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SUMMARIES OF SUBSTANTIVE RATIFIED LEGISLATION - 2007
SUMMARIES OF SUBSTANTIVE
RATIFIED LEGISLATION
2007 GENERAL ASSEMBLY
2007 REGULAR SESSION
RESEARCH DIVISION
N. C. GENERAL ASSEMBLY
NOVEMBER 2007
350 copies of this document were published at an estimated cost of or about $ 10.75 per
copy.
November 2007
To the Members of the 2007 Session of the 2007 General Assembly:
This publication contains summaries of all substantive legislation of general applicability
and certain local legislation having general import from the 2007 Regular Session. Most local
acts are not analyzed in this publication. Significant appropriations matters related to the
subject area specified are also included. For an in- depth review of the appropriations and
revenue process, please refer to Overview: Fiscal and Budgetary Actions, prepared by the Fiscal
Research Division.
The document is organized alphabetically by subject areas. Where feasible, the subject
area is further divided into subgroups. Each subject area also includes a listing of legislative,
independent, and agency studies. This year we have included in the appendix a list of the
studies and reports authorized by the 2007 General Assembly. A bill/ session law index listing
the page number of each summary is at the end of the publication.
This document is the result of a combined effort by the following staff members of the
Research Division: Dee Atkinson, Cindy Avrette, Susan Barham, Brenda Carter, Drupti Chauhan,
Erika Churchill, Karen Cochrane- Brown, Judy Collier, Heather Fennell, Bill Gilkeson, George
Givens, Kory Goldsmith, Trina Griffin, Tim Hovis, Jeff Hudson, Denise Huntley, Shirley Iorio,
Sara Kamprath, Mariah Matheson, Theresa Matula, Kara McCraw, Jennifer McGinnis, Joe Moore,
Jennifer Mundt, Shawn Parker, Howard Alan Pell, Giles S. Perry, Ben Popkin, Wendy Graf Ray,
Walker Reagan, Barbara Riley, Steve Rose, and Susan Sitze. Dan Ettefagh, of the Bill Drafting
Division and Martha Walston, of the Fiscal Research Division also contributed to this document.
Howard Alan Pell is chief editor of this year’s publication, and Brad Krehely is co- editor. Lucy
Anders, of the Research Division also helped edit this document. The specific staff members
contributing to each subject area are listed directly below the chapter heading for that area.
Staff members' initials appear after their names and after each summary they contributed. If
you would like further information regarding any legislation in the various summaries, please
contact the Research Division Office at ( 919) 733- 2578.
This document is also available on the World Wide Web. Go to the General Assembly’s
homepage at http:// www. ncleg. net. Click on " Legislative Publications," then " Research
Division," then " Summaries of Substantive Ratified Legislation." Each summary is hyperlinked to
the final bill text, the bill history, and any applicable fiscal note.
It is hoped that this document will provide a useful source of information for the
members of the General Assembly and the public in North Carolina. We would appreciate
receiving any suggestions for this publication's improvement.
Yours truly,
Terrence D. Sullivan
Director of Research
Guide to Staff Initials
( BC) Brenda Carter
( BG) Bill Gilkeson
( BK) Brad Krehely
( BP) Ben Popkin
( BR) Barbara Riley
( CA) Cindy Avrette
( DA) Dee Atkinson
( DE) Dan Ettefagh
( DC) Drupti Chauhan
( DH) Denise Huntley
( EC) Erika Churchill
( GG) George Givens
( GSP) Giles S. Perry
( HF) Heather Fennell
( HAP) Howard Alan Pell
( JC) Judy Collier
( JH) Jeff Hudson
( JLM) Jennifer McGinnis
( JHM) Joe Moore
( JM) Jennifer Mundt
( KCB) Karen Cochrane- Brown
( KG) Kory Goldsmith
( KM) Kara McCraw
( MM) Mariah Matheson
( MW) Martha Walston
( SB) Susan Barham
( SI) Shirley Iorio
( SK) Sara Kamprath
( SP) Shawn Parker
( SR) Steve Rose
( SS) Susan Sitze
( TG) Trina Griffin
( TH) Tim Hovis
( TM) Theresa Matula
( WGR) Wendy Graf Ray
( WR) Walker Reagan
i
TABLE OF CONTENTS
CHAPTER 1: AGRICULTURE AND WILDLIFE...................................................... 1
ENACTED LEGISLATION .................................................................................................. 1
Agriculture ................................................................................................................ 1
Animals ..................................................................................................................... 3
Wildlife...................................................................................................................... 4
CHAPTER 2: ALCOHOLIC BEVERAGE CONTROL............................................. 7
ENACTED LEGISLATION .................................................................................................. 7
CHAPTER 3: BUSINESS AND COMMERCE............................................................ 9
ENACTED LEGISLATION .................................................................................................. 9
STUDIES....................................................................................................................... 22
CHAPTER 4: CHILDREN AND FAMILIES............................................................. 23
ENACTED LEGISLATION ................................................................................................ 23
CHAPTER 5: CIVIL LAW AND PROCEDURE....................................................... 29
ENACTED LEGISLATION ................................................................................................ 29
CHAPTER 6: CONSTITUTION AND ELECTIONS ............................................... 35
ENACTED LEGISLATION ................................................................................................ 35
MAJOR PENDING LEGISLATION ..................................................................................... 45
CHAPTER 7: CONSUMER PROTECTION ............................................................. 47
ENACTED LEGISLATION ................................................................................................ 47
CHAPTER 8: COURTS, JUSTICE, AND CORRECTIONS.................................... 53
ENACTED LEGISLATION ................................................................................................ 53
STUDIES....................................................................................................................... 68
Legislative Research Commission .......................................................................... 68
Referrals to Existing Commissions/ Committees ..................................................... 69
Referrals to Departments, Agencies, Etc. ............................................................... 70
CHAPTER 9: CRIMINAL LAW AND PROCEDURE............................................. 73
ENACTED LEGISLATION ................................................................................................ 73
MAJOR PENDING LEGISLATION ..................................................................................... 85
CHAPTER 10: EDUCATION ...................................................................................... 87
ENACTED LEGISLATION ................................................................................................ 87
Public Schools......................................................................................................... 87
Higher Education.................................................................................................. 101
Community Colleges ............................................................................................. 102
ii
Universities ........................................................................................................... 105
STUDIES..................................................................................................................... 110
New/ Independent Studies/ Commissions................................................................ 110
Referrals to Existing Commissions/ Committees ................................................... 112
Referrals to Departments, Agencies, Etc. ............................................................. 113
Other Studies......................................................................................................... 115
CHAPTER 11: ENVIRONMENT AND NATURAL RESOURCES...................... 117
ENACTED LEGISLATION .............................................................................................. 117
Air Quality ............................................................................................................ 117
Animal Waste Management .................................................................................. 118
Coastal Development............................................................................................ 120
Fisheries................................................................................................................ 121
Miscellaneous ....................................................................................................... 121
Parks and Public Spaces....................................................................................... 125
Renewable/ Alternative Energy and Energy Efficiency......................................... 126
Solid/ Hazardous Waste......................................................................................... 136
Water Quality/ Quantity/ Groundwater.................................................................. 143
STUDIES..................................................................................................................... 148
New/ Independent Studies/ Commissions................................................................ 148
Referrals to Existing Commissions/ Committees ................................................... 149
Referrals to Departments, Agencies, Etc. ............................................................. 149
MAJOR PENDING LEGISLATION ................................................................................... 150
CHAPTER 12: FINANCE .......................................................................................... 153
ENACTED LEGISLATION .............................................................................................. 153
2007 Appropriations Act....................................................................................... 155
STUDIES..................................................................................................................... 169
MAJOR PENDING LEGISLATION ................................................................................... 169
CHAPTER 13: HEALTH AND HUMAN SERVICES ............................................ 172
ENACTED LEGISLATION .............................................................................................. 172
STUDIES..................................................................................................................... 193
CHAPTER 14: INSURANCE..................................................................................... 196
ENACTED LEGISLATION .............................................................................................. 196
Automobile Insurance ........................................................................................... 196
Health and Life Insurance .................................................................................... 196
Property Insurance ............................................................................................... 203
Miscellaneous ....................................................................................................... 204
STUDIES..................................................................................................................... 207
MAJOR PENDING LEGISLATION ................................................................................... 207
CHAPTER 15: LABOR AND EMPLOYMENT...................................................... 210
ENACTED LEGISLATION .............................................................................................. 210
General Labor and Employment........................................................................... 210
iii
Governmental Employment................................................................................... 211
CHAPTER 16: LOCAL GOVERNMENT................................................................ 216
ENACTED LEGISLATION .............................................................................................. 216
CHAPTER 17: MILITARY, VETERANS', AND INDIAN AFFAIRS .................. 226
ENACTED LEGISLATION .............................................................................................. 226
Military and Veterans' Affairs .............................................................................. 226
CHAPTER 18: OCCUPATIONAL BOARDS AND LICENSING......................... 232
ENACTED LEGISLATION .............................................................................................. 232
STUDIES..................................................................................................................... 255
Referrals to Existing Commissions/ Committees ................................................... 255
CHAPTER 19: PROPERTY, TRUSTS, AND ESTATES ....................................... 256
ENACTED LEGISLATION .............................................................................................. 256
CHAPTER 20: RESOLUTIONS................................................................................ 262
Joint Resolutions................................................................................................... 262
CHAPTER 21: RETIREMENT ................................................................................. 268
ENACTED LEGISLATION .............................................................................................. 268
CHAPTER 22: SENIOR CITIZENS ......................................................................... 274
ENACTED LEGISLATION .............................................................................................. 274
STUDIES..................................................................................................................... 280
Referrals to Departments, Agencies, Etc. ............................................................. 280
CHAPTER 23: STATE GOVERNMENT................................................................. 282
ENACTED LEGISLATION .............................................................................................. 282
Agencies and Departments ................................................................................... 282
Boards, Commissions, and Committees................................................................ 289
Capital Facilities and State Property ................................................................... 291
Ethics..................................................................................................................... 293
Official North Carolina Designations .................................................................. 294
Miscellaneous ....................................................................................................... 294
STUDIES..................................................................................................................... 298
Referrals to Departments, Agencies, Etc. ............................................................. 298
CHAPTER 24: TECHNOLOGY................................................................................ 300
ENACTED LEGISLATION .............................................................................................. 300
CHAPTER 25: TRANSPORTATION....................................................................... 304
ENACTED LEGISLATION .............................................................................................. 304
Department of Transportation .............................................................................. 304
Drivers Licenses.................................................................................................... 306
iv
License Plates/ Vehicles Registration.................................................................... 308
Motor Vehicles Law .............................................................................................. 314
Toll Roads ............................................................................................................. 318
Public Transportation and Rail ............................................................................ 319
Trucks.................................................................................................................... 319
Miscellaneous ....................................................................................................... 321
CHAPTER 26: UTILITIES ........................................................................................ 326
ENACTED LEGISLATION .............................................................................................. 326
CHAPTER 27: VETOED LEGISLATION............................................................... 328
INDEX.......................................................................................................................... ...... i
APPENDIX.................................................................................................................... A- 1
Chapter 1 Agriculture and Wildlife
Page 1
Chapter 1
Agriculture and Wildlife
Erika Churchill ( EC), Barbara Riley ( BR)
Enacted Legislation
Agriculture
Adopt State Collard Festival
S. L. 2007- 28 ( HB 406). See State Government.
Facilitate Distribution of E- Blend Fuel
S. L. 2007- 82 ( SB 567). See Transportation.
Limit Liability at Agricultural Fairs
S. L. 2007- 171 ( HB 590) expands the definition of agritourism activity for purposes of
limited civil liability. The term includes any activity involving an animal exhibition at an
agricultural fair licensed by the Commissioner of Agriculture. The General Statutes provide a
limitation on civil liability for agritourism professionals engaged in the business of providing
agritourism activities. In addition to the expansion of the definition by the act, agritourism
activities are defined as any activity on a farm or ranch that allows the general public, for
recreational, educational, or entertainment purposes, to view or enjoy rural activities including
farming, ranching, historic attractions/ activities, pick your own activities, and others.
If a warning is posted, consistent with the requirements of the Article, an agritourism
professional will not be held liable for the injury or death of a participant resulting from the
inherent risks of participating in agritourism activities. The limitation on liability does not apply if
the agritourism professional does either of the following:
Acts negligently or with willful or wanton disregard for the safety of the participant
and that act is the proximate cause of the injury.
Knew, or should have known, of any of the following and did not make that danger
known to the participant:
• A dangerous condition on the land, facilities, or equipment used in the activity.
• The dangerous propensity of a particular animal.
This act became effective July 4, 2007, and applies to causes of action arising on or after
that date. ( EC)
Registration and Length Exemptions
S. L. 2007- 194 ( SB 738). See Transportation.
University of North Carolina/ Agricultural Extension
Employee Status
S. L. 2007- 195 ( HB 847). See Labor and Employment.
Chapter 1 Agriculture and Wildlife
Page 2
Streamlined Sales Tax Changes
S. L. 2007- 244, Sec. 4 ( HB 257, Sec. 4) revises the sales tax exemption for items sold for
use in commercial fishing to insert references to holders of a commercial fishing license, a
commercial shellfish license, and the operator of a for- hire boat. The reference to the operator of
a for- hire boat is an addition to the statute, but reflects the administrative practice of including
this group in the commercial fishing group.
This section became effective October 1, 2007. ( EC)
See Finance for the summary of the remaining sections of the act.
University Cancer Research Fund
S. L. 2007- 323, Sec. 6.23 ( HB 1473, Sec. 6.23). See Finance.
Study Structure/ Management Agriculture Research Stations
and Farms
S. L. 2007- 323, Sec. 11.4 ( HB 1473, Sec. 11.4). See State Government.
Study Equine Industry in North Carolina
S. L. 2007- 323, Sec. 13.14A( b) and ( c), ( HB 1473, Sec. 13.14A( b) and ( c) provides that,
of the funds appropriated to the Rural Economic Development Center, $ 500,000 shall be
transferred to the Agricultural Advancement Consortium to assess the numbers, composition, and
value of the equine industry in North Carolina. The Agricultural Advancement Consortium also is
directed to develop a plan to maximize the impact of the equine industry in the State.
The section became effective July 1, 2007. ( BR)
Poultry Products Inspection Act Penalties
S. L. 2007- 361 ( HB 589) amends G. S. 106- 549.59 by adding a new subsection providing
for a $ 5,000 civil penalty for violations of the poultry products inspection laws.
The act became effective October 1, 2007, and applies to penalties assessed on or after
that date. ( BR)
Amend Plant Protection and Conservation Act
S. L. 2007- 456 ( HB 862) allows the North Carolina Plant Conservation Board to establish
fees for the permits it is authorized to issue, including the permit to harvest ginseng. The act also
increases the penalty for violations of the Plant Protection and Conservation Act from a Class 3
misdemeanor to a Class 2 misdemeanor, and deletes the fine provisions. The act also authorizes
the agent of the Department of Agriculture and Consumer Services to the list of individuals who
may inspect pertinent papers and records related to the Plant Protection and Conservation Act.
The previous law included only the Commissioner, or any employee of the Department.
This act becomes effective December 1, 2007, and applies to offenses committed on or
after that date. ( EC)
Chapter 1 Agriculture and Wildlife
Page 3
Enact Waterfront Access Study Committee
Recommendations
S. L. 2007- 485 ( SB 646) increases certain boat numbering fees that are held in the
Wildlife Resource Commission's Boating and Waterway Account. The act increased the fee for
numbering a boat from $ 10 to $ 15 for a 1- year period, and increased the fee for a 3- year period
from $ 25 to $ 40. The act also directs the Division of Emergency Management to study ways to
facilitate construction and repair of water dependent structures in regulated flood zones.
This act became effective August 2, 2007. ( EC)
See Finance, Environment and Natural Resources, and Transportation for
additional information on this act.
Property Tax and Present Use Value Changes and Studies
S. L. 2007- 497 ( HB 1499). See Finance.
Exemption for Baler Twine from Sales Tax
S. L. 2007- 500 ( HB 487). See Finance.
Economic Development Modifications
S. L. 2007- 515 ( HB 1595). See Local Government.
Swine Farm Environmental Performance Standards
S. L. 2007- 523 ( SB 1465). See Environment and Natural Resources.
State Food Festival
S. L. 2007- 533 ( HB 433). See State Government.
Clarify/ Extend Animal Waste Management Provisions
S. L. 2007- 536 ( HB 810). See Environment and Natural Resources.
Migrant Housing Health/ Safety
S. L. 2007- 548 ( SB 1466). See Labor and Employment.
Animals
Allow Earthdog Trials
S. L. 2007- 180 ( SB 1424). See Criminal Law and Procedure.
Chapter 1 Agriculture and Wildlife
Page 4
Clarify Dog Fighting and Baiting Law
S. L. 2007- 181 ( SB 21). See Criminal Law and Procedure.
Increase Penalty/ Starvation of Animals
S. L. 2007- 211 ( HB 995). See Criminal Law and Procedure.
Spay/ Neuter Funding
S. L. 2007- 487 ( SB 684) repeals the provisions for the sale of a special edition rabies tag.
The proceeds from sales of the tag have been used to fund the Spay/ Neuter Account in the
Department of Health and Human Services. The act also amends the amount that may be
charged for a rabies tag by 20¢, in addition to the actual cost of the tag, links, and rivets. The
additional 20¢ per tag will be credited to the Spay/ Neuter Account. The 20¢ portion of the fee is
not be imposed for tags provided to persons who operate facilities devoted primarily to the
training or boarding of hunting dogs, or who own and vaccinate 10 or more dogs per year.
The act also provides that if the funds generated by the rabies tag fee are less than
$ 47,500 in any fiscal year, the difference between $ 47,500 and the amount actually generated
may be used to fund rabies education and prevention programs. A county may not receive funds
from the Spay/ Neuter Account, unless the county requires proof of rabies vaccination at the time
of the procedure or requires rabies vaccination at the time of the procedure.
This act becomes effective January 1, 2008. ( BR)
Wildlife
Reciprocity of Disabled Hunting Licenses
S. L. 2007- 2 ( SB 50) directs the Wildlife Resources Commission to investigate the
potential for agreements with other jurisdictions for reciprocal hunting and fishing licenses for the
disabled.
This act became effective March 22, 2007. ( BR)
Waiver of Enforcement/ No- Wake Zones
S. L. 2007- 46 ( SB 361) allows the Wildlife Resources Commission to temporarily and
conditionally waive the enforcement of a no- wake zone on the request of a local government that
encompasses or abuts the no- wake zone, if the Commission determines that public safety and
welfare will not be significantly compromised by the waiver.
This act became effective May 16, 2007. ( BR)
Prohibit Baiting of Bears
S. L. 2007- 96 ( SB 1246) prohibits placing processed food products as bait in any area of
the State where the Wildlife Resources Commission has established an open season for taking
black bear. Processed food products are defined as a food substance or flavoring that has been
modified from its raw components by the addition of ingredients, or by treatment to change its
chemical composition or form, or to enhance aroma or taste. Examples would include substances
modified by sugar, honey, oil, salt, or peanut butter. The term also includes sugary products such
as candies, pastries, and sugar blocks. The act does not prohibit the lawful disposal of solid
Chapter 1 Agriculture and Wildlife
Page 5
waste or the legitimate feeding of livestock, domestic animals, and birds. The prohibition also
does not apply to the release of dogs near a food source that is not a processed food product.
Violation of the act is a Class 2 misdemeanor.
This act became effective October 1, 2007. ( BR)
Brunswick Menhaden Restrictions
S. L. 2007- 320 ( HB 1017). See Environment and Natural Resources.
Amend Wildlife Resources Management Laws
S. L. 2007- 401 ( SB 1464) makes a number of changes to the State's wildlife management
laws. The changes include:
Authorizing the Wildlife Resources Commission to adopt rules governing the exercise of
emergency powers by the Executive Director of the Commission, when the Commission
determines that such powers are necessary to respond to a wildlife disease that threatens
irreparable injury to wildlife or the public. The emergency powers that may be authorized by
adopted rules include:
Providing for an open season for taking beaver with a bow and arrow.
Providing a number of changes in the statutes governing the taking of deer, including
a provision allowing the Executive Director to issue a landholder or landholder's
agent a special license and a number of antlerless and antlered deer tags sufficient
to accommodate the landholder's deer population management objectives, or to
correct any deer population imbalance that may occur on the property.
Specifying that persons hunting deer during a deer firearms season must wear
hunter orange.
Prohibiting the intentional feeding of alligators outside of captivity.
Authorizing the Commission to allow the use of electronic calls in taking migratory
birds.
Directing the Commission to study issues related to the retrieval of wildlife wounded
by hunters. The report is to be submitted to the 2008 General Assembly, the Chairs
of the House Wildlife Resources Committee, and the Senate Agriculture and Natural
Resources Committee no later than May 1, 2008.
The provisions of the act directing the Commission to study issues relating to the
retrieval of wounded wildlife became effective August 21, 2007. The remainder of the act became
effective October 1, 2007, and applies to acts committed on or after that date. ( BR)
Mountain Heritage Trout Waters Program
S. L. 2007- 408 ( SB 1303) creates a new Mountain Heritage Trout Waters 3- Day Fishing
License with a fee of $ 10. The holder of the three- day license is not required to hold a hook and
line license. The act also defines the term " mountain heritage trout waters," as those waters that
have been designated as public mountain trout waters by the Wildlife Resources Commission that
run through, or are adjacent to, a city and have been designated as mountain heritage trout
waters. The Commission is directed to adopt rules to implement a Mountain Heritage Trout
Waters Program to promote trout fishing as a heritage tourism activity, to develop criteria for
participation in the program by cities, and to prepare a management plan for mountain heritage
trout waters. A city that meets the program participation criteria shall be designated a Mountain
Heritage Trout City.
Section 2 of the act establishing the Mountain Heritage Trout Waters 3- Day Fishing
License became effective July 1, 2007. The remainder of the act became effective August 21,
2007. ( BR)
Chapter 1 Agriculture and Wildlife
Page 6
Allow Cyclists to Use Public Lands
S. L. 2007- 449 ( SB 1383). See Transportation.
For a complete list of the studies and reports authorized by the 2007 Session of the
2007 General Assembly, please refer to the Appendix contained in this publication.
Chapter 2 Alcoholic Beverage Control
Page 7
Chapter 2
Alcoholic Beverage Control
Brenda Carter ( BC), Denise Huntley ( DH), Howard Alan Pell ( HAP), Susan Sitze ( SS)
Enacted Legislation
Modify Hours of Sale for Permittees Authorized to Engage in
In- Stand Sales
S. L. 2007- 323, Sec. 6.25 ( HB 1473, Sec. 6.25) modifies the hours of sale for a permittee
who is authorized to sell malt beverages in the seating areas of stadiums, ballparks, and other
similar public places with a seating capacity of 60,000 or more during professional sporting
events, in municipalities with a population greater than 450,000. Sales and consumption of
alcoholic beverages on the premises of a permittee who meets these requirements may begin at
11: 00 a. m. on Sunday, which is one hour earlier than otherwise permitted by State law.
This section became effective July 1, 2007. ( BC)
Alcoholic Beverage Control Election- Cities in Two Counties
S. L. 2007- 386 ( SB 661) amends the Alcoholic Beverage Control election laws to provide
an additional ground upon which a city located in two or more counties may hold a mixed
beverages election. The act permits a city located in two or more counties to hold a mixed
beverages election without having an ABC store election, if a least one municipality in any of the
counties in which the city is located operates an ABC store.
This act became effective July 1, 2007. ( BC)
Alcoholic Beverage Control Law Changes
S. L. 2007- 402 ( HB 267) makes unincorporated municipalities subject to a statute that
allows the issuance of off- premises malt beverage and unfortified wine permits, after an election
allowing the sale of mixed beverages. The act also authorizes an unfortified winery permit holder
to allow winemaking on premises, subject to the appropriate Alcoholic Beverage Control ( ABC)
permit, whereby individual customers who are 21 years old or older may purchase ingredients
and rent the equipment, time, and space to make unfortified wine for personal use in limited
amounts.
The act amends the law concerning the requirement for certain ABC permittees to
recycle beverage containers beginning January 1, 2008. It clarifies that failure to comply with the
recycling requirements will not be grounds for revocation of an ABC permit. The act requires each
applicant and each person renewing an on- premises malt beverage permit, on- premises
unfortified wine permit, on- premises fortified wine permit, or a mixed beverages permit to
prepare and submit with the application or renewal, a plan for the collection and recycling of all
recyclable beverage containers of all beverages to be sold at retail on the premises. A permittee
who is not able to find a recycler for its beverage containers by January 1, 2008, may apply to
the Alcoholic Beverage Control Commission for a one- year stay of the requirement to implement
a recycling program.
This act became effective August 21, 2007. ( BC)
Chapter 2 Alcoholic Beverage Control
Page 8
Drivers License Revocation for Alcoholic Beverage Control
Violation
S. L. 2007- 537 ( HB 1277). See Transportation.
For a complete list of the studies and reports authorized by the 2007 Session of the
2007 General Assembly, please refer to the Appendix contained in this publication.
Chapter 3 Business and Commerce
Page 9
Chapter 3
Business and Commerce
Karen Cochrane- Brown ( KCB), Heather Fennell ( HF), Kory Goldsmith ( KG), Tim Hovis ( TH),
Denise Huntley ( DH), Wendy Graf Ray ( WGR), Walker Reagan ( WR), Steve Rose ( SR)
Enacted Legislation
Amend Bank and Trust Company Assessments
S. L. 2007- 55 ( SB 658) changes the cumulative assessments charged to State- chartered
banks and trust companies to pay for the operation of the Office of the Commissioner of Banks.
The act increases the assessments on smaller banks and decreases the assessments on larger
banks. The act also increases the base assessment rate charged to State trust companies from
$ 6,000 to $ 10,000.
This act became effective May 23, 2007, and applies to assessments made on or after
that date. ( WR)
Electronic Signatures/ Public Agencies
S. L. 2007- 119 ( SB 211). See State Government.
Alcohol Inhalers Illegal
S. L. 2007- 134 ( SB 125). See Criminal Law and Procedure.
Streamline Telecommunications Promotions
S. L. 2007- 157 ( SB 680). See Utilities.
Residential Mortgage Fraud Act
S. L. 2007- 163 ( HB 817). See Consumer Protection.
Identify Loan Originator on Deed of Trust
S. L. 2007- 176 ( HB 313). See Property, Trusts, and Estates.
Rental Car Fee Reform
S. L. 2007- 235 ( SB 1118). See Consumer Protection.
Streamlined Sales Tax Changes
S. L. 2007- 244 ( HB 257). See Finance.
Chapter 3 Business and Commerce
Page 10
Prescription Orders/ Electronic Image
S. L. 2007- 248 ( HB 1369) allows a pharmacist- manager of a pharmacy with a capable
computer system to maintain prescription orders by capturing electronic images of the orders. It
also allows health care providers to keep electronic records of consents to treatment and
authorizations to disclose medical information.
North Carolina law provides that every pharmacist- manager of a pharmacy is required to
maintain, for a minimum of three years, the original of every prescription order and refill
compounded or dispensed at the pharmacy. This act allows the use of electronic images of
prescription orders and refills to comply with those maintenance requirements, if the pharmacy's
computer system is " capable." A computer system is deemed capable if it can provide
information required by the Board within 48 hours of the request. The act also deletes the
requirement that a pharmacist write his or her signature on the face of a prescription for a
controlled substance, when it is dispensed, since an electronic record would not allow for a
handwritten signature.
Current law also allows health care providers to maintain medical records in electronic
format, without maintaining separate paper copies. However, prior to this act, if a consent to
treatment, or an authorization to disclose medical information was in a paper writing, it was
required to be preserved in that format. This act eliminates that requirement and allows those
forms to be kept in electronic format, along with other medical records.
This act became effective July 20, 2007. ( WGR)
Duty to Report Child Porn
S. L. 2007- 263 ( HB 27) provides that any film processor, or computer technician, who
views an image of a minor, or a person who reasonably appears to be a minor, engaging in
sexual activity must report the name of the person requesting the development of the film, or the
person in possession of the computer, to the National Center for Missing and Exploited Children,
or the appropriate local law enforcement officer. A processor of photographic images means any
person who, for compensation: ( 1) develops exposed photographic film into negatives, slides, or
prints; ( 2) makes prints from negatives, slides, digital images, or video; or ( 3) develops,
processes, transfers, edits, or enhances video or digital images. A computer technician means
any person who repairs, installs, or otherwise services any computer or computer network, or
system for compensation.
The requirement may be satisfied if the processor of photographic images, or the
computer technician, reports the required information to a person designated by the employer.
That person must then report the required information to the appropriate authority. The act
creates civil and criminal immunity for a person, or employer, who acts in good faith when
making a report.
This act became effective September 1, 2007. ( KG)
Correction Enterprises
S. L. 2007- 280 ( HB 648). See Courts, Justice and Corrections.
Contracts with Automatic Renewal Clauses
S. L. 2007- 288 ( SB 527). See Consumer Protection.
Chapter 3 Business and Commerce
Page 11
Motorcycle Manufacturer Plates
S. L. 2007- 291 ( HB 135). See Transportation.
Revise Life and Health Insurance Laws
S. L. 2007- 298 ( HB 731). See Insurance.
Increase Criminal Penalty/ Theft of Metals
S. L. 2007- 301 ( HB 367). See Criminal Law and Procedure.
Limit Liability of Liquid Petroleum Gas Dealer/ Certain Others
S. L. 2007- 302 ( HB 1536) provides that liquid petroleum gas ( LPG) dealers and their
employees, agents, and subcontractors will not be held liable for civil damages caused by
improper installation, repair, or use by others, if the dealer did not know of, and consent to, the
action.
Current law regulates liquefied petroleum gases, and sets forth a code of safety for the
handling of liquid petroleum gas. The Department of Agriculture and Consumer Services are
responsible for enforcing the code. The Commissioner of Agriculture may assess civil penalties, in
amounts ranging from $ 100 to $ 500, for violations. A violation of the Article carries a Class 1
misdemeanor criminal penalty. A dealer is defined as someone in the business of selling LPG or
installing, servicing, repairing, adjusting, connecting, or disconnecting containers, equipment, or
appliances that use LPG. The Article limits the liability of persons who provide assistance in an
emergency or accident.
This act provides that a liquid petroleum gas dealer, or the dealer's agent, employee, or
subcontractor, is not liable for civil damages for an injury caused by one or more of the following:
The installation, alteration, modification, or repair of LPG equipment, or an LPG
appliance, by another person, if the LPG dealer, etc., did not know of, and consent
to, the installation, alteration, modification, or repair.
The use of LPG equipment, or an LPG appliance, by another person in a manner or
for a purpose for which it was not intended, if the LPG dealer, etc., did not know of
and consent to its being used in the manner or for the purpose for which it was not
intended.
The installation of LPG equipment, or an LPG appliance, by another person in a
manner not in accordance with the instructions of the manufacturer or in a manner
not in accordance with the rules of Article 5 of Chapter 119, if the LPG dealer did not
know of and consent to its being installed in that manner.
Nothing in the new statute alters an LPG dealer's duty to exercise reasonable care.
This act became effective October 1, 2007, and applies to acts or omissions occurring on
or after that date. ( SR)
North Carolina Green Business Fund
S. L. 2007- 323, Sec. 13.2 ( HB 1473, Sec. 13.2) creates the North Carolina Green Business
Fund as a special revenue fund to promote small businesses that develop and expand the biofuel
industry, the green building industry, clean technology, and renewable energy products and
businesses. The fund is to be administered by the Department of Commerce.
The Department of Commerce is to make grants to private businesses of less than 100
employees, nonprofit organizations, local governments, and State agencies to encourage the
Chapter 3 Business and Commerce
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expansion of small to medium sized businesses with less than 100 employees to grow a green
economy in the State. The funds are to be used for the following purposes:
Maximize development, production, distribution, retail infrastructure, and consumer
purchases of biofuels in the State, including the development of biofuels workforce.
Development of the green building industry in the State through the development
and growth of a market for environmentally conscious, and energy efficient, green
building processes, including:
• The installation, certification, or distribution of green building materials.
• Energy audits.
• Marketing and sales of green building technology in the State.
• The development of a workforce for green building processes.
Attract and leverage private- sector investments and entrepreneurial growth in
environmentally conscious clean technology and renewable energy products and
businesses, including the development of workforces in these industries.
Guidelines for awarding grants under this act are exempt from the rulemaking
requirements of the Administrative Procedures Act.
This section became effective July 1, 2007. ( WR)
Use of State Executive Aircraft
S. L. 2007- 323, Sec. 13.3 ( HB 1473, Sec. 13.3) states that the use of an executive aircraft
by the Department of Commerce for economic development purposes must take precedence over
all other uses. If an executive aircraft is not in use for such purposes, priority of use must be
given to the Governor, the Council of State, and other State officials traveling on State business,
respectively. The Department of Commerce is directed to review annually the rates charged for
the use of executive aircraft and adjust the rates, if necessary. This section also establishes a
rate to be charged, if an executive aircraft is used to attend an event related to collegiate
athletics.
This section became effective July 1, 2007. ( DH)
Report on Business Courts
S. L. 2007- 323, Sec. 14.7 ( HB 1473, Sec. 14.7). See Courts, Justice, and Corrections.
State Health Plan Changes
S. L. 2007- 323, Sec. 28.22A ( HB 1473, Sec. 28.22A). See Insurance.
Privilege Tax on Software Publishers' Machinery and
Equipment
S. L. 2007- 323, Sec. 31.7 ( HB 1473, Sec. 31.7). See Finance.
Modify Tax Credit for Constructing Renewable Fuel Facilities
S. L. 2007- 323, Sec. 31.9 ( HB 1473, Sec. 31.9). See Finance.
Chapter 3 Business and Commerce
Page 13
Expand Sales and Use Tax Refund for Certain Aircraft
Manufacturers
S. L. 2007- 323, Sec. 31.10 ( HB 1473, Sec. 31.10). See Finance.
Local Option County Taxes
S. L. 2007- 323, Sec. 31.17 ( HB 1473, Sec. 31.17). See Finance.
Sales Tax Refund- Research Supplies
S. L. 2007- 323, Sec. 31.20 ( HB 1473, Sec. 31.20). See Finance.
Datacenter Sales Tax Exemption
S. L. 2007- 323, Sec. 31.22 ( HB 1473, Sec. 31.22). See Finance.
Tax Incentive for Railroad Intermodal Facility
S. L. 2007- 323, Sec. 31.23 ( HB 1473, Sec. 31.23). See Finance.
Amend Tax Incentive for Railroad Intermodal Facility
S. L. 2007- 345, Sec. 14.7 ( HB 714, Sec. 14.7). See Finance.
Protect Homeowners/ Reduce Foreclosure
S. L. 2007- 351 ( HB 1374) makes several changes to the law to protect borrowers in
mortgage transactions, including:
Amends the Civil Procedure law, with regard to the statute of limitations, to recover
penalties for usury by including actions for the financing of usurious points, fees, or
other charges. The two- year period would accrue with each payment made and
accepted on the loan.
Amends the law governing the grounds upon which a North Carolina court can
exercise personal jurisdiction over a nonresident defendant in a claim related to local
real property. The act authorizes jurisdiction if the loan was made to a North Carolina
borrower for primarily family or household purposes, and was secured by real
property located within the State on which there is, or will be located, a 1- 4 family
unit dwelling.
Amends the Interest law to provide that any person who acquires the right to receive
payments on a loan made in the State, to a resident of the State, and secured by
property in the State, is deemed to have consented to the exercise of jurisdiction by
the courts of the State for any claim related to the loan.
Amends the law relating to foreclosure under power of sale by adding several items
to the list of information that must be provided to the debtor with the notice of
hearing, including:
• Whether the borrower made requests to the servicer for information in the prior
two years, and whether the servicer complied with such requests.
Chapter 3 Business and Commerce
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• That the debtor need not appear at the hearing, if he or she does not intend to
contest the default, but that failure to appear does not affect the right to pay the
debt and prevent the sale.
• That the trustee is a neutral party and cannot advocate for the creditor or the
debtor.
• That the debtor can apply to the court to stop the sale, on legal or equitable
grounds, prior to the time the rights of the parties to the sale become fixed.
• That the debtor has the right to appear at the hearing and contest the
allegations in the notice, and the grounds the clerk must find to authorize the
foreclosure.
• That if the debtor fails to appear, the trustee will seek an order to sell the
property being foreclosed.
• That the debtor has the right to legal advice, and how the debtor may obtain
free legal advice.
Creates a new Article entitled " Mortgage Debt Collection and Servicing." The new
Article applies to ( i) home loans that are secured by real property and used by the
individual borrower as a dwelling, ( ii) to servicers, defined as a person responsible
for receiving scheduled periodic payments from a borrower under the terms of a
loan, and making payments as required by the terms of the loan. The definition of
servicer does not include an attorney who accepts payments related to loan closings,
defaults, foreclosures, or settlement of disputes related to a loan.
The act restricts the amount and conditions under which fees may be assessed by a
servicer. It also establishes the obligations of the servicer with regard to handling
escrow funds. The servicer must maintain records of written requests for information
made by the borrower regarding disputes or errors in the borrower's account, and
provide responses within 10 business days. The borrower is entitled to one statement
in a six- month period. Thereafter, a charge for additional statements, of no more
than $ 25.00, may be assessed.
The borrower also is entitled to receive a copy of the original note and a statement
of the full payment history within 25 business days of making the request. After
receiving 1 statement in a 6- month period, the borrower may be charged $ 50.00 for
additional copies.
In addition to any equitable or legal remedies that may be available, a borrower
injured by a violation of this Article, the Commissioner of Banks, the Attorney
General, or a party to the loan, may sue for actual damages and attorney's fees. If a
party to the loan sues, the borrower must notify the servicer in writing of the error or
dispute that forms the basis of the claim at least 30 days before commencing the
action. A servicer will not be in violation of the Article, if the servicer shows that the
violation was unintentional and the servicer corrects the error and compensates the
borrower within 30 days of discovery or notice of the error and prior to
commencement of an action.
Sections 4 and 5 of this act become effective April 1, 2008. The remainder of the act
became effective August 16, 2007. ( KCB)
Protect Consumers - Covered Loans
S. L. 2007- 352 ( HB 1817). See Consumer Protection.
North Carolina Foreclosure/ Landlord Tenant Laws
S. L. 2007- 353 ( HB 947). See Local Government and Property, Trusts, and Estates.
Chapter 3 Business and Commerce
Page 15
Use of Senate Seals and Coat of Arms
S. L. 2007- 354 ( SB 371) prohibits anyone, unless directed by the Senate or the Senate
Principal Clerk, to knowingly use, manufacture, reproduce, sell, or purchase for resale any part of
or likeness to any seal or coat of arms of the Senate, except for the manufacture or sale of the
article for the official use of the State. A violation of this act is a Class 2 misdemeanor. The
Attorney General may seek an injunction for violations of this act.
This act became effective August 17, 2007. ( DH)
Prohibit Gift Card Maintenance Fees
S. L. 2007- 363 ( SB 1517). See Consumer Protection.
Retainage Payments/ Construction Contracts
S. L. 2007- 365 ( SB 1245). See State Government.
Sales Tax Exemption for Baked Goods
S. L. 2007- 368 ( SB 1240). See Finance.
Business Entity Clarifications
S. L. 2007- 385 ( SB 576) amends the Business Corporation Act to clarify various
amendments made in 2005 regarding mergers. This act clarifies that a committee of a board of
directors is prohibited from authorizing or approving the corporation's reacquisition of shares,
except according to a formula or method prescribed by the board of directors. The act also
substitutes the term " plan of merger" for the term " articles of merger" throughout the Business
Corporation Act.
This act became effective August 19, 2007. ( HF)
Increase Hold for Items Bought by Pawnbroker
S. L. 2007- 415 ( SB 806) prohibits pawnbrokers from selling, exchanging, bartering, or
removing for the pawnshop any goods that were purchased before the earlier of 7 days after the
pawn ticket information is electronically reported to law enforcement, or 30 days after the
transaction. Currently, a pawnbroker must hold the goods for only 48 hours after the transaction
in which the property is purchased by the pawnbroker.
The act also authorizes the establishment of procedures for reporting pawn ticket records
electronically, by allowing the report to be made to the sheriff or the chief of police, by
transmission over the Internet or by a facsimile transmission, in a manner approved by the
sheriff or chief of police.
This act became effective October 1, 2007, and applies to goods taken by a pawnbroker
in pledge, pawn, or purchase on or after that date. ( KCB)
Extend Qualified Business Venture Tax Credit
S. L. 2007- 422 ( HB 1598). See Finance.
Chapter 3 Business and Commerce
Page 16
Quarterly Escrow Deposits/ Affiliated Tobacco Dealers
S. L. 2007- 435 ( HB 1460). See Finance.
Small Business Contractor Act
S. L. 2007- 441 ( HB 1181) creates the North Carolina Small Business Contractor Authority
( Authority). The purpose of the Authority is to foster economic development and the creation of
jobs by providing financial assistance to financially responsible small businesses that are unable
to obtain adequate financing and bonding assistance in connection with contracts.
The Authority is governed by a board consisting of 11 members: 8 appointed by the
General Assembly, 4 each upon the recommendation of the President Pro Tempore of the Senate
and the Speaker of the House of Representatives, and 3 appointed by the Governor. The
members shall serve four- year terms, and there is no prohibition against serving successive
terms.
The Authority has the power to accept grants and loans, employ staff, acquire and
manage property, develop applications for guaranty agreements, fix and determine fees, adopt
administrative rules, and report quarterly to the Joint Legislative Commission on Governmental
Operations. The Authority may not pledge the full faith and credit of the State.
In order to qualify for assistance from the Authority, a small business concern must meet
certain federally established standards for businesses of similar size and industry. The applicant
also must have a reputation for financial responsibility, be a resident of North Carolina, and
demonstrate to the satisfaction of the Authority that the applicant has been unable to obtain
adequate financing or bonding on reasonable terms through an authorized company.
The act also creates two funds: The Small Business Contract Financing Fund ( Financing
Fund) and the Small Business Surety Bond Fund ( Bond Fund). These are both special revenue
funds. The Financing Fund may be used by the Authority to guarantee a loan made to an
applicant, or as the actual loan to an applicant. The Bond Fund may be used to guarantee a
surety for losses incurred under a bid bond, payment bond, or performance bond on an
applicant's contract. The total amount of guarantees issued and bonds executed by the Authority
may not exceed 90% of the amount of money in the Surety Bond Fund.
It is a Class 2 misdemeanor to knowingly make or cause any false statement or report to
be made in any application or document submitted to an Authority.
This act becomes effective January 1, 2008, and applies to offenses committed or causes
of action arising on or after that date. ( KG)
Fire- Safe Cigarette Act
S. L. 2007- 451 ( HB 1785) enacts a new Article in the General Statutes, the Fire- Safety
Standard and Firefighter Protection Act, to adopt a cigarette fire- safety standard for cigarettes
sold in the State.
Definitions. – The act includes the following definitions:
" Cigarette" means any roll for smoking, whether made wholly or in part, of tobacco
or any other substance, irrespective of size or shape, and whether or not such
tobacco or substance is flavored, adulterated, or mixed with any other ingredient, the
wrapper or cover of which is made of paper or any other substance or material,
other than leaf tobacco.
" Manufacturer" is any of the following:
• Any entity which manufactures or otherwise produces cigarettes or causes
cigarettes to be manufactured or produced anywhere that such manufacturer
intends to be sold in this State, including cigarettes intended to be sold in the
United States through an importer.
Chapter 3 Business and Commerce
Page 17
• The first purchaser anywhere that intends to resell, in the United States,
cigarettes manufactured anywhere that the original manufacturer does not
intend to be sold in the United States.
• Any entity that becomes a successor of these entities.
Test Method and Performance Standard. – Test methods and performance
standards for cigarettes are governed by the act. No cigarette may be sold in the State, unless it
is tested in accordance with the act, meets the performance standards of the act, is accompanied
by a written certification filed with the Commissioner of Insurance by the manufacturer and
marked, as required under the act. Testing must meet the following requirements or standards:
Testing must be done in accordance with the American Society of Testing and
Materials ( ASTM) " Standard Test Method for Measuring the Ignition Strength of
Cigarettes."
Testing must be conducted using 10 layers of filter paper.
No more than 25% of cigarettes may exhibit full- length burns.
Performance standards must be applied only to a complete test trial ( consists of 40
replicate tests).
Written certifications of testing filed by manufacturers shall be based upon testing by
laboratories accredited by the International Organization for Standardization ( ISO) or
comparable standard required by the Commissioner of Insurance ( Commissioner).
No additional testing is required if testing is completed in accordance with the act. A
manufacturer of a cigarette that cannot be tested in accordance with the act shall propose a test
method to the Commissioner for approval. No local government may pass any ordinance
changing the performance standard set forth in the act. The Commissioner must review the
effectiveness of this section and report every three years to the General Assembly, including any
recommendations to improve the act.
Certification. – The act addresses certification of a cigarette's performance standard.
Each manufacturer is required to submit to the Commissioner a written certification, attesting
that the cigarette has been tested and meets the performance standards required under the act.
A cigarette must be recertified every 3 years, and the manufacturer must pay to the
Commissioner a fee of $ 250.00 for each certification form.
If a manufacturer makes any change to a cigarette certified under the act that is likely to
affect the cigarette's compliance with ignition propensity standards required under the act, the
cigarette may not be sold until the manufacturer retests the cigarette under the act.
Cigarettes certified under the act must be marked in 8- point approved type, or larger, to
indicate compliance. Cigarettes sold or offered for sale that do not comply with the performance
standard are subject to forfeiture.
Penalties and Enforcement. – Penalties for violations of the act include:
Manufacturers, distributors, agents, or any other persons who sell, or offer to sell,
cigarettes in violation of the testing requirements are subject to a civil penalty not to
exceed $ 100 per pack, up to a maximum penalty of $ 100,000 per 30- day period.
Retail dealers who knowingly sell, or offer to sell, cigarettes in violation of the act
shall be subject to a civil penalty not to exceed $ 100 per pack, up to a maximum
penalty of $ 25,000 during a 30- day period.
Businesses engaged in the manufacture of cigarettes that knowingly make a false
certification are subject to a civil penalty of $ 75,000, not to exceed $ 250,000 for
each false certification.
Any person violating any other provision of the act is subject to a civil penalty, not to
exceed $ 1,000 for a first offense, and $ 5,000 for each subsequent violation.
The Commissioner or Attorney General may file an action for a violation of the act
including injunctive relief, recovery of costs, or damages incurred by the State.
The act does not apply to cigarettes sold out of state.
Chapter 3 Business and Commerce
Page 18
Preemption. – The act does not apply if a federal reduced cigarette ignition propensity
standard that preempts the act is enacted, but implementation of the federal standard does not
affect any liability for forfeiture or penalties accrued prior to enactment of the federal law.
Other Provisions. – In a provision unrelated to the Fire- Safety and Firefighter
Protection Act, the act clarifies stockholder requirements for a behavioral health professional
corporation.
The Fire- Safety Standard and Firefighter Protection Act becomes effective January 1,
2010. The remainder of the act became effective August 24, 2007. The act does not apply to
cigarettes sold on or after January 1, 2010, if the dealer can establish that taxes were paid on
the cigarettes prior to that date. ( TH)
Dealer Motor Vehicle Inspection/ Records/ Motor Vehicle
Registration
S. L. 2007- 481 ( SB 1147). See Transportation.
Bond License Plate Agent/ Online Vehicle Registration
S. L. 2007- 488 ( SB 1457). See Transportation.
Scrap Vehicle Purchase/ Parts- Record
S. L. 2007- 505 ( SB 1364) requires secondary metals recyclers and salvage yards to
maintain records when purchasing vehicles without a certificate of title for scrap, and amends the
junked motor vehicle law for the City of Monroe.
Scrap Vehicle Purchase. – This act allows secondary metals recyclers and salvage
yards to purchase motor vehicles without a certificate of title for scrap or parts only, if ( i) the
motor vehicle is 10 model years old or older, and ( ii) the secondary metals recyclers and salvage
yards comply with record keeping requirements. Law enforcement may inspect the required
records and all motor vehicles in the possession of the scrap metals recycler, or salvage yard,
when such operations are open for business. The penalty for violation of this provision is a Class
1 misdemeanor for a first offense, and a Class I felony for second and subsequent offenses. Any
motor vehicle, or other tools used to transport another motor vehicle, illegally sold under this
provision may be seized by law enforcement and is subject to forfeiture. Local governments are
preempted from enacting local laws or ordinances that regulate the sale of motor vehicles to
secondary metals recyclers or salvage yards.
The City of Monroe. – This act amends the law to change the definition of " junked
motor vehicles," as it applies in the City of Monroe, to include vehicles that appear to be worth
less than $ 500.
The sections of this act regarding the purchase of vehicles for scrap metal becomes
effective December 1, 2007, and applies to offenses committed and motor vehicles purchased on
or after that date. The section of this act regarding the City of Monroe became effective August
30, 2007. ( HF)
Clarify Motor Vehicle Franchise Laws/ Dealer Termination
S. L. 2007- 513 ( SB 1351) made the following changes to the motor vehicle franchise
laws:
Installment Sales. – The act requires retail installment sales to be evidenced by one or
more written instruments ( previously had to be one instrument), and requires that the written
statement delivered to the buyer that describes the details of the sale be signed by the buyer.
Chapter 3 Business and Commerce
Page 19
Notice of Objection/ Transfer of Dealership. – Current law prohibits a franchisor
from unreasonably refusing to approve a transfer of ownership of a dealership, transfer of a
franchise, change in the executive management or principal operator of a dealership, or
relocation of a dealership. When refusing to approve, the act requires the franchisor to provide
detailed factual and legal bases in the franchisor's notice of objection, and limits those bases to
those specifically listed in the act. It also provides for additional time for the franchisor to provide
notice of objection, if the franchisor requests additional information, to complete its review of a
proposed change.
Rights of Successor of Deceased Dealership Owner. – The act clarifies that a
designated successor of a deceased or incapacitated owner or operator of a dealership succeeds
to all of the rights and obligations of the owner or operator under either the existing franchise or
any other successor, renewal, or replacement franchise.
Manufacturer's Opinion on Viability of Franchise. – The act deletes language
stating that a manufacturer does not owe a duty to a purchaser of a motor vehicle franchise to
disclose its opinion that the franchise is not viable, or is not consistent with the manufacturer's
distribution or marketing forecast or plans.
Full Compensation for Warranty Work. – The act clarifies that a manufacturer must
fully compensate its dealers for warranty parts and service, and may not attempt to recover
those costs from the dealer through other charges or surcharges.
Denial of Claims for Reimbursement for Warranty Work. – The act clarifies that a
dealer's claim for reimbursement for warranty parts and services may not be denied by the
manufacturer based solely on a failure to comply with the manufacturer's claim documentation
procedures. The dealer also must have failed to comply with the same procedure within the
previous 12 months and received a written warning from the manufacturer of the failure.
Procedures for Dealer Claims. – The act clarifies that a manufacturer must have
reasonable written procedures for substantiating a dealer's claim for sales incentives, service
incentives, rebates, or other forms of incentive compensation.
Civil Actions. – The act allows only motor vehicle dealers and parties to a franchise as
parties who may bring a civil action for violation of the Manufacturers Licensing Law.
Dealer Eligibility to Purchase Program Vehicles. – The act prohibits a manufacturer
from considering the performance of its franchised dealers relating to sale of new motor vehicles
to determine the following with regard to program, certified, or other used vehicles:
The dealer's eligibility to purchase vehicles from the manufacturer.
The volume, type, or models the dealer is eligible to purchase from the
manufacturer.
The price of vehicles the dealer is eligible to purchase from the manufacturer.
Availability of discounts, credits, rebates, or sales incentives the dealer is eligible to
receive from the manufacturer for purchase of vehicles.
Access to Customer Information. – The act prohibits a manufacturer from accessing
customer or prospect information maintained by a dealer for purposes of soliciting the customer
on behalf of, or directing the customer to, another dealer. The prohibition does not apply to:
Customers that request a reference to another dealership.
Customers that move more than 60 miles from the dealership where the information
was accessed.
Customer information that was originally provided to the dealership by the
manufacturer.
Situations where the dealer has agreed to give the manufacturer access to the
information in a separate, written instrument.
Truck Dealer Cost Reimbursement. – The act requires manufacturers of vehicles
with a gross vehicle weight rating of 16,000 pounds or more to compensate dealers ( at a rate of
$ 600 per vehicle registered in the State) for the cost of special tools, equipment, and training for
which the dealers are liable, when the manufacturer sells a portion of its vehicles to converters
and other non- dealer retailers.
Chapter 3 Business and Commerce
Page 20
Compensation of Dealers/ Franchise Termination due to Industry
Reorganization. – Current law prohibits a manufacturer from terminating a franchise with a
licensed new motor vehicle dealer, unless certain requirements are met regarding notice,
determination of good cause for termination, and payment of compensation to the dealer. This
act adds the following new provisions to the law dealing with termination of a franchise that
results from a change in ownership, or control of all or part of the business of a manufacturer,
termination of all or part of the business operations of a manufacturer, or discontinuance of the
sale of the product line, or a change in distribution system by the manufacturer:
The manufacturer has to notify the dealer of the termination not less than 180 days
prior to the effective date of the termination.
The manufacturer is liable to the dealer for an amount at least equivalent to the fair
market value of the franchise on one of the following dates, whichever provides the
highest amount:
• The date the franchisor announces the action resulting in termination.
• The date the action resulting in termination first became general knowledge.
• The day 12 months prior to the date the notice of termination is issued.
Payment is due within 90 days of the effective date of the termination. However, if
the termination is due to a change in distributors, the manufacturer may avoid
payment if the new distributor offers the dealer a franchise with acceptable terms.
A franchise continues in full force and operation, notwithstanding a change in the
system of distribution of motor vehicles offered for sale under the franchise. Upon
the occurrence of the change, the Division is required to deny a manufacturer's
application for a license or license renewal, unless the applicant offers each dealer
who is a party to the franchise a new franchise agreement containing substantially
the same provisions, or assumes the obligations of the previous franchise agreement.
Applicability. – The act is applicable to all franchises and agreements existing at the
time of its ratification, and to all future franchises and agreements.
This act became effective August 30, 2007. However, nothing in the act applies to any
administrative proceeding pending before the Commissioner of Motor Vehicles, or any case
pending in a court on or before that date. ( WGR)
Wireless Telecommunications Facilities
S. L. 2007- 526 ( SB 831). See Local Government.
Industrial Machinery - Building Code
S. L. 2007- 529 ( SB 490) amends the State Building Code ( Code), to provide that the Code
does not apply to the regulation of the design, construction, location, installation, or operation of
industrial machinery. However, if, during the building code inspection process, an electrical
inspector has any concerns about the electrical safety of a piece of machinery, the inspector may
refer the concern to the Occupational Safety and Health Division of the North Carolina
Department of Labor. The inspector may not withhold a certificate of occupancy or mandate
third- party testing of the machinery based solely on this concern.
" Industrial machinery" is defined as equipment and machinery used in a system of
operations for the explicit purpose of producing, and does not include equipment permanently
attached to or a component part of a building and related to building services such as ventilation,
heating and cooling, plumbing, fire suppression or prevention, and general electrical
transmission.
This act became effective August 31, 2007. ( TH)
Chapter 3 Business and Commerce
Page 21
Amend Dry- Cleaning Solvent Cleanup Act
S. L. 2007- 530 ( SB 1362). See Environment and Natural Resources.
Amend Funeral Service Practice/ Other Related Laws
S. L. 2007- 531 ( SB 1435). See Occupational Boards and Licensing.
Deceptive Advertising of Business Location
S. L. 2007- 545 ( SB 514) makes it an unfair and deceptive trade practice for a person who
is in the business of supplying a perishable product to advertise that the business is located in a
certain geographic location, when the business is actually located elsewhere, unless the
advertisement contains the actual municipality and state of the location of the business.
This act became effective October 1, 2007, and applies to advertising printed or
published on or after that date. ( WR)
Job Maintenance and Capital Development Fund
S. L. 2007- 552 ( Extra Session) ( HB 4 ( Extra Session)) creates a fund in the Department of
Commerce ( Department) to be used to encourage businesses to maintain high- paying jobs and
make capital investments in the State.
Under the act, in order to be eligible for a grant a company must:
Invest, or intend to invest, at least $ 200 million of private funds within a 6- year
period in improvements to real property and additions to tangible personal property
to be used in the business in the State.
Employ, or maintain employment of, at least 2,000 full- time employees in the State.
Be located in a Tier One county at the time the application is made.
Meet a wage standard equal to 140% of the average weekly wage for the county.
Provide health insurance to all full- time employees, have no serious OSHA violations
within the past three years, and have no serious environmental law violations within
the past three years.
Under the act, the Economic Investment Committee must recommend the grants to the
Department. The Department may enter into up to 5 grants, with the maximum individual grant
being up to $ 4 million per year, with a maximum of cumulative grants of no more than $ 60
million. The amount of each grant must be determined after consideration of the amount of sales
and use taxes paid on machinery and equipment, sales and use taxes paid on building materials
related to expansion, taxes paid on electricity, natural gas and other fuels, additional income or
franchise tax paid, worker training expenses incurred, and State permitting fees paid.
The Department must report quarterly to the Joint Legislative Committee on
Governmental Operations on grants awarded under this act.
The act directs the Joint Select Committee on Economic Development Incentives to
compile a report containing a comprehensive listing of all economic development incentives
provided in the State, and to report to the 2009 General Assembly.
This act became effective July 1, 2007. ( WR)
Job Maintenance and Capital Development Fund
HB 1761 – Vetoed August 30, 2007. See Vetoed Legislation.
Chapter 3 Business and Commerce
Page 22
Studies
Study Equine Industry in North Carolina
S. L. 2007- 323, Sec. 13.14A ( HB 1473, Sec. 13.14A) directs the sum of $ 500,000, of the
funds appropriated to the Rural Economic Development Center, Inc., for the 2007- 2008 fiscal
year, to be allocated to the Agricultural Advancement Consortium for:
Assessing the numbers, composition, and value of the equine industry in North
Carolina.
Analyzing the direct and indirect impact of the industry on the State's economy.
Developing a comprehensive plan to maximize the economic opportunities presented
by the equine industry.
The assessment of the industry must provide data on both a statewide and countywide
basis. The Consortium may contract with other agencies of State government, constituent
institutions of the University of North Carolina, and private consultants to conduct the assessment
and plan development. It must complete its work within 12 months of the funds becoming
available. A report containing the results of the assessment of the equine industry and its plan for
maximizing the economic impact of the industry must be filed with the Chairs of the Joint
Legislative Commission on Governmental Operations, and the Chairs of the Senate and House of
Representatives Appropriations Committees.
This section became effective July 1, 2007. ( DH)
Authorize Minority Disparity Study
S. L. 2007- 345, Sec. 9.2 ( HB 714, Sec. 9.2) authorizes the Department of Administration
to conduct a study of the relevant evidence of the effects of race- based and gender- based
discrimination upon the utilization of minority- owned and women- owned business enterprises in
contracts for planning, design, preconstruction, construction, maintenance, renovation, or repairs
of State building projects, including local government units, or other public or private entities,
that receive State funding. The Director of the Budget is authorized, within funds available in any
State agency, to use up to $ 1.5 million for the study authorized under this section.
This section became effective July 1, 2007. ( HF)
For a complete list of the studies and reports authorized by the 2007 Session of the
2007 General Assembly, please refer to the Appendix contained in this publication.
Chapter 4 Children and Families
Page 23
Chapter 4
Children and Families
Drupti Chauhan ( DC), Erika Churchill ( EC), Shirley Iorio ( SI), Wendy Graf Ray ( WGR)
Enacted Legislation
Child Restraint Systems/ Federal Compliance
S. L. 2007- 6 ( HB 61). See Transportation.
Domestic Violence Victims/ Security
S. L. 2007- 15 ( HB 46) requires the North Carolina Council for Women/ Domestic Violence
Commission to consider, in cooperation with the North Carolina Coalition Against Domestic
Violence, whether State- funded agencies that operate domestic violence shelters should adopt
safety guidelines as a criterion for receipt of State funds. The Council is required to report to the
Joint Legislative Committee on Domestic Violence no later than May 1, 2008, on the review
results. The act also requires clerks of Superior Court, where practical and if requested by a
domestic violence victim, to make a secure area available to the victim to await the hearing of
the victim's case.
This act became effective April 12, 2007. ( WGR)
Schools Provide Information on Cervical Cancer
S. L. 2007- 59 ( SB 260). See Education.
Domestic Violence Victims/ Add Protections
S. L. 2007- 116 ( SB 30). See Courts, Justice, and Corrections and Criminal Law and
Procedure.
Amend Family Resource Center Grant Program Laws
S. L. 2007- 130 ( HB 696) changes the purpose of the Family Resource Center Grant
Program from providing grants to establish family resource centers to implementing family
support programs that are research- based and have been evaluated for effectiveness.
Additionally, the act extends the age range for services from birth through elementary school age
children, to children from birth through 17 years of age. The act also specifies that the grants
prevent child abuse and neglect by implementing program models that have been evaluated and
found to improve outcomes for children and families.
This act became effective June 27, 2007. ( EC)
Remove Barriers to Interstate Adoption
S. L. 2007- 151 ( HB 865) amends North Carolina statutes pertaining to termination of
parental rights and adoption to make it easier for nonresidents to adopt children in this State.
Adoption conditioned upon termination of parental rights. – In North Carolina,
the biological parents' rights are not required to be terminated before an adoption can take
Chapter 4 Children and Families
Page 24
place. It is enough that the biological parent has consented to an adoption, or relinquished the
child to an agency for adoption. The decree of adoption has the effect of terminating the
biological parents' rights. However, some other states do require that the biological parents'
rights be terminated before an adoption can take place. This act authorizes North Carolina courts
to terminate parental rights when all of the following conditions are met:
The child has been relinquished for adoption or directly placed with a prospective
adoptive parent.
The relinquishment or consent to adoption has become irrevocable.
Termination of parental rights is a condition precedent to adoption in the jurisdiction
where the adoption will take place.
The parent does not contest the termination.
Jurisdiction over adoption proceedings. – Currently, a prospective adoptive parent
is required to live in North Carolina for at least six months prior to filing an adoption petition, with
the exception that a prospective adoptive parent who has moved to North Carolina may file a
petition to adopt a child who has lived in North Carolina for six months or from birth. In addition,
a North Carolina court may not exercise jurisdiction over an adoption proceeding if another state
is exercising jurisdiction, so long as the other jurisdiction is acting in conformity with the Uniform
Child- Custody Jurisdiction and Enforcement Act at the time the petition is filed. This act deletes
the requirement that a prospective adoptive parent reside in North Carolina before filing a
petition to adopt. A North Carolina court will have jurisdiction under any of the following
circumstances:
The child has lived in North Carolina for six months or from birth.
The prospective adoptive parent has lived in North Carolina for at least six months.
A North Carolina child- placing agency or department of social services has legal
custody of the child.
The act also allows a North Carolina court to exercise jurisdiction when another state was
already exercising jurisdiction at the time the adoption petition is filed if, within 60 days after the
date the petition is filed, the other court dismisses its proceeding or releases jurisdiction.
This act became effective October 1, 2007, and applies to motions in the cause, or
petitions filed on or after that date. ( WGR)
Expand Reach of Courts/ Termination of Parental Rights
S. L. 2007- 152 ( HB 866) expands the jurisdiction of North Carolina courts, by giving to
courts that have jurisdiction to make a child- custody determination the jurisdiction to terminate
the parental rights of any parent, irrespective of the parent's state of residence.
Under current law, district courts have exclusive original jurisdiction to hear and
determine any petition or motion relating to termination of parental rights to any juvenile who
resides in, is found in, or is in the legal or actual custody of a county department of social
services or licensed child- placing agency in the district. Before exercising jurisdiction, the court
must find that it has jurisdiction to make a child- custody determination under the provisions of
the law dealing with initial child- custody jurisdiction, jurisdiction to modify determination, or
temporary emergency jurisdiction. The law grants North Carolina courts temporary emergency
jurisdiction if the child is present in this State and the child has been abandoned, or it is
necessary in an emergency to protect the child because the child, or a sibling, or parent of the
child is subjected to or threatened with mistreatment or abuse. Custody determinations made by
courts establishing jurisdiction under this section are primarily intended to be temporary orders,
designed to protect the child until the State that has jurisdiction enters an order.
This act expands the jurisdiction of North Carolina district courts hearing petitions or
motions to terminate parental rights to any juvenile in the custody of a county department of
social services or licensed child- placing agency. The act gives courts having jurisdiction to make a
child- custody determination the jurisdiction to terminate the parental rights of any parent,
Chapter 4 Children and Families
Page 25
irrespective of the parent's state of residence. The act requires that, before a court may exercise
jurisdiction regarding the parental rights of a nonresident parent, the court must find:
That it has jurisdiction to make a child- custody determination under the initial child-custody
jurisdiction provisions or the jurisdiction to modify determination provisions,
without regard to the temporary emergency jurisdiction provisions.
That proper process was served on the nonresident parent.
This act became effective October 1, 2007, and applies to motions in the cause or
petitions filed on or after that date. ( WGR)
Every Child Ready to Learn
S. L. 2007- 173 ( HB 150). See Education.
Custody/ Visitation/ Military Orders
S. L. 2007- 175 ( HB 1634). See Military, Veterans', and Indian Affairs.
Assault Disabled Person/ Institutional Setting
S. L. 2007- 188 ( HB 554). See Criminal Law and Procedure.
Violate Order/ Possess Deadly Weapon Felony
S. L. 2007- 190 ( HB 47). See Criminal Law and Procedure.
Study Safety Restraints on School Buses
S. L. 2007- 191 ( SB 812). See Transportation.
Access to Information for Adult Adoptees
S. L. 2007- 262 ( HB 445) authorizes a child- placing agency or a county department of
social services to act as a confidential intermediary between an adult adoptee or an adult lineal
descendant of a deceased adoptee and a biological parent of the adoptee. These agencies may
share nonidentifying birth family health information. With written consent of both parties, the
agencies may facilitate contact or share identifying information between the parties. The act also
allows a child- placing agency or a county department of social services to act as a confidential
intermediary for the adoptive parents of a minor adoptee, in order to obtain nonidentifying birth
family health information. A confidential intermediary is authorized to charge a reasonable fee for
services, so long as the fee is pursuant to a written agreement signed by the individual to be
charged. The Division of Social Services is required to establish guidelines for confidential
intermediary services.
The act also defines " adult" as an individual who has attained the age of 21 years for the
purposes of the adoption records confidentiality and disclosure statutes.
This act becomes effective January 1, 2008. ( DC)
Duty to Report Child Porn
S. L. 2007- 263 ( HB 27). See Business and Commerce.
Chapter 4 Children and Families
Page 26
Amend Child Welfare Laws/ Comply with Federal Laws
S. L. 2007- 276 ( HB 698). See Health and Human Services.
" More at Four" Program and Office of School Readiness
S. L. 2007- 323, Sec. 7.24 ( HB 1473, Sec. 7.24). See Education.
Collaboration Among Departments on School- Based Child
and Family Team Initiative
S. L. 2007- 323, Sec. 10.9 ( HB 1473, Sec. 10.9) establishes the School- Based Child and
Family Team Initiative to identify and coordinate appropriate community services and supports
for children at risk of school failure or out- of- home placement, in order to address the physical,
social, legal, emotional, and developmental factors that affect academic performance. This
section also establishes the North Carolina Child and Family Leadership Council to review and
advise the Governor in the development of the Initiative, and to ensure the active participation
and collaboration in the Initiative by all State agencies and their local counterparts providing
services to children in participating counties. The Department of Health and Human Services, the
Department of Juvenile Justice and Delinquency Prevention, the Administrative Office of the
Courts, and the Department of Public Instruction are directed to ensure collaboration in the
development and implementation of the Initiative.
This section became effective July 1, 2007. ( WGR)
Comprehensive Treatment Services Program
S. L. 2007- 323, Sec. 10.10 ( a)-( h) ( HB 1473, Sec. 10.10 ( a)-( h)). See Health and
Human Services.
Changes to the Legislative Study Commission on Children
and Youth
S. L. 2007- 323, Secs. 10.10( i) and ( j) ( HB 1473, Secs. 10.10( i) and ( j)) make changes to
the duties and membership of the Legislative Study Commission on Children and Youth
( Commission) and create a new Task Force on the Coordination of Children's Services ( Task
Force).
These sections give the Commission the duty to determine the adequacy and
appropriateness of services to children and youth served by the Mental Health, Developmental
Disabilities, and Substance Abuse Services system. These sections also make changes to the
membership of the Commission.
The sections also create the Task Force. The purpose of the Task Force is to study and
recommend changes to the Commission, the Governor, and the General Assembly to improve
collaboration and coordination among agencies that provide services to children, youth, and
families with multiple service needs. The Task Force must report at least annually to the
Commission and on April 1 of each year to the House Appropriations Subcommittee on Health
and Human Services; the Senate Appropriations Committee on Health and Human Services; the
Joint Legislative Oversight Committee on Mental Health, Developmental Disabilities, and
Substance Abuse Services; and the Fiscal Research Division.
These sections became effective July 1, 2007. ( WGR)
Chapter 4 Children and Families
Page 27
Child Care Subsidy Rates
S. L. 2007- 323, Sec. 10.15 ( HB 1473, Sec. 10.15) sets out eligibility requirements and
payment rates for subsidized child care services in North Carolina.
This section became effective July 1, 2007. ( WGR)
North Carolina Partnership for Children Personnel Record
Protection
S. L. 2007- 323, Sec. 10.19B ( HB 1473, Sec. 10.19B). See Labor and Employment.
Child Support Program/ Enhanced Standards
S. L. 2007- 323, Sec. 10.28 ( HB 1473, Sec. 10.28) requires the Department of Health and
Human Services to develop and implement performance standards for all State and county child
support enforcement offices in North Carolina. The standards must include all of the following:
Cost per collection.
Consumer satisfaction.
Paternity establishments.
Administrative costs.
Orders established.
Collections on arrearages.
Location of absent parents.
Other related performance measures.
This section also requires the Department to monitor the performance of each office and
implement a system of reporting that allows offices to review their performance and the
performance of other offices. The Department must publish an annual performance report,
including statewide and local office performance. The Department is required to report on its
progress to the Senate Appropriations Committee on Health and Human Services, the House
Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division by
May 1 of each even- numbered year beginning in 2008.
This section became effective July 1, 2007. ( WGR)
Intensive Family Preservation Services Funding and
Performance Enhancements
S. L. 2007- 323, Sec. 10.33 ( HB 1473, Sec. 10.33) directs the Intensive Family
Preservation Services ( IFPS) Program to provide intensive services to children and families in
cases of abuse, neglect, and dependency where a child is at imminent risk of removal from the
home, and in cases of abuse where a child is not at imminent risk of removal. The IFPS must
ensure the application of standardized assessment criteria for determining imminent risk and out-of-
home placement. The Department of Health and Human Services must require that any
program or entity that receives funding for the purpose of IFPS provide information and data that
allows for all of the following:
An established follow- up system with at least six months of follow- up services.
Detailed information on specific interventions applied.
Cost- benefit data.
Data on long- term benefits obtained by tracking families through the process.
The number of families remaining intact and associated interventions.
Chapter 4 Children and Families
Page 28
The number and percentage by race of children receiving services, compared to the
ratio of their distribution in the general population, involved with Child Protective
Services.
The Department is required to report on the IFPS Program each even- numbered year
beginning in 2008 to the House Appropriations Subcommittee on Health and Human Services, the
Senate Appropriations Committee on Health and Human Services, and the Fiscal Research
Division.
This section became effective July 1, 2007. ( WGR)
Annual Evaluation of Tarheel Challenge Program
S. L. 2007- 323, Sec. 16.1 ( HB 1473, Sec. 16.1). See Courts, Justice, and Corrections.
Adoption Tax Credit
S. L. 2007- 323, Sec. 31.6 ( HB 1473, Sec. 31.6). See Finance.
Homebound Instruction for Disabled Students
S. L. 2007- 425 ( HB 14). See Education.
Homebound Instruction Standards
S. L. 2007- 429 ( HB 20). See Education.
Child Support Collection Fee/ Non- Temporary Assistance for
Needy Families ( TANF)
S. L. 2007- 460 ( HB 825). See Health and Human Services.
Require Disclosure/ Sex Offenders/ Child Custody
S. L. 2007- 462 ( HB 1328). See Civil Law and Procedure.
For a complete list of the studies and reports authorized by the 2007 Session of the
2007 General Assembly, please refer to the Appendix contained in this publication.
Chapter 5 Civil Law and Procedure
Page 29
Chapter 5
Civil Law and Procedure
Brenda Carter ( BC), Karen Cochrane- Brown ( KCB), Bill Gilkeson ( BG), Kory Goldsmith ( KG),
Trina Griffin ( TG), Tim Hovis ( TH), Howard Alan Pell ( HAP), Wendy Graf Ray ( WGR),
Walker Reagan ( WR), Steve Rose ( SR), Susan Sitze ( SS)
Enacted Legislation
Residential Mortgage Fraud Act
S. L. 2007- 163 ( HB 817). See Consumer Protection.
Limit Liability at Agricultural Fairs
S. L. 2007- 171 ( HB 590). See Animals and Wildlife.
Motor Vehicle Chop Shop Act
S. L. 2007- 178 ( HB 1354). See Criminal Law and Procedure.
Violate Order/ Possess Deadly Weapon Felony
S. L. 2007- 190 ( HB 47). See Criminal Law and Procedure.
Amend Civil No- Contact Order Laws
S. L. 2007- 199 ( HB 1482) amends two definitions pertaining to civil no- contact orders. In
2004, the General Assembly enacted statutes creating civil no- contact protective orders. Courts
can issue these protective orders in situations where a person has been a victim of stalking or
nonconsensual sexual conduct committed by a person with whom the victim is not in a domestic
relationship. Under the Civil No- Contact Orders statutes, " unlawful conduct" is defined as the
commission of one or more acts of ( i) nonconsensual sexual conduct, including single incidences
of nonconsensual sexual conduct, or ( ii) stalking. The definition of unlawful conduct does not
include acts of self- defense or defense of others.
The act clarifies the definition of " stalking" by reorganizing the sentence and amending
the definition of " unlawful conduct" by stating that the acts have to be committed by a person of
16 years of age or older, in order to meet the definition of " unlawful conduct."
This act became effective July 8, 2007. ( SR)
Civil Jury Selection/ Equal Challenges
S. L. 2007- 210 ( HB 244) amends the law governing jurors in civil actions, to provide for
equity between the parties with respect to juror challenges. The act authorizes the judge in a civil
case to increase the number of challenges for plaintiffs with antagonistic interests, under the
same circumstances that a judge may now increase the number of juror challenges for
defendants with antagonistic interests. Prior to this act, the judge could apportion the eight
peremptory challenges between or among defendants with antagonistic interests, or the judge
Chapter 5 Civil Law and Procedure
Page 30
could increase the total number of challenges to allow up to six for each defendant. The act also
authorizes the judge to increase the number of challenges for the opposing side, if the judge has
increased the number of challenges for plaintiffs or defendants.
This act became effective October 1, 2007, and applies to actions called for trial on or
after that date. ( KCB)
Recovery of Costs in Civil Cases
S. L. 2007- 212 ( HB 21). See Courts, Justice, and Corrections.
Immunity/ Veterinarians Reporting Animal Cruelty
S. L. 2007- 232 ( HB 1359) amends the law regarding cruelty to animals by adding a
provision granting immunity for veterinarians reporting animal cruelty in violation of State law.
The law provides that any veterinarian who ( i) makes a report of animal cruelty, or ( ii)
participates in any investigation or testifies in a judicial proceeding that arises from a report of
animal cruelty, is immune from civil or criminal liability and liability from professional disciplinary
action or breach of any veterinarian- patient confidentiality, provided the veterinarian does not act
in bad faith or with a malicious purpose. Failure to report animal cruelty would not be grounds for
disciplinary action under the Veterinarian Practice Act.
This act became effective October 1, 2007. ( TH)
Challenge to Administrative Subpoena
S. L. 2007- 251 ( SB 1432) amends the statutes dealing with proceedings before the
Employment Security Commission ( ESC) and the Property Tax Commission ( PTC), by providing a
procedure to quash a subpoena issued by one of those commissions.
Under the law prior to this act, the chairman, or any duly authorized representative or
member of the ESC, was authorized to " issue subpoenas to compel the attendance of witnesses
and the production of books, papers, correspondence, memoranda, and other records deemed
necessary as evidence, in connection with a disputed claim or the administration of this Chapter."
However, there was no procedure available for quashing a subpoena. Similarly, the PTC, a
member of the PTC, or any employee of the Department of Revenue authorized by the PTC, had
the authority to subpoena witnesses and documents, with no procedure available for quashing
such a subpoena.
This act provides a procedure to quash a subpoena issued by the ESC or the PTC. The
act allows those commissions to quash a subpoena upon a motion if, after a hearing, the
commission finds any of the following concerning the subpoena:
It requires production of evidence that does not relate to a matter in issue.
It fails to describe with sufficient particularity the evidence required to be produced.
It is subject to being quashed for any other reason sufficient in law.
A hearing on a motion to quash is required to be heard at least 10 days prior to the
hearing for which the subpoena was issued, and the denial of a motion to quash is subject to
immediate judicial review in the Superior Court in the county where the person subject to the
subpoena resides.
This act became effective July 20, 2007. ( WGR)
Mediation of Property Insurance Claims
S. L. 2007- 300 ( HB 730). See Insurance.
Chapter 5 Civil Law and Procedure
Page 31
Limit Liability of Liquefied Petroleum Gas Dealer/ Certain
Others
S. L. 2007- 302 ( HB 1536). See Business and Commerce.
Industrial Commission Strategic Plan/ Report
S. L. 2007- 323, Sec. 13.4A ( HB 1473, Sec. 13.4A) directs the Industrial Commission to
develop a strategic plan no later than April 1, 2008, for tracking compliance with the
requirements for prompt payments of workers compensation benefits and to expeditiously
resolve medical compensation disputes in workers compensation cases. The Industrial
Commission also is directed to include in its annual report information concerning compliance
with the prompt pay requirements of workers compensation benefits and the resolution of
medical compensation disputes. A copy of the report is to be submitted to the Joint Legislative
Commission on Governmental Operations by October 1 of each year.
This section became effective July 1, 2007. ( WR)
Report on Business Courts
S. L. 2007- 323, Sec. 14.7 ( HB 1473, Sec. 14.7). See Courts, Justice, and Corrections.
Protect Homeowners/ Reduce Foreclosure
S. L. 2007- 351 ( HB 1374). See Business and Commerce.
North Carolina Foreclosure/ Landlord Tenant Laws
S. L. 2007- 353 ( HB 947). See Local Government and Property, Trusts, and Estates.
Civil Trial Exhibits
S. L. 2007- 407 ( SB 1117) authorizes the trial judge in a civil case to permit the jury to
take certain exhibits into the jury room, upon the jury's request and in the judge's discretion. The
trial judge may, upon a deliberating jury's request and after giving the parties notice and an
opportunity to be heard, direct that parts of requested testimony be read to the jury, or that the
jury be permitted to reexamine requested evidence in open court. Upon a deliberating jury's
request, the court may permit the jury to take any of the following into the jury room:
Exhibits that have been passed to the jury.
Photographs admitted into evidence, shown to the jury, and used by any witnesses
in testimony before the jury.
Any illustrative exhibits admitted into evidence and used by any witnesses in
testimony before the jury.
Summaries of testimony, lists, or other similar documents prepared in the courtroom by
any party may not be sent to the jury room with the jury, and depositions may be taken into the
jury room only with the consent of the parties. In sending exhibits to the jury, the court must
ensure that the evidentiary integrity of the exhibit is preserved.
This act became effective for trials commencing on or after October 1, 2007. ( BC)
Chapter 5 Civil Law and Procedure
Page 32
Tort Claims Limit Increased
S. L. 2007- 452 ( HB 22). See State Government.
Require Disclosure/ Sex Offenders/ Child Custody
S. L. 2007- 462 ( HB 1328) requires a person convicted of a sexually violent offense, who is
seeking child custody ex parte, to disclose the conviction in the pleadings. An ex parte
proceeding is one in which the respondent to the action has not been notified of the action, and
has no opportunity to be heard prior to the court taking action. A court may not enter, ex parte,
a temporary order for custody which changes the living arrangements of a child, or changes
custody, unless the court finds either of the following:
The child is exposed to a substantial risk of bodily injury, or sexual abuse.
There is a substantial risk that the child may be abducted or removed from the State
of North Carolina, for the purpose of evading the jurisdiction of North Carolina
courts.
A " sexually violent offense" includes rape; first or second degree sexual offense; sexual
battery; attempted rape or sexual offense; intercourse and sexual offense with certain victims;
statutory rape or sexual offense of person who is 13-, 14-, or 15- years- old where the defendant
is at least 6 years older; subjecting or maintaining a person for sexual servitude; incest;
employing or permitting minor to assist in offenses against public morality and decency; felonious
indecent exposure; first, second, or third degree sexual exploitation of a minor; promoting or
participating in the prostitution of a minor; taking indecent liberties with children; solicitation of
child by computer to commit an unlawful sex act. The term also includes a solicitation or
conspiracy to commit any of these offenses, or aiding and abetting any of these offenses.
This act became effective October 1, 2007, and applies to actions and proceedings filed
on or after that date. ( HAP)
Reform Tax Appeals
S. L. 2007- 491 ( SB 242). See Finance.
Advance Directives/ Health Care Power of Attorney
S. L. 2007- 502 ( HB 634). See Health and Human Services.
Scrap Vehicle Purchase/ Parts- Records
S. L. 2007- 505 ( SB 1364). See Business and Commerce.
Amend Civil Procedure Rule 45
S. L. 2007- 514 ( HB 316) amends Rule 45 of the Rules of Civil Procedure to require that,
when a subpoena is served directing a person to produce designated records, the party or
attorney issuing the subpoena must, within five business days of receipt of the material, provide
notice to all other parties of receipt of the material produced. The party or attorney issuing the
subpoena also must, upon request, provide all other parties reasonable opportunity to inspect
and copy the material produced at the expense of the inspecting party.
This act became effective October 1, 2007, and applies to actions filed on or after that
date. ( TG)
Chapter 5 Civil Law and Procedure
Page 33
Arbitration/ Negligent Health Care Claims
S. L. 2007- 541 ( HB 1671) creates a new Article in the General Statutes that provides for
the voluntary arbitration of personal injury or wrongful death actions, based on negligence in the
provision of health care. This act applies to any claim for personal injury or wrongful death
damages, that is based on alleged negligence in the provision of health care by a health care
provider.
Arbitration requirements. – The parties may elect, before or after the filing of an
action, to file a stipulation with the court agreeing to submit to arbitration under this Article and
must file a declaration with the court prior to the discovery scheduling conference, if an
agreement is not reached. If the parties go to arbitration before the action is filed, the statute of
limitations for filing the action is tolled.
Selection of arbitrator. – An arbitrator is selected by agreement of all the parties
within 45 days of the stipulation. If an agreement is not reached, the arbitrator is selected from
emergency superior court judges who agree to be on a list maintained by the Administrative
Office of the Courts. The parties each strike names from the list until one last name remains. The
fees and expenses of the arbitrator are paid equally by the parties.
Witnesses and discovery. – Each side is entitled to two experts on liability, two
experts on damages, and one rebuttal expert. Each side is entitled to the following discovery:
25 interrogatories.
10 requests for admission.
Whatever is allowable under court rules for requests for production of documents
and for mental and physical examinations.
Depositions of any party and any expert that the party expects to call as a witness,
and five depositions per side for other witnesses, unless exceptional circumstances
require otherwise.
An arbitrator may issue a subpoena for the attendance of a witness and the production
of records.
Time Limits. – Within 45 days of stipulation to arbitration, the parties must submit a
copy of all relevant medical records or a release for medical records. Within 120 days, the
claimant must disclose to each defendant the name and curriculum vitae of expert witnesses
( 140 days for the defendant). Within 160 days, each party must disclose the name and
curriculum vitae of rebuttal experts. Within 240 days, all discovery shall be completed, and within
270 days the arbitration hearing must begin.
Written decision. – Within 14 days after completion of the hearing, the arbitrator shall
issue and sign a decision in writing. An award under this article may not exceed $ 1 million.
Judgment by court. – After receiving notice of a hearing, the party may file a motion
with the court for a judgment, at which time the court must issue a judgment unless the decision
is modified, corrected, or vacated.
Appeal. – There is no right to a trial de novo on appeal. Appeals are limited to bases
found in current law, including cases of fraud, refusal to postpone a hearing upon sufficient
cause, or mathematical miscalculation.
This act becomes effective January 1, 2008, and applies to agreements to arbitrate
entered into on or after that date. ( BG)
For a complete list of the studies and reports authorized by the 2007 Session of the
2007 General Assembly, please refer to the Appendix contained in this publication.
Chapter 5 Civil Law and Procedure
Page 34
Chapter 6 Constitution and Elections
Page 35
Chapter 6
Constitution and Elections
Erika Churchill ( EC), Bill Gilkeson ( BG), Kara McCraw ( KM)
Note: For legislation affecting voting, the legislation cannot be implemented until it
has received approval under Section 5 of the Voting Rights Act of 1965. Approval is
most commonly obtained administratively from the United States Attorney General.
This requirement applies to legislation affecting any of the 40 North Carolina counties
covered by Section 5, including all statewide legislation. Unless otherwise indicated,
the effective date stated is the effective date as it is in the legislation. The act cannot
be implemented until Voting Rights Act approval is obtained.
Enacted Legislation
Archdale Elections
S. L. 2007- 41 ( SB 22) requires that regular municipal elections in the City of Archdale be
conducted in even- numbered years, beginning in 2008. The act extends the terms of current
elected officials to the new election schedule. The act also redefines the election wards of
Archdale, so that the city will have six City Council members -- four elected from single- member
districts and two elected by the city as a whole.
Archdale is a city of 9,014, according to the 2000 Census. It lies mostly in Randolph
County, which is not subject to Section 5 of the Voting Rights Act, 42 U. S. C. 1971, but partly in
Guilford County, which is covered by Section 5. The act is, therefore, subject to Section 5
preclearance.
The general law, enacted in 1971, is that municipal elections are held in odd- numbered
years. Of more than 500 municipalities in North Carolina, none departed from that general law
until 2006, when High Point's city elections were moved to even- numbered years. Archdale is the
second city to follow suit.
This act became effective May 14, 2007. ( BG)
Chapel Hill Campaign Finance Options
S. L. 2007- 222 ( HB 483) authorizes the Town of Chapel Hill to appropriate local funds for
a voluntary public campaign financing program for local offices under certain conditions. The
State Board of Elections must develop guidelines which meet the following criteria:
Participating candidates must demonstrate public support and voluntarily accept
strict fund- raising and spending limits.
Requirements must be drawn to further the public purpose of free and fair elections,
and must not discriminate for or against any candidate on the basis of race, creed,
position on issues, status of incumbency or nonincumbency, or party affiliation.
Public funds must be restricted to use for campaign purposes, based on guidelines
drawn by the State Board of Elections.
Unspent public funds must be returned to the local government.
At least one public hearing must be held before adoption of the program, and the
program must be approved by the State Board of Elections as meeting its guidelines. Notice of
the program must be given to the county board of elections.
Funds paid pursuant to the program are not subject to contribution limitations or the
prohibition on corporate contributions, but must be reported in all campaign reports required by
law as if they were contributions.
Chapter 6 Constitution and Elections
Page 36
A report analyzing the experience implementing the program must be prepared no later
than six months after the second election in which money is appropriated for the public campaign
financing program. The report must be presented to the Joint Legislative Commission on
Governmental Operations, the Fiscal Research Division of the Legislative Services Office, and the
committees in the House of Representatives and Senate to which election- related bills are
primarily referred.
This act became effective July 16, 2007, and expires on July 1, 2012. ( KM)
( Note: As this act affects only the Town of Chapel Hill in Orange County, it is not subject
to preclearance.)
Registration and Voting at One- Stop Sites
S. L. 2007- 253 ( HB 91) allows eligible persons who have missed the standard 25- day
registration deadline before an election, to register and vote in that election during the one- stop
(" early voting") period. The one- stop period runs from the third Thursday before an election
through the last Saturday before the election.
Generally, North Carolina voters may not vote in an election unless they have registered
to vote 25 days before election day. In prior law, exceptions were as follows:
For those persons who have become qualified after the deadline, by naturalization or
restoration to citizenship after serving a felony sentence, they may register on
election day only.
For those persons who may register and vote by absentee ballot, because of their
overseas or military status, they may register at any time prior to the election.
This act creates a process to allow any person who is qualified to vote to register in
person and vote at a one- stop site, after the general close of voter registration. In order to
register and vote, the person must do both of the following:
Complete the standard voter registration form, including the attestation that the
person is a U. S. citizen and resides at the address given. That attestation is signed
under penalty of a Class I felony.
Provide " proof of residence," which could be one of several valid documents that had
the person's name and current residence address: a North Carolina driver's license, a
photo identification ( I. D.) from a government agency, a utility bill, bank statement,
paycheck, government check, or other government document. ( This is similar to the
list of I. D. s that satisfy the Help America Vote Act ( HAVA) federal I. D. requirement
for certain first- time voters, except that the HAVA list allows any valid photo I. D.,
while the bill allows only a government- issued one.)
Once registered at the one- stop site, the person is entitled to vote then, or later at another one-stop
site. The person will vote a retrievable ballot, just as other one- stop voters.
Within two business days after the person has registered at the one- stop site, the board
of elections must proceed to verify the person's identity and address. The person's one- stop
ballot must be counted, unless the board determines that the applicant is not qualified to vote.
A person already registered may update information on that person's voter records at the
one- stop site during the one- stop voting period, except that that person cannot change party
registration before a partisan primary.
The act requires the State Board of Elections to monitor the implementation of the act,
and to report to the Joint Legislative Commission on Governmental Operations no later than
March 1, 2009, on its findings regarding expanding the process to include same- day registration
and voting on Election Day.
This act generally became effective when it was signed by the Governor on July 20,
2007. The bill contained a provision that governed its application to 2007 primaries and elections
designed to avoid administrative complications, based on the timing of preclearance under
Section 5 of the Voting Rights Act. Because the bill was precleared on August 16, 2007, it was
Chapter 6 Constitution and Elections
Page 37
made effective with respect to registration and voting for any primary or election held on or after
October 9, 2007. ( BG)
Help America Vote Act ( HAVA) Funds
S. L. 2007- 323, Sec. 25.1 ( HB 1473, Sec. 25.1) directs the State Board of Elections on
how to spend money in two accounts during the 2007- 2008 and 2008- 2009 fiscal years. Those
two accounts result from federal grants under the Help American Vote Act of 2002 ( HAVA). One
of them is the Election Fund, the repository of federal grants under HAVA. The other is the
Maintenance of Effort Reserve, consisting of funds the State must appropriate to continue to be
eligible for federal HAVA funds.
This section became effective July 1, 2007. ( BG)
Legal Expense Funds
S. L. 2007- 349 ( HB 1737) requires elected officers to create a legal expense fund, if the
elected officer, or a group of individuals on the elected officer's behalf, receives a contribution
from someone other than that elected officer's self, spouse, parents, brothers, or sisters, for
either of the following purposes:
To fund an existing legal action taken by or against the elected officer in that elected
officer's capacity.
To fund a potential legal action taken by or against an elected officer in that elected
officer's official capacity.
No more than one legal expense fund may be created for the same legal action. Legal
actions arising out of the same set of transactions and occurrences are treated as the same legal
action under the act.
Each legal expense fund must appoint a treasurer, who must receive training by the
State Board of Elections ( Board) within three months of appointment, and at least once every
four years thereafter. The treasurer must keep detailed accounts of contributions and
expenditures.
The treasurer must file with the Board an organizational report which includes:
The name, address, and purpose of the legal expense fund.
The names, addresses, and relationships of elected officers, candidates, and political
parties.
The name and address of the custodian of books and accounts.
A listing of all banks, safety deposit boxes, and other depositories used.
Contact information of any assistant treasurers.
Any other information requested by the Board.
The treasurer also must file a quarterly report with the Board. The quarterly report must
include:
Contributions. The treasurer must report the following information on contributions
totaling more than $ 50 in the quarter:
• Name, mailing address, and principal occupation of each contributor.
• The amount of the contribution.
• The date the contribution was received.
Expenditures. The treasurer must report all expenditures.
Loans. The treasurer must report all proceeds from loans separately.
Contributions of more than $ 50 must be made by noncash methods ( check, draft, money
order, credit card charge, debit, or other noncash method that is subject to written verification).
Legal expense funds must not accept contributions from a corporation, labor union, insurance
company, professional association, or business entity in excess of $ 4,000 per calendar year.
Chapter 6 Constitution and Elections
Page 38
Most violations of the act are punishable as a Class 1 misdemeanor. Signing a report
knowing the information to be untrue is punishable as a Class I felony.
The act also makes conforming changes to the existing statutes to reflect the creation of
the legal expense fund.
This act becomes effective January 1, 2008. ( EC)
Candidate Felony Disclosure
S. L. 2007- 369 ( SB 1218) requires a candidate for elective office in North Carolina to file a
disclosure statement, at the same time the candidate files a notice of candidacy, verifying
whether or not the candidate has ever been convicted of a felony. The requirement applies to
individuals who become candidates due to a vacancy among party nominees occurring after
nomination and before the election, unaffiliated candidates nominated by petition, write- in
candidates for partisan elections, candidates for new political parties, candidates for municipal
elections, candidates for local school board elections, candidates for sanitary district boards, and
any other candidates for election by the people. This requirement does not apply to candidates
required to file Statements of Economic Interest, which also require disclosure of felony
convictions.
The State Board of Elections must adapt the candidacy form to include the disclosure
statement, and make clear that felony convictions dismissed as a result of reversal on appeal, a
pardon of innocence, or which have been expunged do not have to be disclosed. Candidates who
disclose a felony conviction must provide the name of the offense, date of conviction, date of
restoration of citizenship rights, and county and state of conviction. Completing the form with
knowledge the information is untrue is a Class I felony.
If a candidate fails to complete the required disclosure statement, the board of elections
accepting the filing must notify the candidate of the omission, and inform the candidate that the
statement must be completed within 48 hours. The candidate's filing is incomplete if the required
disclosure statement is not completed within 48 hours after the notice, and the individual's name
will not appear on the ballot, and votes for the individual will not be counted.
The form must be available as a public record in the office of the board of elections
where the candidate files the notice of candidacy, and must contain an explanation that a prior
felony conviction does not preclude holding elective office if the candidate's rights of citizenship
have been restored.
This act becomes effective January 1, 2008. ( KM)
Election Amendments
S. L. 2007- 391 ( HB 1743) is an omnibus bill that makes multiple changes to the election
laws.
Clarifies the Provision for False Campaign Reports. – The act addresses an issue
that arose in recent prosecutions. Previous law prohibiting a false statement on a campaign
report classified the act as perjury. The State's perjury statute requires that the false statement
has to have been made under an oath administered by an oath- administering official. The
campaign report requires certification— it is not required to be under oath. A Superior Court
judge commented that the legislature might want to address the disjuncture of statutes. The act
provides that lying on the campaign report is a Class I felony, but it does not reference the
perjury statute. Effective December 1, 2007, and applies to offenses committed on or after that
date.
Increases Civil Penalties for Deceptive Late Filing. – Under prior law, the civil
penalty for filing a campaign report late is $ 250 a day, up to a maximum of $ 10,000, for reports
affecting statewide races, and $ 50 a day, up to a maximum of $ 500, for reports affecting only
nonstatewide races. The act provides that if the board of elections determines, by clear and
Chapter 6 Constitution and Elections
Page 39
convincing evidence, that the late filing constitutes a willful attempt to conceal contributions or
expenditures, the board may assess a civil penalty up to 3 times the amount of the contributions
or expenditures willfully attempted to be concealed. Effective when bill becomes law, and applies
to offenses on or after that date.
Repeals $ 3,000 Presumption for " Political Committee." – The act deletes a part
of the definition of " political committee" that set a $ 3,000 presumption for whether an
organization had the " major purpose" of supporting or opposing candidates.
Earlier Distribution of Judicial Voter Guide. – The act allows the State Board of
Elections to send out the Judicial Voter Guide two weeks earlier than currently. Prior law said the
Guide could be distributed no earlier than 14 days, nor later than 7 days, before the beginning of
the one- stop period. The act changes the earliest date to be 28 days before the one- stop period.
The Guide contains information about candidates for Supreme Court and Court of Appeals.
Precinct Boundary Program Changes. – The act fleshes out the statute enacted in
2005 that provides that North Carolina will participate in the 2010 Census Redistricting Data
Program. The purpose of the program is to have the State's precinct lines included on the official
Census maps, so that Census data will be available by precinct. In past decades, the State has
worked with county boards of elections to report precinct lines and attempted to get the Census
Bureau to accept those lines as Census block boundaries. In the past, the Census has insisted
that its block boundaries be on visible features or certain political boundaries. After that process,
the General Assembly limited how county boards of elections could alter their precincts during
the decade. This time, the Census Bureau has said it will accept any precinct line a State reports,
regardless of the underlying feature. The act changes the past practice in two ways:
Directs the Executive Secretary of the State Board of Elections to report precinct lines
to the Census Bureau as they exist on a date certain ( January 1, 2008). They will be
reported as " Voting Tabulation Districts," the Census Bureau's term.
Freezes those Voting Tabulation Districts, prohibiting counties from changing them.
County boards of elections may still change their precincts, so long as they can
report election results by the unchanged Voting Tabulation Districts. Currently,
counties are required to report absentee and early votes by precinct. The bill
empowers the State Board of Elections to set standards for county boards of
elections in changing their precinct lines.
Allows Ballots to Be Combined. – The act clarifies that boards of elections may
combine any ballot items on a single ballot.
Corrects Description of Multi- County Districts in Ballot Access Statute. – The
act corrects a description of multi- county districts in the unaffiliated candidates' statute. The
statute provides that a district office " compris[ es] two or more counties," in the context of
providing for how many signatures an unaffiliated candidate must collect to qualify in a multi-county
district. The description leaves out districts that include parts of more than one county.
The correction uses a reference to a statute that describes ballot items that are " in the
jurisdiction of the State Board of Elections" for purposes of canvassing. For consistency, the
section amends the write- in statute in the same way.
Establishes Misdemeanor Penalty for Breaching Ballot Secrecy. – The act
establishes a Class 1 misdemeanor for anyone who has access to ballots revealing how an
individual voted. Under prior law, such disclosure was prohibited, but not criminalized. Effective
December 1, 2007, and applies to offenses committed on or after that date.
Clarifies No Write- In Space Unless Write- Ins Allowed. – The act clarifies that a
board of elections is not required to provide a space for voters to write in a candidate, if the law
does not allow write- in candidates in that race.
Corrects Date Reference in Certificate Statute. – The act provides that a certificate
of election shall be issued on the 10th day after the final decision of the State Board in a protest,
rather than 10 days after.
Extends Provision for Recasting Lost Votes. – In 2005, several thousand one- sto
Object Description
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| Title | Summaries of substantive ratified legislation... General Assembly... |
| Date | 2007 |
| Description | 2007 |
| Digital Characteristics-A | 2.1 KB; 419 p. |
| Digital Format |
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| Pres Local File Path-M | \Preservation_content\StatePubs\pubs_borndigital\images_master\ |
| Full Text | SUMMARIES OF SUBSTANTIVE RATIFIED LEGISLATION - 2007 SUMMARIES OF SUBSTANTIVE RATIFIED LEGISLATION 2007 GENERAL ASSEMBLY 2007 REGULAR SESSION RESEARCH DIVISION N. C. GENERAL ASSEMBLY NOVEMBER 2007 350 copies of this document were published at an estimated cost of or about $ 10.75 per copy. November 2007 To the Members of the 2007 Session of the 2007 General Assembly: This publication contains summaries of all substantive legislation of general applicability and certain local legislation having general import from the 2007 Regular Session. Most local acts are not analyzed in this publication. Significant appropriations matters related to the subject area specified are also included. For an in- depth review of the appropriations and revenue process, please refer to Overview: Fiscal and Budgetary Actions, prepared by the Fiscal Research Division. The document is organized alphabetically by subject areas. Where feasible, the subject area is further divided into subgroups. Each subject area also includes a listing of legislative, independent, and agency studies. This year we have included in the appendix a list of the studies and reports authorized by the 2007 General Assembly. A bill/ session law index listing the page number of each summary is at the end of the publication. This document is the result of a combined effort by the following staff members of the Research Division: Dee Atkinson, Cindy Avrette, Susan Barham, Brenda Carter, Drupti Chauhan, Erika Churchill, Karen Cochrane- Brown, Judy Collier, Heather Fennell, Bill Gilkeson, George Givens, Kory Goldsmith, Trina Griffin, Tim Hovis, Jeff Hudson, Denise Huntley, Shirley Iorio, Sara Kamprath, Mariah Matheson, Theresa Matula, Kara McCraw, Jennifer McGinnis, Joe Moore, Jennifer Mundt, Shawn Parker, Howard Alan Pell, Giles S. Perry, Ben Popkin, Wendy Graf Ray, Walker Reagan, Barbara Riley, Steve Rose, and Susan Sitze. Dan Ettefagh, of the Bill Drafting Division and Martha Walston, of the Fiscal Research Division also contributed to this document. Howard Alan Pell is chief editor of this year’s publication, and Brad Krehely is co- editor. Lucy Anders, of the Research Division also helped edit this document. The specific staff members contributing to each subject area are listed directly below the chapter heading for that area. Staff members' initials appear after their names and after each summary they contributed. If you would like further information regarding any legislation in the various summaries, please contact the Research Division Office at ( 919) 733- 2578. This document is also available on the World Wide Web. Go to the General Assembly’s homepage at http:// www. ncleg. net. Click on " Legislative Publications," then " Research Division," then " Summaries of Substantive Ratified Legislation." Each summary is hyperlinked to the final bill text, the bill history, and any applicable fiscal note. It is hoped that this document will provide a useful source of information for the members of the General Assembly and the public in North Carolina. We would appreciate receiving any suggestions for this publication's improvement. Yours truly, Terrence D. Sullivan Director of Research Guide to Staff Initials ( BC) Brenda Carter ( BG) Bill Gilkeson ( BK) Brad Krehely ( BP) Ben Popkin ( BR) Barbara Riley ( CA) Cindy Avrette ( DA) Dee Atkinson ( DE) Dan Ettefagh ( DC) Drupti Chauhan ( DH) Denise Huntley ( EC) Erika Churchill ( GG) George Givens ( GSP) Giles S. Perry ( HF) Heather Fennell ( HAP) Howard Alan Pell ( JC) Judy Collier ( JH) Jeff Hudson ( JLM) Jennifer McGinnis ( JHM) Joe Moore ( JM) Jennifer Mundt ( KCB) Karen Cochrane- Brown ( KG) Kory Goldsmith ( KM) Kara McCraw ( MM) Mariah Matheson ( MW) Martha Walston ( SB) Susan Barham ( SI) Shirley Iorio ( SK) Sara Kamprath ( SP) Shawn Parker ( SR) Steve Rose ( SS) Susan Sitze ( TG) Trina Griffin ( TH) Tim Hovis ( TM) Theresa Matula ( WGR) Wendy Graf Ray ( WR) Walker Reagan i TABLE OF CONTENTS CHAPTER 1: AGRICULTURE AND WILDLIFE...................................................... 1 ENACTED LEGISLATION .................................................................................................. 1 Agriculture ................................................................................................................ 1 Animals ..................................................................................................................... 3 Wildlife...................................................................................................................... 4 CHAPTER 2: ALCOHOLIC BEVERAGE CONTROL............................................. 7 ENACTED LEGISLATION .................................................................................................. 7 CHAPTER 3: BUSINESS AND COMMERCE............................................................ 9 ENACTED LEGISLATION .................................................................................................. 9 STUDIES....................................................................................................................... 22 CHAPTER 4: CHILDREN AND FAMILIES............................................................. 23 ENACTED LEGISLATION ................................................................................................ 23 CHAPTER 5: CIVIL LAW AND PROCEDURE....................................................... 29 ENACTED LEGISLATION ................................................................................................ 29 CHAPTER 6: CONSTITUTION AND ELECTIONS ............................................... 35 ENACTED LEGISLATION ................................................................................................ 35 MAJOR PENDING LEGISLATION ..................................................................................... 45 CHAPTER 7: CONSUMER PROTECTION ............................................................. 47 ENACTED LEGISLATION ................................................................................................ 47 CHAPTER 8: COURTS, JUSTICE, AND CORRECTIONS.................................... 53 ENACTED LEGISLATION ................................................................................................ 53 STUDIES....................................................................................................................... 68 Legislative Research Commission .......................................................................... 68 Referrals to Existing Commissions/ Committees ..................................................... 69 Referrals to Departments, Agencies, Etc. ............................................................... 70 CHAPTER 9: CRIMINAL LAW AND PROCEDURE............................................. 73 ENACTED LEGISLATION ................................................................................................ 73 MAJOR PENDING LEGISLATION ..................................................................................... 85 CHAPTER 10: EDUCATION ...................................................................................... 87 ENACTED LEGISLATION ................................................................................................ 87 Public Schools......................................................................................................... 87 Higher Education.................................................................................................. 101 Community Colleges ............................................................................................. 102 ii Universities ........................................................................................................... 105 STUDIES..................................................................................................................... 110 New/ Independent Studies/ Commissions................................................................ 110 Referrals to Existing Commissions/ Committees ................................................... 112 Referrals to Departments, Agencies, Etc. ............................................................. 113 Other Studies......................................................................................................... 115 CHAPTER 11: ENVIRONMENT AND NATURAL RESOURCES...................... 117 ENACTED LEGISLATION .............................................................................................. 117 Air Quality ............................................................................................................ 117 Animal Waste Management .................................................................................. 118 Coastal Development............................................................................................ 120 Fisheries................................................................................................................ 121 Miscellaneous ....................................................................................................... 121 Parks and Public Spaces....................................................................................... 125 Renewable/ Alternative Energy and Energy Efficiency......................................... 126 Solid/ Hazardous Waste......................................................................................... 136 Water Quality/ Quantity/ Groundwater.................................................................. 143 STUDIES..................................................................................................................... 148 New/ Independent Studies/ Commissions................................................................ 148 Referrals to Existing Commissions/ Committees ................................................... 149 Referrals to Departments, Agencies, Etc. ............................................................. 149 MAJOR PENDING LEGISLATION ................................................................................... 150 CHAPTER 12: FINANCE .......................................................................................... 153 ENACTED LEGISLATION .............................................................................................. 153 2007 Appropriations Act....................................................................................... 155 STUDIES..................................................................................................................... 169 MAJOR PENDING LEGISLATION ................................................................................... 169 CHAPTER 13: HEALTH AND HUMAN SERVICES ............................................ 172 ENACTED LEGISLATION .............................................................................................. 172 STUDIES..................................................................................................................... 193 CHAPTER 14: INSURANCE..................................................................................... 196 ENACTED LEGISLATION .............................................................................................. 196 Automobile Insurance ........................................................................................... 196 Health and Life Insurance .................................................................................... 196 Property Insurance ............................................................................................... 203 Miscellaneous ....................................................................................................... 204 STUDIES..................................................................................................................... 207 MAJOR PENDING LEGISLATION ................................................................................... 207 CHAPTER 15: LABOR AND EMPLOYMENT...................................................... 210 ENACTED LEGISLATION .............................................................................................. 210 General Labor and Employment........................................................................... 210 iii Governmental Employment................................................................................... 211 CHAPTER 16: LOCAL GOVERNMENT................................................................ 216 ENACTED LEGISLATION .............................................................................................. 216 CHAPTER 17: MILITARY, VETERANS', AND INDIAN AFFAIRS .................. 226 ENACTED LEGISLATION .............................................................................................. 226 Military and Veterans' Affairs .............................................................................. 226 CHAPTER 18: OCCUPATIONAL BOARDS AND LICENSING......................... 232 ENACTED LEGISLATION .............................................................................................. 232 STUDIES..................................................................................................................... 255 Referrals to Existing Commissions/ Committees ................................................... 255 CHAPTER 19: PROPERTY, TRUSTS, AND ESTATES ....................................... 256 ENACTED LEGISLATION .............................................................................................. 256 CHAPTER 20: RESOLUTIONS................................................................................ 262 Joint Resolutions................................................................................................... 262 CHAPTER 21: RETIREMENT ................................................................................. 268 ENACTED LEGISLATION .............................................................................................. 268 CHAPTER 22: SENIOR CITIZENS ......................................................................... 274 ENACTED LEGISLATION .............................................................................................. 274 STUDIES..................................................................................................................... 280 Referrals to Departments, Agencies, Etc. ............................................................. 280 CHAPTER 23: STATE GOVERNMENT................................................................. 282 ENACTED LEGISLATION .............................................................................................. 282 Agencies and Departments ................................................................................... 282 Boards, Commissions, and Committees................................................................ 289 Capital Facilities and State Property ................................................................... 291 Ethics..................................................................................................................... 293 Official North Carolina Designations .................................................................. 294 Miscellaneous ....................................................................................................... 294 STUDIES..................................................................................................................... 298 Referrals to Departments, Agencies, Etc. ............................................................. 298 CHAPTER 24: TECHNOLOGY................................................................................ 300 ENACTED LEGISLATION .............................................................................................. 300 CHAPTER 25: TRANSPORTATION....................................................................... 304 ENACTED LEGISLATION .............................................................................................. 304 Department of Transportation .............................................................................. 304 Drivers Licenses.................................................................................................... 306 iv License Plates/ Vehicles Registration.................................................................... 308 Motor Vehicles Law .............................................................................................. 314 Toll Roads ............................................................................................................. 318 Public Transportation and Rail ............................................................................ 319 Trucks.................................................................................................................... 319 Miscellaneous ....................................................................................................... 321 CHAPTER 26: UTILITIES ........................................................................................ 326 ENACTED LEGISLATION .............................................................................................. 326 CHAPTER 27: VETOED LEGISLATION............................................................... 328 INDEX.......................................................................................................................... ...... i APPENDIX.................................................................................................................... A- 1 Chapter 1 Agriculture and Wildlife Page 1 Chapter 1 Agriculture and Wildlife Erika Churchill ( EC), Barbara Riley ( BR) Enacted Legislation Agriculture Adopt State Collard Festival S. L. 2007- 28 ( HB 406). See State Government. Facilitate Distribution of E- Blend Fuel S. L. 2007- 82 ( SB 567). See Transportation. Limit Liability at Agricultural Fairs S. L. 2007- 171 ( HB 590) expands the definition of agritourism activity for purposes of limited civil liability. The term includes any activity involving an animal exhibition at an agricultural fair licensed by the Commissioner of Agriculture. The General Statutes provide a limitation on civil liability for agritourism professionals engaged in the business of providing agritourism activities. In addition to the expansion of the definition by the act, agritourism activities are defined as any activity on a farm or ranch that allows the general public, for recreational, educational, or entertainment purposes, to view or enjoy rural activities including farming, ranching, historic attractions/ activities, pick your own activities, and others. If a warning is posted, consistent with the requirements of the Article, an agritourism professional will not be held liable for the injury or death of a participant resulting from the inherent risks of participating in agritourism activities. The limitation on liability does not apply if the agritourism professional does either of the following: Acts negligently or with willful or wanton disregard for the safety of the participant and that act is the proximate cause of the injury. Knew, or should have known, of any of the following and did not make that danger known to the participant: • A dangerous condition on the land, facilities, or equipment used in the activity. • The dangerous propensity of a particular animal. This act became effective July 4, 2007, and applies to causes of action arising on or after that date. ( EC) Registration and Length Exemptions S. L. 2007- 194 ( SB 738). See Transportation. University of North Carolina/ Agricultural Extension Employee Status S. L. 2007- 195 ( HB 847). See Labor and Employment. Chapter 1 Agriculture and Wildlife Page 2 Streamlined Sales Tax Changes S. L. 2007- 244, Sec. 4 ( HB 257, Sec. 4) revises the sales tax exemption for items sold for use in commercial fishing to insert references to holders of a commercial fishing license, a commercial shellfish license, and the operator of a for- hire boat. The reference to the operator of a for- hire boat is an addition to the statute, but reflects the administrative practice of including this group in the commercial fishing group. This section became effective October 1, 2007. ( EC) See Finance for the summary of the remaining sections of the act. University Cancer Research Fund S. L. 2007- 323, Sec. 6.23 ( HB 1473, Sec. 6.23). See Finance. Study Structure/ Management Agriculture Research Stations and Farms S. L. 2007- 323, Sec. 11.4 ( HB 1473, Sec. 11.4). See State Government. Study Equine Industry in North Carolina S. L. 2007- 323, Sec. 13.14A( b) and ( c), ( HB 1473, Sec. 13.14A( b) and ( c) provides that, of the funds appropriated to the Rural Economic Development Center, $ 500,000 shall be transferred to the Agricultural Advancement Consortium to assess the numbers, composition, and value of the equine industry in North Carolina. The Agricultural Advancement Consortium also is directed to develop a plan to maximize the impact of the equine industry in the State. The section became effective July 1, 2007. ( BR) Poultry Products Inspection Act Penalties S. L. 2007- 361 ( HB 589) amends G. S. 106- 549.59 by adding a new subsection providing for a $ 5,000 civil penalty for violations of the poultry products inspection laws. The act became effective October 1, 2007, and applies to penalties assessed on or after that date. ( BR) Amend Plant Protection and Conservation Act S. L. 2007- 456 ( HB 862) allows the North Carolina Plant Conservation Board to establish fees for the permits it is authorized to issue, including the permit to harvest ginseng. The act also increases the penalty for violations of the Plant Protection and Conservation Act from a Class 3 misdemeanor to a Class 2 misdemeanor, and deletes the fine provisions. The act also authorizes the agent of the Department of Agriculture and Consumer Services to the list of individuals who may inspect pertinent papers and records related to the Plant Protection and Conservation Act. The previous law included only the Commissioner, or any employee of the Department. This act becomes effective December 1, 2007, and applies to offenses committed on or after that date. ( EC) Chapter 1 Agriculture and Wildlife Page 3 Enact Waterfront Access Study Committee Recommendations S. L. 2007- 485 ( SB 646) increases certain boat numbering fees that are held in the Wildlife Resource Commission's Boating and Waterway Account. The act increased the fee for numbering a boat from $ 10 to $ 15 for a 1- year period, and increased the fee for a 3- year period from $ 25 to $ 40. The act also directs the Division of Emergency Management to study ways to facilitate construction and repair of water dependent structures in regulated flood zones. This act became effective August 2, 2007. ( EC) See Finance, Environment and Natural Resources, and Transportation for additional information on this act. Property Tax and Present Use Value Changes and Studies S. L. 2007- 497 ( HB 1499). See Finance. Exemption for Baler Twine from Sales Tax S. L. 2007- 500 ( HB 487). See Finance. Economic Development Modifications S. L. 2007- 515 ( HB 1595). See Local Government. Swine Farm Environmental Performance Standards S. L. 2007- 523 ( SB 1465). See Environment and Natural Resources. State Food Festival S. L. 2007- 533 ( HB 433). See State Government. Clarify/ Extend Animal Waste Management Provisions S. L. 2007- 536 ( HB 810). See Environment and Natural Resources. Migrant Housing Health/ Safety S. L. 2007- 548 ( SB 1466). See Labor and Employment. Animals Allow Earthdog Trials S. L. 2007- 180 ( SB 1424). See Criminal Law and Procedure. Chapter 1 Agriculture and Wildlife Page 4 Clarify Dog Fighting and Baiting Law S. L. 2007- 181 ( SB 21). See Criminal Law and Procedure. Increase Penalty/ Starvation of Animals S. L. 2007- 211 ( HB 995). See Criminal Law and Procedure. Spay/ Neuter Funding S. L. 2007- 487 ( SB 684) repeals the provisions for the sale of a special edition rabies tag. The proceeds from sales of the tag have been used to fund the Spay/ Neuter Account in the Department of Health and Human Services. The act also amends the amount that may be charged for a rabies tag by 20¢, in addition to the actual cost of the tag, links, and rivets. The additional 20¢ per tag will be credited to the Spay/ Neuter Account. The 20¢ portion of the fee is not be imposed for tags provided to persons who operate facilities devoted primarily to the training or boarding of hunting dogs, or who own and vaccinate 10 or more dogs per year. The act also provides that if the funds generated by the rabies tag fee are less than $ 47,500 in any fiscal year, the difference between $ 47,500 and the amount actually generated may be used to fund rabies education and prevention programs. A county may not receive funds from the Spay/ Neuter Account, unless the county requires proof of rabies vaccination at the time of the procedure or requires rabies vaccination at the time of the procedure. This act becomes effective January 1, 2008. ( BR) Wildlife Reciprocity of Disabled Hunting Licenses S. L. 2007- 2 ( SB 50) directs the Wildlife Resources Commission to investigate the potential for agreements with other jurisdictions for reciprocal hunting and fishing licenses for the disabled. This act became effective March 22, 2007. ( BR) Waiver of Enforcement/ No- Wake Zones S. L. 2007- 46 ( SB 361) allows the Wildlife Resources Commission to temporarily and conditionally waive the enforcement of a no- wake zone on the request of a local government that encompasses or abuts the no- wake zone, if the Commission determines that public safety and welfare will not be significantly compromised by the waiver. This act became effective May 16, 2007. ( BR) Prohibit Baiting of Bears S. L. 2007- 96 ( SB 1246) prohibits placing processed food products as bait in any area of the State where the Wildlife Resources Commission has established an open season for taking black bear. Processed food products are defined as a food substance or flavoring that has been modified from its raw components by the addition of ingredients, or by treatment to change its chemical composition or form, or to enhance aroma or taste. Examples would include substances modified by sugar, honey, oil, salt, or peanut butter. The term also includes sugary products such as candies, pastries, and sugar blocks. The act does not prohibit the lawful disposal of solid Chapter 1 Agriculture and Wildlife Page 5 waste or the legitimate feeding of livestock, domestic animals, and birds. The prohibition also does not apply to the release of dogs near a food source that is not a processed food product. Violation of the act is a Class 2 misdemeanor. This act became effective October 1, 2007. ( BR) Brunswick Menhaden Restrictions S. L. 2007- 320 ( HB 1017). See Environment and Natural Resources. Amend Wildlife Resources Management Laws S. L. 2007- 401 ( SB 1464) makes a number of changes to the State's wildlife management laws. The changes include: Authorizing the Wildlife Resources Commission to adopt rules governing the exercise of emergency powers by the Executive Director of the Commission, when the Commission determines that such powers are necessary to respond to a wildlife disease that threatens irreparable injury to wildlife or the public. The emergency powers that may be authorized by adopted rules include: Providing for an open season for taking beaver with a bow and arrow. Providing a number of changes in the statutes governing the taking of deer, including a provision allowing the Executive Director to issue a landholder or landholder's agent a special license and a number of antlerless and antlered deer tags sufficient to accommodate the landholder's deer population management objectives, or to correct any deer population imbalance that may occur on the property. Specifying that persons hunting deer during a deer firearms season must wear hunter orange. Prohibiting the intentional feeding of alligators outside of captivity. Authorizing the Commission to allow the use of electronic calls in taking migratory birds. Directing the Commission to study issues related to the retrieval of wildlife wounded by hunters. The report is to be submitted to the 2008 General Assembly, the Chairs of the House Wildlife Resources Committee, and the Senate Agriculture and Natural Resources Committee no later than May 1, 2008. The provisions of the act directing the Commission to study issues relating to the retrieval of wounded wildlife became effective August 21, 2007. The remainder of the act became effective October 1, 2007, and applies to acts committed on or after that date. ( BR) Mountain Heritage Trout Waters Program S. L. 2007- 408 ( SB 1303) creates a new Mountain Heritage Trout Waters 3- Day Fishing License with a fee of $ 10. The holder of the three- day license is not required to hold a hook and line license. The act also defines the term " mountain heritage trout waters," as those waters that have been designated as public mountain trout waters by the Wildlife Resources Commission that run through, or are adjacent to, a city and have been designated as mountain heritage trout waters. The Commission is directed to adopt rules to implement a Mountain Heritage Trout Waters Program to promote trout fishing as a heritage tourism activity, to develop criteria for participation in the program by cities, and to prepare a management plan for mountain heritage trout waters. A city that meets the program participation criteria shall be designated a Mountain Heritage Trout City. Section 2 of the act establishing the Mountain Heritage Trout Waters 3- Day Fishing License became effective July 1, 2007. The remainder of the act became effective August 21, 2007. ( BR) Chapter 1 Agriculture and Wildlife Page 6 Allow Cyclists to Use Public Lands S. L. 2007- 449 ( SB 1383). See Transportation. For a complete list of the studies and reports authorized by the 2007 Session of the 2007 General Assembly, please refer to the Appendix contained in this publication. Chapter 2 Alcoholic Beverage Control Page 7 Chapter 2 Alcoholic Beverage Control Brenda Carter ( BC), Denise Huntley ( DH), Howard Alan Pell ( HAP), Susan Sitze ( SS) Enacted Legislation Modify Hours of Sale for Permittees Authorized to Engage in In- Stand Sales S. L. 2007- 323, Sec. 6.25 ( HB 1473, Sec. 6.25) modifies the hours of sale for a permittee who is authorized to sell malt beverages in the seating areas of stadiums, ballparks, and other similar public places with a seating capacity of 60,000 or more during professional sporting events, in municipalities with a population greater than 450,000. Sales and consumption of alcoholic beverages on the premises of a permittee who meets these requirements may begin at 11: 00 a. m. on Sunday, which is one hour earlier than otherwise permitted by State law. This section became effective July 1, 2007. ( BC) Alcoholic Beverage Control Election- Cities in Two Counties S. L. 2007- 386 ( SB 661) amends the Alcoholic Beverage Control election laws to provide an additional ground upon which a city located in two or more counties may hold a mixed beverages election. The act permits a city located in two or more counties to hold a mixed beverages election without having an ABC store election, if a least one municipality in any of the counties in which the city is located operates an ABC store. This act became effective July 1, 2007. ( BC) Alcoholic Beverage Control Law Changes S. L. 2007- 402 ( HB 267) makes unincorporated municipalities subject to a statute that allows the issuance of off- premises malt beverage and unfortified wine permits, after an election allowing the sale of mixed beverages. The act also authorizes an unfortified winery permit holder to allow winemaking on premises, subject to the appropriate Alcoholic Beverage Control ( ABC) permit, whereby individual customers who are 21 years old or older may purchase ingredients and rent the equipment, time, and space to make unfortified wine for personal use in limited amounts. The act amends the law concerning the requirement for certain ABC permittees to recycle beverage containers beginning January 1, 2008. It clarifies that failure to comply with the recycling requirements will not be grounds for revocation of an ABC permit. The act requires each applicant and each person renewing an on- premises malt beverage permit, on- premises unfortified wine permit, on- premises fortified wine permit, or a mixed beverages permit to prepare and submit with the application or renewal, a plan for the collection and recycling of all recyclable beverage containers of all beverages to be sold at retail on the premises. A permittee who is not able to find a recycler for its beverage containers by January 1, 2008, may apply to the Alcoholic Beverage Control Commission for a one- year stay of the requirement to implement a recycling program. This act became effective August 21, 2007. ( BC) Chapter 2 Alcoholic Beverage Control Page 8 Drivers License Revocation for Alcoholic Beverage Control Violation S. L. 2007- 537 ( HB 1277). See Transportation. For a complete list of the studies and reports authorized by the 2007 Session of the 2007 General Assembly, please refer to the Appendix contained in this publication. Chapter 3 Business and Commerce Page 9 Chapter 3 Business and Commerce Karen Cochrane- Brown ( KCB), Heather Fennell ( HF), Kory Goldsmith ( KG), Tim Hovis ( TH), Denise Huntley ( DH), Wendy Graf Ray ( WGR), Walker Reagan ( WR), Steve Rose ( SR) Enacted Legislation Amend Bank and Trust Company Assessments S. L. 2007- 55 ( SB 658) changes the cumulative assessments charged to State- chartered banks and trust companies to pay for the operation of the Office of the Commissioner of Banks. The act increases the assessments on smaller banks and decreases the assessments on larger banks. The act also increases the base assessment rate charged to State trust companies from $ 6,000 to $ 10,000. This act became effective May 23, 2007, and applies to assessments made on or after that date. ( WR) Electronic Signatures/ Public Agencies S. L. 2007- 119 ( SB 211). See State Government. Alcohol Inhalers Illegal S. L. 2007- 134 ( SB 125). See Criminal Law and Procedure. Streamline Telecommunications Promotions S. L. 2007- 157 ( SB 680). See Utilities. Residential Mortgage Fraud Act S. L. 2007- 163 ( HB 817). See Consumer Protection. Identify Loan Originator on Deed of Trust S. L. 2007- 176 ( HB 313). See Property, Trusts, and Estates. Rental Car Fee Reform S. L. 2007- 235 ( SB 1118). See Consumer Protection. Streamlined Sales Tax Changes S. L. 2007- 244 ( HB 257). See Finance. Chapter 3 Business and Commerce Page 10 Prescription Orders/ Electronic Image S. L. 2007- 248 ( HB 1369) allows a pharmacist- manager of a pharmacy with a capable computer system to maintain prescription orders by capturing electronic images of the orders. It also allows health care providers to keep electronic records of consents to treatment and authorizations to disclose medical information. North Carolina law provides that every pharmacist- manager of a pharmacy is required to maintain, for a minimum of three years, the original of every prescription order and refill compounded or dispensed at the pharmacy. This act allows the use of electronic images of prescription orders and refills to comply with those maintenance requirements, if the pharmacy's computer system is " capable." A computer system is deemed capable if it can provide information required by the Board within 48 hours of the request. The act also deletes the requirement that a pharmacist write his or her signature on the face of a prescription for a controlled substance, when it is dispensed, since an electronic record would not allow for a handwritten signature. Current law also allows health care providers to maintain medical records in electronic format, without maintaining separate paper copies. However, prior to this act, if a consent to treatment, or an authorization to disclose medical information was in a paper writing, it was required to be preserved in that format. This act eliminates that requirement and allows those forms to be kept in electronic format, along with other medical records. This act became effective July 20, 2007. ( WGR) Duty to Report Child Porn S. L. 2007- 263 ( HB 27) provides that any film processor, or computer technician, who views an image of a minor, or a person who reasonably appears to be a minor, engaging in sexual activity must report the name of the person requesting the development of the film, or the person in possession of the computer, to the National Center for Missing and Exploited Children, or the appropriate local law enforcement officer. A processor of photographic images means any person who, for compensation: ( 1) develops exposed photographic film into negatives, slides, or prints; ( 2) makes prints from negatives, slides, digital images, or video; or ( 3) develops, processes, transfers, edits, or enhances video or digital images. A computer technician means any person who repairs, installs, or otherwise services any computer or computer network, or system for compensation. The requirement may be satisfied if the processor of photographic images, or the computer technician, reports the required information to a person designated by the employer. That person must then report the required information to the appropriate authority. The act creates civil and criminal immunity for a person, or employer, who acts in good faith when making a report. This act became effective September 1, 2007. ( KG) Correction Enterprises S. L. 2007- 280 ( HB 648). See Courts, Justice and Corrections. Contracts with Automatic Renewal Clauses S. L. 2007- 288 ( SB 527). See Consumer Protection. Chapter 3 Business and Commerce Page 11 Motorcycle Manufacturer Plates S. L. 2007- 291 ( HB 135). See Transportation. Revise Life and Health Insurance Laws S. L. 2007- 298 ( HB 731). See Insurance. Increase Criminal Penalty/ Theft of Metals S. L. 2007- 301 ( HB 367). See Criminal Law and Procedure. Limit Liability of Liquid Petroleum Gas Dealer/ Certain Others S. L. 2007- 302 ( HB 1536) provides that liquid petroleum gas ( LPG) dealers and their employees, agents, and subcontractors will not be held liable for civil damages caused by improper installation, repair, or use by others, if the dealer did not know of, and consent to, the action. Current law regulates liquefied petroleum gases, and sets forth a code of safety for the handling of liquid petroleum gas. The Department of Agriculture and Consumer Services are responsible for enforcing the code. The Commissioner of Agriculture may assess civil penalties, in amounts ranging from $ 100 to $ 500, for violations. A violation of the Article carries a Class 1 misdemeanor criminal penalty. A dealer is defined as someone in the business of selling LPG or installing, servicing, repairing, adjusting, connecting, or disconnecting containers, equipment, or appliances that use LPG. The Article limits the liability of persons who provide assistance in an emergency or accident. This act provides that a liquid petroleum gas dealer, or the dealer's agent, employee, or subcontractor, is not liable for civil damages for an injury caused by one or more of the following: The installation, alteration, modification, or repair of LPG equipment, or an LPG appliance, by another person, if the LPG dealer, etc., did not know of, and consent to, the installation, alteration, modification, or repair. The use of LPG equipment, or an LPG appliance, by another person in a manner or for a purpose for which it was not intended, if the LPG dealer, etc., did not know of and consent to its being used in the manner or for the purpose for which it was not intended. The installation of LPG equipment, or an LPG appliance, by another person in a manner not in accordance with the instructions of the manufacturer or in a manner not in accordance with the rules of Article 5 of Chapter 119, if the LPG dealer did not know of and consent to its being installed in that manner. Nothing in the new statute alters an LPG dealer's duty to exercise reasonable care. This act became effective October 1, 2007, and applies to acts or omissions occurring on or after that date. ( SR) North Carolina Green Business Fund S. L. 2007- 323, Sec. 13.2 ( HB 1473, Sec. 13.2) creates the North Carolina Green Business Fund as a special revenue fund to promote small businesses that develop and expand the biofuel industry, the green building industry, clean technology, and renewable energy products and businesses. The fund is to be administered by the Department of Commerce. The Department of Commerce is to make grants to private businesses of less than 100 employees, nonprofit organizations, local governments, and State agencies to encourage the Chapter 3 Business and Commerce Page 12 expansion of small to medium sized businesses with less than 100 employees to grow a green economy in the State. The funds are to be used for the following purposes: Maximize development, production, distribution, retail infrastructure, and consumer purchases of biofuels in the State, including the development of biofuels workforce. Development of the green building industry in the State through the development and growth of a market for environmentally conscious, and energy efficient, green building processes, including: • The installation, certification, or distribution of green building materials. • Energy audits. • Marketing and sales of green building technology in the State. • The development of a workforce for green building processes. Attract and leverage private- sector investments and entrepreneurial growth in environmentally conscious clean technology and renewable energy products and businesses, including the development of workforces in these industries. Guidelines for awarding grants under this act are exempt from the rulemaking requirements of the Administrative Procedures Act. This section became effective July 1, 2007. ( WR) Use of State Executive Aircraft S. L. 2007- 323, Sec. 13.3 ( HB 1473, Sec. 13.3) states that the use of an executive aircraft by the Department of Commerce for economic development purposes must take precedence over all other uses. If an executive aircraft is not in use for such purposes, priority of use must be given to the Governor, the Council of State, and other State officials traveling on State business, respectively. The Department of Commerce is directed to review annually the rates charged for the use of executive aircraft and adjust the rates, if necessary. This section also establishes a rate to be charged, if an executive aircraft is used to attend an event related to collegiate athletics. This section became effective July 1, 2007. ( DH) Report on Business Courts S. L. 2007- 323, Sec. 14.7 ( HB 1473, Sec. 14.7). See Courts, Justice, and Corrections. State Health Plan Changes S. L. 2007- 323, Sec. 28.22A ( HB 1473, Sec. 28.22A). See Insurance. Privilege Tax on Software Publishers' Machinery and Equipment S. L. 2007- 323, Sec. 31.7 ( HB 1473, Sec. 31.7). See Finance. Modify Tax Credit for Constructing Renewable Fuel Facilities S. L. 2007- 323, Sec. 31.9 ( HB 1473, Sec. 31.9). See Finance. Chapter 3 Business and Commerce Page 13 Expand Sales and Use Tax Refund for Certain Aircraft Manufacturers S. L. 2007- 323, Sec. 31.10 ( HB 1473, Sec. 31.10). See Finance. Local Option County Taxes S. L. 2007- 323, Sec. 31.17 ( HB 1473, Sec. 31.17). See Finance. Sales Tax Refund- Research Supplies S. L. 2007- 323, Sec. 31.20 ( HB 1473, Sec. 31.20). See Finance. Datacenter Sales Tax Exemption S. L. 2007- 323, Sec. 31.22 ( HB 1473, Sec. 31.22). See Finance. Tax Incentive for Railroad Intermodal Facility S. L. 2007- 323, Sec. 31.23 ( HB 1473, Sec. 31.23). See Finance. Amend Tax Incentive for Railroad Intermodal Facility S. L. 2007- 345, Sec. 14.7 ( HB 714, Sec. 14.7). See Finance. Protect Homeowners/ Reduce Foreclosure S. L. 2007- 351 ( HB 1374) makes several changes to the law to protect borrowers in mortgage transactions, including: Amends the Civil Procedure law, with regard to the statute of limitations, to recover penalties for usury by including actions for the financing of usurious points, fees, or other charges. The two- year period would accrue with each payment made and accepted on the loan. Amends the law governing the grounds upon which a North Carolina court can exercise personal jurisdiction over a nonresident defendant in a claim related to local real property. The act authorizes jurisdiction if the loan was made to a North Carolina borrower for primarily family or household purposes, and was secured by real property located within the State on which there is, or will be located, a 1- 4 family unit dwelling. Amends the Interest law to provide that any person who acquires the right to receive payments on a loan made in the State, to a resident of the State, and secured by property in the State, is deemed to have consented to the exercise of jurisdiction by the courts of the State for any claim related to the loan. Amends the law relating to foreclosure under power of sale by adding several items to the list of information that must be provided to the debtor with the notice of hearing, including: • Whether the borrower made requests to the servicer for information in the prior two years, and whether the servicer complied with such requests. Chapter 3 Business and Commerce Page 14 • That the debtor need not appear at the hearing, if he or she does not intend to contest the default, but that failure to appear does not affect the right to pay the debt and prevent the sale. • That the trustee is a neutral party and cannot advocate for the creditor or the debtor. • That the debtor can apply to the court to stop the sale, on legal or equitable grounds, prior to the time the rights of the parties to the sale become fixed. • That the debtor has the right to appear at the hearing and contest the allegations in the notice, and the grounds the clerk must find to authorize the foreclosure. • That if the debtor fails to appear, the trustee will seek an order to sell the property being foreclosed. • That the debtor has the right to legal advice, and how the debtor may obtain free legal advice. Creates a new Article entitled " Mortgage Debt Collection and Servicing." The new Article applies to ( i) home loans that are secured by real property and used by the individual borrower as a dwelling, ( ii) to servicers, defined as a person responsible for receiving scheduled periodic payments from a borrower under the terms of a loan, and making payments as required by the terms of the loan. The definition of servicer does not include an attorney who accepts payments related to loan closings, defaults, foreclosures, or settlement of disputes related to a loan. The act restricts the amount and conditions under which fees may be assessed by a servicer. It also establishes the obligations of the servicer with regard to handling escrow funds. The servicer must maintain records of written requests for information made by the borrower regarding disputes or errors in the borrower's account, and provide responses within 10 business days. The borrower is entitled to one statement in a six- month period. Thereafter, a charge for additional statements, of no more than $ 25.00, may be assessed. The borrower also is entitled to receive a copy of the original note and a statement of the full payment history within 25 business days of making the request. After receiving 1 statement in a 6- month period, the borrower may be charged $ 50.00 for additional copies. In addition to any equitable or legal remedies that may be available, a borrower injured by a violation of this Article, the Commissioner of Banks, the Attorney General, or a party to the loan, may sue for actual damages and attorney's fees. If a party to the loan sues, the borrower must notify the servicer in writing of the error or dispute that forms the basis of the claim at least 30 days before commencing the action. A servicer will not be in violation of the Article, if the servicer shows that the violation was unintentional and the servicer corrects the error and compensates the borrower within 30 days of discovery or notice of the error and prior to commencement of an action. Sections 4 and 5 of this act become effective April 1, 2008. The remainder of the act became effective August 16, 2007. ( KCB) Protect Consumers - Covered Loans S. L. 2007- 352 ( HB 1817). See Consumer Protection. North Carolina Foreclosure/ Landlord Tenant Laws S. L. 2007- 353 ( HB 947). See Local Government and Property, Trusts, and Estates. Chapter 3 Business and Commerce Page 15 Use of Senate Seals and Coat of Arms S. L. 2007- 354 ( SB 371) prohibits anyone, unless directed by the Senate or the Senate Principal Clerk, to knowingly use, manufacture, reproduce, sell, or purchase for resale any part of or likeness to any seal or coat of arms of the Senate, except for the manufacture or sale of the article for the official use of the State. A violation of this act is a Class 2 misdemeanor. The Attorney General may seek an injunction for violations of this act. This act became effective August 17, 2007. ( DH) Prohibit Gift Card Maintenance Fees S. L. 2007- 363 ( SB 1517). See Consumer Protection. Retainage Payments/ Construction Contracts S. L. 2007- 365 ( SB 1245). See State Government. Sales Tax Exemption for Baked Goods S. L. 2007- 368 ( SB 1240). See Finance. Business Entity Clarifications S. L. 2007- 385 ( SB 576) amends the Business Corporation Act to clarify various amendments made in 2005 regarding mergers. This act clarifies that a committee of a board of directors is prohibited from authorizing or approving the corporation's reacquisition of shares, except according to a formula or method prescribed by the board of directors. The act also substitutes the term " plan of merger" for the term " articles of merger" throughout the Business Corporation Act. This act became effective August 19, 2007. ( HF) Increase Hold for Items Bought by Pawnbroker S. L. 2007- 415 ( SB 806) prohibits pawnbrokers from selling, exchanging, bartering, or removing for the pawnshop any goods that were purchased before the earlier of 7 days after the pawn ticket information is electronically reported to law enforcement, or 30 days after the transaction. Currently, a pawnbroker must hold the goods for only 48 hours after the transaction in which the property is purchased by the pawnbroker. The act also authorizes the establishment of procedures for reporting pawn ticket records electronically, by allowing the report to be made to the sheriff or the chief of police, by transmission over the Internet or by a facsimile transmission, in a manner approved by the sheriff or chief of police. This act became effective October 1, 2007, and applies to goods taken by a pawnbroker in pledge, pawn, or purchase on or after that date. ( KCB) Extend Qualified Business Venture Tax Credit S. L. 2007- 422 ( HB 1598). See Finance. Chapter 3 Business and Commerce Page 16 Quarterly Escrow Deposits/ Affiliated Tobacco Dealers S. L. 2007- 435 ( HB 1460). See Finance. Small Business Contractor Act S. L. 2007- 441 ( HB 1181) creates the North Carolina Small Business Contractor Authority ( Authority). The purpose of the Authority is to foster economic development and the creation of jobs by providing financial assistance to financially responsible small businesses that are unable to obtain adequate financing and bonding assistance in connection with contracts. The Authority is governed by a board consisting of 11 members: 8 appointed by the General Assembly, 4 each upon the recommendation of the President Pro Tempore of the Senate and the Speaker of the House of Representatives, and 3 appointed by the Governor. The members shall serve four- year terms, and there is no prohibition against serving successive terms. The Authority has the power to accept grants and loans, employ staff, acquire and manage property, develop applications for guaranty agreements, fix and determine fees, adopt administrative rules, and report quarterly to the Joint Legislative Commission on Governmental Operations. The Authority may not pledge the full faith and credit of the State. In order to qualify for assistance from the Authority, a small business concern must meet certain federally established standards for businesses of similar size and industry. The applicant also must have a reputation for financial responsibility, be a resident of North Carolina, and demonstrate to the satisfaction of the Authority that the applicant has been unable to obtain adequate financing or bonding on reasonable terms through an authorized company. The act also creates two funds: The Small Business Contract Financing Fund ( Financing Fund) and the Small Business Surety Bond Fund ( Bond Fund). These are both special revenue funds. The Financing Fund may be used by the Authority to guarantee a loan made to an applicant, or as the actual loan to an applicant. The Bond Fund may be used to guarantee a surety for losses incurred under a bid bond, payment bond, or performance bond on an applicant's contract. The total amount of guarantees issued and bonds executed by the Authority may not exceed 90% of the amount of money in the Surety Bond Fund. It is a Class 2 misdemeanor to knowingly make or cause any false statement or report to be made in any application or document submitted to an Authority. This act becomes effective January 1, 2008, and applies to offenses committed or causes of action arising on or after that date. ( KG) Fire- Safe Cigarette Act S. L. 2007- 451 ( HB 1785) enacts a new Article in the General Statutes, the Fire- Safety Standard and Firefighter Protection Act, to adopt a cigarette fire- safety standard for cigarettes sold in the State. Definitions. – The act includes the following definitions: " Cigarette" means any roll for smoking, whether made wholly or in part, of tobacco or any other substance, irrespective of size or shape, and whether or not such tobacco or substance is flavored, adulterated, or mixed with any other ingredient, the wrapper or cover of which is made of paper or any other substance or material, other than leaf tobacco. " Manufacturer" is any of the following: • Any entity which manufactures or otherwise produces cigarettes or causes cigarettes to be manufactured or produced anywhere that such manufacturer intends to be sold in this State, including cigarettes intended to be sold in the United States through an importer. Chapter 3 Business and Commerce Page 17 • The first purchaser anywhere that intends to resell, in the United States, cigarettes manufactured anywhere that the original manufacturer does not intend to be sold in the United States. • Any entity that becomes a successor of these entities. Test Method and Performance Standard. – Test methods and performance standards for cigarettes are governed by the act. No cigarette may be sold in the State, unless it is tested in accordance with the act, meets the performance standards of the act, is accompanied by a written certification filed with the Commissioner of Insurance by the manufacturer and marked, as required under the act. Testing must meet the following requirements or standards: Testing must be done in accordance with the American Society of Testing and Materials ( ASTM) " Standard Test Method for Measuring the Ignition Strength of Cigarettes." Testing must be conducted using 10 layers of filter paper. No more than 25% of cigarettes may exhibit full- length burns. Performance standards must be applied only to a complete test trial ( consists of 40 replicate tests). Written certifications of testing filed by manufacturers shall be based upon testing by laboratories accredited by the International Organization for Standardization ( ISO) or comparable standard required by the Commissioner of Insurance ( Commissioner). No additional testing is required if testing is completed in accordance with the act. A manufacturer of a cigarette that cannot be tested in accordance with the act shall propose a test method to the Commissioner for approval. No local government may pass any ordinance changing the performance standard set forth in the act. The Commissioner must review the effectiveness of this section and report every three years to the General Assembly, including any recommendations to improve the act. Certification. – The act addresses certification of a cigarette's performance standard. Each manufacturer is required to submit to the Commissioner a written certification, attesting that the cigarette has been tested and meets the performance standards required under the act. A cigarette must be recertified every 3 years, and the manufacturer must pay to the Commissioner a fee of $ 250.00 for each certification form. If a manufacturer makes any change to a cigarette certified under the act that is likely to affect the cigarette's compliance with ignition propensity standards required under the act, the cigarette may not be sold until the manufacturer retests the cigarette under the act. Cigarettes certified under the act must be marked in 8- point approved type, or larger, to indicate compliance. Cigarettes sold or offered for sale that do not comply with the performance standard are subject to forfeiture. Penalties and Enforcement. – Penalties for violations of the act include: Manufacturers, distributors, agents, or any other persons who sell, or offer to sell, cigarettes in violation of the testing requirements are subject to a civil penalty not to exceed $ 100 per pack, up to a maximum penalty of $ 100,000 per 30- day period. Retail dealers who knowingly sell, or offer to sell, cigarettes in violation of the act shall be subject to a civil penalty not to exceed $ 100 per pack, up to a maximum penalty of $ 25,000 during a 30- day period. Businesses engaged in the manufacture of cigarettes that knowingly make a false certification are subject to a civil penalty of $ 75,000, not to exceed $ 250,000 for each false certification. Any person violating any other provision of the act is subject to a civil penalty, not to exceed $ 1,000 for a first offense, and $ 5,000 for each subsequent violation. The Commissioner or Attorney General may file an action for a violation of the act including injunctive relief, recovery of costs, or damages incurred by the State. The act does not apply to cigarettes sold out of state. Chapter 3 Business and Commerce Page 18 Preemption. – The act does not apply if a federal reduced cigarette ignition propensity standard that preempts the act is enacted, but implementation of the federal standard does not affect any liability for forfeiture or penalties accrued prior to enactment of the federal law. Other Provisions. – In a provision unrelated to the Fire- Safety and Firefighter Protection Act, the act clarifies stockholder requirements for a behavioral health professional corporation. The Fire- Safety Standard and Firefighter Protection Act becomes effective January 1, 2010. The remainder of the act became effective August 24, 2007. The act does not apply to cigarettes sold on or after January 1, 2010, if the dealer can establish that taxes were paid on the cigarettes prior to that date. ( TH) Dealer Motor Vehicle Inspection/ Records/ Motor Vehicle Registration S. L. 2007- 481 ( SB 1147). See Transportation. Bond License Plate Agent/ Online Vehicle Registration S. L. 2007- 488 ( SB 1457). See Transportation. Scrap Vehicle Purchase/ Parts- Record S. L. 2007- 505 ( SB 1364) requires secondary metals recyclers and salvage yards to maintain records when purchasing vehicles without a certificate of title for scrap, and amends the junked motor vehicle law for the City of Monroe. Scrap Vehicle Purchase. – This act allows secondary metals recyclers and salvage yards to purchase motor vehicles without a certificate of title for scrap or parts only, if ( i) the motor vehicle is 10 model years old or older, and ( ii) the secondary metals recyclers and salvage yards comply with record keeping requirements. Law enforcement may inspect the required records and all motor vehicles in the possession of the scrap metals recycler, or salvage yard, when such operations are open for business. The penalty for violation of this provision is a Class 1 misdemeanor for a first offense, and a Class I felony for second and subsequent offenses. Any motor vehicle, or other tools used to transport another motor vehicle, illegally sold under this provision may be seized by law enforcement and is subject to forfeiture. Local governments are preempted from enacting local laws or ordinances that regulate the sale of motor vehicles to secondary metals recyclers or salvage yards. The City of Monroe. – This act amends the law to change the definition of " junked motor vehicles," as it applies in the City of Monroe, to include vehicles that appear to be worth less than $ 500. The sections of this act regarding the purchase of vehicles for scrap metal becomes effective December 1, 2007, and applies to offenses committed and motor vehicles purchased on or after that date. The section of this act regarding the City of Monroe became effective August 30, 2007. ( HF) Clarify Motor Vehicle Franchise Laws/ Dealer Termination S. L. 2007- 513 ( SB 1351) made the following changes to the motor vehicle franchise laws: Installment Sales. – The act requires retail installment sales to be evidenced by one or more written instruments ( previously had to be one instrument), and requires that the written statement delivered to the buyer that describes the details of the sale be signed by the buyer. Chapter 3 Business and Commerce Page 19 Notice of Objection/ Transfer of Dealership. – Current law prohibits a franchisor from unreasonably refusing to approve a transfer of ownership of a dealership, transfer of a franchise, change in the executive management or principal operator of a dealership, or relocation of a dealership. When refusing to approve, the act requires the franchisor to provide detailed factual and legal bases in the franchisor's notice of objection, and limits those bases to those specifically listed in the act. It also provides for additional time for the franchisor to provide notice of objection, if the franchisor requests additional information, to complete its review of a proposed change. Rights of Successor of Deceased Dealership Owner. – The act clarifies that a designated successor of a deceased or incapacitated owner or operator of a dealership succeeds to all of the rights and obligations of the owner or operator under either the existing franchise or any other successor, renewal, or replacement franchise. Manufacturer's Opinion on Viability of Franchise. – The act deletes language stating that a manufacturer does not owe a duty to a purchaser of a motor vehicle franchise to disclose its opinion that the franchise is not viable, or is not consistent with the manufacturer's distribution or marketing forecast or plans. Full Compensation for Warranty Work. – The act clarifies that a manufacturer must fully compensate its dealers for warranty parts and service, and may not attempt to recover those costs from the dealer through other charges or surcharges. Denial of Claims for Reimbursement for Warranty Work. – The act clarifies that a dealer's claim for reimbursement for warranty parts and services may not be denied by the manufacturer based solely on a failure to comply with the manufacturer's claim documentation procedures. The dealer also must have failed to comply with the same procedure within the previous 12 months and received a written warning from the manufacturer of the failure. Procedures for Dealer Claims. – The act clarifies that a manufacturer must have reasonable written procedures for substantiating a dealer's claim for sales incentives, service incentives, rebates, or other forms of incentive compensation. Civil Actions. – The act allows only motor vehicle dealers and parties to a franchise as parties who may bring a civil action for violation of the Manufacturers Licensing Law. Dealer Eligibility to Purchase Program Vehicles. – The act prohibits a manufacturer from considering the performance of its franchised dealers relating to sale of new motor vehicles to determine the following with regard to program, certified, or other used vehicles: The dealer's eligibility to purchase vehicles from the manufacturer. The volume, type, or models the dealer is eligible to purchase from the manufacturer. The price of vehicles the dealer is eligible to purchase from the manufacturer. Availability of discounts, credits, rebates, or sales incentives the dealer is eligible to receive from the manufacturer for purchase of vehicles. Access to Customer Information. – The act prohibits a manufacturer from accessing customer or prospect information maintained by a dealer for purposes of soliciting the customer on behalf of, or directing the customer to, another dealer. The prohibition does not apply to: Customers that request a reference to another dealership. Customers that move more than 60 miles from the dealership where the information was accessed. Customer information that was originally provided to the dealership by the manufacturer. Situations where the dealer has agreed to give the manufacturer access to the information in a separate, written instrument. Truck Dealer Cost Reimbursement. – The act requires manufacturers of vehicles with a gross vehicle weight rating of 16,000 pounds or more to compensate dealers ( at a rate of $ 600 per vehicle registered in the State) for the cost of special tools, equipment, and training for which the dealers are liable, when the manufacturer sells a portion of its vehicles to converters and other non- dealer retailers. Chapter 3 Business and Commerce Page 20 Compensation of Dealers/ Franchise Termination due to Industry Reorganization. – Current law prohibits a manufacturer from terminating a franchise with a licensed new motor vehicle dealer, unless certain requirements are met regarding notice, determination of good cause for termination, and payment of compensation to the dealer. This act adds the following new provisions to the law dealing with termination of a franchise that results from a change in ownership, or control of all or part of the business of a manufacturer, termination of all or part of the business operations of a manufacturer, or discontinuance of the sale of the product line, or a change in distribution system by the manufacturer: The manufacturer has to notify the dealer of the termination not less than 180 days prior to the effective date of the termination. The manufacturer is liable to the dealer for an amount at least equivalent to the fair market value of the franchise on one of the following dates, whichever provides the highest amount: • The date the franchisor announces the action resulting in termination. • The date the action resulting in termination first became general knowledge. • The day 12 months prior to the date the notice of termination is issued. Payment is due within 90 days of the effective date of the termination. However, if the termination is due to a change in distributors, the manufacturer may avoid payment if the new distributor offers the dealer a franchise with acceptable terms. A franchise continues in full force and operation, notwithstanding a change in the system of distribution of motor vehicles offered for sale under the franchise. Upon the occurrence of the change, the Division is required to deny a manufacturer's application for a license or license renewal, unless the applicant offers each dealer who is a party to the franchise a new franchise agreement containing substantially the same provisions, or assumes the obligations of the previous franchise agreement. Applicability. – The act is applicable to all franchises and agreements existing at the time of its ratification, and to all future franchises and agreements. This act became effective August 30, 2007. However, nothing in the act applies to any administrative proceeding pending before the Commissioner of Motor Vehicles, or any case pending in a court on or before that date. ( WGR) Wireless Telecommunications Facilities S. L. 2007- 526 ( SB 831). See Local Government. Industrial Machinery - Building Code S. L. 2007- 529 ( SB 490) amends the State Building Code ( Code), to provide that the Code does not apply to the regulation of the design, construction, location, installation, or operation of industrial machinery. However, if, during the building code inspection process, an electrical inspector has any concerns about the electrical safety of a piece of machinery, the inspector may refer the concern to the Occupational Safety and Health Division of the North Carolina Department of Labor. The inspector may not withhold a certificate of occupancy or mandate third- party testing of the machinery based solely on this concern. " Industrial machinery" is defined as equipment and machinery used in a system of operations for the explicit purpose of producing, and does not include equipment permanently attached to or a component part of a building and related to building services such as ventilation, heating and cooling, plumbing, fire suppression or prevention, and general electrical transmission. This act became effective August 31, 2007. ( TH) Chapter 3 Business and Commerce Page 21 Amend Dry- Cleaning Solvent Cleanup Act S. L. 2007- 530 ( SB 1362). See Environment and Natural Resources. Amend Funeral Service Practice/ Other Related Laws S. L. 2007- 531 ( SB 1435). See Occupational Boards and Licensing. Deceptive Advertising of Business Location S. L. 2007- 545 ( SB 514) makes it an unfair and deceptive trade practice for a person who is in the business of supplying a perishable product to advertise that the business is located in a certain geographic location, when the business is actually located elsewhere, unless the advertisement contains the actual municipality and state of the location of the business. This act became effective October 1, 2007, and applies to advertising printed or published on or after that date. ( WR) Job Maintenance and Capital Development Fund S. L. 2007- 552 ( Extra Session) ( HB 4 ( Extra Session)) creates a fund in the Department of Commerce ( Department) to be used to encourage businesses to maintain high- paying jobs and make capital investments in the State. Under the act, in order to be eligible for a grant a company must: Invest, or intend to invest, at least $ 200 million of private funds within a 6- year period in improvements to real property and additions to tangible personal property to be used in the business in the State. Employ, or maintain employment of, at least 2,000 full- time employees in the State. Be located in a Tier One county at the time the application is made. Meet a wage standard equal to 140% of the average weekly wage for the county. Provide health insurance to all full- time employees, have no serious OSHA violations within the past three years, and have no serious environmental law violations within the past three years. Under the act, the Economic Investment Committee must recommend the grants to the Department. The Department may enter into up to 5 grants, with the maximum individual grant being up to $ 4 million per year, with a maximum of cumulative grants of no more than $ 60 million. The amount of each grant must be determined after consideration of the amount of sales and use taxes paid on machinery and equipment, sales and use taxes paid on building materials related to expansion, taxes paid on electricity, natural gas and other fuels, additional income or franchise tax paid, worker training expenses incurred, and State permitting fees paid. The Department must report quarterly to the Joint Legislative Committee on Governmental Operations on grants awarded under this act. The act directs the Joint Select Committee on Economic Development Incentives to compile a report containing a comprehensive listing of all economic development incentives provided in the State, and to report to the 2009 General Assembly. This act became effective July 1, 2007. ( WR) Job Maintenance and Capital Development Fund HB 1761 – Vetoed August 30, 2007. See Vetoed Legislation. Chapter 3 Business and Commerce Page 22 Studies Study Equine Industry in North Carolina S. L. 2007- 323, Sec. 13.14A ( HB 1473, Sec. 13.14A) directs the sum of $ 500,000, of the funds appropriated to the Rural Economic Development Center, Inc., for the 2007- 2008 fiscal year, to be allocated to the Agricultural Advancement Consortium for: Assessing the numbers, composition, and value of the equine industry in North Carolina. Analyzing the direct and indirect impact of the industry on the State's economy. Developing a comprehensive plan to maximize the economic opportunities presented by the equine industry. The assessment of the industry must provide data on both a statewide and countywide basis. The Consortium may contract with other agencies of State government, constituent institutions of the University of North Carolina, and private consultants to conduct the assessment and plan development. It must complete its work within 12 months of the funds becoming available. A report containing the results of the assessment of the equine industry and its plan for maximizing the economic impact of the industry must be filed with the Chairs of the Joint Legislative Commission on Governmental Operations, and the Chairs of the Senate and House of Representatives Appropriations Committees. This section became effective July 1, 2007. ( DH) Authorize Minority Disparity Study S. L. 2007- 345, Sec. 9.2 ( HB 714, Sec. 9.2) authorizes the Department of Administration to conduct a study of the relevant evidence of the effects of race- based and gender- based discrimination upon the utilization of minority- owned and women- owned business enterprises in contracts for planning, design, preconstruction, construction, maintenance, renovation, or repairs of State building projects, including local government units, or other public or private entities, that receive State funding. The Director of the Budget is authorized, within funds available in any State agency, to use up to $ 1.5 million for the study authorized under this section. This section became effective July 1, 2007. ( HF) For a complete list of the studies and reports authorized by the 2007 Session of the 2007 General Assembly, please refer to the Appendix contained in this publication. Chapter 4 Children and Families Page 23 Chapter 4 Children and Families Drupti Chauhan ( DC), Erika Churchill ( EC), Shirley Iorio ( SI), Wendy Graf Ray ( WGR) Enacted Legislation Child Restraint Systems/ Federal Compliance S. L. 2007- 6 ( HB 61). See Transportation. Domestic Violence Victims/ Security S. L. 2007- 15 ( HB 46) requires the North Carolina Council for Women/ Domestic Violence Commission to consider, in cooperation with the North Carolina Coalition Against Domestic Violence, whether State- funded agencies that operate domestic violence shelters should adopt safety guidelines as a criterion for receipt of State funds. The Council is required to report to the Joint Legislative Committee on Domestic Violence no later than May 1, 2008, on the review results. The act also requires clerks of Superior Court, where practical and if requested by a domestic violence victim, to make a secure area available to the victim to await the hearing of the victim's case. This act became effective April 12, 2007. ( WGR) Schools Provide Information on Cervical Cancer S. L. 2007- 59 ( SB 260). See Education. Domestic Violence Victims/ Add Protections S. L. 2007- 116 ( SB 30). See Courts, Justice, and Corrections and Criminal Law and Procedure. Amend Family Resource Center Grant Program Laws S. L. 2007- 130 ( HB 696) changes the purpose of the Family Resource Center Grant Program from providing grants to establish family resource centers to implementing family support programs that are research- based and have been evaluated for effectiveness. Additionally, the act extends the age range for services from birth through elementary school age children, to children from birth through 17 years of age. The act also specifies that the grants prevent child abuse and neglect by implementing program models that have been evaluated and found to improve outcomes for children and families. This act became effective June 27, 2007. ( EC) Remove Barriers to Interstate Adoption S. L. 2007- 151 ( HB 865) amends North Carolina statutes pertaining to termination of parental rights and adoption to make it easier for nonresidents to adopt children in this State. Adoption conditioned upon termination of parental rights. – In North Carolina, the biological parents' rights are not required to be terminated before an adoption can take Chapter 4 Children and Families Page 24 place. It is enough that the biological parent has consented to an adoption, or relinquished the child to an agency for adoption. The decree of adoption has the effect of terminating the biological parents' rights. However, some other states do require that the biological parents' rights be terminated before an adoption can take place. This act authorizes North Carolina courts to terminate parental rights when all of the following conditions are met: The child has been relinquished for adoption or directly placed with a prospective adoptive parent. The relinquishment or consent to adoption has become irrevocable. Termination of parental rights is a condition precedent to adoption in the jurisdiction where the adoption will take place. The parent does not contest the termination. Jurisdiction over adoption proceedings. – Currently, a prospective adoptive parent is required to live in North Carolina for at least six months prior to filing an adoption petition, with the exception that a prospective adoptive parent who has moved to North Carolina may file a petition to adopt a child who has lived in North Carolina for six months or from birth. In addition, a North Carolina court may not exercise jurisdiction over an adoption proceeding if another state is exercising jurisdiction, so long as the other jurisdiction is acting in conformity with the Uniform Child- Custody Jurisdiction and Enforcement Act at the time the petition is filed. This act deletes the requirement that a prospective adoptive parent reside in North Carolina before filing a petition to adopt. A North Carolina court will have jurisdiction under any of the following circumstances: The child has lived in North Carolina for six months or from birth. The prospective adoptive parent has lived in North Carolina for at least six months. A North Carolina child- placing agency or department of social services has legal custody of the child. The act also allows a North Carolina court to exercise jurisdiction when another state was already exercising jurisdiction at the time the adoption petition is filed if, within 60 days after the date the petition is filed, the other court dismisses its proceeding or releases jurisdiction. This act became effective October 1, 2007, and applies to motions in the cause, or petitions filed on or after that date. ( WGR) Expand Reach of Courts/ Termination of Parental Rights S. L. 2007- 152 ( HB 866) expands the jurisdiction of North Carolina courts, by giving to courts that have jurisdiction to make a child- custody determination the jurisdiction to terminate the parental rights of any parent, irrespective of the parent's state of residence. Under current law, district courts have exclusive original jurisdiction to hear and determine any petition or motion relating to termination of parental rights to any juvenile who resides in, is found in, or is in the legal or actual custody of a county department of social services or licensed child- placing agency in the district. Before exercising jurisdiction, the court must find that it has jurisdiction to make a child- custody determination under the provisions of the law dealing with initial child- custody jurisdiction, jurisdiction to modify determination, or temporary emergency jurisdiction. The law grants North Carolina courts temporary emergency jurisdiction if the child is present in this State and the child has been abandoned, or it is necessary in an emergency to protect the child because the child, or a sibling, or parent of the child is subjected to or threatened with mistreatment or abuse. Custody determinations made by courts establishing jurisdiction under this section are primarily intended to be temporary orders, designed to protect the child until the State that has jurisdiction enters an order. This act expands the jurisdiction of North Carolina district courts hearing petitions or motions to terminate parental rights to any juvenile in the custody of a county department of social services or licensed child- placing agency. The act gives courts having jurisdiction to make a child- custody determination the jurisdiction to terminate the parental rights of any parent, Chapter 4 Children and Families Page 25 irrespective of the parent's state of residence. The act requires that, before a court may exercise jurisdiction regarding the parental rights of a nonresident parent, the court must find: That it has jurisdiction to make a child- custody determination under the initial child-custody jurisdiction provisions or the jurisdiction to modify determination provisions, without regard to the temporary emergency jurisdiction provisions. That proper process was served on the nonresident parent. This act became effective October 1, 2007, and applies to motions in the cause or petitions filed on or after that date. ( WGR) Every Child Ready to Learn S. L. 2007- 173 ( HB 150). See Education. Custody/ Visitation/ Military Orders S. L. 2007- 175 ( HB 1634). See Military, Veterans', and Indian Affairs. Assault Disabled Person/ Institutional Setting S. L. 2007- 188 ( HB 554). See Criminal Law and Procedure. Violate Order/ Possess Deadly Weapon Felony S. L. 2007- 190 ( HB 47). See Criminal Law and Procedure. Study Safety Restraints on School Buses S. L. 2007- 191 ( SB 812). See Transportation. Access to Information for Adult Adoptees S. L. 2007- 262 ( HB 445) authorizes a child- placing agency or a county department of social services to act as a confidential intermediary between an adult adoptee or an adult lineal descendant of a deceased adoptee and a biological parent of the adoptee. These agencies may share nonidentifying birth family health information. With written consent of both parties, the agencies may facilitate contact or share identifying information between the parties. The act also allows a child- placing agency or a county department of social services to act as a confidential intermediary for the adoptive parents of a minor adoptee, in order to obtain nonidentifying birth family health information. A confidential intermediary is authorized to charge a reasonable fee for services, so long as the fee is pursuant to a written agreement signed by the individual to be charged. The Division of Social Services is required to establish guidelines for confidential intermediary services. The act also defines " adult" as an individual who has attained the age of 21 years for the purposes of the adoption records confidentiality and disclosure statutes. This act becomes effective January 1, 2008. ( DC) Duty to Report Child Porn S. L. 2007- 263 ( HB 27). See Business and Commerce. Chapter 4 Children and Families Page 26 Amend Child Welfare Laws/ Comply with Federal Laws S. L. 2007- 276 ( HB 698). See Health and Human Services. " More at Four" Program and Office of School Readiness S. L. 2007- 323, Sec. 7.24 ( HB 1473, Sec. 7.24). See Education. Collaboration Among Departments on School- Based Child and Family Team Initiative S. L. 2007- 323, Sec. 10.9 ( HB 1473, Sec. 10.9) establishes the School- Based Child and Family Team Initiative to identify and coordinate appropriate community services and supports for children at risk of school failure or out- of- home placement, in order to address the physical, social, legal, emotional, and developmental factors that affect academic performance. This section also establishes the North Carolina Child and Family Leadership Council to review and advise the Governor in the development of the Initiative, and to ensure the active participation and collaboration in the Initiative by all State agencies and their local counterparts providing services to children in participating counties. The Department of Health and Human Services, the Department of Juvenile Justice and Delinquency Prevention, the Administrative Office of the Courts, and the Department of Public Instruction are directed to ensure collaboration in the development and implementation of the Initiative. This section became effective July 1, 2007. ( WGR) Comprehensive Treatment Services Program S. L. 2007- 323, Sec. 10.10 ( a)-( h) ( HB 1473, Sec. 10.10 ( a)-( h)). See Health and Human Services. Changes to the Legislative Study Commission on Children and Youth S. L. 2007- 323, Secs. 10.10( i) and ( j) ( HB 1473, Secs. 10.10( i) and ( j)) make changes to the duties and membership of the Legislative Study Commission on Children and Youth ( Commission) and create a new Task Force on the Coordination of Children's Services ( Task Force). These sections give the Commission the duty to determine the adequacy and appropriateness of services to children and youth served by the Mental Health, Developmental Disabilities, and Substance Abuse Services system. These sections also make changes to the membership of the Commission. The sections also create the Task Force. The purpose of the Task Force is to study and recommend changes to the Commission, the Governor, and the General Assembly to improve collaboration and coordination among agencies that provide services to children, youth, and families with multiple service needs. The Task Force must report at least annually to the Commission and on April 1 of each year to the House Appropriations Subcommittee on Health and Human Services; the Senate Appropriations Committee on Health and Human Services; the Joint Legislative Oversight Committee on Mental Health, Developmental Disabilities, and Substance Abuse Services; and the Fiscal Research Division. These sections became effective July 1, 2007. ( WGR) Chapter 4 Children and Families Page 27 Child Care Subsidy Rates S. L. 2007- 323, Sec. 10.15 ( HB 1473, Sec. 10.15) sets out eligibility requirements and payment rates for subsidized child care services in North Carolina. This section became effective July 1, 2007. ( WGR) North Carolina Partnership for Children Personnel Record Protection S. L. 2007- 323, Sec. 10.19B ( HB 1473, Sec. 10.19B). See Labor and Employment. Child Support Program/ Enhanced Standards S. L. 2007- 323, Sec. 10.28 ( HB 1473, Sec. 10.28) requires the Department of Health and Human Services to develop and implement performance standards for all State and county child support enforcement offices in North Carolina. The standards must include all of the following: Cost per collection. Consumer satisfaction. Paternity establishments. Administrative costs. Orders established. Collections on arrearages. Location of absent parents. Other related performance measures. This section also requires the Department to monitor the performance of each office and implement a system of reporting that allows offices to review their performance and the performance of other offices. The Department must publish an annual performance report, including statewide and local office performance. The Department is required to report on its progress to the Senate Appropriations Committee on Health and Human Services, the House Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division by May 1 of each even- numbered year beginning in 2008. This section became effective July 1, 2007. ( WGR) Intensive Family Preservation Services Funding and Performance Enhancements S. L. 2007- 323, Sec. 10.33 ( HB 1473, Sec. 10.33) directs the Intensive Family Preservation Services ( IFPS) Program to provide intensive services to children and families in cases of abuse, neglect, and dependency where a child is at imminent risk of removal from the home, and in cases of abuse where a child is not at imminent risk of removal. The IFPS must ensure the application of standardized assessment criteria for determining imminent risk and out-of- home placement. The Department of Health and Human Services must require that any program or entity that receives funding for the purpose of IFPS provide information and data that allows for all of the following: An established follow- up system with at least six months of follow- up services. Detailed information on specific interventions applied. Cost- benefit data. Data on long- term benefits obtained by tracking families through the process. The number of families remaining intact and associated interventions. Chapter 4 Children and Families Page 28 The number and percentage by race of children receiving services, compared to the ratio of their distribution in the general population, involved with Child Protective Services. The Department is required to report on the IFPS Program each even- numbered year beginning in 2008 to the House Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division. This section became effective July 1, 2007. ( WGR) Annual Evaluation of Tarheel Challenge Program S. L. 2007- 323, Sec. 16.1 ( HB 1473, Sec. 16.1). See Courts, Justice, and Corrections. Adoption Tax Credit S. L. 2007- 323, Sec. 31.6 ( HB 1473, Sec. 31.6). See Finance. Homebound Instruction for Disabled Students S. L. 2007- 425 ( HB 14). See Education. Homebound Instruction Standards S. L. 2007- 429 ( HB 20). See Education. Child Support Collection Fee/ Non- Temporary Assistance for Needy Families ( TANF) S. L. 2007- 460 ( HB 825). See Health and Human Services. Require Disclosure/ Sex Offenders/ Child Custody S. L. 2007- 462 ( HB 1328). See Civil Law and Procedure. For a complete list of the studies and reports authorized by the 2007 Session of the 2007 General Assembly, please refer to the Appendix contained in this publication. Chapter 5 Civil Law and Procedure Page 29 Chapter 5 Civil Law and Procedure Brenda Carter ( BC), Karen Cochrane- Brown ( KCB), Bill Gilkeson ( BG), Kory Goldsmith ( KG), Trina Griffin ( TG), Tim Hovis ( TH), Howard Alan Pell ( HAP), Wendy Graf Ray ( WGR), Walker Reagan ( WR), Steve Rose ( SR), Susan Sitze ( SS) Enacted Legislation Residential Mortgage Fraud Act S. L. 2007- 163 ( HB 817). See Consumer Protection. Limit Liability at Agricultural Fairs S. L. 2007- 171 ( HB 590). See Animals and Wildlife. Motor Vehicle Chop Shop Act S. L. 2007- 178 ( HB 1354). See Criminal Law and Procedure. Violate Order/ Possess Deadly Weapon Felony S. L. 2007- 190 ( HB 47). See Criminal Law and Procedure. Amend Civil No- Contact Order Laws S. L. 2007- 199 ( HB 1482) amends two definitions pertaining to civil no- contact orders. In 2004, the General Assembly enacted statutes creating civil no- contact protective orders. Courts can issue these protective orders in situations where a person has been a victim of stalking or nonconsensual sexual conduct committed by a person with whom the victim is not in a domestic relationship. Under the Civil No- Contact Orders statutes, " unlawful conduct" is defined as the commission of one or more acts of ( i) nonconsensual sexual conduct, including single incidences of nonconsensual sexual conduct, or ( ii) stalking. The definition of unlawful conduct does not include acts of self- defense or defense of others. The act clarifies the definition of " stalking" by reorganizing the sentence and amending the definition of " unlawful conduct" by stating that the acts have to be committed by a person of 16 years of age or older, in order to meet the definition of " unlawful conduct." This act became effective July 8, 2007. ( SR) Civil Jury Selection/ Equal Challenges S. L. 2007- 210 ( HB 244) amends the law governing jurors in civil actions, to provide for equity between the parties with respect to juror challenges. The act authorizes the judge in a civil case to increase the number of challenges for plaintiffs with antagonistic interests, under the same circumstances that a judge may now increase the number of juror challenges for defendants with antagonistic interests. Prior to this act, the judge could apportion the eight peremptory challenges between or among defendants with antagonistic interests, or the judge Chapter 5 Civil Law and Procedure Page 30 could increase the total number of challenges to allow up to six for each defendant. The act also authorizes the judge to increase the number of challenges for the opposing side, if the judge has increased the number of challenges for plaintiffs or defendants. This act became effective October 1, 2007, and applies to actions called for trial on or after that date. ( KCB) Recovery of Costs in Civil Cases S. L. 2007- 212 ( HB 21). See Courts, Justice, and Corrections. Immunity/ Veterinarians Reporting Animal Cruelty S. L. 2007- 232 ( HB 1359) amends the law regarding cruelty to animals by adding a provision granting immunity for veterinarians reporting animal cruelty in violation of State law. The law provides that any veterinarian who ( i) makes a report of animal cruelty, or ( ii) participates in any investigation or testifies in a judicial proceeding that arises from a report of animal cruelty, is immune from civil or criminal liability and liability from professional disciplinary action or breach of any veterinarian- patient confidentiality, provided the veterinarian does not act in bad faith or with a malicious purpose. Failure to report animal cruelty would not be grounds for disciplinary action under the Veterinarian Practice Act. This act became effective October 1, 2007. ( TH) Challenge to Administrative Subpoena S. L. 2007- 251 ( SB 1432) amends the statutes dealing with proceedings before the Employment Security Commission ( ESC) and the Property Tax Commission ( PTC), by providing a procedure to quash a subpoena issued by one of those commissions. Under the law prior to this act, the chairman, or any duly authorized representative or member of the ESC, was authorized to " issue subpoenas to compel the attendance of witnesses and the production of books, papers, correspondence, memoranda, and other records deemed necessary as evidence, in connection with a disputed claim or the administration of this Chapter." However, there was no procedure available for quashing a subpoena. Similarly, the PTC, a member of the PTC, or any employee of the Department of Revenue authorized by the PTC, had the authority to subpoena witnesses and documents, with no procedure available for quashing such a subpoena. This act provides a procedure to quash a subpoena issued by the ESC or the PTC. The act allows those commissions to quash a subpoena upon a motion if, after a hearing, the commission finds any of the following concerning the subpoena: It requires production of evidence that does not relate to a matter in issue. It fails to describe with sufficient particularity the evidence required to be produced. It is subject to being quashed for any other reason sufficient in law. A hearing on a motion to quash is required to be heard at least 10 days prior to the hearing for which the subpoena was issued, and the denial of a motion to quash is subject to immediate judicial review in the Superior Court in the county where the person subject to the subpoena resides. This act became effective July 20, 2007. ( WGR) Mediation of Property Insurance Claims S. L. 2007- 300 ( HB 730). See Insurance. Chapter 5 Civil Law and Procedure Page 31 Limit Liability of Liquefied Petroleum Gas Dealer/ Certain Others S. L. 2007- 302 ( HB 1536). See Business and Commerce. Industrial Commission Strategic Plan/ Report S. L. 2007- 323, Sec. 13.4A ( HB 1473, Sec. 13.4A) directs the Industrial Commission to develop a strategic plan no later than April 1, 2008, for tracking compliance with the requirements for prompt payments of workers compensation benefits and to expeditiously resolve medical compensation disputes in workers compensation cases. The Industrial Commission also is directed to include in its annual report information concerning compliance with the prompt pay requirements of workers compensation benefits and the resolution of medical compensation disputes. A copy of the report is to be submitted to the Joint Legislative Commission on Governmental Operations by October 1 of each year. This section became effective July 1, 2007. ( WR) Report on Business Courts S. L. 2007- 323, Sec. 14.7 ( HB 1473, Sec. 14.7). See Courts, Justice, and Corrections. Protect Homeowners/ Reduce Foreclosure S. L. 2007- 351 ( HB 1374). See Business and Commerce. North Carolina Foreclosure/ Landlord Tenant Laws S. L. 2007- 353 ( HB 947). See Local Government and Property, Trusts, and Estates. Civil Trial Exhibits S. L. 2007- 407 ( SB 1117) authorizes the trial judge in a civil case to permit the jury to take certain exhibits into the jury room, upon the jury's request and in the judge's discretion. The trial judge may, upon a deliberating jury's request and after giving the parties notice and an opportunity to be heard, direct that parts of requested testimony be read to the jury, or that the jury be permitted to reexamine requested evidence in open court. Upon a deliberating jury's request, the court may permit the jury to take any of the following into the jury room: Exhibits that have been passed to the jury. Photographs admitted into evidence, shown to the jury, and used by any witnesses in testimony before the jury. Any illustrative exhibits admitted into evidence and used by any witnesses in testimony before the jury. Summaries of testimony, lists, or other similar documents prepared in the courtroom by any party may not be sent to the jury room with the jury, and depositions may be taken into the jury room only with the consent of the parties. In sending exhibits to the jury, the court must ensure that the evidentiary integrity of the exhibit is preserved. This act became effective for trials commencing on or after October 1, 2007. ( BC) Chapter 5 Civil Law and Procedure Page 32 Tort Claims Limit Increased S. L. 2007- 452 ( HB 22). See State Government. Require Disclosure/ Sex Offenders/ Child Custody S. L. 2007- 462 ( HB 1328) requires a person convicted of a sexually violent offense, who is seeking child custody ex parte, to disclose the conviction in the pleadings. An ex parte proceeding is one in which the respondent to the action has not been notified of the action, and has no opportunity to be heard prior to the court taking action. A court may not enter, ex parte, a temporary order for custody which changes the living arrangements of a child, or changes custody, unless the court finds either of the following: The child is exposed to a substantial risk of bodily injury, or sexual abuse. There is a substantial risk that the child may be abducted or removed from the State of North Carolina, for the purpose of evading the jurisdiction of North Carolina courts. A " sexually violent offense" includes rape; first or second degree sexual offense; sexual battery; attempted rape or sexual offense; intercourse and sexual offense with certain victims; statutory rape or sexual offense of person who is 13-, 14-, or 15- years- old where the defendant is at least 6 years older; subjecting or maintaining a person for sexual servitude; incest; employing or permitting minor to assist in offenses against public morality and decency; felonious indecent exposure; first, second, or third degree sexual exploitation of a minor; promoting or participating in the prostitution of a minor; taking indecent liberties with children; solicitation of child by computer to commit an unlawful sex act. The term also includes a solicitation or conspiracy to commit any of these offenses, or aiding and abetting any of these offenses. This act became effective October 1, 2007, and applies to actions and proceedings filed on or after that date. ( HAP) Reform Tax Appeals S. L. 2007- 491 ( SB 242). See Finance. Advance Directives/ Health Care Power of Attorney S. L. 2007- 502 ( HB 634). See Health and Human Services. Scrap Vehicle Purchase/ Parts- Records S. L. 2007- 505 ( SB 1364). See Business and Commerce. Amend Civil Procedure Rule 45 S. L. 2007- 514 ( HB 316) amends Rule 45 of the Rules of Civil Procedure to require that, when a subpoena is served directing a person to produce designated records, the party or attorney issuing the subpoena must, within five business days of receipt of the material, provide notice to all other parties of receipt of the material produced. The party or attorney issuing the subpoena also must, upon request, provide all other parties reasonable opportunity to inspect and copy the material produced at the expense of the inspecting party. This act became effective October 1, 2007, and applies to actions filed on or after that date. ( TG) Chapter 5 Civil Law and Procedure Page 33 Arbitration/ Negligent Health Care Claims S. L. 2007- 541 ( HB 1671) creates a new Article in the General Statutes that provides for the voluntary arbitration of personal injury or wrongful death actions, based on negligence in the provision of health care. This act applies to any claim for personal injury or wrongful death damages, that is based on alleged negligence in the provision of health care by a health care provider. Arbitration requirements. – The parties may elect, before or after the filing of an action, to file a stipulation with the court agreeing to submit to arbitration under this Article and must file a declaration with the court prior to the discovery scheduling conference, if an agreement is not reached. If the parties go to arbitration before the action is filed, the statute of limitations for filing the action is tolled. Selection of arbitrator. – An arbitrator is selected by agreement of all the parties within 45 days of the stipulation. If an agreement is not reached, the arbitrator is selected from emergency superior court judges who agree to be on a list maintained by the Administrative Office of the Courts. The parties each strike names from the list until one last name remains. The fees and expenses of the arbitrator are paid equally by the parties. Witnesses and discovery. – Each side is entitled to two experts on liability, two experts on damages, and one rebuttal expert. Each side is entitled to the following discovery: 25 interrogatories. 10 requests for admission. Whatever is allowable under court rules for requests for production of documents and for mental and physical examinations. Depositions of any party and any expert that the party expects to call as a witness, and five depositions per side for other witnesses, unless exceptional circumstances require otherwise. An arbitrator may issue a subpoena for the attendance of a witness and the production of records. Time Limits. – Within 45 days of stipulation to arbitration, the parties must submit a copy of all relevant medical records or a release for medical records. Within 120 days, the claimant must disclose to each defendant the name and curriculum vitae of expert witnesses ( 140 days for the defendant). Within 160 days, each party must disclose the name and curriculum vitae of rebuttal experts. Within 240 days, all discovery shall be completed, and within 270 days the arbitration hearing must begin. Written decision. – Within 14 days after completion of the hearing, the arbitrator shall issue and sign a decision in writing. An award under this article may not exceed $ 1 million. Judgment by court. – After receiving notice of a hearing, the party may file a motion with the court for a judgment, at which time the court must issue a judgment unless the decision is modified, corrected, or vacated. Appeal. – There is no right to a trial de novo on appeal. Appeals are limited to bases found in current law, including cases of fraud, refusal to postpone a hearing upon sufficient cause, or mathematical miscalculation. This act becomes effective January 1, 2008, and applies to agreements to arbitrate entered into on or after that date. ( BG) For a complete list of the studies and reports authorized by the 2007 Session of the 2007 General Assembly, please refer to the Appendix contained in this publication. Chapter 5 Civil Law and Procedure Page 34 Chapter 6 Constitution and Elections Page 35 Chapter 6 Constitution and Elections Erika Churchill ( EC), Bill Gilkeson ( BG), Kara McCraw ( KM) Note: For legislation affecting voting, the legislation cannot be implemented until it has received approval under Section 5 of the Voting Rights Act of 1965. Approval is most commonly obtained administratively from the United States Attorney General. This requirement applies to legislation affecting any of the 40 North Carolina counties covered by Section 5, including all statewide legislation. Unless otherwise indicated, the effective date stated is the effective date as it is in the legislation. The act cannot be implemented until Voting Rights Act approval is obtained. Enacted Legislation Archdale Elections S. L. 2007- 41 ( SB 22) requires that regular municipal elections in the City of Archdale be conducted in even- numbered years, beginning in 2008. The act extends the terms of current elected officials to the new election schedule. The act also redefines the election wards of Archdale, so that the city will have six City Council members -- four elected from single- member districts and two elected by the city as a whole. Archdale is a city of 9,014, according to the 2000 Census. It lies mostly in Randolph County, which is not subject to Section 5 of the Voting Rights Act, 42 U. S. C. 1971, but partly in Guilford County, which is covered by Section 5. The act is, therefore, subject to Section 5 preclearance. The general law, enacted in 1971, is that municipal elections are held in odd- numbered years. Of more than 500 municipalities in North Carolina, none departed from that general law until 2006, when High Point's city elections were moved to even- numbered years. Archdale is the second city to follow suit. This act became effective May 14, 2007. ( BG) Chapel Hill Campaign Finance Options S. L. 2007- 222 ( HB 483) authorizes the Town of Chapel Hill to appropriate local funds for a voluntary public campaign financing program for local offices under certain conditions. The State Board of Elections must develop guidelines which meet the following criteria: Participating candidates must demonstrate public support and voluntarily accept strict fund- raising and spending limits. Requirements must be drawn to further the public purpose of free and fair elections, and must not discriminate for or against any candidate on the basis of race, creed, position on issues, status of incumbency or nonincumbency, or party affiliation. Public funds must be restricted to use for campaign purposes, based on guidelines drawn by the State Board of Elections. Unspent public funds must be returned to the local government. At least one public hearing must be held before adoption of the program, and the program must be approved by the State Board of Elections as meeting its guidelines. Notice of the program must be given to the county board of elections. Funds paid pursuant to the program are not subject to contribution limitations or the prohibition on corporate contributions, but must be reported in all campaign reports required by law as if they were contributions. Chapter 6 Constitution and Elections Page 36 A report analyzing the experience implementing the program must be prepared no later than six months after the second election in which money is appropriated for the public campaign financing program. The report must be presented to the Joint Legislative Commission on Governmental Operations, the Fiscal Research Division of the Legislative Services Office, and the committees in the House of Representatives and Senate to which election- related bills are primarily referred. This act became effective July 16, 2007, and expires on July 1, 2012. ( KM) ( Note: As this act affects only the Town of Chapel Hill in Orange County, it is not subject to preclearance.) Registration and Voting at One- Stop Sites S. L. 2007- 253 ( HB 91) allows eligible persons who have missed the standard 25- day registration deadline before an election, to register and vote in that election during the one- stop (" early voting") period. The one- stop period runs from the third Thursday before an election through the last Saturday before the election. Generally, North Carolina voters may not vote in an election unless they have registered to vote 25 days before election day. In prior law, exceptions were as follows: For those persons who have become qualified after the deadline, by naturalization or restoration to citizenship after serving a felony sentence, they may register on election day only. For those persons who may register and vote by absentee ballot, because of their overseas or military status, they may register at any time prior to the election. This act creates a process to allow any person who is qualified to vote to register in person and vote at a one- stop site, after the general close of voter registration. In order to register and vote, the person must do both of the following: Complete the standard voter registration form, including the attestation that the person is a U. S. citizen and resides at the address given. That attestation is signed under penalty of a Class I felony. Provide " proof of residence," which could be one of several valid documents that had the person's name and current residence address: a North Carolina driver's license, a photo identification ( I. D.) from a government agency, a utility bill, bank statement, paycheck, government check, or other government document. ( This is similar to the list of I. D. s that satisfy the Help America Vote Act ( HAVA) federal I. D. requirement for certain first- time voters, except that the HAVA list allows any valid photo I. D., while the bill allows only a government- issued one.) Once registered at the one- stop site, the person is entitled to vote then, or later at another one-stop site. The person will vote a retrievable ballot, just as other one- stop voters. Within two business days after the person has registered at the one- stop site, the board of elections must proceed to verify the person's identity and address. The person's one- stop ballot must be counted, unless the board determines that the applicant is not qualified to vote. A person already registered may update information on that person's voter records at the one- stop site during the one- stop voting period, except that that person cannot change party registration before a partisan primary. The act requires the State Board of Elections to monitor the implementation of the act, and to report to the Joint Legislative Commission on Governmental Operations no later than March 1, 2009, on its findings regarding expanding the process to include same- day registration and voting on Election Day. This act generally became effective when it was signed by the Governor on July 20, 2007. The bill contained a provision that governed its application to 2007 primaries and elections designed to avoid administrative complications, based on the timing of preclearance under Section 5 of the Voting Rights Act. Because the bill was precleared on August 16, 2007, it was Chapter 6 Constitution and Elections Page 37 made effective with respect to registration and voting for any primary or election held on or after October 9, 2007. ( BG) Help America Vote Act ( HAVA) Funds S. L. 2007- 323, Sec. 25.1 ( HB 1473, Sec. 25.1) directs the State Board of Elections on how to spend money in two accounts during the 2007- 2008 and 2008- 2009 fiscal years. Those two accounts result from federal grants under the Help American Vote Act of 2002 ( HAVA). One of them is the Election Fund, the repository of federal grants under HAVA. The other is the Maintenance of Effort Reserve, consisting of funds the State must appropriate to continue to be eligible for federal HAVA funds. This section became effective July 1, 2007. ( BG) Legal Expense Funds S. L. 2007- 349 ( HB 1737) requires elected officers to create a legal expense fund, if the elected officer, or a group of individuals on the elected officer's behalf, receives a contribution from someone other than that elected officer's self, spouse, parents, brothers, or sisters, for either of the following purposes: To fund an existing legal action taken by or against the elected officer in that elected officer's capacity. To fund a potential legal action taken by or against an elected officer in that elected officer's official capacity. No more than one legal expense fund may be created for the same legal action. Legal actions arising out of the same set of transactions and occurrences are treated as the same legal action under the act. Each legal expense fund must appoint a treasurer, who must receive training by the State Board of Elections ( Board) within three months of appointment, and at least once every four years thereafter. The treasurer must keep detailed accounts of contributions and expenditures. The treasurer must file with the Board an organizational report which includes: The name, address, and purpose of the legal expense fund. The names, addresses, and relationships of elected officers, candidates, and political parties. The name and address of the custodian of books and accounts. A listing of all banks, safety deposit boxes, and other depositories used. Contact information of any assistant treasurers. Any other information requested by the Board. The treasurer also must file a quarterly report with the Board. The quarterly report must include: Contributions. The treasurer must report the following information on contributions totaling more than $ 50 in the quarter: • Name, mailing address, and principal occupation of each contributor. • The amount of the contribution. • The date the contribution was received. Expenditures. The treasurer must report all expenditures. Loans. The treasurer must report all proceeds from loans separately. Contributions of more than $ 50 must be made by noncash methods ( check, draft, money order, credit card charge, debit, or other noncash method that is subject to written verification). Legal expense funds must not accept contributions from a corporation, labor union, insurance company, professional association, or business entity in excess of $ 4,000 per calendar year. Chapter 6 Constitution and Elections Page 38 Most violations of the act are punishable as a Class 1 misdemeanor. Signing a report knowing the information to be untrue is punishable as a Class I felony. The act also makes conforming changes to the existing statutes to reflect the creation of the legal expense fund. This act becomes effective January 1, 2008. ( EC) Candidate Felony Disclosure S. L. 2007- 369 ( SB 1218) requires a candidate for elective office in North Carolina to file a disclosure statement, at the same time the candidate files a notice of candidacy, verifying whether or not the candidate has ever been convicted of a felony. The requirement applies to individuals who become candidates due to a vacancy among party nominees occurring after nomination and before the election, unaffiliated candidates nominated by petition, write- in candidates for partisan elections, candidates for new political parties, candidates for municipal elections, candidates for local school board elections, candidates for sanitary district boards, and any other candidates for election by the people. This requirement does not apply to candidates required to file Statements of Economic Interest, which also require disclosure of felony convictions. The State Board of Elections must adapt the candidacy form to include the disclosure statement, and make clear that felony convictions dismissed as a result of reversal on appeal, a pardon of innocence, or which have been expunged do not have to be disclosed. Candidates who disclose a felony conviction must provide the name of the offense, date of conviction, date of restoration of citizenship rights, and county and state of conviction. Completing the form with knowledge the information is untrue is a Class I felony. If a candidate fails to complete the required disclosure statement, the board of elections accepting the filing must notify the candidate of the omission, and inform the candidate that the statement must be completed within 48 hours. The candidate's filing is incomplete if the required disclosure statement is not completed within 48 hours after the notice, and the individual's name will not appear on the ballot, and votes for the individual will not be counted. The form must be available as a public record in the office of the board of elections where the candidate files the notice of candidacy, and must contain an explanation that a prior felony conviction does not preclude holding elective office if the candidate's rights of citizenship have been restored. This act becomes effective January 1, 2008. ( KM) Election Amendments S. L. 2007- 391 ( HB 1743) is an omnibus bill that makes multiple changes to the election laws. Clarifies the Provision for False Campaign Reports. – The act addresses an issue that arose in recent prosecutions. Previous law prohibiting a false statement on a campaign report classified the act as perjury. The State's perjury statute requires that the false statement has to have been made under an oath administered by an oath- administering official. The campaign report requires certification— it is not required to be under oath. A Superior Court judge commented that the legislature might want to address the disjuncture of statutes. The act provides that lying on the campaign report is a Class I felony, but it does not reference the perjury statute. Effective December 1, 2007, and applies to offenses committed on or after that date. Increases Civil Penalties for Deceptive Late Filing. – Under prior law, the civil penalty for filing a campaign report late is $ 250 a day, up to a maximum of $ 10,000, for reports affecting statewide races, and $ 50 a day, up to a maximum of $ 500, for reports affecting only nonstatewide races. The act provides that if the board of elections determines, by clear and Chapter 6 Constitution and Elections Page 39 convincing evidence, that the late filing constitutes a willful attempt to conceal contributions or expenditures, the board may assess a civil penalty up to 3 times the amount of the contributions or expenditures willfully attempted to be concealed. Effective when bill becomes law, and applies to offenses on or after that date. Repeals $ 3,000 Presumption for " Political Committee." – The act deletes a part of the definition of " political committee" that set a $ 3,000 presumption for whether an organization had the " major purpose" of supporting or opposing candidates. Earlier Distribution of Judicial Voter Guide. – The act allows the State Board of Elections to send out the Judicial Voter Guide two weeks earlier than currently. Prior law said the Guide could be distributed no earlier than 14 days, nor later than 7 days, before the beginning of the one- stop period. The act changes the earliest date to be 28 days before the one- stop period. The Guide contains information about candidates for Supreme Court and Court of Appeals. Precinct Boundary Program Changes. – The act fleshes out the statute enacted in 2005 that provides that North Carolina will participate in the 2010 Census Redistricting Data Program. The purpose of the program is to have the State's precinct lines included on the official Census maps, so that Census data will be available by precinct. In past decades, the State has worked with county boards of elections to report precinct lines and attempted to get the Census Bureau to accept those lines as Census block boundaries. In the past, the Census has insisted that its block boundaries be on visible features or certain political boundaries. After that process, the General Assembly limited how county boards of elections could alter their precincts during the decade. This time, the Census Bureau has said it will accept any precinct line a State reports, regardless of the underlying feature. The act changes the past practice in two ways: Directs the Executive Secretary of the State Board of Elections to report precinct lines to the Census Bureau as they exist on a date certain ( January 1, 2008). They will be reported as " Voting Tabulation Districts," the Census Bureau's term. Freezes those Voting Tabulation Districts, prohibiting counties from changing them. County boards of elections may still change their precincts, so long as they can report election results by the unchanged Voting Tabulation Districts. Currently, counties are required to report absentee and early votes by precinct. The bill empowers the State Board of Elections to set standards for county boards of elections in changing their precinct lines. Allows Ballots to Be Combined. – The act clarifies that boards of elections may combine any ballot items on a single ballot. Corrects Description of Multi- County Districts in Ballot Access Statute. – The act corrects a description of multi- county districts in the unaffiliated candidates' statute. The statute provides that a district office " compris[ es] two or more counties," in the context of providing for how many signatures an unaffiliated candidate must collect to qualify in a multi-county district. The description leaves out districts that include parts of more than one county. The correction uses a reference to a statute that describes ballot items that are " in the jurisdiction of the State Board of Elections" for purposes of canvassing. For consistency, the section amends the write- in statute in the same way. Establishes Misdemeanor Penalty for Breaching Ballot Secrecy. – The act establishes a Class 1 misdemeanor for anyone who has access to ballots revealing how an individual voted. Under prior law, such disclosure was prohibited, but not criminalized. Effective December 1, 2007, and applies to offenses committed on or after that date. Clarifies No Write- In Space Unless Write- Ins Allowed. – The act clarifies that a board of elections is not required to provide a space for voters to write in a candidate, if the law does not allow write- in candidates in that race. Corrects Date Reference in Certificate Statute. – The act provides that a certificate of election shall be issued on the 10th day after the final decision of the State Board in a protest, rather than 10 days after. Extends Provision for Recasting Lost Votes. – In 2005, several thousand one- sto |
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