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August 27
NCGA fails to Jump Start Our Businesses with Crowdfunding Legislation

Crowdfunding is a relatively new capital raising tool, which was generally used in the past as a financing method for such ventures as films and music recordings.  To date, crowdfunding has not been a popular method for offering and selling securities because offering a share of financial returns or profits from business activities would subject the transaction to federal and state securities laws, requiring certain registrations with the Securities and Exchange Commission (SEC) and state securities regulators. U.S. Securities and Exchange Commission, SEC Issues Proposal on Crowdfunding (October 23, 2013).

In 2012, Congress passed the JOBS Act (Jumpstart Our Business Startups Act).  The JOBS Act, among other things, added a new section, 4(a)(6), to the Securities Act of 1933, creating a new exemption for certain crowdfunding offerings from SEC and state law registration requirements.  However, before the law can become effective the SEC must promulgate and implement rules regulating the exemption.  For further information on the JOBS Act, please see The JOBS Act—An Overview and Some Recent Developments, written by Michael E. Slipsky and David R. Krosner.

As of this summer, the SEC has proposed rules for crowdfunding, but those rulesare not final. A dozen states are making an effort to join Georgia, Kansas, Michigan, Alabama, Maine, Washington, Wisconsin, and Indiana by developing their own regulations allowing crowdfunding within the states. States are growing frustrated and tired of waiting for the SEC to adopt federal regulations.  See Posting of Bill Meagher to, States make own crowdfunding rules, rather than wait for SEC (May 5, 2014, 15:03 EST).

In response to the federal delay, Representative Tom Murry of Wake County sponsored state legislation attempting to allow and regulate crowdfunding in North Carolina, filing House Bill 680, the JOBS Act, on April 9, 2013.  House Bill 680 did not pass the Senate and was not eligible for consideration in the 2014 short session.  For that reason, in June the House added the crowdfunding provisions, titled, “Jump-Start Our Business Start-Ups Act,” to the 32 page fifth edition of Senate Bill 734, Regulatory Reform Act of 2014. 

When compromise discussions between the House and Senate on Senate Bill 734 stalled, the Senate added to House Bill 1224 various provisions regarding modifications to the local government sales and use tax rate as well as other provisions including the crowdfunding provisions.  House Bill 1224 had been filed at the beginning of the short session as a bill modifying the Job Maintenance and Capital Development Fund.  The House rejected the Senate’s modifications of House Bill 1224.  As a result, the House and Senate appointed a conference committee, and the committee made its report on July 31, 2014.  The Proposed Conference Committee Substitute was passed by the Senate, however it failed in the House. 

The final version of House Bill 1224, the Proposed Conference Committee Substitute, would have allowed North Carolina residents to invest up to only $2,000 per purchaser - unless the purchaser is an accredited investor as defined by rule 501 of SEC regulation D, 17 C.F.R. § 230.501 - in new in-state ventures through the crowdfunding mechanism.  It would have allowed most companies to raise up to $1 million in capital through unregistered securities without a financial audit and up to $2 million in capital if the issuer has undergone and made available to each prospective investor and the Secretary of State the documentation resulting from a financial audit.  Essentially companies would have been able to sell securities directly to the North Carolina public without having to incur the expense of conducting a registered securities offering.  The NC Secretary of State would have been tasked with the regulation of these types of transactions and would have collected quarterly reports.  See Posting of Mark Binker to WRAL TechWire, Crowdfunding bill clears N.C. Senate Committee,  (July 16, 2014 14:08 EST).

The General Assembly has adjourned sine die.  Although crowdfunding provision had an opportunity to become law during the 2014 short session in either Senate Bill 734 or the Proposed Conference Committee Substitute of House Bill 1224, the General Assembly did not pass the crowdfunding provision.  House Bill 1224 failed in the House and the compromise finally reached for Senate Bill 734 in the ratified bill excluded the crowdfunding provision.  There is a possibility the crowdfunding provision could again be considered before the 2015 session, scheduled for late January, if three-fifths of all members of the Senate and three-fifths of all members of the House vote to do so, as provided in Section 11(2) of Article II of the North Carolina Constitution.  However, the more likely scenario for the General Assembly to return would be for a “special session” by call of the Governor.  As provided in Section 5(7) of Article 3 of North Carolina Constitution, “[t]he Governor may, on extraordinary occasions, by and with the advice of the Council of State, convene the General Assembly in extra session by his proclamation, stating therein the purpose or purposes for which they are thus convened.”

As of Wednesday, November 26th, Jillian Decamp is no longer with Poyner Spruill.

August 12
2014 “Short” General Assembly Session?

​The House and Senate chambers are discussing compromises surrounding two adjournment resolutions, House Joint Resolution 1276 and Senate Joint Resolution 881. The Senate is scheduled to come back on August 13, while the House is scheduled to come back on August 14 for a no vote session. The chambers will be able to consider any matter rightly before the 2014 short session due to the issue that two weeks ago the Senate and House could not agree to an adjournment resolution limiting the subject matter of the potential August 13-15 sessions.
After the General Assembly meets this week, they anticipate reconvening on November 17 to potentially consider matters as follows:

  • Bills related to the structure, operation, and funding of Medicaid;
  • Bills relating to claims or orders in litigation to which the State, its instrumentalities, or its officers are parties;
  • Confirmations pursuant to G.S. 7A 45.1(a10) if it becomes law; and
  • A joint resolution adjourning the 2013 Regular Session of the General Assembly sine die.

As of November 26th, Jillian DeCamp is no longer with Poyner Spruill

July 11
Compromise Probable for Coal Ash Bill

On July 3, 2014, with a final vote of 93-16, the House gave final approval to Senate Bill 729, outlining the cleanup and closure of North Carolina coal combustion residuals surface impoundments, better known as coal ash ponds. Senate Bill 729 directs the closure of all coal ash ponds, whether high or low risk, by no later than 2029. 

The Senate has scheduled Senate Bill 729 to be heard on concurrence on Monday, July 14. The Senate has previously scheduled the bill to be heard twice, postponing it both times. 

Senate Bill 729 began in the Senate chamber as the “Governor’s Coal Ash Action Plan” and after eight weeks and 40 amendments considered on either the House or Senate floors, the bill has passed both chambers, now titled “Coal Ash Management Act of 2014.” Representative Chuck McGrady, a Republican representing Henderson County and one of the members running the bill through the House Chamber, commented during the debate last week, that six months ago, they never thought they’d be at this place debating a coal ash bill, yet here they were.

During the debates House and Senate leadership tried their best to reject amendments from members naming specific sites located within the members’ districts as priority for cleanup efforts. The bill lays out a process for the experts, engineers and scientists, to determine the order for cleanup of the sites. Representatives McGrady, Samuelson, and Lewis made this point repeatedly during debate, while opposing such amendments.

Since Senate Bill 729 began in the Senate, and has now passed both chambers, the Senate must either vote to concur or not to concur.  If the Senate does not concur, a conference committee will be appointed from each chamber to try to work out the differences between the Senate and the House’s plans. The Speaker of the House already named his conference committee, after the passage of the bill on July 3, 2014. Senator Tom Apodaca has publically stated the Senate would “absolutely not” agree with the House amendments, therefore requiring a compromise between the chambers.


As of Novemver 26th, Jillian DeCamp is no longer with Poyner Spruill

April 23
Environmental Review Commission holds final meeting prior to start of 2014 Short Session

​It seemed fitting that the Environmental Review Commission (the Commission), met yesterday, Earth Day, for its last scheduled meeting before the start of the 2014 short session.  Yesterday's meeting was chaired by Representative Ruth Samuelson.  The Commission heard presentations from Tom Reeder, Director of the Division of Water Resources at DENR, Paul Newton, North Carolina State President of Duke Energy, Edward Finley, Jr., Chairman of the North Carolina Utilities Commission, and Chris Ayers, Executive Director of the North Carolina Utilities Commission Public Staff.  At the close of the meeting the Chairwoman entertained public comment for close to an hour.
Duke Energy presented its support for a coal ash plan that could potentially incorporate several options into one solution and addresses, not only the Dan River, but other active and retired sites.  Duke Energy presented three scenarios to the committee.  The first plan, costing $2.0-2.5 billion, 1) incorporates the use of hybrid caps in places of the closure of some sites, 2) moves some sites to new lined structural fills or landfills, 3) continues the Asheville structural fill, and 4) converts some sites to dry fly ash.  The second plan, costing $6.0-8.0 billion, would incrementally excavate ash from 10 sites to landfills over a 20 to 30 year period.  The third plan, costing $7.0-10.0 billion, would incrementally move the ash to all-dry pneumatic bottom ash handling systems and include the thermally-driven evaporation of other process water.  Mr. Newton stated Duke believed the answer was somewhere between the first and second options.  
The Sierra Club, the Roanoke River Basin Association, and the Catawba Riverkeeper, among several others, offered their comment. 
The Sierra Club urged that the General Assembly set minimum standards for the closure of coal ash ponds such that Duke Energy could propose alternatives that adequately demonstrate effective protection of water supplies.  The Sierra Club also asked the legislature to bring coal ash under its waste management laws, since North Carolina is the only state that does not treat wet coal ash as solid waste.  Finally, the Sierra Club asked legislators to regulate structural fills and require liners and groundwater monitoring when coal ash is used as structural fill.  
Other speakers asked the Commission to require the drainage and removal of coal ash from all open coal ash pits and the storage of all coal ash in dry, sealed above-ground containers or the reuse of the ash in products such as concrete. 
The Commission did not take any votes and did not introduce any potential legislation.  The Commission had previously met on April 9th of this month and voted to approve its final report for the 2014 short session, which includes the Commission's legislative proposals.

As of November 26th, Jillian DeCamp is no longer with Poyner Spruill.

February 06
Proposed Fracking Setback Rules Approved

​The North Carolina Mining and Energy Commission (the Commission) voted last week on fracking standards governing safe drilling distances from homes, streams and other sensitive landmarks.  With only one dissenting vote, the Commission voted to adopt 650 feet as the minimum safe distance a natural gas well can be drilled from buildings, homes and water wells.  The Commission also approved a 200-foot safety buffer for fracking from streams, wetlands and flood plains.  These setback distances are measured from the wellhead at the surface, where a heavy industrial operation must be set up during the drilling and fracking process. While not the most stringent, the new setback rules approved by the Commission are some of the toughest in the United States.  The setback rules do, however,  contain provisions that allow for a waiver of or variance from the setback should the applicant meet certain requirements.  A copy of the setback rules approved by the Commission can be found here.

Fracking rules approved by the Commission are recommendations to the General Assembly, which will have final say over North Carolina's fracking regulations. Until those standards are given final approval by the General Assembly, fracking remains under a moratorium in North Carolina.


Essick_Chad_TN.jpgChad Essick primarily represents land owners, developers and local governments in state and federal court on a myriad of land-use and zoning issues including vested rights, constitutional matters and zoning ordinance interpretations. He also represents land owners and developers before local Boards of Adjustment, Planning Commissions, City Councils, and County Commissioners on matters related to zoning, permitting, variances, annexations, special use permits, site plans, subdivisions and road closings. Chad may be reached at 919.783.2896 or

November 11
General Assembly to Study Market Based Principals in Health Care: Sustainability and Transparency

​Between now and May 2014, the General Assembly will study what some believe to be barriers to a market-based health care delivery system. Among those perceived barriers that will be studied is North Carolina’s Certificate of Need law.  The General Assembly will also be studying ways to enhance health care provider recruitment, retention and distribution in order to increase access to medical care throughout North Carolina.

During its last two sessions, the North Carolina General Assembly has utilized its Legislative Research Commission (LRC) to study a number of matters during the time the legislature is in recess.  The LRC will do that this year through Joint Committees staffed by both Senators and Representatives and House Committees staffed only by House members.  The LRC is chaired by Sen. Tom Apodaca, Rules Chair of the Senate and Rep. Tim Moore, Rules Chair of the House.  On October 29, House Speaker Thom Tillis and the President Pro Tem of the Senate, Phil Berger, announced the matters that will be studied by the LRC. 

One of the joint studies will focus on Market Based Solutions and Elimination of Anti-Competitive Practices in Health Care

Specifically, the study will focus on:

  1. Perceived barriers at the federal level, including health care laws and reimbursement
  2. Perceived barriers at the state level, including reimbursement, regulation of health care delivery, and the impact of the CON law on community hospitals
  3. Comparison of NC’s CON law to other states with and without CON laws
  4. Comparison of same day surgery offered by hospitals and non-hospital owned ambulatory surgery centers
  5. Restrictive covenants in physician employment agreements

The Joint Study Committee on Market Based Solutions and Elimination of Anti-Competitive Practices in Health Care is co-chaired by Sen. Tom Apodoca of Henderson County and Rep. Marilyn Avila of Wake County.  The Committee is expected to meet several times between now and May 2014, and is charged with making an interim report to the General Assembly when it re-convenes in May 2014, including recommended legislation.  The Committee’s final report will be to the 2015 General Assembly.

Another of the Joint Studies will focus on Health Care Provider Practice Sustainability and Training/Additional Transparency in Health Care.

Specifically, the study will focus on:

  1. Current and projected supply and distribution of health care providers.  The specialities that are most needed now and in the future will be identified.
  2. Existing programs in NC to recruit and retain health care providers
  3. Regulatory burdens to recruitment and retention
  4. Successful recruitment and retention programs in other states
  5. Current and future role of physicians’ assistants and registered nurses, particularly in medically underserved areas
  6. Telemedicine
  7. Transparency in cost

The Joint Study Committee is chaired by Sen. Ralph Hise of Mitchell County and Rep. Mark Hollo of Alexander County.  The Committee is expected to meet several times between now and May 2014, and is charged with making an interim report to the General Assembly when it re-convenes in May 2014, including recommended legislation.  The Committee’s final report will be to the 2015 General Assembly.

As of November 26th, Jillian DeCamp is no longer with Poyner Spruill.
August 28
NC Supreme Court Limits Private Lawsuits for Sedimentation Violations

​The North Carolina Supreme Court recently ruled that a notice of non-compliance with sedimentation and erosion control regulations does not trigger an injured neighbor’s right to sue for damages caused by a “violation." The court’s reasoning is a bit nebulous,  but the decision clearly means that a person clearing land can be in non-compliance with sedimentation and erosion control requirements without violating them. This is a bit perplexing since there is little doubt literally that to be in non-compliance with a rule or law is to violate it. Perhaps the best explanation is the recognition that total compliance with all requirements is nearly impossible, so notices of compliance are meant to give a developer a warning and a specified time to correct the “non-compliance." Perhaps the court was just being merciful, if not semantically logical. Regardless of reasoning, there are several clear messages. Those in the land clearing business will have a lot less to fear from private lawsuits claiming damages from violations, and those who may be affected by sediment or runoff will have a  much more restricted cause of action to redress any damage. And as a logical extension, DENR and local governments may not be able to assess penalties based on notices of non-compliance but rather will have to issue a notice of violation before issuing a penalty. This could lead regulators to being less liberal in giving notices of non-compliance. This should not be a green light for land developers to use poor sedimentation and erosion control measures since DENR or a local government can choose at any time to issue a notice of violation accompanied by a penalty if corrections required by a notice of non-compliance are not made within the specified time – the penalties are notoriously high.

Dunn_Glenn_TN.jpgGlenn Dunn has over thirty years of experience over the full range of environmental law practice. He has represented cities, counties, developers, industries and lenders regarding compliance with regulatory requirements, environmental risk analysis, remediation, and when necessary, administrative litigation. Glenn may be reached at or 919.783.2842.

July 18
Highlights from the recently proposed Tax Reform Plan - updated 7/23/13

On July 15th Governor Pat McCrory, Senator Phil Berger, President Pro Tem of the Senate, and House Speaker Thom Tillis released a tax reform plan under a Proposed Conference Committee Substitute to House Bill 998. During the following two days, the House and Senate debated the plan. Democratic members in both chambers criticized the plan as a disproportionate tax cut for the wealthy which will result in cuts to essential government services.  Republican members responded that the plan will put money back into the pockets of all individual tax payers, not just the wealthy, and businesses.  This, they believe, will generate jobs and economic opportunities for all North Carolinians. Governor McCrory signed the bill into law on July 23,2013 releasing the following statements “I came to the governor’s office a few short months ago with a sense of urgency and resolve to put North Carolinians back to work, ... I firmly believe that this reform package will prove to be critically important to growing North Carolina's economy and getting people back to work.  This tax reform package puts more money in families’ budgets and will restore confidence for North Carolina businesses. Because of this package, job creators will think about relocating to our great state."
This plan is an historic change to the tax structure of North Carolina, a structure that had not been reformed since the 1930’s. Democratic members believe the shift in policy to lower taxes is a shift in the wrong direction because they believe it will actually result in a tax hike for many individual taxpayers and starve essential government services and programs.  There are some members that believe the plan may not go far enough, but all Republican members agree this plan is one step forward in the continuing process of tax reform, appropriately decreasing the size of government, and will have the effect of increasing revenue as it stimulates North Carolina’s economy. On the House floor during the Proposed Committee Substitute’s third reading, Representative David Lewis from Harnett County stated he believed the Proposed Committee Substitute will produce adequate revenue to meet the needs of our growing state.
Below please find some highlights from the proposed tax plan.

Personal Income Tax

  • Eliminates the three-tiered state personal income tax and reduces taxes from the current maximum rate of 7.75% and minimum rate of 6% to 5.8% in 2014 and 5.75% in 2015.
  • Increases the standard deduction for all taxpayers, applied to the:
    • First $15,000 of income for those married filing jointly
    • First $12,000 of income for heads of household
    • First $7,500 of income for single filers
  • Retains the state child tax credit and increases it for families making less than $40,000
  • Retains deductions for mortgage and property tax up to $20,000
  • Allows full tax deductions of charitable contributions
  • Exempts Social Security from taxable income
  • Eliminates deductions on retirement income 

Corporate Income Tax

  • Reduces the corporate income tax from 6.9% to 6% in 2014 and then to 5% in 2015, a 29% rate reduction
  • After 2015, if state revenue grows and meets its goals it will trigger a tax cut to 4% in 2016 and 3% in 2017

Other Highlights

  • Caps the state gas tax through June 30, 2015
  • Eliminates North Carolina’s estate tax
  • Exempts essential goods and services, such as food and drugs, from being taxed
  • Eliminates sales tax holidays for back-to-school and Energy Star products beginning in 2014
  • Expands taxable services to entertainment admission tickets and certain service contracts, while exempting out elementary or secondary school events, agriculture fairs, nonprofit entertainment events lasting no more than seven days, and youth athletic contest events sponsored by a nonprofit entity
  • Caps nonprofit state sales tax refunds at $45 million in any one year
As of November 26th, Jillian DeCamp is no longer with Poyner Spruill.
June 28
Senate Passes Bill to Alter Landfill Permit Requirements

​The Senate recently passed a bill (S328) that would scale back many of the landfill permitting requirements first imposed in 2007, yet increases applicable fees and would impose new restrictions to avoid adverse impacts on military operations.   The requirements imposed in 2007 were supposedly aimed at curtailing the construction of new landfills that could receive large volumes of out-of-state waste.  Those requirements made it virtually impossible to find a suitable site in North Carolina for most types of new landfills.  This bill would eliminate some of those impediments, such as very restrictive buffers between new landfills and gamelands or national wildlife refuges.  It would also eliminate a requirement that DENR deny a permit application if it found: (i) the facility would result in significant damage to ecological systems, natural resources, etc., or (ii) there was a practical alternative for the facility.  DENR would no longer be required to deny a permit based upon cumulative environmental impacts as well.

But the bill adds a new basis for mandatory denial of a permit application, namely a finding by DENR that the facility would encroach upon or adversely impact any military installation or operation.  It requires DENR to solicit the views of the relevant armed services branch on this subject when a permit application is received.

The bill would also require that the owner of any landfill receiving more than 240,000 tons of waste per year research alternative disposal technologies, and complete a feasibility study for gas-to-energy or other waste-to-energy technologies at the facility.

 Our sources tell us the bill faces an uphill battle in the House.

April 17
Proposed Bill Would Limit Zoning Regulation of Manufactured Homes

​North Carolina counties would lose some of their ability to restrict where manufactured housing can be located under a bill filed in the North Carolina House.  Currently, many counties have significant restrictions on where manufactured homes can be placed.  House Bill 769 would prevent counties from adopting or enforcing zoning regulations that exclude manufactured homes from being located on individual lots in areas zoned for single-family residential use.  The proposed legislation does not apply to incorporated areas and does not prevent counties from regulating mobile home parks.  Further, House Bill 769 would not prevent counties from regulating manufactured homes in historic districts or "in any other area where the county has a compelling interest in preserving aesthetic and design standards."  It is unclear, however, how it would be determined whether a county has such a compelling interest.  The bill's sponsor, Representative Nathan Ramsey, believes the legislation is necessary to increase the supply of affordable housing.  The bill has been referred to the House Government Committee. 


Chad Essick primarily represents land owners, developers and local governments in state and federal court on a myriad of land-use and zoning issues including vested rights, constitutional matters and zoning ordinance interpretations. He also represents land owners and developers before local Boards of Adjustment, Planning Commissions, City Councils, and County Commissioners on matters related to zoning, permitting, variances, annexations, special use permits, site plans, subdivisions and road closings. Chad may be reached at 919.783.2896 or

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