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League Identifies and Initiates Needed Election Statutory Change

A bill to regulate investments by cemeteries and funeral homes was stripped Thursday and replaced with 18 separate elections law changes, one of them related to drafting problems in previous legislation identified by League Associate General Counsel John Phelps. The issue arose as a result of a drafting issue that he discovered in last year's sweeping election reform legislation. The error inadvertently created two conflicting timeframes governing when city council initiated special elections related to charter amendments can be held. If Senate Bill 403 is enacted, the statute will provide needed clarification to municipalities regarding when these elections can lawfully take place. The League thanks Representative David Lewis and the House Elections Committee Counsel for their assistance in securing this clarification. Contact: John Phelps
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Coal Ash Provision Extends to Cities

A provision in the omnibus coal ash regulation bill considered this week by three Senate committees would extend to cities and towns. The measure would reduce the time allowed for wastewater spill reporting. Though aimed at coal ash facilities, this provision would apply to municipal and industrial wastewater system operators as well. In contrast, municipalities would not benefit from another provision that clarified state law regarding groundwater compliance boundaries, at least as it applied to coal ash facilities. Clarification of this area of state law became necessary after a March court decision upended previous interpretations of the law. While the provision included in the coal ash bill would respond to the precedent set by the March court decision as applied to coal ash facilities, the bill did not inlcude the same fix for other affected parties like municipalities. Municipalities are regulated by the same section of law at issue in the court case, particularly in the practice of land application of biosolids. If left unaddressed by the legislature, this court decision could force cities to undertake expensive "immediate" actions to eliminate the sources of any discharges that contributed to a violation of the state's groundwater quality standards. Get background on how this court decision could affect municipal wastewater operations in "Judge's Decision Upends Law for Land Application Sites' Groundwater Contamination," March 2014 EcoLINC. The bill is now calendared for consideration by the full Senate Tuesday. Contact: Erin Wynia


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Statewide Nutrient Standards Proposed

The N.C. Division of Water Resources (DWR) submitted its latest draft of the Nutrient Criteria Development Plan (NCDP) to the U.S. Environmental Protection Agency (EPA) this month, which differed significantly from earlier drafts reviewed by stakeholders over the past year. The NCDP is a roadmap for state regulators to use when developing nutrient management strategies such as the Jordan Lake Rules or Neuse Rules.

While retaining several site-specific features from previous iterations of the plan, the new plan proposed to develop statewide numeric nutrient criteria for estuaries (June 2023), reservoirs and lakes (June 2024), and rivers and streams (June 2025). The League membership made nutrient regulation based on site-specific data and analysis its top regulatory advocacy goal, and therefore opposed these additional new proposals. (Read more in June EcoLINC). Contact: Sarah Collins


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Poll Demonstrates Support for Keeping Privilege License Tax

A plurality of North Carolina's registered voters opposes legislative efforts to bar municipalities from charging business privilege license taxes, according to the latest poll from North Carolina-based Public Policy Polling. The poll, taken June 12-15, showed 32 percent of respondents opposing legislation that would take away the ability of municipalities to charge the privilege license tax effective July 1, 2015, compared to 25 percent who favor the measure. Forty-two percent had no opinion. PPP polled 1,076 voters. Finding a replacement source of revenue for the pending repeal of the tax is a top priority for the League, and the efforts of League members to connect with their legislators have been key in getting commitments from them to address the projected revenue loss. The poll is evidence the message is getting out. Thank you for your hard work! Contact: Scott Mooneyham