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NC Legislative Update: June 22, 2018

June 22, 2018

*The Nexsen Pruet NC Legislative Update did not publish last week. This update covers both last week and this week.

THIS WEEK

Lawmakers focused this week on passing legislation that is not subject to gubernatorial action, such as local bills and constitutional amendments.  They also addressed two vetoes from the Governor.  Last Friday, Gov. Cooper vetoed Senate Bill 486 and Senate Bill 757, three hours before the midnight 10-day deadline for him to take action on the measures.  SB 757 altered judicial districts in Mecklenburg, Wake, New Hanover, and Pender Counties, respectively.  SB 486, entitled The Elections Security and Transparency Act, made various changes to election laws, including a “sore loser” provision, which prevents people who ran and lost in a primary election from switching parties and running for the same seat.  Lawmakers criticized the Governor for prolonging the vetoes and for delivering them at 9:28 PM that night to the personal address of the Senate Principal Clerk.  Both vetoes were overridden.

Cooper vetoes judicial district, election bills – Shelby Star
Republicans complete veto overrides on 2 election-bills – N&O

The General Assembly is expected to adjourn “sine die” next Friday, June 29th.  House Rules Chairman Rep. David Lewis (R-Harnett) announced that lawmakers could potentially pass up to seven Constitutional Amendments before they adjourn.  Both chambers began that process this week, addressing voter I.D., capping the maximum income tax rate at 5.5%, Marsy’s Law, establishing a constitutional right to hunt and fish, and legislative appointment of judicial vacancies.  Other issues that could surface include the right-to-work law, eminent domain, and potentially others. Constitutional Amendments require the approval of a three-fifths majority of members present and voting.  If approved, voters would then be asked to approve or reject the proposed amendments on this November’s ballot.

Voter ID amendment headed toward House vote – WRAL
Victims’ rights amendment has wide support amid questions about cost – Carolina Journal
Proposal gives General Assembly power over judicial appointments – WRAL
Amendments protecting hunting and fishing, requiring voter ID move closer to full House vote – Carolina Journal
Tax cap proposal stirs up simmering legislative tensions – WRAL

Numerous local bills began moving this week as well.  The majority of these measures are typically noncontroversial, or are requested by a county or municipality.  However, some local bills, such as Senate Bill 813, may not necessarily have the support of the majority of residents from an affected area. The bill would change the way Asheville’s City Councilors are elected, from running at-large to running in individual districts, and is largely opposed by local residents.

Van Duyn to back Asheville council districts bill if Senate shifts election dates – Citizen-Times

The Governor signed Senate Bill 758 into law, authorizing the Department of Transportation to issue a $3 Billion bond for highway construction.  The measure allows the State to borrow up to $300 Million each year for 10 years.  Funds will come from the State Highway Trust Fund rather than the general fund, so the debt issuance does not need approval from the voters.

LAST WEEK

The North Carolina General Assembly concluded a whirlwind week last Friday that included floor sessions lasting late into the night.  The House began the week by finalizing the override of Gov. Cooper’s (D) budget veto, making the measure law.  Various committees met throughout the week, and several of the major policy committees in each chamber, such as Finance and Rules, met multiple times to move legislation to the floor.

NC House votes to complete veto override – Spectrum News

The utilization of a procedural move known as a proposed committee substitute (PCS), which allows the contents of a bill to be changed in its entirety, was on full display.  Lawmakers used this “gut and amend” approach to lessen the time needed for, sometimes controversial, pieces of legislation to make their way through the committee process.  Leadership had previously announced that the NCGA would address most of the legislation subject to gubernatorial action by the end of the week.  Doing this started the 10-day clock the Governor has to take action on these bills.  There are currently 77 bills pending on the Governor’s desk, all of which were ratified and presented to him on either Thursday or Friday last week.

NC lawmakers advance bills as session's days dwindle – Citizen-Times
Big laws. Little notice. Late nights. 'It seems like we get worse every session.' – N&O
Eyeing exit, House lawmakers OK long agenda – WRAL

As expected, lawmakers passed Budget Technical Corrections bill in Senate Bill 335, to amend the recently passed budget.  It is standard practice for lawmakers to pass a budget technical corrections bill, but it was particularly necessary this year because lawmakers used an unrelated Conference Report as the vehicle for the budget, preventing either body from offering amendments on the floor.  While it is always the case that a conference report cannot be amended, the product of a Conference Committee is typically some composite of two versions of a similar bill that have been vetted in either chamber.

Suicide hotline gains, Charlotte schools lose in budget tweaks – WRAL
Budget Corrections Bill Would Allow Durham-Orange Light Rail to Move Forward – Chapelboro

The House passed Senate Bill 711, the Farm Act of 2018, with a few tweaks that the Senate ultimately accepted.  While the bill retained a controversial provision intended to benefit hog farmers in legal battles with their neighbors, another provision restricting what can be marketed as “milk”, was essentially neutered, requiring eleven other states to enact similar provisions before it takes effect.  A sales tax exemption for a zoo operated by a qualifying farmer was also removed.  Among the provisions, the bill:

  • Repeals the North Carolina Handler's Act and enacts the Fruit and Vegetable Handlers Registration Act.
  • Allows the Department of Agriculture to release collected information relating to agriculture that is confidential under federal law if confidentiality is waived by the federal agency that requires confidentiality.
  • Exempts the Department from the Umstead Act, which prohibits the State from competing against businesses, to sell merchandise related to its Got to Be NC Agriculture marketing promotion at the State Fair.
  • Classifies "verified propagules," which are seeds or clones from an industrial hemp plant that has been tested and confirmed to have a THC concentration that complies with federal law, as hemp products.
  • Directs Agriculture and Forestry Awareness Study Commission to study requiring the holders of unused rights-of-way and utility easements to offer the easements to the underlying property owners for fair market value, and the advisability of excluding property enrolled in present use value taxation from rural fire protection district and county service district taxes.
  • Requires that land records in every county include some form of notice to alert a person researching the title of a particular tract that the tract is located within one half-mile of a poultry, swine, or dairy qualifying farm or other qualifying farm or a voluntary agricultural district, or within 600 feet of any other type of qualifying farm.
  • Under the current right-to-farm law, no agricultural or forestry operation may be or become a nuisance by "any changed conditions in or about the locality of the operation after the operation has been in operation for more than one year, when such operation was not a nuisance at the time the operation began." This legislation amends the right-to-farm law that a changed condition of a farm operation includes, but is not limited to, a change in the ownership, occupancy, or use of the property that is affected by the alleged nuisance.
  • Directs the Utilities Commission to adopt rules to establish reasonable limitations on the amount by which a natural gas company may increase rates for cost recovery for construction and extension of natural gas service to a farm.
  • Directs the Department of Revenue to publish a depreciation schedule for farm equipment and make the schedule electronically available on its website.
  • Makes various modifications for the World Equestrian Games, which will be held in Rutherford County this fall, and is expected to be the largest sporting ever held in NC.

Farm Act heads to Cooper – WRAL
House panel puts cap back on 'milk' definition – WRAL
Hog Farm Lawsuit Protections Pass – NC Health News

Another perennial bill, the Regulatory Reform Act of 2018, emerged from a Conference Committee for an unrelated bill, House Bill 374, in the same manner as the budget.  The 18-page omnibus bill makes changes to a variety of laws from motorcycle financing, to solid waste, and importing American eels from Maryland.  Like the budget, it was presented as an up-or-down vote, preventing either body from amending the bill.  A summary of the bill prepared by NCGA staff attorneys can be found here.

The House concurred with a Senate PCS to House Bill 382, entitled DOI Omnibus.  The bill makes several changes to insurance laws at the request of the Department of Insurance (DOI).  Among the provisions, the bill:

  • Incorporates model act language from the National Association of Insurance Commissioners (NAIC) into North Carolina's Life and Health Insurance Guaranty Association Act.
  • Amends the Surplus Lines Act by allowing an insurer to be designated as a "nonadmitted domestic surplus lines insurer" in North Carolina. This designation would allow the insurer to be domiciled in North Carolina and write surplus lines insurance in North Carolina.
  • Makes amendments to North Carolina's consent to rate statute for both automobile insurance and homeowners insurance.
  • Makes numerous technical changes to various insurance laws at the recommendation of DOI.

Lawmakers passed House Bill 500, entitled ABC Omnibus Legislation, which makes various changes to ABC laws in NC, over the objections of several brewers opposed to provisions amending aspects of the franchise law.  Amendments to the bill removed provisions that would have allowed movie theatres to serve, beer, wine, and mixed drinks, and authorized the sale of beer and wine on state owned passenger-only ferries.  In its final form, the bill:

  • Makes technical and clarifying changes to various ABC laws.
  • Adds stadiums or ballparks with at least 3,000 seats to serve, beer, wine, and mixed drinks.
  • Clarifies that a permit for a golf course restaurant allows beverages to be consumed on the entire golf course property, including the rough.
  • Eases regulations for nonprofits to obtain ABC permits for fundraisers.
  • Allows distillers to sell merchandise at tastings.
  • Allows the transfer of control of a beer or wine wholesaler to a family member, prior to the owner’s death, and expands the definition of “designated family member”.  It also restricts a supplier’s right to match and reassign to a preferred designee, the ability to purchase the ownership interest in a wholesaler.
  • Restricts the ability of a supplier to maintain an ownership interest in a wholesaler, and restricts the supplier’s ability to financially assist a proposed purchaser in acquiring ownership of a wholesaler's business.

A pair of Medicaid related measures, House Bill 403, entitled Medicaid and Behavioral Health Modifications, and House Bill 156, entitled Medicaid PHP Licensure & Transformation Modifications.  Both bills had been in conference since the legislature adjourned last year.  Conferees on both bills were able to reach an agreement and both measures passed both bodies unanimously.  Lawmakers also passed House Bill 998, which authorizes a number of studies to improve access to healthcare in rural areas.

Bill Would Study Rural Medical Education, Ease the Way for More Dentists – NC Health News
Remote corners of N.C. face dental-care shortage; lawmakers take note – Carolina Journal

IN OTHER NEWS

The U.S. Supreme Court has left the issue of partisan gerrymandering in limbo for the time being.  The Court sent two cases involving the subject in Wisconsin and Maryland, back to lower courts for further proceedings.  That means the next partisan gerrymandering case the court could address is the challenge to North Carolina’s congressional districts.
Is NC partisan gerrymander case up next after Supreme Court 'punts' on Wisconsin and Maryland? – N&O

The U.S. Supreme Court also ruled this week that states can impose a sales tax on online shoppers.  Until now, many online retailers have avoided collecting sales taxes on sales based on a previous court ruling that said they must have a substantial physical presence in the state collecting the tax.  Lawmakers could potentially address this matter next week, as estimates say the change could be worth $400 Million or more per year to NC.
Many online shoppers don't pay a state sales tax. That's going to change. – N&O

Judicial filing began Monday amidst uncertainty regarding the lack of a primary election, as well as the status of the judicial districts changes contained in the recently vetoed SB 757.  The NC Democratic Party challenged the elimination of judicial primaries in court, but Judge Catherine Eagles informed the plaintiffs that she intended to rule in favor of legislators in the case.
Judge rules for lawmakers: No primary elections for NC judges – N&O

Andrew Dunn of Long Leaf Politics has a very good, impartial breakdown explaining the recent tax reductions and their impact on the State.
North Carolina’s tax cuts, explained – Long Leaf Politics

According to a publication from the National Association of State Budget Officers, NC has the largest reserve account in the Southeast.  At $1.8 Billion, the “rainy day fund” represents 8% of the State’s total annual expenditures.  The recently enacted state budget, which takes effect July 1st, will increase the account balance to $2 Billion.
Spring 2018 Fiscal Survey of the States – NASBO


In addition to providing Government Affairs Services, the Nexsen Pruet Public Policy team provides attorneys and clients with a newsletter summarizing the week's activities and conveying the inner workings of the legislative process and state government in Raleigh during the legislative session. Please feel free to pass this along to your clients or other interested parties. If you would like to receive the update in your inbox, please email kdjones@nexsenpruet.com to be added to the list. If you are interested in learning more about how Nexsen Pruet can help you achieve your public policy goals and acquiring legislative representation in North Carolina or South Carolina, please reach out to Sandy Sands at ssands@nexsenpruet.com or TJ Bugbee at tjbugbee@nexsenpruet.com.

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