2013 Legislative Session Review for ASHRAE

Betsy Bailey, Executive Director and LobbyistProfessional Engineers of NC

January 8, 2014

Agenda for Today

1) Importance of Advocacy

2) Current Political Environment and Leadership

3) A Few New Laws Affecting the Engineering Profession

4) What to Expect for 2014

Engineers have a Huge Stake in Public Policy Decisions

Profession and Practice of Engineering is Heavily Regulated

• Licensed practice of engineering is defined in NC General Statutes – 89C

• How you practice is also defined in state law and local ordinances (construction, environmental statutes, etc.)

• Corporate income tax rates and individual tax rates are codified in state law. Also, insurance such as worker’s comp, unemployment, labor laws, etc.

Affects Your Personal Life• Voter I.D. Laws• Social Issues• Education Funding

If you’re Not at the Table, You’re Likely to be on the Menu!

Political Climate

– Heavily Partisan – Discord Between House and Senate 8.9% Unemployment– Discord with Governor – Mostly Senate– Loss of Power by Certain Interest Groups

• Health Care• League of Municipalities• Educators

– Tax Cuts– Less Government– Assault on local government

NC State GovernmentCompositionMostly Republican

Democrat

-Republican Controlled Legislature-Republican Governor-Mix of Democrats and Republicans in Cabinet Posts-Republicans in Executive Level Agency Positions-Republicans in most “appointed” positions

Legislature:61 Freshmen (although some Senate Freshman held previous House seats)60 Democrats (43 in House and 17 in Senate)110 Republicans (77 in House and 33 in Senate)6 Engineers in State Legislature (3 PEs all but 1 are Freshmen)

Six EngineersRepresentative Mike Hager (R)

2nd term, Burke, RutherfordRutherfordHouse Majority WhipChair Public Utilities & Energy

Representative Rick Catlin, PE (R)Freshman, New HanoverHouse Republican Freshman LeaderEnvironmental Engineer/CEO Catlin Engineers and ScientistsChair, Regulatory Reform Subcommittee on Environment

Representative Dean Arp, PE (R)Freshman, Union House Republican Freshman WhipArp Engineering, Inc.Vice chair, Appropriations & Subcommittee on

Transportation

Six EngineersRepresentative Chris Millis, PE (R)

Freshman – Onslow, PenderVice Chair, Commerce and Job DevelopmentReg Reform Sub on EnvironmentCivil Engineer, Paramounte Engineering, Inc.

Representative Dennis Riddell (R)Freshman, AlamanceServes on Commerce & Job DevelopmentMarine Engineer; ThermographerMEBA; Matson Navigation

Representative Chris Whitmire (R)Freshman, Transylvania Serves on Commerce & Job DevelopmentReg Reform Sub on EnvironmentMilitary Officer, U.S. Air Force, Currently

Self EmployedEngineering Education

New Leadership = Big Changes

• Change began in 2011 under Democratic Governor with Republican Majorities in House and Senate

• Republican Governor in 2013 Enabled Republicans to Enact More of Their Legislative Agenda:

• Voter I.D. Requirement Done• Limit to Medicaid Expansion under Affordable Care Act Done• Reduction in Unemployment Benefits Done• Public vs. Private Schools i.e., allowance for vouchers Done• More Control of Local Government Done although several bills await Governor• Repeal of Racial Justice Act Done• Expanded Regulatory Reform Done but continues• Acceleration of Hydraulic Fracturing Done with limitations• More Partisan Board and Commission Appointments Partially accomplished • Tax Reform Done (but to a lesser extent than originally thought)

Engineering Legislative Priorities• Infrastructure Investment and Innovative Reforms

– Design Build and P3 legislation for non-transportation construction – Increased Funding for Transportation– Increased Funding for Water/Wastewater/Stormwater Infrastructure Projects– Increased Funding for Building Repair and Maintenance

• Regulatory Reform– Streamline Permit Review i.e., limit review of PE work – Establish more Fast Track Permitting Options

• Tort Reform– Certificate of Merit for Architects and Engineers

• Job Creation– Continued Government Outsourcing where practical– Energy investments to support economic development

• Professional and Business – Tax Modernization that Encourages Economic Growth– No tax on Engineering Professional Services– Strengthen Quality Based Selection laws i.e., eliminate government exemption– Ensure Engineering Expertise on State Boards and Commissions

Engineering - ConstructionNew Law

HB 857 – Public Contracts/Construction Methods/DB/P3Prevention Act (Legislative Priority)

- Allows additional construction delivery and financing options for local and state government: Design Build; Design Build Bridging and Public Private Partnerships

- Ensures fair, equitable, open QUALITY BASED design and contracting procedures

- Eliminates QBS exemption of projects over $50,000 including transportation projects

PENC Position: Support. PENC hosted a series of regional meetings across the state to provide more detail on these changes. Additionally, PENC will be working with AIA and AGC to provide opportunities for the design and construction community to further discuss implementation.

Engineering - ConstructionNew Law

HB 120 – Building Codes/Local Consistency

- Changed the code cycle for residential from 3 years to 6 years- Prohibits a city from adopting ordinance or policy that requires additional inspections, beyond those required by state Building Code, without approval by NCBCC. Does not limit the authority of the city to require inspections upon unforeseen or unique circumstances that require immediate action

PENC Position: Neutral. The Building Code Council recently considered a similar code cycle change for commercial from 3 to 6 years but it failed. If the issue is taken up again by the BCC and is approved, PENC and AIA are prepared to take it to the legislature and request it be kept at 3 years.

Engineering – ConstructionNew Law

HB 628 – Protect/Promote Locally Sourced Building Materials

- The Anti-LEED bill- Introduced because some locally sourced wood products were

considered to be “disadvantaged” in the LEED rating system.

- Was successfully amended to ensure that the LEED rating system could still be used in state buildings but now contains a provision that there be an energy efficiency paybackperiod of 10 years.

PENC Position. Opposed original version as it would have had the effect of eliminating the use of LEED rating system for public buildings. Opposed provision with the 10 year payback requirement.

Engineering – ConstructionNEW LAW

SB 547 – Energy Saving Contracting Requirements

- Requires Qualified Provider to be prequalified by State Energy Office

- Defines Qualified Reviewer as Licensed Architect or Engineer with experience in energy efficiency measures

- Qualified Reviewed must consider both qualitative and quantitative measures. Governmental unit is not obligated to accept.

- Criteria for selection of provider based on quality not price - Guaranteed energy savings shall be determined by using

established measurement and verification methodologies such as Guideline 14-2002 of ASHRAE

Engineering - ConstructionBills Eligible for Consideration in Short Session

HB 201 – Reinstate 2009 Energy Conservation Code

- Scales back energy efficiency standards for commercial buildings adopted last year

- Energy efficiency standards would go back to 2009 requirements- Carolinas AGC spoke in support of the bill although several of their

largest contractors opposed it

PENC Position: Neutral for now due to information gathered from members stating that impact on engineering design is “manageable”. This position will be reconsidered in light of it’s eligibility for the short session. The bill passed the House but was held in the Senate. Is eligible for consideration in the short session.

Engineering - EnvironmentNew Law

HB 74 – Omnibus Regulatory Reform Bill8 PartsI. Improve Rule-Making ProcessII. State and Local Government RegulationsIII. Business and Labor RegulationsIV. Environmental and Public Health RegulationsV. Amend Environmental LawsVI. Solid Waste Reform ProvisionsVII. Industrial CommissionVIII. Severability and Effective Date

Engineering - EnvironmentNew Law

HB 74 – Omnibus Regulatory Reform BillI. Improve Rule-Making Process- Fiscal note required for all rules changes- Fiscal impact on local governments and NCDOT (environmental

permitting) required to be published- Periodic Review and Expiration of Existing Rules

Requires initial determination by agency of necessity (based on public comment within last two years)Requires 10 year reviewRules Review Commission reviews Agency determinationsRRC reports to Joint Legislative Administrative ProcedureOversight Committee

Engineering - EnvironmentNew Law

HB 74 – Omnibus Regulatory Reform BillII. State and Local Government Regulations- Requires study of occupational licensing board agencies by

Program Evaluation Division- Prohibits cities and counties from enacting ordinances that are

also regulated by a State or federal statute enforced by an environmental agency unless local body approves unanimously:NCDENR; EMC; Coastal Resources Commission; Marine Fisheries; Wildlife Resources; Commission on PublicHealth; Sedimentation Control Commission; Miningand Energy Commission and Pesticide Board

- Environmental Review Commission to study instances of local ordinances and where local ordinance is more restrictive(In effect until October 1, 2014)

Engineering - EnvironmentNew Law

HB 74 – Omnibus Regulatory Reform ActIV. Environmental and Public Health Regulations

- Establishes requirements for carbon monoxide detectors infood and lodging establishments (NC State Building Code)

Engineering - EnvironmentNew Law

HB 74 – Omnibus Regulatory Reform Act (Legislative Priority)V. Amend Environmental Laws REVIEW OF ENGINEERING WORK- Provides that NCDENR, NCDOT, HHS and local governments study

their internal processes for review of applications and plans submitted for their approval. To include:i) standard processes for each environmental permit program with respect to evaluation and approvalii) mechanisms in place to ensure staff who are not PEs are not engaged in the unauthorized practice of engineeringiii) standard scope of review within each permit program to ensure staff are not exceeding statutory or rulemaking authorityiv) opportunities to eliminate unnecessary or superfluous revisions and opportunities to streamline review

- Agencies to report findings to ERC by 1/1/2014- ERC to further collaborate with NCBELS and PENC before 2014

session

Engineering - EnergyNew Law

SB 76 – Domestic Energy Jobs Act (Legislative Priority)

- Keeps moratorium in place until rules are developed- Bans disposal of wastewater underground- Creates offshore energy management fund- Allows Secretary of NCDENR to replace State Geologist on Mining

and Energy Commission- Creates Energy Policy Council under NCDENR- HB 74 requires issue of disclosure of fracking chemicals to be

further studied by MEC. PENC Position: PENC supports shale gas exploration as long as it can be

done safely and groundwater can be protected from potentially harmful chemicals. This is a future area of focus for PENC – defining what components of “fracking” should be under the direction of a PE.

Engineering - EnergyBills that did not Pass Either Chamber

HB 298/SB 365 – Affordable and Reliable Energy Act

- Senate Bill 3 established a Renewable Energy Portfolio standard of 12% beginning in 2015 that would require energy companies to produce 12% of their energy from renewables like wind, solar, swine and poultry waste.

- This legislation would freeze the renewable energy portfolio standard at the current rate of 3% through 2023. In 2023, requirements would be eliminated.

- Not eligible for consideration in short session but…PENC Position: PENC is opposed to this bill. Technically, because neither

version of this bill passed one chamber, it is not eligible for consideration in the short session. However, the Joint Legislative Energy Policy Council is already hearing presentations on Senate Bill 3 and the “cost” to the ratepayer for continuing the renewable energy portfolio standard.

Engineering –Energy/Environment

NEW LAW

SB 402 – Appropriation Act of 2013- Transfers Energy Office from Commerce to NCDENR

This is an ongoing transfer that should be completed by February of this year. The transfer is an effort to align the energy efforts with the shale gas rules and regulations which are being developed by the Mining and Energy Commission.

Engineering – Tort Reform

HB 739 – Certificate of Merit for Architects and Engineers (Legislative Priority)

- Would require that before a negligence claim against a licensed architect or engineer is filed a professional licensed in the same practice areas as the defendant must review the facts and certify that the claim has merit and should be adjudicated.

- The opposition from Carolinas AGC was neutralized. However, trial lawyers still oppose.

- Although “technically” not eligible for consideration in the short session, there is an opportunity for this legislation to be considered again in 2014.

PENC Position. Support.

What to Expect in 2014• Funding for Education and Medicaid• Nothing controversial in election year• May be tweaks to tax reform package• Consideration of bills carried over and study committee

recommendations• May be further discord between the House and Senate• Elections should not change balance of power

What We’ll Be Working on in 2014(and Beyond)

• Making the case for more Repair and Renovation Funding for public buildings

• Opposing efforts to repeal the Energy Code• Opposing efforts to change commercial building code from 3 year to 6

year cycle as was done on residential side• Making recommendations on Regulatory Review of Engineering Work• Promoting Certificate of Merit legislation for Architects and Engineers• Opposing efforts to repeal the Renewal Energy Portfolio (SB 3)• Working on a number of environmental issues i.e., Streamlined

Permitting• Education and outreach for new Design Build legislation• Monitoring work of Mining and Energy Commission on Hydraulic

Fracturing