LEGISLATIVE REPORT June 28, 2016

LEGISLATIVE REPORT June 28, 2016 Budget At the end of last week the House and Senate leadership reported that much progress had been made in reaching a compromise on the 22.2 billion dollar state budget. On 10:30 p.m. Friday a House Finance Chairman posted to social media an image of white smoke (signaling the selection of a new Pope at the Vatican), which veterans of the General Assembly understood to mean an agreement had been reached between the chambers. A final review of language is set for Monday, and the document is expected to be posted online late Monday night. While the final budget is a conference report (compromise version of legislation passed by both chambers in different forms) and cannot be amended on the floor, it is still a two-day bill, meaning separate votes must be taken over consecutive sessions. Given a House rule that requires the document to be public for 48 hours before a vote can take place, the House is expected to hold budget votes on Thursday and Friday (likely near midnight Friday morning) before adjourning for the holiday weekend. The Senate does not have a public notice rule and can vote the budget out earlier in the week if they choose. TOWING AND RECOVERY PROFESSIONALS OF NC Short Rows With the budget compromise agreed to the rush to finish up remaining business and adjourn for the year will increase significantly this week. Some major issues remain each chamber has passed a regulatory reduction bill, and a compromise version has yet to surface, and neither has a much-anticipated fix to the controversial House Bill 2, just to name two. Adjournment this week or next week is expected, meaning the remaining days will be fast, furious and somewhat dangerous. The danger comes as at this time in session entirely new provisions, as well as proposals that have been vetted but have not moved through the process, can find their way into unrelated bills or be brought up for last-minute approval (see below for an explanation of the most common method). We will remain vigilantly watchful for any proposals that would be harmful (or well-intentioned but not well developed) that attempt to be snuck by in the waning days. THIS LEGISLATIVE REPORT IS A PUBLICATION OF KOCHANEK LAW GROUP AND IS A MEMBER BENEFIT OF TRPNC. ANY USE OR REPRODUCTION OF THIS REPORT IS LIMITED TO TRPNC AND ITS MEMBERS. FOR MORE INFORMATION: Colleen Kochanek Alexander C. Miller P.O. Box 12946 Raleigh, NC 27605 919.747.9988 colleen@kochaneklawgroup.com alex@kochaneklawgroup.com www.kochaneklawgroup.com

Kratom On Friday, the Senate passed a bill that would make it illegal to sell kratom to anyone under the age of 18. Kratom, a tree in the coffee family, has been named a new psychoactive substance by the United Nations Office on Drugs and Crime for its sedative and stimulating effects. Kratom can be taken in liquid or powdered form. The bill would further create a study on kratom as well as nitrous oxide, commonly referred to as "whippets." Police Body Cameras The House voted to approve a bill that would allow for footage captured by police body cameras to be requested by affected parties. The bill would not make the footage public record, but rather sets up a formal system for persons captured in body camera footage to potentially review the film through a written request. There are a number of exceptions in which police could decline to release footage, including fear of releasing personal information and compromising the safety of a person. Some House Democrats argued that the bill does not go far enough to address the public's concerns in encounters with law enforcement, however many others spoke of the measure as a great first step in establishing transparency. Gut and Amend Debate over the General Assembly s gut and amend tactics have amplified over the past few weeks as the legislature prepares to adjourn. Committees from both chambers have seen an increase in Proposed Committee Substitutes, which often remove the previous language of a bill and replace it with entirely new, often unrelated, content. Proposed Committee Substitutes have been common practice towards the end of a legislative session in years past as they are a way of allowing new content to be introduced in the final days of a session. Often the bills being gutted have already passed in another chamber and would not be seen otherwise. Opponents of this tactic cite the need for members of the public to be given 24 hours to view any proposed changes before a vote can be taken. House Speaker Tim Moore noted that the continuation of gut and amend in the remainder of the session is likely to get worse before it gets better. BILL UPDATES HOUSE BILL 3, Omnibus Constitutional Amendments, was amended in the Senate Rules Committee to place 3 proposed Constitutional amendments in this bill. The Amendments must be approved by voters at a statewide election to be conducted on November 8, 2016, and would: prohibit condemnation of private property except for a public use (Eminent Domain) and provide for the payment of just compensation with right of trial by jury in all condemnation cases; provide for taxpayer protections that establish a State Emergency Savings Reserve Fund and reduce the maximum income tax rate to five and one-half percent from ten percent; and protect the right of the people to hunt, fish, and harvest wildlife. The bill as amended was approved by the Senate Rules Committee and will next be considered by the full Senate. HOUSE BILL 287, Amend Insurance Laws. The provisions of this bill were removed entirely in the Senate Insurance Committee and replaced with new provisions to: make it a Class 3 misdemeanor for any person who, with the intent to deceive an insurer, does any of the following: o presents or causes to be presented a written or oral statement in support of an application for issuance of or amendment to a policy of auto insurance or for vehicle 2

registration knowing that the application contains false or misleading information that states the applicant is an eligible risk when the applicant is not an eligible risk; or o assists, abets, solicits, or conspires with another person to prepare or make any written or oral statement that is intended to be presented to an insurer in connection with or in support of an application for issuance of or amendment to a policy of auto insurance or for vehicle registration if the person knows that the statement contains false or misleading information that states the applicant is an eligible risk when the applicant is not an eligible risk; make it a Class H felony for any applicant who, with the intent to deceive an insurer, knowingly violates G.S. 58-2-164(b) for the purpose of obtaining auto insurance covering one or more vehicles, the operation of which requires a Commercial Drivers License; and provide that, in addition to any other penalties authorized by law, a violation of this subsection may be punishable by a fine of not more than $10,000 for each violation; provide that, if an applicant provides false or misleading information material to the applicant's or any named insured's status as an eligible risk and that fraudulent information makes the applicant or any named insured appear to be an eligible risk when that person is in fact not an eligible risk, the insurer may do any or all of the following: o refuse to issue, amend, or endorse a policy; o cancel or refuse to renew a policy that has been issued; o deny coverage for any claim by the applicant for auto liability, comprehensive, or collision coverage; however, this would not apply to bodily injury or property damage claims of innocent third parties to the extent of any minimum financial responsibility requirement of State or federal law; and allow a motor vehicle liability policy to provide that the insured must reimburse the insurer for any payment made under a policy of insurance if the issuance of the policy was induced by a knowing and material misrepresentation of facts relating to the insured's status as an eligible risk. For these purposes, a payment made would include any sums paid for satisfaction, in whole or in part, of any judgment against the insured or for a reasonable settlement of a claim against the insured for bodily injury or property damage. A payment made would further include any costs or attorneys' fees incurred by the insurer in the adjustment, investigation, or defense of a claim; enhance and improve consumer protections and transparency related to motor vehicle maintenance and repairs, long-term care insurance, and consent to rate; make various technical and policy changes to North Carolina's captive insurance law provisions; enable the establishment of a State-based private flood insurance market; enable insurers to receive restitution from convicted defendants; and make various other amendments to insurance laws. The bill as amended in the Senate Insurance Committee, the Senate Judiciary II Committee, and on the Senate floor was approved by the Senate. The bill has been sent to the House to consider the changes made by the Senate. HOUSE BILL 594, MV Dealer Doc. Retention/Inspection/Format. The provisions of this bill were removed in the Senate Transportation Committee and replaced with new provisions to: require records maintained by a motor vehicle dealer to be made available for inspection by the Division within a reasonable period of time after being requested by the Division; allow a motor vehicle dealer to satisfy the record-keeping requirements either by (1) keeping and maintaining written or paper records at the dealership facility where the vehicles were sold or at another site within this State provided that the location and the name of a designated contact agent are provided to the Division, or (2) maintaining electronic copies of the records required, provided that the Division will have access to these electronic records from a location within this State; and 3

allow any record required to be kept and maintained to be converted to electronic form and retained by a dealer in electronic form without retention of the original or any copies of the record in paper or other nonelectronic form. The bill as amended was approved by the Senate Transportation Committee and will next be considered by the full Senate. HOUSE BILL 972, Law Enforcement Recordings/No Public Record, was amended on the House floor to allow the court to place any conditions or restrictions on the release of the recording that the court, in its discretion, deems appropriate. The bill as amended was approved by the full House and will next be sent to the Senate for consideration. SENATE BILL 124, Assumed Bus. Name/IC Contempt/Parks, was amended in the House Judiciary II Committee to: amend the definition of assumed business name as follows: o in the case of an individual, any name other than a real name of the individual; o in the case of a partnership other than a limited liability partnership or limited partnership, any name other than a real name of each of the general partners of the partnership; and o in the case of any other person, any name other than a real name of the person; require a person who engages in business in this State under more than one assumed business name to file an assumed business name certificate for each assumed business name; however, the person could include no more than five assumed business names in one assumed business name certificate if that same person is or will be engaging in business under each of the assumed business names listed in the certificate; provide that the Assumed Business Name Act does not apply to a political committee or a referendum committee that has filed a statement of organization with the State Board of Elections or a county board of elections; require an assumed business name certificate to include the nature (was, type) of the business; require an assumed business name certificate to be signed in the name of the corporation or limited liability company by an officer of the corporation or a manager of the limited liability company or by another individual authorized by law to act for the corporation or limited liability company; and amend the provision regarding consequences of signing a false certificate to remove the provision that would have allowed expenses to be awarded in a civil action, and instead, provide that a person is not liable for expenses caused by an error or ambiguity in describing the nature of the business in an assumed business name certificate or a certificate of amendment. The bill as amended was approved by the House Judiciary II Committee and will next be considered by the full House. SENATE BILL 570, Expand Certificate of Relief & Expunction. The provisions of this bill were removed in the House Judiciary I Committee and replaced with new provisions to expand the availability of certificates of relief to certain offenders and for expunctions of findings of not guilty or not responsible. (The certificate relieves the landlord, employer, and others of liability). The bill would: allow an individual who is convicted of criminal offenses no higher than a Class G felony to petition the court where the individual was convicted of the most serious offense for a Certificate of Relief relieving collateral consequences as permitted by this Article. An individual who has more than one conviction in the same class of offense as the most serious offense and the convictions are in more than one court would petition the court on the most recent conviction; 4

allow the court to issue a Certificate of Relief to an individual that shows that, if the individual has been convicted of five or fewer eligible offenses and 12 months have passed since the individual has completed his or her sentence; require a person who files a petition for a certificate of relief to pay a $50 fee to the clerk of superior court at the time the petition is filed (except for an indigent person); and allow a person who has previously been granted an expunction under this section and is subsequently charged with a crime, either a misdemeanor or a felony, or was charged with an infraction for the purchase, possession, or consumption of alcohol by a 19 or 20-Year Old prior to December 1, 1999, and a finding of not guilty or not responsible is entered, to apply to have the subsequent finding expunged. The court would hold a hearing on the application, and if the court finds that the person had not previously (1) received an expungement and (2) been convicted of any felony under the laws of the United States, this State, or any other state, the court would order the expunction of the finding of not guilty or not responsible. No person as to whom such an order has been entered would be held thereafter under any provision of any law to be guilty of perjury, or to be guilty of otherwise giving a false statement or response to any inquiry made for any purpose, by reason of his failure to recite or acknowledge any expunged entries concerning apprehension or trial. The bill as amended was approved by the House Judiciary I Committee and will next be considered by the House Finance Committee. LEGISLATION ENACTED HOUSE BILL 256, Handicapped Parking/Veterans Plate. This bill to allow partially disabled veterans to park in a handicapped parking space when displaying the partially disabled veteran special plate and to provide that medical certification and recertification requirements for handicapped parking privileges may be satisfied by a disability determination issued by the US Department of Veterans Affairs indicating the person is handicapped was signed into law by the Governor on June 22, 2016. Effective: June 22, 2016. - Colleen Kochanek TRPNC Legislative Counsel P.O. Box 12946 Raleigh, NC 27605 919.747.9988 colleen@kochaneklawgroup.com www.kochaneklawgroup.com i Alexander C. Miller, MSW Lobbyist, Kochanek Law Group 919.619.3360 alex@kochaneklawgroup.com i THIS LEGISLATIVE REPORT IS A PUBLICATION OF KOCHANEK LAW GROUP AND IS A MEMBER BENEFIT OF TRPNC. ANY USE OR REPRODUCTION OF THIS REPORT IS LIMITED TO TRPNC AND ITS MEMBERS. 5