NC Legislative Update - July 2016

by Nexsen Pruet, PLLC

Nexsen Pruet, PLLC

Last Week

Following a fast paced week, the legislature adjourned the 2015-16 Session sine die on Friday, July 1st, just before midnight. After convening on April 25th, lawmakers completed the short session in just 68 days, a far cry from last year’s long session which lasted 9-months. Self-imposed pressure to adjourn prior to the 4th of July weekend loomed throughout the week, causing a number of bills to move very quickly through both chambers. Perhaps more interesting than the legislation that did pass are the high-profile proposals that failed to gain the approval of both chambers in the final hours of session. There are still a number of bills remaining on the Governor’s desk. He has 30 days from the end of the legislative session to sign or veto the bills or they become law without his signature. 
Legislators end short session – Wilkes Journal-Patriot 
Several high-profile bills left behind by lawmakers – WRAL 
What NC lawmakers did – and didn’t do – in the short session – Charlotte Observer

The failure of two local bills in the House sponsored by two powerful Senators was evidence of the friction between the two chambers and was largely responsible for an abrupt adjournment. The House Finance Committee rejected Senate Bill 46 entitled Jacksonville Occupancy Tax, sponsored by Sen. Brown (R-Onslow), the Senate Majority Leader and Senior Appropriations Chairman. The bill would have used revenues from the tax to build a sporting complex or stadium. During a contentious debate, several House members noted that the bill violated a House rule requiring revenues from occupancy taxes be used to promote tourism. Later that evening, the full House rejected Senate Bill 897, sponsored by Sen. Apodaca (R-Henderson), the Senate Rules Chairman, which would have redistricted the City of Asheville. Sen. Apodaca was in the House chamber when a bipartisan coalition voted 47-59 against the measure. When approached by reporters Sen. Apodaca, who is retiring from the Senate, said "I'm sure they're just sending a goodbye present to me." 
Fractious House shoots down Asheville redistricting measure – WRAL 
House Republicans stood up to questionable process – Citizen-Times

Discussions began earlier in the week regarding a potential change to House Bill 2, amid concerns that the NBA would move next year’s All-Star game out of Charlotte. Governor McCrory (R) addressed a joint caucus of House and Senate Republicans to discuss the proposed changes. He also met independently with Senate Democrats at the Governor’s mansion in an attempt to move forward with the “fix”. Draft legislation circulated later in the week included restoring a plaintiff’s ability to file discriminatory termination suits in State Court among other minor changes. The NBA however issued a press release stating that the changes were insufficient. In the final hours of Friday night, lawmakers used a Conference Committee for House Bill 169 to strip all of the regulatory reform language from the bill and pass a stand-alone provision restoring plaintiff’s ability to sue in state court for wrongful discharge due to discrimination. Prior to HB2, the statute of limitations was three years which was reduced to one under this change. The budget technical corrections bill also contained an appropriation of $500,000 to defend the State in litigation over HB2. 
NBA, Hornets not satisfied with latest revisions to HB 2 – CBJ 
Bipartisan coalition to pass HB2 changes fell apart amid pressure from Roy Cooper – WBTV 
Lawmakers reverse small piece of HB2 – WRAL 
Lawmakers set aside $500,000 for HB2 litigation – WRAL

House Bill 169 was not the only piece of regulatory reforming legislation that failed to pass. Other bills that failed included: Senate Bill 303 the Regulatory Reform Act of 2016; House Bill 763 the Military Operations Protections Act of 2016 which included restrictions on wind farms; and House Bill 593 Amend Environmental & Other Laws. Several other high profile bills also failed to gain the approval of both chambers including:

House Bill 3 – Omnibus Constitutional Amendments which contained three independent constitutional amendments dealing with: reducing the maximum income tax from 10% to 5.5%; preserving the right to hunt and fish; and eminent domain
House bill 100 – Local Government Immigration Compliance, which would withhold state funding to cities and counties for roads and schools if they were not following state laws on immigration; and prevent police officers from accepting ID cards from nonprofit groups and local governments to identify people
House Bill 954 – Terminate Agreement for Tolling of I-77
Senate Bill 821 – GSC Technical Corrections 1

The legislature successfully passed House Bill 959, entitled DOT Proposed Legislative Changes, which makes revisions to various transportation laws. One provision requires individuals riding a bicycle to have a red rear light or wear a reflective vest or clothing visible from a distance of at least 300 feet from the rear when riding at night. Another section repeals a law that makes it an infraction for a vehicle owner who fails to sign their registration card with pen and ink upon receipt. The most notable provision repeals the MAP Act, a law that allowed DOT to restrict the use of private property falling under a proposed corridor for a potential future project. The MAP Act was recently found unconstitutional by the NC Supreme Court.
House Passes bill effectively nullifying Map Act – Carolina Journal

The legislature also passed House bill 972, which regulates the disclosure of footage from police body cameras and dashboard cameras statewide, excluding both from public record laws. Concerns about transparency were raised as reviewing the footage will be more difficult under the new legislation. The bill awaits action from the Governor.
NC Senate votes to regulate release of body-cam footage – N&O

The House Insurance Committee heard House Bill 1048, entitled Reduce Barriers to Improve NC Health & Safety. The bill would prevent health insurers from requiring a process called Step Therapy, whereby patients must try less expensive, generic drugs before insurance will cover a more expensive drug. The bill was vigorously opposed by insurance companies, as well as the NC Chamber and the NC chapter of the National Federation of Independent Business. Opponents of the bill claim that the bill was a health insurance mandate and would further raise the costs of healthcare on employers. Proponents argued that the medicine that works best should be paid for without risking the health of the patient, with the physician making the decision for the patient. Rep. Lewis (R-Harnett) ultimately pulled his own bill, saying that he expected it would have passed the Committee, but that there was not enough time to get the bill through both chambers before adjournment. He also noted that he intends to revisit the issue next year.
Legislator kills his own prescription drug bill after battle with insurance companies – N&O

The House will be without a stalwart of the chamber when the 2017-18 Session convenes in January. Longtime and beloved House Principal Clerk, Denise Weeks will retire by the end of the year. She had intended to retire on May 1st, but was convinced by leaders in both parties to stay on through the short session. To prevent her from retiring altogether, bipartisan legislation, House Bill 1019, was filed by Rep. G. Martin (D-Wake) and Rep. Torbett (R-Gaston). The bill establishes duties a Principal Clerk of the House of Representatives must realize to be eligible for retirement and was debated by the Committee of the Whole, which is the full House. The bill paid homage to Mrs. Weeks, recognizing her many accolades as requirements for retirement eligibility, with the exception of one. The last duty in the proposed legislation requires the House Principal Clerk to serve in the role for 50 years, preventing her from retiring for another 27 years. The House passed the resolution unanimously in the last few minutes of the session. The problem is Denise plans to retire anyway.

Legislation in the News:
Some NC teachers concerned over proposed background check law – WNCN
NC Senate opts against vote on Whitewater Center plan – Charlotte Observer
Achievement School District clears NC General Assembly – Winston-Salem Journal
Needle/ Syringe Exchange Bill Has Good Shot at Becoming Law – NC Health News
Lead testing, water park testing bill clears House – WRAL
North Carolina Governor Signs Bitcoin Bill Into Law – Coin Desk
Bill would force NC attorney general to defend redistricting, other local acts – Winston-Salem Journal

Budget Highlights

After reaching an agreement on the 235-page, $22.34 Billion budget, the two chambers passed the Conference Report for House Bill 1030, a 2.8% spending increase over 2015. The Senate passed the budget, largely along party lines 36-14, with Senators Clark (D-Cumberland) and Smith (D-Columbus) voting with the Republican majority. The House passed the budget with strong bipartisan numbers 91-22, with 19 Democrats voting with the Republican majority. Among other provisions, the budget:

  • Provides additional $475 Million to the Savings Reserve Account, or “rainy day fund”, bring the total to nearly $1.6 Billion, close to 8% of state’s annual spending, in reserves for any future economic downturns
  • Increases the standard deduction on personal income, or the “zero tax bracket” for married filing jointly, from $15,500 to $17,500, over 2 years in $1,000 increments.
    Provides $500,000 for Zika virus prevention
  • Uses $18 million from the sale of the Dorothea Dix campus to expand inpatient behavioral health beds targeting rural areas
  • Provides $7.7 million for graduate medical residency program at Cape Fear Valley Medical Center
  • Provides $11 Million to create a Asheville campus for the UNC School of Medicine
  • Funds additional 300 slots for Alzheimer’s patients and their families through the Community Alternative Program for Disabled Adults
  • Increases average teacher pay from $47,783 to $54,224 over the next three years
  • Establishes a pilot program awarding performance based bonuses for 3rd grade teachers
  • Fully funds enrollment growth for K-12, community colleges and university system
  • Establishes $34.8 Million opportunity scholarship grant fund reserve for need-based scholarships
  • Establishes tuition reimbursement pilot program for up to 25 teacher assistants per County in Anson, Franklin, Moore, Richmond, and Scotland Counties who pursue a full teaching degree
  • Reduces in-state tuition to $500 per semester at Western Carolina University, Elizabeth city State University, and UNC Pembroke beginning in 2018, and stabilize tuition increases at other institutions
  • Permanent 1.5% pay increase; 0.5% one-time bonus for state employees; and 1.6% cost of living bonus for retired state employees
  • Repeals the $500,000 cap on state funding for light rail projects effective for the next round of project prioritization, but adds other restrictions
  • Provides additional $32 Million for Strategic Transportation Investment, allowing for new highway projects over the next decade

House Dems criticize state budget, but many vote for it – WRAL
NC budget compromise: Teacher raises, low college tuition, tax cut – N&O
Highlights of North Carolina government budget agreement – WRAL

Coal Ash

Following Gov. McCrory’s veto of Senate Bill 71, which made changes to the Coal Ash Management Act, the two chambers passed House Bill 630, a compromise on the issue between the legislative and executive branches. After meeting privately with the Governor and House leaders, the Senate used the “gut and amend” tactic to put the language in a House Bill that had been sitting in the Senate Rules Committee since April of last year. The bill repeals all provisions related to the Coal Ash Management Commission in the General Statutes and modifies appointments and other provisions governing the Mining Commission and the Oil and Gas Commission. It also requires the owner of a coal ash basin to provide permanent alternative water supplies for residents in areas surrounding the site. It also allows for the reconsideration of risk classifications for coal ash basin based on fulfillment of certain criteria, allowing some of the basins to be classified as low-risk and capped in place. This legislation could save Duke Energy millions of dollars in cleanup costs. Environmental groups opposed the legislation which now awaits action from the Governor.
Lawmakers approve easing coal ash law – WRAL

Farm Bill

The House approved a PCS for Senate Bill 770, the NC Farm Act of 2016, sponsored by Sen. Jackson (R-Sampson). The Senate concurred with the House changes and the bill now awaits action from the Governor. The bill, among other provisions:

  • Grants the Department of Agriculture and Consumer Services (DACS) several new powers to enforce the DACS bedding sanitation program
  • Authorizes DACS to appoint and deploy agricultural emergency response teams to respond to agricultural emergencies.
  • Authorizes employees of the Wildlife Resources Commission and employees of federal agencies whose responsibilities include fisheries and wildlife management, to cull feral swine from an aircraft with the written permission of the landowner
  • Eliminates the rendering plant inspection committee
  • Allow local school boards to develop and implement policies to facilitate and maximize purchases of food grown or raised in North Carolina
  • Extends the sunset for the production credit for commercial facilities for processing renewable fuel from January 1, 2017 to January 1, 2020.
  • Clarifies that a building permit is not required for certain work costing less than $15,000 provided that the work is performed in accordance with the current edition of the North Carolina State Building Code
  • Exempts any activity that constitutes a bona fide farm use, including the production of mulch, ornamental plants, sod, and other horticultural products from the Sedimentation Pollution Control Act
  • Waives or prorates deferred taxes when property under present use valuation (PUV) is transferred for less than its true value to a nonprofit entity for conservation or historical preservation

Adds section extending the renewable energy tax credit for swine and poultry waste renewable energy facilities to January 1st 2017 for those in the public utility's interconnection queue, provided that prior to May 21, 2016, the facility has: entered into the interconnection queue and; either obtained a certificate of public convenience and necessity or reported to the Utilities Commission that it proposes to construct the facility

In Other News

Sen. Fletcher Hartsell (R-Cabarrus), a 13-term Senator who is not seeking reelection, was indicted by a Wake County Grand Jury early in the last week of session. Sen. Hartsell faces allegations of misusing campaign funds and three felony counts of filing false campaign reports. His case was continued on Tuesday.
Hartsell takes center stage on Senate floor after indictment – N&O

The attempt by Elon professor Eric Fink to challenge Sen. Berger in November as an Unaffiliated candidate has fallen short. Fink fell roughly 800 signatures shy of the necessary 5,000, leaving Sen. Berger unopposed this fall. Three Unaffiliated candidates did qualify for the ballot in three House races. House Majority Leader Rep. Hager (R-Rutherford), House Freshman Majority Whip Rep. Bradford (R-Mecklenburg), and Rep. Burr (R-Stanly) were once unopposed but will now each face an Unaffiliated opponent in November.
Unaffiliated candidates miss party for NC votes – WRAL

In the News

Implant pumps new life into lobbyist's failed heart – WRAL
NC skirted abortion rules that Supreme Court struck down – N&O
Supreme Court to rule on use of race in redistricting – WBTV
CSX continues search for rail hub site – Carolina Journal
New Wake County school board, commission maps declared illegal – N&O
Wake elections board must tackle commissioner, school board districts – WRAL
U.S. Justice Department Asks Judge To Block House Bill 2 – WFMY
National analysts praise N.C. regulatory reforms – Carolina Journal
Goodnight, Luddy, Currie, Pope: How eastern N.C. supports presidential candidates with its checkbook – TBJ
Five new NC DMV laws take effect July 1 – Chatham Journal
NC becomes focus of presidential campaign – WRAL

Other Useful Links

Office of the Governor
North Carolina General Assembly

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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