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NORTH CAROLINA REGISTER Volume 18, Issue 20 Pages 1760 - 1841 April 15, 2004 This issue contains documents officially filed through March 24, 2004. Office of Administrative Hearings Rules Division 424 North Blount Street (27601) 6714 Mail Serv ice Center Raleigh, NC 27699-6714 (919) 733-2678 FAX (919) 733-3462 Julian Mann III, Director Camille Winston, Deputy Director Molly Masich, Director of APA Services Ruby Creech, Publications Coordinator Linda Dupree, Editorial Assistant Dana Sholes, Editorial Assistant Julie Brincefield, Editorial Assistant IN THIS ISSUE I. IN ADDITION ENR - Public Notice - Hazardous Waste...................1760 Summary of Notice of Intent to Redevelop A Brownsfield Property - St Ives 220 Commercial....1761 II. PROPOSED RULES Agriculture Board of Agriculture ..................................................1762 - 1767 Commerce State Banking Commission.......................................1768 - 1774 Environment and Natural Resources Environmental Health................................................1792 - 1793 Health and Human Services Medical Care Commission........................................1774 - 1776 Insurance ........................................................................1776 - 1791 Licensing Boards Pharmacy, Board of....................................................1793 - 1794 III. TEMPORARY RULES Expired Temporary Rules Administration ............................................................1795 DENR/Marine Fisheries Commission ....................1795 IV. CONTESTED CASE DECISIONS Index to ALJ Decisions.................................................1796 - 1803 Text of Selected Decisions 03 DHR 0903 ..............................................................1804 - 1829 04 DHR 0051 ..............................................................1830 - 1837 03 OSP 1554................................................................1838 - 1841 For the CUMULATIVE INDEX to the NC Register go to: http://oahnt.oah.state.nc.us/register/CI.pdf North Carolina Register is published semi-monthly for $195 per year by the Office of Administrative Hearings, 424 North Blount Street, Raleigh, NC 27601. North Carolina Register (ISSN 15200604) to mail at Periodicals Rates is paid at Raleigh, NC. POSTMASTER: Send Address changes to the North Carolina Register, 6714 Mail Service Center, Raleigh, NC 27699-6714. NORTH CAROLINA ADMINISTRATIVE CODE CLASSIFICATION SYSTEM The North Carolina Administrative Code (NCAC) has four major classifications of rules. Three of these, titles, chapters, and sections are mandatory. The major classification of the NCAC is the title. Each major department in the North Carolina executive branch of government has been assigned a title number. Titles are further broken down into chapters which shall be numerical in order. Subchapters are optional classifications to be used by agencies when appropriate. NCAC TITLES TITLE 21 LICENSING BOARDS TITLE 24 INDEPENDENT AGENCIES 1 ADMINISTRATION 2 AGRICULTURE & CONSUMER SERVICES 3 AUDITOR 4 COMMERCE 5 CORRECTION 6 COUNCIL OF STATE 7 CULTURAL RESOURCES 8 ELECTIONS 9 GOVERNOR 10A HEALTH AND HUMAN SERVICES 11 INSURANCE 12 JUSTICE 13 LABOR 14A CRIME CONTROL & PUBLIC SAFETY 15A ENVIRONMENT &NATURAL RESOURCES 16 PUBLIC EDUCATION 17 REVENUE 18 SECRETARY OF STATE 19A TRANSPORTATION 20 TREASURER 21* OCCUPATIONAL LICENSING BOARDS 22 ADMINISTRATIVE PROCEDURES (REPEALED) 23 COMMUNITY COLLEGES 24* INDEPENDENT AGENCIES 25 STATE PERSONNEL 26 ADMINISTRATIVE HEARINGS 27 NC STATE BAR 28 JUVENILE JUSTICE AND DELINQUENCY PREVENTION 1 Acupuncture 2 Architecture 3 Athletic Trainer Examiners 4 Auctioneers 6 Barber Examiners 8 Certified Public Accountant Examiners 10 Chiropractic Examiners 11 Employee Assistance Professionals 12 General Contractors 14 Cosmetic Art Examiners 16 Dental Examiners 17 Dietetics/Nutrition 18 Electrical Contractors 19 Electrolysis 20 Foresters 21 Geologists 22 Hearing Aid Dealers and Fitters 25 Interpreter/Transliterator (Reserved) 26 Landscape Architects 28 Landscape Contractors 29 Locksmith Licensing 30 Massage & Bodywork Therapy 31 Marital and Family Therapy 32 Medical Examiners 33 Midwifery Joint Committee 34 Funeral Service 36 Nursing 37 Nursing Home Administrators 38 Occupational Therapists 40 Opticians 42 Optometry 44 Osteopathic Examination (Repealed) 45 Pastoral Counselors, Fee-Based Practicing 46 Pharmacy 48 Physical Therapy Examiners 50 Plumbing, Heating & Fire Sprinkler Contractors 52 Podiatry Examiners 53 Professional Counselors 54 Psychology 56 Professional Engineers & Land Surveyors 57 Real Estate Appraisal 58 Real Estate Commission 60 Refrigeration Examiners 61 Respiratory Care 62 Sanitarian Examiners 63 Social Work Certification 64 Speech & Language Pathologists & Audiologists 65 Therapeutic Recreation Certification 66 Veterinary Medical 68 Substance Abuse Professionals 69 Soil Scientists 1 Housing Finance 2 Agricultural Finance Authority 3 Safety & Health Review Board 4 Reserved 5 State Health Plan Purchasing Alliance Board Note: Title 21 contains the chapters of the various occupational licensing boards and Title 24 contains the chapters of independent agencies. NORTH CAROLINA REGISTER Publication Schedule for January 2004 – December 2004 FILING DEADLINES NOTICE OF TEXT PERMANENT RULE TEMPORARY RULES Volume & issue number Issue date Last day for filing Earliest date for public hearing End of required comment period Deadline to submit to RRC for review at next meeting Earliest Eff. Date of Permanent Rule Delayed Eff. Date of Permanent Rule (first legislative day of the next regular session) 270th day from publication in the Register 18:13 01/02/04 12/08/03 01/17/04 03/02/04 03/22/04 05/01/04 05/10/04 09/28/04 18:14 01/15/04 12/19/03 01/30/04 03/15/04 03/22/04 05/01/04 05/10/04 10/11/04 18:15 02/02/04 01/09/04 02/17/04 04/02/04 04/20/04 06/01/04 01/26/05 10/29/04 18:16 02/16/04 01/26/04 03/02/04 04/16/04 04/20/04 06/01/04 01/26/05 11/12/04 18:17 03/01/04 02/09/04 03/16/04 04/30/04 05/20/04 07/01/04 01/26/05 11/26/04 18:18 03/15/04 02/23/04 03/30/04 05/14/04 05/20/04 07/01/04 01/26/05 12/10/04 18:19 04/01/04 03/11/04 04/16/04 06/01/04 06/21/04 08/01/04 01/26/05 12/27/04 18:20 04/15/04 03/24/04 04/30/04 06/14/04 06/21/04 08/01/04 01/26/05 01/10/05 18:21 05/03/04 04/12/04 05/18/04 07/02/04 07/20/04 09/01/04 01/26/05 01/28/05 18:22 05/17/04 04/26/04 06/01/04 07/16/04 07/20/04 09/01/04 01/26/05 02/11/05 18:23 06/01/04 05/10/04 06/16/04 08/02/04 08/20/04 10/01/04 01/26/05 02/26/05 18:24 06/15/04 05/24/04 06/30/04 08/16/04 08/20/04 10/01/04 01/26/05 03/12/05 19:01 07/01/04 06/10/04 07/16/04 08/30/04 09/20/04 11/01/04 01/26/05 03/28/05 19:02 07/15/04 06/23/04 07/30/04 09/13/04 09/20/04 11/01/04 01/26/05 04/11/05 19:03 08/02/04 07/12/04 08/17/04 10/01/04 10/20/04 12/01/04 01/26/05 04/29/05 19:04 08/16/04 07/26/04 08/31/04 10/15/04 10/20/04 12/01/04 01/26/05 05/13/05 19:05 09/01/04 08/11/04 09/16/04 11/01/04 11/22/04 01/01/05 01/26/05 05/29/05 19:06 09/15/04 08/24/04 09/30/04 11/15/04 11/22/04 01/01/05 01/26/05 06/12/05 19:07 10/01/04 09/10/24 10/16/04 11/30/04 12/20/04 02/01/05 05/00/06 06/28/05 19:08 10/15/04 09/24/04 10/30/04 12/14/04 12/20/04 02/01/05 05/00/06 07/12/05 19:09 11/01/04 10/11/04 11/16/04 12/31/04 01/20/05 03/01/05 05/00/06 07/29/05 19:10 11/15/04 10/22//04 11/30/04 01/14/05 01/20/05 03/01/05 05/00/06 08/12/05 19:11 12/01/04 11/05/04 12/16/04 01/31/05 02/21/05 04/01/05 05/00/06 08/28/05 19:12 12/15/04 11/22/04 12/30/04 02/14/05 02/21/05 04/01/05 05/00/06 09/11/05 EXPLANATION OF THE PUBLICATION SCHEDULE This Publication Schedule is prepared by the Office of Adminis trative Hearings as a public service and the computation of time periods are not to be deemed binding or controlling. Time is computed according to 26 NCAC 2C .0302 and the Rules of Civil Procedure, Rule 6. GENERAL The North Carolina Register shall be published twice a month and contains the following information submitted for publication by a state agency: (1) temporary rules; (2) notices of rule-making proceedings; (3) text of proposed rules; (4) text of permanent rules approved by the Rules Review Commission; (5) notices of receipt of a petition for municipal incorporation, as required by G.S. 120-165; (6) Executive Orders of the Governor; (7) final decision letters from the U.S. Attorney General concerning changes in laws affecting voting in a juris diction subject of Section 5 of the Voting Rights Act of 1965, as required by G.S. 120-30.9H; (8) orders of the Tax Review Board issued under G.S. 105-241.2; and (9) other information the Codifier of Rules determines to be helpful to the public. COMPUTING TIME: In computing time in the schedule, the day of publication of the North Carolina Register is not included. The last day of the period so computed is included, unless it is a Saturday, Sunday, or State holiday, in which event the period runs until the preceding day which is not a Saturday, Sunday, or State holiday. FILING DEADLINES ISSUE DATE: The Register is published on the first and fifteen of each month if the first or fifteenth of the month is not a Saturday, Sunday, or State holiday for emp loyees mandated by the State Personnel Commission. If the first or fifteenth of any month is a Saturday, Sunday, or a holiday for State employees, the North Carolina Register issue for that day will be published on the day of that month after the first or fifteenth that is not a Saturday, Sunday, or holiday for State employees. LAST DAY FOR FILING: The last day for filing for any issue is 15 days before the issue date excluding Saturdays, Sundays, and holidays for State employees. NOTICE OF TEXT EARLIEST DATE FOR PUBLIC HEARING: The hearing date shall be at least 15 days after the date a notice of the hearing is published. END OF REQUIRED COMMENT PERIOD An agency shall accept comments on the text of a proposed rule for at least 60 days after the text is published or until the date of any public hearings held on the proposed rule, whichever is longer. DEADLINE TO SUBMIT TO THE RULES REVIEW COMMISSION: The Commission shall review a rule submitted to it on or before the twentieth of a month by the last day of the next month. FIRST LEGISLATIVE DAY OF THE NEXT REGULAR SESSION OF THE GENERAL ASSEMBLY: This date is the first legislative day of the next regular session of the General Assembly following approval of the rule by the Rules Review Commission. See G.S. 150B- 21.3, Effective date of rules. IN ADDITION 18:20 NORTH CAROLINA REGISTER April 15, 2004 1760 Note from the Codifier: This Section contains public notices that are required to be published in the Register or have been approved by the Codifier of Rules for publication. PUBLIC NOTICE NORTH CAROLINA DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES HAZARDOUS WASTE SECTION 1646 MAIL SERVICE CENTER RALEIGH, NORTH CAROLINA 27699-1646 (919) 733-2178 Notice of proposed issuance of and public comment period for delisting petition under the Federal Resource Conservation and Recovery Act as amended by the Hazardous and Solid Waste Amendments of 1984 (PL-98-616) and the North Carolina Hazardous Waste Management Rules (15A NCAC 13A) for GlaxoSmithKline (GSK), Research Triangle Park, Durham County, North Carolina. The public comment period will begin on the date of this notice and extend for thirty (30) days thereafter. Comments regarding the delisting petition should be sent to the following address: Elizabeth W. Cannon North Carolina Hazardous Waste Section 1646 Mail Service Center Raleigh, North Carolina 27699-1646 All data submitted by the applicant is available as part of the administrative record. NC DENR will provide auxiliary aids and services for disabled persons who wish to review the GSK’s delisting petition to comply with the Americans with Disabilities Act. To receive special services, please contact Rita Umozurike at the address and phone number below as early as possible, so arrangements can be made. A copy is available for review from 9 a.m. to 4 p.m., Monday through Friday at the: Hazardous Waste Section 401 Oberlin Road, Room 150 Raleigh, North Carolina 27605 Call (919) 733-2178 ext. 311 for an appointment. Here is a summary of the delisting petition. The Hazardous Waste Section is preparing to approve GSK’s delisting petition for ash from the incinerator’s air pollution control equipment. The ash is currently considered hazardous, but analysis has shown that the ash generated at this specific facility does not contain constituents at a level that causes it to be considered hazardous waste. Data was collected over several weeks, under conditions that indicate worst-case levels of the chemical constituents. If the delisting is approved, GSK may be allowed to send this waste to a North Carolina lined municipal landfill for disposal. All comments received during the public comment will be considered in the decision-making process regarding the delisting petition. IN ADDITION 18:20 NORTH CAROLINA REGISTER April 15, 2004 1761 SUMMARY OF NOTICE OF INTENT TO REDEVELOP A BROWNFIELDS PROPERTY St. Ives 220 Commercial, LLC Pursuant to N.C.G.S. § 130A-310.34, St. Ives 220 Commercial, LLC has filed with the North Carolina Department of Environment and Natural Resources (“DENR”) a Notice of Intent to Redevelop a Brownfields Property (“Property”) in Wake Forest, Wake County, North Carolina. The Property consists of approximately 33 acres and is located at 12415 Capitol Boulevard. Environmental contamination exists on the Property in soil and groundwater. St. Ives 220 Commercial, LLC has committed itself to redevelop the Property for mixed commercial, retail, conference/convention/events center/flex space/warehousing and office space uses. The Notice of Intent to Redevelop a Brownfields Property includes: (1) a proposed Brownfields Agreement between DENR and St. Ives 220 Commercial, LLC, which in turn includes (a) a map showing the location of the Property, (b) a description of the contaminants involved and their concentrations in the media of the Property, (c) the above-stated description of the intended future use of the Property, and (d) proposed investigation and remediation; and (2) a proposed Notice of Brownfields Property prepared in accordance with G.S. 130A-310.35. The full Notice of Intent to Redevelop a Brownfields Property may be reviewed at the Wake Forest Town Manager’s Office, 401 Elm Street, Wake Forest, NC 27587 by contacting Joyce Wilson, Town Clerk at 919.554.6190; or at 401 Oberlin Rd., Raleigh, NC 27605 by contacting Shirley Liggins at that address, at shirley.liggins@ncmail.net, or at (919) 733-2801, ext. 336, where DENR will provide auxiliary aids and services for persons with disabilities who wish to review the documents. Written public comments may be submitted to DENR within 60 days after the date this Notice is published in a newspaper of general circulation serving the area in which the brownfields property is located, or in the North Carolina Register, whichever is later. Written requests for a public meeting may be submitted to DENR within 30 days after the period for written public comments begins. All such comments and requests should be addressed as follows: Mr. Bruce Nicholson Brownfields Program Manager Division of Waste Management NC Department of Environment and Natural Resources 401 Oberlin Road, Suite 150 Raleigh, North Carolina 27605 PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1762 This Section contains the text of proposed rules. At least 60 days prior to the publication of text, the agency published a Notice of Rule-making Proceedings. The agency must accept comments on the proposed rule for at least 30 days from the publication date, or until the public hearing, or a later date if specified in the notice by the agency. The required comment period is 60 days for a rule that has a substantial economic impact of at least five million dollars ($5,000,000). Statutory reference: G.S. 150B-21.2. TITLE 2 – DEPARTMENT OF AGRICULTURE & CONSUMER SERVICES Notice is hereby given in accordance with G.S. 150B-21.2 that the NC Board of Agriculture intends to amend the rule cited as 02 NCAC 52B .0406. Proposed Effective Date: August 1, 2004 Instructions on How to Demand a Public Hearing: (must be requested in writing within 15 days of notice): Any person may request a public hearing on the proposed rule by submitting a request in writing no later than April 30, 2004, to David S. McLeod, Secretary, NC Board of Agriculture, 1001 Mail Service Center, Raleigh, NC 27699-1001. Reason for Proposed Action: This rule establishes requirements for testing horses and other equine for equine infectious anemia (EIA). Proposed changes would clarify responsibilities for checking EIA test papers of equine in public places such as horse shows, and make technical changes. Procedure by which a person can object to the agency on a proposed rule: Any person may object to the proposed rule by submitting a written statement of objection(s) to David S. McLeod, Secretary, NC Board of Agriculture, 1001 Mail Service Center, Raleigh, NC 27699-1001. Written comments may be submitted to: David S. McLeod, Secretary, NC Board of Agriculture, 1001 Mail Service Center, Raleigh, NC 27699-1001, Phone (919)733-7125 ext. 249, Fax (919) 716-0105, email david.mcleod@ncmail.net. Comment period ends: June 14, 2004 Procedure for Subjecting a Proposed Rule to Legislative Review: Any person who objects to the adoption of a permanent rule may submit written comments to the agency. A person may also submit written objections to the Rules Review Commission. If the Rules Review Commission receives written and signed objections in accordance with G.S. 150B-21.3(b2) from 10 or more persons clearly requesting review by the legislature and the Rules Review Commission approves the rule, the rule will become effective as provided in G.S. 150B-21.3(b1). The Commission will receive written objections until 5:00 p.m. on the 6th business day preceding the end of the month in which a rule is approved. The Commission will receive those objections by mail, delivery service, hand delivery, or facsimile transmission. If you have any further questions concerning the submission of objections to the Commission, please call a Commission staff attorney at 919-733-2721. Fiscal Impact State Local Substantive (>$3,000,000) None SECTION .0400 - EQUINE INFECTIOUS ANEMIA (EIA) 02 NCAC 52B .0406 EIA TEST REQUIRED (a) All equine more than six months of age entering North Carolina for any purpose other than for immediate slaughter shall be accompanied by a copy of the certificate of test from a laboratory approved by the USDA showing the animal to be negative to an approved test for equine infectious anemia (EIA) within the past 12 months, except as provided in 02 NCAC 52B .0410. (See 02 NCAC 52B .0206 for other importation requirements.) (b) No equine more than six months of age shall be sold, offered for sale, traded, given away, or moved for the purpose of change of ownership unless accompanied by the original official negative test for EIA administered within 12 months prior to sale or movement, except that equine which are offered for sale at auction markets or sales may have a blood sample drawn at the market by the market's veterinarian at the seller's expense. In such cases, the equine may be sold and transferred contingent upon receipt of an official negative EIA test. Until receipt of an official negative EIA test, the equine must be isolated in accordance with standards for isolation of positive reactors, pursuant to 02 NCAC 52B .0408(c)(2). (c) All equine brought to or kept at any public stables or other public place for exhibition, recreation or assembly shall be accompanied by either the original or a copy of an official negative test for EIA administered within the previous 12 months. The owner, operator or person in charge of any public stables or other public place where equine are brought or kept for exhibition, recreation or assembly shall not permit an equine to remain on the premises without the test required by this Rule. (d) A person in possession or control of an equine in a public place shall, upon the request of an authorized person, present the original or a copy of the test required by this Rule and shall assist in identifying the equine. A person in possession or control of an equine who does not have an original or a copy of the test required by this Rule shall remove the equine from the premises within two hours of receiving written notification to leave from an authorized person. As used in this Rule, "authorized person" means the person in charge of the premises, or the State Veterinarian or his representative. Authority G.S. 106-405.17; S.L. 1999-237, s. 13.6. * * * * * * * * * * * * * * * * * * * * Notice is hereby given in accordance with G.S. 150B-21.2 that the NC Board of Agriculture intends to adopt the rule cited as 02 PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1763 NCAC 52J .0104 and amend the rules cited as 02 NCAC 52J .0101-0103, .0201-.0207, .0209-.0210, .0302. Proposed Effective Date: January 1, 2005 Instructions on How to Demand a Public Hearing: (must be requested in writing within 15 days of notice): Any person may request a public hearing on the proposed rule by submitting a request in writing no later than April 30, 2004, to David S. McLeod, Secretary, NC Board of Agriculture, 1001 Mail Service Center, Raleigh, NC 27699-1001. Reason for Proposed Action: Proposed changes would clarify existing rules by making requirements more specific, add requirements for drainage of facilities, acceptable impervious surfaces for sanitation, fencing of outdoors areas, and other changes to improve quality of facilities and care provided by licensees. Procedure by which a person can object to the agency on a proposed rule: Any person may object to the proposed rule by submitting a written statement of objection(s) to David S. McLeod, Secretary, NC Board of Agriculture, 1001 Mail Service Center, Raleigh, NC 27699-1001. Written comments may be submitted to: David S. McLeod, Secretary, NC Board of Agriculture, 1001 Mail Service Center, Raleigh, NC 27699-1001, Phone (919)733-7125 ext. 249, Fax (919) 716-0105, email david.mcleod@ncmail.net. Comment period ends: June 14, 2004 Procedure for Subjecting a Proposed Rule to Legislative Review: Any person who objects to the adoption of a permanent rule may submit written comments to the agency. A person may also submit written objections to the Rules Review Commission. If the Rules Review Commission receives written and signed objections in accordance with G.S. 150B-21.3(b2) from 10 or more persons clearly requesting review by the legislature and the Rules Review Commission approves the rule, the rule will become effective as provided in G.S. 150B-21.3(b1). The Commission will receive written objections until 5:00 p.m. on the 6th business day preceding the end of the month in which a rule is approved. The Commission will receive those objections by mail, delivery service, hand delivery, or facsimile transmission. If you have any further questions concerning the submission of objections to the Commission, please call a Commission staff attorney at 919-733-2721. Fiscal Impact State Local Substantive (>$3,000,000) None CHAPTER 52 - VETERINARY DIVISION SUBCHAPTER 52J - ANIMAL WELFARE SECTION SECTION .0100 - RECORD KEEPING AND LICENSING 02 NCAC 52J .0101 RECORDS; ANIMAL SHELTERS, ETC. Operators of all animal shelters, pet shops, public auctions, and dealers shall maintain records on all dogs and cats showing the following: (1) origin of animals (including names and addresses of consignors) and date animals were received; (2) description of animals including species, age, sex, breed, and color markings; (3) location of animal if not kept at the licensed or registered facility; (3)(4) disposition of animals including name and address of person to whom animal is sold, traded or adopted; adopted and the date of such transaction; in the event of death, the record shall show the date, signs of illness, or cause of death if identified; if euthanized, the record will shall show date and type of euthanasia; and (4)(5) record of veterinary care including treatments treatments, immunization and immunization; date, time, description of medication (including name and dosage), and initials of person administering any product or procedure. (5) maintain records on file for a period of one calendar year. Authority G.S. 19A-24. 02 NCAC 52J .0102 RECORDS; BOARDING KENNELS Operators of boarding kennels shall maintain records of all dogs and cats showing the following: (1) name and address of owner or person responsible for animal, the date of entry and signature and address of individual to whom animal is released; released and the date of release; (2) description of animal including breed, sex, age and color marking; and (3) record of veterinary care including treatment provided while boarded, which shall include date, times, description of medication (including name and dosage) and immunization; initials of person administering product or procedure. (4) records on file must be maintained for a period of one calendar year. Authority G.S. 19A-24. 02 NCAC 52J .0103 INSPECTION OF RECORDS All operators of animal shelters, pet shops, boarding kennels, public auctions, and persons operating as dealers will shall make all required records available to the director or his authorized representative on request. request, during the business and PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1764 cleaning hours listed on the license application. The operator must be able to match each animal to its record upon request. Records shall be maintained for a period of one year after the animal is released. Authority G.S. 19A-24; 19A-25. 02 NCAC 52J .0104 DEFINITIONS As used in this Subchapter: (1) "Accessories" means any objects used in cleaning and sanitizing primary enclosures, exercise areas, or objects to which an animal may have access, including, but not limited to toys, blankets, food and water utensils, and bedding. (2) "Adequate" means a condition which, when met, does not jeopardize an animal's comfort, safety or health. (3) "Cage" means a primary enclosure which is enclosed on all sides and also on the top and bottom. (4) "Husbandry" means the practice of daily care administered to animals. (5) "Isolation" means the setting apart of an animal from all other animals, food, and equipment in the facility for the sole purpose of preventing the spread of disease. (6) "License period" means July 1 through June 30. (7) "Long term care" means the housing of an animal for a period of more than 30 consecutive days. (8) "Properly cleaned" means the removal of carcasses, debris, food waste, excrement, or other organic material with adequate frequency. (9) "Social interaction" means friendly physical contact or play between animals of the same species or with a person. (10) "Suitable method of drainage" means drainage that allows for the elimination of water and waste products, prevents contamination of animals, allows animals to remain dry, and complies with applicable building codes and local ordinances. (11) "Supervision of animals" means one person (at least 16 years of age) present, at all times, able to directly view each enclosure or common area. Authority G.S. 19A-24. SECTION .0200 - FACILITIES AND OPERATING STANDARDS 02 NCAC 52J .0201 GENERAL (a) Housing facilities for dogs and cats shall be structurally sound and maintained in good repair to protect the animals from injury, contain the animals and restrict the entrance of other animals and people. (b) All light fixtures and electrical outlets in animal areas shall be in compliance with the State Building Code. (b) (c) Reliable and adequate safe electric power, if required, power is required to comply with other provisions of the Animal Welfare Act and adequate potable water shall be available. Act. (c) (d) Supplies of food and bedding shall be stored in facilities which adequately protect such supplies against infestation or contamination by vermin. vermin and insects. All open bags of food shall be stored in airtight containers with lids. Refrigeration shall be provided for supplies of perishable food. (d) (e) Provisions shall be made for the daily removal and disposal of animal and food waste, bedding and debris, debris from the housing facility in accordance with local ordinances, to assure facility will be maintained in a clean and sanitary manner. (e) (f) Hot and cold running, potable water must be available. Facilities such as washroom, basin or sink shall be provided to maintain cleanliness among animal caretakers caretakers, animals, and animal food and water receptacles. (f) (g) Ambient temperature shall be measured and read outside the primary enclosure at a distance not to exceed three feet from any one of the external walls and on a level parallel to the bottom of the primary enclosure at a point approximately half the distance between the top and bottom of such enclosure. Facility shall have ability to confirm ambient temperature. (h) A separate five-foot perimeter fence is required if any animals have access to an outdoor enclosure, including unsupervised exercise areas. (i) An adequate drainage system must be provided for the housing facility. (j) All areas of a facility are subject to review or inspection by North Carolina Department of Agriculture and Consumer Services employees during normal business hours (8:00 a.m. through 5:30 p.m. Monday through Friday). (k) All animals in a facility are subject to these standards, regardless of ownership. (l) A licensee or registrant shall comply with all federal, state and local laws, rules and ordinances relating to or affecting the welfare of dogs and cats in its facility. (m) No dog or cat shall be in a window display except during business hours and then only in compliance with standards set forth in this Section. Authority G.S. 19A-24. 02 NCAC 52J .0202 INDOOR FACILITIES (a) Indoor housing facilities for dogs and cats shall be sufficiently adequately heated and cooled when necessary to protect the dogs and cats from cold and excessive heat and provide for their health and comfort. The ambient temperature shall not be allowed to fall below 50 degrees F. for dogs and cats not acclimated to lower temperatures. or exceed 85 degrees F. (b) Indoor housing facilities for dogs and cats shall be adequately ventilated to provide for the health and comfort of the animals at all times. Such The facilities shall be provided with fresh air either by means of windows, doors, vents or air conditioning and shall be ventilated so as to minimize drafts, drafts. Air flow shall be adequate to minimize odors and moisture condensation. Ventilation shall be provided when PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1765 ambient temperature is 85 degrees F. or higher. (c) Indoor housing facilities for dogs and cats shall have ample light by natural or artificial means or both, of good quality and well distributed. Such light shall provide uniformly distributed illumination of sufficient light intensity to permit routine inspection and cleaning during the entire working period. Primary enclosures shall be so placed as to protect the dogs and cats from excessive illumination. adequate illumination to permit routine inspections, maintenance, cleaning and housekeeping of the facility and observation of the animals. Illumination shall provide regular diurnal lighting cycles of either natural or artificial light, uniformly diffused throughout the animal facilities. (d) Interior building surfaces of indoor facilities with which animals come in contact shall be constructed and maintained so that they are substantially impervious to moisture, so that it may and can be readily sanitized. (e) A suitable method of drainage shall be provided to rapidly eliminate excess water from an indoor housing facility. If closed drain systems are used, they shall be equipped with traps and installed to prevent odors and backup of sewage. The drainage system shall be constructed to prevent cross-contamination among animals. Authority G.S. 19A-24. 02 NCAC 52J .0203 OUTDOOR FACILITIES (a) When sunlight is likely to cause overheating and discomfort, sufficient shade shall be provided to allow all dogs and cats kept outdoors to protect themselves from the direct rays of the sun. Primary enclosures and walkways with which an animal comes in contact shall be constructed of sealed concrete or other surfaces impervious to moisture. Gravel may be used if maintained at a minimum depth of six inches and kept in a sanitary manner. (b) Dogs and cats kept outdoors shall be provided with access to shelter housing to allow them to remain dry and comfortable during inclement weather. Housing shall be constructed of material which is impervious to moisture, and which can be disinfected. One house shall be available for each animal within each enclosure. (c) In addition to housing, the enclosure shall provide protection from excessive sun and inclement weather. (d) Animal owners shall be advised at the time of reservation and admission if the animal will be kept in outside facilities. (c) (e) A suitable method of drainage shall be provided to rapidly eliminate excess water. The drainage system shall be constructed to prevent cross-contamination among animals. Authority G.S. 19A-24. 02 NCAC 52J .0204 PRIMARY ENCLOSURES (a) Primary enclosures shall be constructed so as to prevent contamination from waste and wastewater from animals in other enclosures. All surfaces with which an animal comes in contact shall be impervious to moisture. For primary enclosures placed into service on or after January 1, 2005, no wood can be within the animal's reach. For primary enclosures in use in a licensed or registered facility prior to January 1, 2005, any damaged wood must be replaced in a manner that does not permit contact with wood by the animal. (a) (b) Primary enclosures for dogs and cats shall be structurally sound and maintained in good repair and in a manner to prevent injury to animals and keep other animals out. Primary enclosures shall be constructed so as to provide sufficient space to allow each dog or cat to walk, turn about freely freely, and to easily stand, sit, or lie in a comfortable, normal natural position. The height of a primary enclosure other than a cage shall be no less than five feet. All enclosures shall be constructed to prevent the escape of animals. (c) Each primary enclosure shall be provided with a solid resting surface or surfaces adequate to comfortably hold all occupants of the primary enclosure at the same time. All resting surfaces must be of a non-porous or easily sanitized material, such as a towel, or a disposable material such as newspaper. The resting surface or surfaces shall be elevated in primary enclosures housing two or more cats. (b) (d) In addition to Paragraph (a) (b) of this Regulation, Rule, each dog shall be provided a minimum square footage of floor space equal to the mathematical square of the sum of the length of the dog in inches, as measured from the tip of its nose to the base of its tail, plus six inches. inches, then divide the product by 144. The calculation is: (length of dog in inches + 6) x (length of dog in inches + 6) = required floor space in square inches. Required floor space in square inches ÷ 144 = required floor space in square feet. The calculation shall be expressed in square feet. Not more than 12 four adult dogs shall be housed in the same primary enclosure. enclosure without supervision. (length of dog in inches + 6") (length of dog in inches + 6") required area inches =required square feet144 (e) If more than four dogs are housed in a common area or enclosure, then there must be at least one supervisor for each 12 dogs housed within each enclosure or common area. No more than 36 dogs may be housed in any enclosure or common area at any time. (c) (f) In addition to Paragraph (a) (b) of this Regulation, Rule, each adult cat housed in any primary enclosure shall be provided a minimum of two and one-half four square feet of floor space. space which may include elevated resting surfaces. Each kitten shall be provided 1.5 square feet. Not more than 12 adult cats shall be housed in the same primary enclosure. (d) In all enclosures having a solid floor, a receptacle containing sufficient clean litter shall be provided for excreta. Each primary enclosure shall be provided with a solid resting surface or surfaces adequate to comfortably hold all occupants of the primary enclosures at the same time. Such resting surface or surfaces shall be elevated in primary enclosures housing two or more cats. (g) In all cat enclosures, a receptacle containing sufficient clean litter shall be provided for waste. A minimum of one receptacle per three cats is required. Authority G.S. 19A-24. 02 NCAC 52J .0205 FEEDING (a) Dogs and cats shall be fed at least once each day 24-hour PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1766 period except as otherwise might be required to provide adequate veterinary care. Food shall be commercially prepared food which complies with laws applicable to animal feed or the food shall be provided by the owner. The food shall be free from contamination, wholesome, palatable, and of sufficient adequate quality and quantity appropriate for the given size, age, and nutritive value condition of an animal to meet the normal daily requirements for the condition and size of the dog or cat. nutritional value. Puppies and kittens less than six months of age shall be fed at least twice in each 24 hour 24-hour period. An eight hour eight-hour interval between feedings is required if only two feedings are offered in a 24 hour 24-hour period. (b) Food receptacles shall be accessible to all dogs or cats and shall be located so as to minimize contamination by excreta. Feeding pans waste. For every adult animal, there must be at least one food receptacle offered. Food receptacles shall be durable and shall be kept clean and sanitized. Damaged receptacles shall be replaced. Disposable food receptacles may be used but must be discarded after each feeding. Self feeders may be used for the feeding of dry food, and they shall be sanitized regularly to prevent molding, deterioration or caking of feed. (c) Food and water receptacles in outdoor facilities shall be protected from the elements. Authority G.S. 19A-24. 02 NCAC 52J .0206 WATERING If potable water is not accessible to the dogs and cats at all times, potable water shall be offered to such animals at least twice daily for periods of not less than one hour, Animals shall have continuous access to fresh water, except as might otherwise be required to provide adequate veterinary care. Watering receptacles shall be durable and kept clean and sanitized. Damaged receptacles shall be replaced. Authority G.S. 19A-24. 02 NCAC 52J .0207 SANITATION (a) Excreta Waste shall be removed from primary enclosures as often as necessary and exercise areas to prevent contamination of the dogs or cats contained therein and to reduce disease hazards and odors. Enclosures and exercise areas for dogs and cats must be properly cleaned a minimum of two times per day. The animal must be able to walk or lie down without coming in contact with any waste or debris. When a hosing or flushing method is used for cleaning a primary enclosure commonly known as a cage, any dog an enclosure, dogs or cat cats contained therein shall be removed from such enclosure during the cleaning process, and adequate measures shall be taken to protect the animals in other such enclosures from being contaminated with water and other wastes. (b) Sanitization of primary enclosures Sanitation shall be as follows: (1) Prior to the introduction of dogs or cats into empty primary enclosures previously occupied, such enclosures and accessories shall be sanitized in the manner provided in Subparagraph (3) of this Paragraph. (2) Primary In addition to primary enclosures for dogs or cats shall be sanitized often enough to prevent an accumulation being properly cleaned a minimum of debris or excreta, or a disease hazard, provided, however, that such two times per day, enclosures and accessories shall be sanitized at least a minimum of once every two weeks seven days in the manner provided in Subparagraph (3) of this Paragraph. Paragraph if the same animal is housed in the same enclosure more than seven days. (3) Cages, rooms and hard-surfaced pens or runs shall be sanitized by: (A) washing them with hot water (180 degrees F.) and soap or detergent as in a mechanical cage washer; or (B) washing all soiled surfaces with a detergent solution to remove all organic matter followed by or in conjunction with application of a safe and effective disinfectant approved by the director; disinfectant; or (C) cleaning all soiled surfaces with live steam. (4) Food and water receptacles shall be sanitized daily with hot water, detergent, and approved disinfectant. (5) Soiled linens and cloth products shall be mechanically washed with detergent and sanitized. (6) Any area accessible to multiple animals shall be kept clean and sanitary. (c) Premises (buildings and grounds) shall be kept clean and in good repair in order to protect the animals from injury and to facilitate the prescribed husbandry practices set forth in this Rule. Premises shall remain free of accumulations of trash. trash, junk, waste products, and discarded matter. Weeds, grasses, and bushes must be controlled so as to facilitate cleaning of the premises and to improve pest control, and to protect the health and well-being of the animals. (d) An effective program for the control of insects, ectoparasites, and avian and mammalian pests shall be established and maintained. (e) No dog or cat shall be in a window display except during business hours and then only in compliance with standards set forth in 2 NCAC 52J .0200. Authority G.S. 19A-24. 02 NCAC 52J .0209 CLASSIFICATION AND SEPARATION Animals housed in the same primary enclosure shall be maintained in compatible groups, with the following additional restrictions: (1) Females in season (estrus) shall not be housed in the same primary enclosure with males, except for planned breeding purposes. Breeding shall not be allowed in animal PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1767 shelters. (2) In boarding kennels, animals of different owners shall not have contact with other animals, unless written permission is obtained from the animal's owner. Any dog or cat exhibiting a vicious an aggressive disposition shall be housed individually in a primary enclosure. (3) Puppies or kittens less than six four months of age shall not be housed in the same primary enclosure with adult dogs or cats other than their dams, except when permanently maintained in breeding colonies. colonies, or if requested in writing, by the animals' owner, as in a boarding kennel. Puppies or kittens between 4 and 16 weeks of age shall have daily access to human social interaction, excluding animals which pose a danger to humans or other animals. (4) Dogs shall not be housed in the same primary enclosure with cats, nor shall dogs or cats be housed in the same primary enclosure with any other species of animals. Exceptions will be allowed at boarding kennels, if requested in writing by the animals' owner. (5) All facilities shall designate an isolation area for animals being treated or observed for communicable diseases. Dogs or cats under quarantine or treatment in isolation that are being treated for a communicable disease shall be separated from other dogs or cats and other suspectable susceptible species of animals in such a manner as to minimize dissemination of such disease. A sign shall be posted at the cage or isolation area when in use, giving notice of a communicable disease. (6) Animals in long term care which are intended for adoption or sale must be provided the following: (a) Daily access to both human and same species social interaction. (b) Daily access to space other than the primary enclosure. (c) A species and size-appropriate toy, unless it poses a health threat. (7) All animals shall be confined in primary enclosures or exercise areas. Authority G.S. 19A-24. 02 NCAC 52J .0210 VETERINARY CARE (a) Programs A written program of veterinary care to include disease control and prevention, vaccination, euthanasia, and adequate veterinary care shall be established and maintained under with the supervision and assistance of a licensed veterinarian. (b) If there is a severe or persistent disease problem at the facility, the facility operator shall obtain a veterinarian's written recommendations for correcting the problem. (b) (c) Each dog and cat shall be observed daily by the animal caretaker in charge, or by someone under his direct supervision. Sick or diseased, injured, lame, or blind dogs or cats shall be provided with veterinary care or be humanely disposed of unless such action is inconsistent with the research purposes for which such animal was obtained and is being held, provided, however, euthanized, provided that the provision this shall not effect affect compliance with any state or local law requiring the holding, for a specified period, of animals suspected of being diseased. Obviously sick, diseased, or deformed animals will not be offered for sale or adoption. If euthanasia is performed at a facility, a list of personnel approved to perform euthanasia shall be maintained on a Letter of Euthanasia Certification form and kept on file at the facility. Diseased or deformed animals shall be sold or adopted only under the policy set forth in the "Program of Veterinary Care." Full written disclosure of the medical condition of the animal shall be provided to the new owner. (d) All animals in a licensed or registered facility shall be in compliance with the North Carolina rabies law, G.S. 130A, Article 6, Part 6. Authority G.S. 19A-24. 02 NCAC 52J .0302 PRIMARY ENCLOSURES USED IN TRANSPORTING DOGS AND CATS (a) Primary enclosures such as compartments or transport cages, cartons, or crates used to transport cats and dogs shall be well constructed, well ventilated and designed to protect the health and insure the safety of the animals. Such enclosures shall be constructed or positioned in the vehicle in such a manner that: (1) Each animal in the vehicle has sufficient fresh air for normal breathing. (2) The openings of such enclosures are easily accessible for emergency removals at all times. (3) The animals are adequately protected from the elements. The ambient temperature shall not be allowed to exceed 95 maintained between 50 degrees F. F at any time nor to exceed 85 degrees F. for a period of more than four hours. The ambient temperature will not be allowed to fall below 50 and 85 degrees F. unless animals are acclimated to lower temperatures. (b) Animals transported in the same primary enclosure shall be of the same species. Puppies or kittens less than six four months of age shall not be transported in the same primary enclosure with adult dogs and cats other than their dams. (c) Primary enclosures used to transport dogs and cats shall be large enough for each animal to stand erect, turn about freely freely, and to easily stand, sit, or lie down in a normal natural position. (d) Animals shall not be placed in primary enclosures over other animals in transit unless such enclosure is constructed so as to prevent animal excreta from entering lower enclosures. (e) All primary enclosures used to transport dogs and cats shall be sanitized between use for shipments. Authority G.S. 19A-24. PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1768 TITLE 04 – DEPARTMENT OF COMMERCE Notice is hereby given in accordance with G.S. 150B-21.2 that the State Banking Commission, Commissioner of Banks intends to adopt the rules cited as 04 NCAC 03B .0219-.0228, .0301- .0304; amend the rules citied as 04 NCAC 03B .0101-.0103, .0105 and repeal the rules cited as 04 NCAC 03B .0201-.0206, .0209-.0218. Proposed Effective Date: August 1, 2004 Public Hearing: Date: April 30, 2004 Time: 9:00 a.m. Location: 316 W. Edenton Street, Raleigh, NC Reason for Proposed Action: To update the agency's address in several rules; to incorporate statutory revisions into and otherwise update the agency's rules governing administrative hearings and appeals to the full Banking Commission in contested cases. Procedure by which a person can object to the agency on a proposed rule: Objections may be submitted in writing to William H. Finlay, Agency Legal Specialist, 4309 Mail Service Center, Raleigh, NC 27699-4309, or by email, wfinlay@nccob.org. Objections may also be made in person at the public hearing. Written comments may be submitted to: William H. Finlay, Agency Legal Specialist, 4309 Mail Service Center, Raleigh, NC 27699-4309, phone (919)715-0082, Fax (919)733-6918, and email wfinlay@nccob.org. Comment period ends: June 14, 2004 Procedure for Subjecting a Proposed Rule to Legislative Review: Any person who objects to the adoption of a permanent rule may submit written comments to the agency. A person may also submit written objections to the Rules Review Commission. If the Rules Review Commis sion receives written and signed objections in accordance with G.S. 150B-21.3(b2) from 10 or more persons clearly requesting review by the legislature and the Rules Review Commission approves the rule, the rule will become effective as provided in G.S. 150B-21.3(b1). The Commission will receive written objections until 5:00 p.m. on the 6th business day preceding the end of the month in which a rule is approved. The Commission will receive those objections by mail, delivery service, hand delivery, or facsimile transmission. If you have any further questions concerning the submission of objections to the Commission, please call a Commission staff attorney at 919-733-2721. Fiscal Impact State Local Substantive (>$3,000,000) None SUBCHAPTER 3B - RULE-MAKING AND CONTESTED CASES SECTION .0100 - RULE-MAKING 04 NCAC 03B .0101 PETITIONS (a) Any person wishing to submit a petition requesting the adoption, amendment, or repeal of a rule by the Banking Commission shall address a petition to: Office of The Commissioner of Banks P.O. Box 10709 4309 Mail Service Center Raleigh, North Carolina 27605-0709. 27699-4309. Attention: Rule-making Coordinator (b) The Commissioner of Banks will determine, based on a study of the facts stated in the petition, whether the public interest will be served by granting it. He will consider all the contents of the submitted petition, plus any additional information he deems relevant. Authority G.S. 53-92; 150B-20. 04 NCAC 03B .0102 NOTICE (a) Any person or agency desiring to be placed on the mailing list for Banking Commission rule-making notices may file a request in writing, furnishing their name and mailing address to: Office of The Commissioner of Banks P.O. Box 10709 4309 Mail Service Center Raleigh, North Carolina 27605-0709. 27699-4309. Attention: Rule-making Coordinator The request must state the subject areas within the authority of the Banking Commission for which notice is requested. (b) Persons desiring information in addition to that provided in a particular rule -making notice may contact: Office of The Commissioner of Banks P.O. Box 10709 4309 Mail Service Center Raleigh, North Carolina 27605-0709. 27699-4309. Attention: Rule-making Coordinator Authority G.S. 53-92; 150B-20. 04 NCAC 03B .0103 HEARINGS (a) Unless otherwise stated in a particular rule-making notice, hearings before the Banking Commission shall be held in Raleigh, North Carolina, at regular scheduled or special called meetings of the Banking Commission. (b) Any person desiring to present oral data, views, or arguments on the proposed rule must, before the hearing, file a notice with: Office of The Commissioner of Banks P.O. Box 10709 4309 Mail Service Center Raleigh, North Carolina 27605-0709. 27699-4309. Attention: Rule-making Coordinator Any person permitted to make an oral presentation shall submit a written copy of the presentation to the above-named person prior to or at the hearing. (c) A request to make an oral presentation must contain a brief summary of the individual's views with respect thereto, and a statement of the length of time the individual wants to speak. PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1769 Presentations may not exceed 15 minutes unless, upon request, either before or at the hearing, the Commissioner of Banks or the presiding officer should determine that fundamental fairness and procedural due process require an extension of time. (d) Upon receipt of a request to make an oral presentation the Commissioner of Banks shall acknowledge receipt of the request, and inform the person requesting of the imposition of any limitations deemed necessary to the end of a full and effective public hearing on the proposed rule. (e) Upon receipt of such written comments prompt acknowledgment shall be made including a statement that the comments therein shall be considered fully by the Banking Commission. (f) The presiding officer at the hearing shall have complete control of the proceedings, including: extensions of any time requirements, recognition of speakers, time allotments for presentations, direction of the flow of the discussion, and the management of the hearing. The presiding officer, at all times, shall take care that each person participating in the hearing is given a fair opportunity to present views, data, and comments. Authority G.S. 53-92; 150B-21.2. 04 NCAC 03B .0105 DECLARATORY RULINGS (a) Any person substantially affected by a statute administered or rule promulgated by the Commissioner of Banks or the Banking Commission may request a declaratory ruling as to: (1) whether, and if so how, the statute or rule applies to a given factual situation; or (2) whether a particular agency rule is valid. All decisions of the Commissioner of Banks relative to declaratory rulings shall be subject to review by the Banking Commission upon written application of any aggrieved party. (b) The Commissioner of Banks will have the sole power to make such declaratory rulings. All requests for declaratory rulings shall be written and mailed to: Office of The Commissioner of Banks P.O. Box 10709 4309 Mail Service Center Raleigh, North Carolina 27605-0709. 27699-4309. Attention: Legal Division (c) All requests for a declaratory ruling must include the following information: (1) name and address of petitioner; (2) statute or rule to which petition relates; (3) concise statement of the manner in which petitioner is aggrieved by the rule or statute or its potential application to him; (4) a statement of whether an oral hearing is desired, and if so the reasons for such an oral hearing. (d) Whenever the Commissioner of Banks believes for good cause that the issuance of a declaratory ruling is undesirable, he may refuse to do so. When good cause for refusing to issue a declaratory ruling is deemed to exist, the Commissioner of Banks will notify the petitioner of his decision in writing, stating reasons for the denial of a declaratory ruling. (e) Where a declaratory ruling is deemed appropriate, the Commissioner of Banks will issue the ruling within 60 days of receipt of the petition. (f) A declaratory ruling procedure may consist of written submissions, oral hearings, or such other procedures as may be appropriate in a particular case. Authority G.S. 53-92; 150B-17. SECTION .0200 - CONTESTED CASES 04 NCAC 03B .0201 BANKING COMMISSION HEARINGS The regular or called meetings of the Banking Commission shall be the forum for all contested cases involving the Banking Commission. In addition to those contested cases automatically subject to hearing by the Banking Commission, the agenda for meetings of the Banking Commission shall provide for the hearing of any appeal by an interested party of any decision or action of the Commissioner of Banks, as well as any specific dispute which any party may have with the Commissioner of Banks or with the Banking Commission. Authority G.S. 53-92; 150B-2(2). 04 NCAC 03B .0202 HEARINGS BEFORE THE COMMISSIONER OF BANKS Whenever, pursuant to statute, the Commissioner of Banks is authorized or required to hold a hearing, the Commissioner of Banks shall be the hearing officer and such hearing shall be conducted in compliance with and subject to the provisions of Section .0200 of Subchapter 3B of these rules. Authority G.S. 53-92; 150B-2(2). 04 NCAC 03B .0203 REQUEST FOR HEARING (a) Whenever a person believes his rights, duties, or privileges have been affected by action of the Commissioner of Banks and he has not been notified of a right to a hearing, he may request an administrative hearing. (b) Before a hearing request can be made, a person must first make reasonable efforts to resolve the problem with the Commissioner of Banks informally. This requirement will be satisfied by contacting: The Commissioner of Banks P.O. Box 951 Raleigh, North Carolina 27602. (c) Following such informal contact with the Commissioner of Banks, if still dissatisfied, the person may file a written request with: The Commissioner of Banks P.O. Box 951 Raleigh, North Carolina 27602. Such request must contain the following information: (1) name and address of petitioner, (2) a concise statement of the agency action being challenged, (3) a concise statement of the way in which the petitioner has been aggrieved, (4) a clear and specific demand for a hearing. (d) Such request will be acknowledged within 30 days after submission of the request and a hearing scheduled promptly. PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1770 Authority G.S. 53-92; 150B-38. 04 NCAC 03B .0204 NOTICE (a) Notice of a hearing shall be given reasonably in advance of the hearing so as to allow the party affected reasonable time to prepare for the hearing, and will not be less than 15 days, except as authorized for emergencies. (b) Notice of a hearing shall include: (1) a statement of the date, hour, place, and nature of the hearing; (2) a reference to the particular sections of the statutes and rules involved; (3) a short and plain statement of the factual allegations. Authority G.S. 53-92; 150B-38(b). 04 NCAC 03B .0205 WRITTEN ANSWERS TO NOTICE Any person receiving notice of a contested case hearing may file a written answer. Such answer must be filed at least 30 days prior to commencement of the hearing by delivering or mailing it to person indicated in the notice. Authority G.S. 53-92; 150B-38. 04 NCAC 03B .0206 REPRESENTATION BY AN ATTORNEY The administrative hearing is especially designed to give any person the opportunity to effectively represent himself to protect his rights, duties, and privileges. However, if a party desires, he may employ an attorney to represent him at the administrative hearing. Authority G.S. 53-92; 150B-38. 04 NCAC 03B .0209 DISCOVERY Any aggrieved party may discover any information from the Banking Commission or the Commissioner of Banks which may be available, except records related solely to the internal procedures of the agency or those which have been properly classified as confidential under statutory authority. Authority G.S. 53-92; 53-99; 53-125; 150B-39. 04 NCAC 03B .0210 RULES OF EVIDENCE The rules of evidence as applied in the Superior and District Court Divisions of the Genera l Court of Justice shall be followed in any proceeding before the Banking Commission or the Commissioner of Banks involving a contested case. Irrelevant, immaterial, and unduly repetitious evidence shall be excluded. Authority G.S. 53-92; 150B-41. 04 NCAC 03B .0211 PRE-HEARING CONFERENCE (a) In any contested cases, the hearing officer, the Commissioner of Banks, or such other person or persons as the Banking Commission may designate may hold a conference in advance of holding the hearing and require attendance of all parties. (b) This conference will be informal in nature. (c) This conference will be noted in the notice of hearing or in a subsequent notice if a conference is later determined to be necessary by the hearing officer. (d) The purposes of this conference will be to discuss: (1) the possibility of simplification of issues, (2) stipulation of facts or findings, (3) identification of areas where evidence will be needed, (4) indications of depositions or subpoenas needed, (5) the need for consolidation of cases or joint hearings, (6) any other matters which will reduce costs or save time or otherwise aid expeditious disposition of the contested cases. Authority G.S. 53-92; 150B-40. 04 NCAC 03B .0212 PLACE AND FORUM FOR CONTESTED CASES All administrative hearings conducted by the Commissioner of Banks or by the Banking Commission shall be held at the location stipulated in the notice. Authority G.S. 53-92; 150B-24. 04 NCAC 03B .0213 FAILURE TO APPEAR FOR A CONTESTED CASE If a party served with notice fails to appear without having notified the hearing officer and no continuance, adjournment, or like disposition is ordered, the hearing officer may proceed with the hearing in the party's absence. Authority G.S. 53-92; 150B-40. 04 NCAC 03B .0214 CONSOLIDATION OF CONTESTED CASES (a) In appropriate cases, i.e., when there is a common question of law or fact, when the same or related parties are involved, or to avoid unnecessary cost and delay, the hearing officer may order the cases consolidated into one hearing. (b) When such an order is made, the Commissioner of Banks shall give notice to the parties involved of the consolidation. Authority G.S. 53-92; 150B-38. 04 NCAC 03B .0215 INTERVENTION OF A NEW PARTY INTO A CONTESTED CASE (a) A petition to intervene as of right or permissively as provided in North Carolina Rules of Civil Procedure, Rule 24, will be granted if the petitioner meets the criteria of Rule 24 and is timely. It will be deemed untimely if a grant would cause substantial prejudice to the rights of the parties, substantial added expense, or compellingly serious inconvenience to the parties or the Banking Commission. PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1771 (b) A person desiring to intervene in a contested case must file a written petition with: The Commissioner of Banks P.O. Box 951 Raleigh, North Carolina 27602. (c) The petition must be made on Form 22 which can be obtained from the Commissioner, which form includes the following information: (1) a citation to any statutory or nonstatutory grounds for intervention (if any; if not, so state); (2) a statement of the claim or defense in respect of which intervention is sought; (3) name and address; (4) business or occupation; (5) full identification of the hearing in which petitioner is seeking to intervene; (6) summary of the arguments or evidence petitioner seeks to present. (d) In the event the Commissioner of Banks determines to allow intervention, notification of that decision will be issued promptly to all parties and to the petitioner. In cases of discretionary intervention, such notification will include a statement of the limitations, if any, of time, subject matter, evidence, or whatever else is deemed necessary, which are imposed on the intervenor. (e) In the event the Commissioner's decision is to deny intervention, the petitioner will be notified promptly. Such notice will be in writing, will state all reasons for the decision, and will be issued to the petitioner and to all parties. Authority G.S. 53-92; 150B-38(f). 04 NCAC 03B .0216 DISQUALIFICATION OF HEARING OFFICER (a) If for any reason the hearing officer determines that personal bias or other factors would keep him from being able to conduct the hearing and perform all duties in an impartial manner, he shall submit in writing to the Commissioner of Banks his disqualification and the reasons therefor. (b) If for any reason any party in a contested case believes that the hearing officer is personally biased or otherwise unable to conduct the hearing and perform all duties in an impartial manner, the party may file a sworn, notarized, affidavit with the Commissioner of Banks. (c) The affidavit must state all facts the party deems relevant to the disqualification of the hearing officer. (d) An affidavit of disqualification will be considered timely if filed before commencement of the hearing. Any other affidavit may be found timely provided it is filed at the first opportunity after the party becomes aware of facts which give rise to a reasonable belief the officer may be disqualified under this rule. (e) Procedure. The Banking Commission shall decide whether to disqualify the person in the following manner: (1) The allegations of the affidavit shall be investigated by the Commissioner of Banks. (2) The person whose disqualification is to be determined will not participate in the decision but may be called on to furnish information to the Commissioner of Banks. (3) The Commissioner of Banks will report his findings and his recommendations to the Banking Commission who will then decide whether to disqualify the challenged individual. (4) A record of proceedings and the reasons for decisions reached will be maintained as part of the contested case record. (f) Resumption of Hearing. When a hearing officer is disqualified or otherwise is unable to continue the hearing, another hearing officer will replace him and that hearing will be resumed except as follows: (1) When oral testimony has already been given, and it is determined by the successor hearing officer that the viewing of the witness is an important element of the case, that portion of the testimony and evidence will be repeated. (2) When continuation of the hearing would result in substantial prejudice, for whatever reasons, to the rights of the parties, either a new hearing will be initiated or the case will be dismissed without prejudice. (g) The determination of whether resuming and continuing the case will result in substantial prejudice is to be made by the new hearing officer. (h) Determinations of decisions of disqualification, continuation of the hearing, rehearing of a portion or all of a contested case, or dismissal of a case without prejudice, together with a statement of reasons, will be part of the record of the case and communicated to all parties promptly. Authority G.S. 53-92; 150B-40. 04 NCAC 03B .0217 SUBPOENAS (a) The hearing officer is empowered to issue subpoenas in the Banking Commissioner's name. (b) Subpoenas requiring the attendance of witnesses, or those to produce documents, evidence, or things, will be issued promptly by the hearing officer after receipt of a request from a party to the case for such subpoena, except as stated herein. (c) The hearing officer will have the discretion to refuse a request for the issuance of a subpoena if, clearly, on its face, the request is objectionable or unreasonable. (d) Except as may be otherwise stated in a particular subpoena, any person receiving a subpoena from the Banking Commission may object thereto by filing a written objection to the subpoena with: The Commissioner of Banks P.O. Box 951 Raleigh, North Carolina 27602. Such request must include a concise but complete statement of reasons why the subpoena should be revoked or modified. These reasons may include lack of relevancy of the evidence requested, lack of particularity in the description of the evidence sought, or any other reason sufficient in law for holding the subpoena invalid, such as that the evidence is privileged, that appearance or production would be so disruptive as to be unreasonable in light of the significance of the evidence sought, or other undue hardships. PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1772 (e) The person subpoenaed must simultaneously with filing his objection with the agency serve his objection on the party who requested the subpoena. (f) The party requesting the subpoena, in such time as may be granted by the hearing officer, may file a written response to the objection. The response shall be served in like manner as the objection. (g) After receipt of the objection and a response thereto, if any, the hearing officer shall issue a notice to the party who requested the subpoena and the party challenging the subpoena and may notify all other parties of an open hearing, to be scheduled as soon as practicable, at which time evidence and testimony may be presented limited to the questions raised by the objection and response, if any. (h) Promptly after the close of such hearing, the officer will rule on the challenge and issue a written decision. A copy of his decision will be issued to all parties and made a part of the record. (i) The request for subpoena must include the following information: (1) name of agency and contested case, (2) name of party requesting the subpoena, (3) name of person subpoenaed and person on whose behalf he is to testify, (4) specification of the materials requested. (j) The subpoena must include: (1) name of agency and contested case, (2) name of person subpoenaed and person on whose behalf he is to testify, (3) specification of the materials requested, (4) notice that the agency can apply to the courts for an order of contempt if the subpoenaed person does not comply. Authority G.S. 53-92; 150B-39. 04 NCAC 03B .0218 PUBLIC INSPECTION OF FILES Files containing the material listed herein shall be maintained and shall be available for public inspection during normal business hours at the office of: The Commissioner of Banks P.O. Box 951 Raleigh, North Carolina 27602. (1) all rules and all other written statements of policy or interpretations formulated, adopted, or used by the Commissioner of Banks and the Banking Commission in the discharge of its functions; (2) all final orders, decisions, and opinions made after February 1, 1976, together with all materials that were before the deciding officers at the time the final order, decision, or opinion was made, except materials properly for good cause held confidential. Authority G.S. 53-92; 53-99. 04 NCAC 03B .0219 DEFINITIONS As used in this Subchapter: (1) "Appellate Panel" means an appellate review panel appointed pursuant to G.S. 53-92(d). (2) "Commission" means the North Carolina State Banking Commission. (3) "Commissioner" means the North Carolina Commissioner of Banks. (4) "Court" means a North Carolina District or Superior Court. (5) "Day" means a calendar day, other than a Saturday, Sunday or North Carolina state holiday. (6) "Hearing officer" means the Commissioner or an individual appointed by the Commissioner pursuant to G.S. 53-93. (7) "Rules of Civil Procedure " means the North Carolina Rules of Civil Procedure, G.S. 1A-1, et seq., as the same may be amended from time to time. (8) Terms used herein which are defined by G.S. 150B shall be defined as in G.S. 150B. Authority G.S. 53-92; 53-93; 150B-38(h). 04 NCAC 03B .0220 HEARINGS Whenever the Commissioner is authorized or required by law to hold a hearing, the hearing officer shall conduct the hearing in accordance with the applicable provisions of law, the Rules of Civil Procedure, the Rules of Evidence and the procedures set forth in this Subchapter. Authority G.S. 53-92; 53-93; 53-186; 53-208.10; 53-208.23; 53-224.25; 53-228; 53-233.16; 53-243.12; 53-251; 53-271(c); 53-284; 53 321; 53-327; 53-369; 53-370; 53-412; 150B-38(h). 04 NCAC 03B .0221 APPLICATION OF THE RULES OF CIVIL PROCEDURE Except as otherwise provided in this Subchapter or in G.S. 150B, the Rules of Civil Procedure shall apply in hearings and prehearing proceedings governed by this Subchapter to the same extent as though the hearing or prehearing proceeding was pending in a Court. Authority G.S. 53-93; 150B-38(h). 04 NCAC 03B .0222 FILING OF DOCUMENTS (a) All requests for hearing, written answers, motions, responses to motions or other papers required or permitted to be filed in any contested case shall be signed by the party or the party's attorney and the original thereof filed with the Commissioner addressed as follows: If filed via the United States Postal Service: Office of the Commissioner of Banks 4309 Mail Service Center Raleigh, NC 27699-4309 Attn: Legal Division If filed via a private overnight mail service or via hand delivery: Office of the Commissioner of Banks 316 W. Edenton Street PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1773 Raleigh, NC 27603-1716 Attn: Legal Division (b) A copy of any papers filed with the Commissioner, together with any attachments, shall be served upon all parties in any manner permitted by the Rules of Civil Procedure. (c) Any paper required or permitted to be filed pursuant to this Rule shall be considered filed on the date it is actually received at the address above. Authority G.S. 53-93; 150B-38(h). 04 NCAC 03B .0223 REQUEST FOR A HEARING (a) A person aggrieved may request a hearing, which shall be conducted by a hearing officer. The request shall be made in writing, state all statutory or other legal bases for the request, describe the events or circumstances giving rise to the request and shall include a copy of any supporting documents or other papers supporting the request. If applicable, the request may (but need not) include a statement of pertinent legal issues or questions. (b) If the Commissioner determines that it is appropriate to do so, he may direct his staff to schedule a hearing, notwithstanding the fact that no request for a hearing has been received. In such cases, the Commissioner's direction shall be treated as a request for a hearing. Authority G.S. 53-93; 53-208.10(c); 53-208.23; 53-243.12(b); 150B-38(h). 04 NCAC 03B .0224 DATE, TIME AND LOCATION OF HEARING; MOTIONS TO CONTINUE (a) The date, time and location of any hearing under this Subchapter shall be set forth in the notice of hearing or other paper which commences the hearing process. (b) Any party may move to continue the hearing. (c) The hearing officer shall rule on any motion to continue. Unless oral argument is requested by the hearing officer, motions to continue shall be decided based upon the written submissions of the parties. Authority G.S. 53-93; 150B-38(h). 04 NCAC 03B .0225 MOTIONS (a) Any party may file any motion which would be permitted under the Rules of Civil Procedure if the contested case was pending in a Court. (b) The opposing party may file such response as is permitted by the Rules of Civil Procedure to any such motion within five days of the date that it is filed with the Commissioner. (c) The hearing officer shall promptly rule on any such motion. The hearing officer may rule on any motion with or without oral argument. If the hearing officer determines that oral argument is appropriate, he shall notify the parties of the date for such argument. The notice shall indicate whether the argument is to be conducted in person or by conference call. Authority G.S. 53-93; 150B-38(h). 04 NCAC 03B .0226 PRE-HEARING CONFERENCE (a) If the hearing officer determines that to do so would aid in the prompt and efficient resolution of any contested case, the hearing officer may order that the parties attend a pre-hearing conference. The notice of the conference shall either be included in the document referred to in Rule .0224(a) of this Subchapter or in a separate written order. The purpose of a pre-hearing conference is to: (1) explore any grounds upon which a contested case may be resolved without the need for a hearing; (2) determine the scope of discovery each party wishes to pursue; (3) exchange exhibits and other evidence; (4) reach stipulations or other agreements; and (5) pursue any other matters which will reduce the cost, save time, simplify the issues to be heard, or otherwise aid in the expeditious disposition of the matters to be addressed by the hearing. (b) The pre-hearing conference may be conducted informally between the parties. At the request of either party, the pre-hearing conference may be conducted by a member of the Commissioner's legal staff. Authority G.S. 53-93; 150B-38(h); 150B-41(c). 04 NCAC 03B .0227 HEARINGS (a) Prior to the commencement of a hearing, the hearing officer shall rule on any outstanding motions. (b) Once a hearing has begun the hearing officer, may adjourn the hearing and reconvene the same at a later time or date. (c) Hearings are open to the public, except as to any testimony or other evidence regarding matters made confidential by law. (d) Hearings shall be conducted in a manner which conforms to the extent reasonably possible to the Rules of Civil Procedure and the Rules of Evidence. The order of evidence shall be determined by the hearing officer. (e) Persons permitted to intervene pursuant to the Rules of Civil Procedure shall be permitted to participate in the hearing only to the extent the hearing officer determines is necessary for a full and fair adjudication of the case. Authority G.S. 53-92(d); 53-93; 150B-38(h). 04 NCAC 03B .0228 STIPULATIONS Parties may by written stipulation agree upon the facts or any portion thereof and their stipulation may be regarded and used as evidence at the hearing. However, the hearing officer shall not be precluded from requiring or allowing the introduction of additional evidence concerning the issues to which the parties have stipulated. Authority G.S. 53-93; 150B-38(h). SECTION .0300 - APPEALS TO THE STATE BANKING COMMISSION 04 NCAC 03B .0301 APPOINTMENT OF APPELLATE PANEL PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1774 In the event the Chairman of the Commission, pursuant to G.S. 53-92(d), appoints an Appellate Panel to consider an appeal and make a recommended decision to the State Banking Commission, the Commissioner's staff shall send all parties written notice of that appointment. Authority G.S. 53-92(c); 53-92(d); 53-95; 53-107.2(a); 53-115; 53-215; 53-224.30; 53-231; 53-232.17; 53-243.02; 53-252; 53-272; 53-289; 53-350; 53-410; 53-412; 150B-38(h). 04 NCAC 03B .0302 RECORD ON APPEAL; HEARING DATE; MEMORANDA OF LAW (a) The record on appeal shall consist of the official agency record as set forth in G.S. 150B-42. (b) The Commissioner's counsel, after consulting with the chair of the Commission or Appellate Panel, shall provide each party with written instructions setting forth the deadlines by which memoranda of law shall be filed by the parties, when the appeal will be considered by the Commission or Appellate Panel, and whether oral argument will be heard. Authority G.S. 53-92(c); 53-92(d); 150B-38(h). 04 NCAC 03B .0303 ORAL ARGUMENT (a) The decision to hear oral argument in an appeal to the Commission shall be in the discretion of the Commission or Appellate Panel. If oral argument is permitted, the chair of the Commission or Appellate Panel shall notify the Commissioner, who shall notify all parties and set a date and time for same. (b) If oral argument is permitted, each party shall be allowed a maximum of 30 minutes for oral argument, including rebuttal arguments. Authority G.S. 53-92; 53-95; 150B-38(h). 04 NCAC 03B .0304 COMMISSION REVEW OF APPELLATE PANEL'S RECOMMENDED DECISION (a) If an appeal is heard by an Appellate Panel, that Appellate Panel, after reviewing the record on appeal, memoranda of law and hearing oral arguments, if any, shall make a recommended decision to the Commission. The Commission shall, by a vote of the majority of its members present and voting at any regular or special meeting, either affirm, affirm with modifications or reject the recommended decision of the Appellate Panel. (b) If the Commission rejects the Appellate Panel's recommended decision, it shall specify the actions the Appellate Panel or the Commissioner shall take with regard to the appeal. (c) A decision to affirm or to affirm with modifications shall be considered a "final agency decision" for purposes of G.S. 150B- 42. Authority G.S. 53-92; 53-95; 150B-38(h). TITLE 10A – DEPARTMENT OF HEALTH AND HUMAN SERVICES Notice is hereby given in accordance with G.S. 150B-21.2 that the NC Medical Care Commission intends to amend the rules cited as 10A NCAC 13B .3401-.3402, .3405, .6204 and repeal the rules cited as 10A NCAC 13B .3403-.3404. Proposed Effective Date: October 1, 2004 Public Hearing: Date: June 3, 2004 Time: 10:00 a.m. Location: Council Building, Room 201, Dorothea Dix Campus, 701 Barbour Dr., Raleigh, NC Reason for Proposed Action: The NC Medical Care Commission has approved to initiate permanent rulemaking for these Rules. The "Notice of Text" is the first step in the permanent rule-making process. These rules pertain to the licensure of hospitals. The changes include, but are not limited to, an omission of amending a rule regarding neonatal services organization with rule amendments effective April 1, 2003, technical changes rules to reflect the current Federal Government name designation for the Small Rural Hospital Flexibility Program and repealing rules that no longer apply to hospitals participating in the Small Rural Health Flexibility Program in accordance with 42 CFR 485 Subpart F. Procedure by which a person can object to the agency on a proposed rule: A person may object to the agency on the proposed rules by submitting written comments on the proposed rules. They may also object by attending the public hearing and personally voice their objections during that time. Written comments may be submitted to: Nadine Pfeiffer, NCDFS, 2711 Mail Service Center, Raleigh, NC 27699-2711, phone (919) 733-7461, fax (919) 733-8274, and email nadine.pfeiffer@ncmail.net. Comment period ends: June 14, 2004 Procedure for Subjecting a Proposed Rule to Legislative Review: Any person who objects to the adoption of a permanent rule may submit written comments to the agency. A person may also submit written objections to the Rules Review Commission. If the Rules Review Commission receives written and signed objections in accordance with G.S. 150B-21.3(b2) from 10 or more persons clearly requesting review by the legislature and the Rules Review Commission approves the rule, the rule will become effective as provided in G.S. 150B-21.3(b1). The Commission will receive written objections until 5:00 p.m. on the 6th business day preceding the end of the month in which a rule is approved. The Commission will receive those objections by mail, delivery service, hand delivery, or facsimile transmission. If you have any further questions concerning the submission of objections to the Commission, please call a Commission staff attorney at 919-733-2721. Fiscal Impact State Local Substantive (>$3,000,000) None PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1775 CHAPTER 13 – NC MEDICAL CARE COMMISSION SUBCHAPTER 13B –LICENSING OF HOSPITALS SECTION .3400 - SUPPLEMENTAL RULES FOR THE LICENSURE OF CRITICAL ACCESS HOSPITALS 10A NCAC 13B .3401 SUPPLEMENTAL RULES The rules of this Section pertain only to designated Primary Care Hospitals or Federally Certified Primary Care Hospitals.Critical Access Hospitals in accordance with 42 CFR 485 Subpart F. The general requirements of this Subchapter shall apply to such facilities except where they are specifically waived or modified by the rules of this Section. Authority G.S. 131E-79. 10A NCAC 13B .3402 DEFINITIONS The following definitions shall apply throughout this Section, unless context otherwise clearly indicates to the contrary: (1) "Available" means provided directly by the facility or by written agreement with a qualified provider of the service within one hour. hour driving time . (2) "Designated Primary Care Hospital" "Critical Access Hospital" means a facility designated by the North Carolina Office of Research, Demonstrations and Rural Health Development in accordance with G.S. 131E- 76(6).42 CFR 485 Subpart F. (3) "Federally Certified Primary Care Hospital" means a hospital which has been designated and certified as a Federally Certified Rural Primary Care Hospital under the Essential Access Community Hospital Program administered through the North Carolina Office of Research, Demonstrations and Rural Health Development in accordance with P.L. 101-239 and P.L. 101-508. (4) "Primary Care Inpatient Services" means that the hospital provides acute care inpatient services appropriate to the level of service at the facility up to a maximum annual average daily census of 15 patients per day. In addition, the facility may also provide long term care in "swing bed" or distinct part status and psychiatric distinct part beds. Authority G.S. 131E-79. 10A NCAC 13B .3403 LICENSURE APPLICATION An application from a facility seeking to be licensed under the rules of this Section must be accompanied by written certification from the North Carolina Office of Research, Demonstrations and Rural Health Development that the facility is a Designated Primary Care Hospital or a Federally Certified Primary Care Hospital. Authority G.S. 131E-79. 10A NCAC 13B .3404 FEDERALLY CERTIFIED PRIMARY CARE HOSPITAL (a) The requirements of 10A NCAC 13B .3500 through .5206 shall be waived for a facility which the North Carolina Office of Research, Demonstrations and Rural Health Development certified as a designated Federally Certified Primary Care Hospital, and Rule .6227 (f) and (g) of that Subchapter shall not apply to such facilities which do not provide emergency room service or maintain any life support systems. (b) The Division may conduct any validation survey or investigation of a specific complaint in facilities which choose to be licensed as a Federally Certified Primary Care Hospital. Authority G.S. 131E-79. 10A NCAC 13B .3405 DESIGNATED CRITICAL ACCESS HOSPITALS The requirements of 10A NCAC 13B shall apply to Designated Primary Care Hospitals Critical Access Hospitals with the following modifications: (1) Autopsy facilities required in Rule .4907 of this Subchapter are not required for a Designated Primary Care Hospital, provided that the facility has in effect a written agreement with another facility meeting Rule .4907 of this Subchapter for providing autopsy services. (2) Radiological services required in Section .4800 of this Subchapter are not required for Designated Primary Care Hospitals provided that the facility has radiological equipment on site and a written agreement with another licensed facility meeting the requirements of Section .4800 of this Subchapter which makes radiological service available. (3) Emergency services required in Rules .4102 - .4110Section .4100 of this Subchapter are not required.required for Designated Primary Care Hospitals. Emergency response capability set forth in Rule .4101 of this Subchapter shall be provided. Medical staff of a Designated Primary Care Hospital shall participate in training facility personnel in require that facility personnel are capable of initiating life-saving measures at a first-aid level of response for any patient or person in need of such services. This shall include: (a) Establishing protocols or agreements with any facility providing emergency services; (b) Initiating basic cardio-respiratory cardio-pulmonary resuscitation according to the American Red Cross or American Heart Association standards; PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1776 (c) Availability of intravenous fluids and supplies required to establish intravenous access; and (d) Availability of first-line emergency drugs as specified by the medical staff. (4) Anesthesia services required in Section .4600 of this Subchapter are not required in Designated Primary Care Hospitals hospitals not offering outpatient surgery services. (5) Food services required in Section .4700 of this Subchapter shall be provided for inpatients of Designated Primary Care Hospitals either directly or made available through contractual arrangements. Authority G.S. 131E-79. SECTION .6200 - CONSTRUCTION REQUIREMENTS 10A NCAC 13B .6204 NEONATAL LEVEL III AND LEVEL IV NURSERY (a) Units shall be accessible to post-partum nursing and delivery units. (b) The nursery shall be located and arranged to preclude unrelated traffic through the nursery. (c) Each nursery shall contain the following: (1) Lavatory located within 20 feet travel distance of each bassinet; (2) Emergency calling system; and (3) Charting facilities. (d) There shall be six feet between bassinets for Neonatal Level III IV units and five feet between bassinets for Neonatal Level II III units. Neonatal Level III IV nurseries shall have 80 square feet per bassinet not including corridors and cabinets. Neonatal Level II III nurseries shall have 50 square feet per bassinet not including cabinets and corridors. Corridors or aisles shall have at least eight feet of clear width for access to bassinets. (e) Each nursery shall be served by a connecting workroom. It shall contain gowning facilities at the entrance for staff and housekeeping personnel, lavatory, and storage. One workroom may serve more than one nursery. The workroom may be omitted if equivalent work area and facilities are provided within the nursery. Gowning and hand washing facilities shall be provided at the entrance to each nursery. (f) Space for examination and treatment shall be provided and shall contain a counter, storage, and lavatory. It may serve more than one nursery room and may be located in a workroom. (g) If commercially prepared formula is not used, space and equipment to accommodate the handling, storage, and preparation of formula shall be provided. (h) A janitor's closet for the exclusive use of the housekeeping staff in maintaining the nursery suite shall be provided. It shall contain a floor receptor or service sink and storage space for housekeeping equipment and supplies. (i) Doors to nurseries shall be no less than three feet wide. If doors are provided directly from nurseries to public corridors or public spaces, they shall be equipped with "one-way" hardware for exit only to prevent unauthorized entry. (j) Smoke detection shall be provided in each nursery bed space. Authority G.S. 131E-79. TITLE 11 – DEPARTMENT OF INSURANCE Notice is hereby given in accordance with G.S. 150B-21.2 that the NC Department of Insurance intends to amend the rules cited as 11 NCAC 01 .0403 .0416, .0418, .0425, .0427, .0429. Proposed Effective Date: August 1, 2004 Public Hearing: Date: May 4, 2004 Time: 10:00 a.m. Location: Dobbs Building, 3rd Floor Hearing Room, 430 N. Salisbury St., Raleigh, NC Reason for Proposed Action: The amendments are technical in nature and are just being updated. Procedure by which a person can object to the agency on a proposed rule: The Department of Insurance will accept written objections to these Rules until the expiration of the comment period (June 14, 2004). Objections need to be specific and sent to the attention of the APA Coordinator. Written comments may be submitted to: Ellen K. Sprenkel, 1201 Mail Service Center, Raleigh, NC 27699-1201, phone (919) 733-4529, fax (919) 733-6495, and email esprenke@ncdoi.net. Comment period ends: June 14, 2004 Procedure for Subjecting a Proposed Rule to Legislative Review: Any person who objects to the adoption of a permanent rule may submit written comments to the agency. A person may also submit written objections to the Rules Review Commission. If the Rules Review Commission receives written and signed objections in accordance with G.S. 150B-21.3(b2) from 10 or more persons clearly requesting review by the legislature and the Rules Review Commission approves the rule, the rule will become effective as provided in G.S. 150B-21.3(b1). The Commission will receive written objections until 5:00 p.m. on the 6th business day preceding the end of the month in which a rule is approved. The Commission will receive those objections by mail, delivery service, hand delivery, or facsimile transmission. If you have any further questions concerning the submission of objections to the Commission, please call a Commission staff attorney at 919-733-2721. Fiscal Impact State Local Substantive (>$3,000,000) None CHAPTER 1 - DEPARTMENTAL RULES PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1777 SECTION .0400 - ADMINISTRATIVE HEARINGS 11 NCAC 01 .0403 REQUEST FOR HEARING (a) A request for an administrative hearing under 11 NCAC 1 .0401 must be in writing and shall contain the following information: (1) name and address of the person requesting the hearing, (2) a concise statement of the departmental action being challenged, (3) a concise statement of the manner in which the petitioner is aggrieved, and (4) a clear and specific demand for a public hearing. (b) The request for hearing shall be filed with: Commissioner of Insurance, ATTENTION: Deputy Commissioner, Hearings Office, N.C. Department of Insurance, Post Office Box 26387, Raleigh, North Carolina 27611. General Counsel, N.C. Department of Insurance, 1201 Mail Service Center, Raleigh, NC 27699-1201. Authority G.S. 58-2-40; 150B-38. 11 NCAC 01 .0416 DUTIES OF THE HEARING OFFICER In conjunction with the powers in this Section, in General Statute Chapter 58, and in Article 3A of General Statute Chapter 150B, the hearing officer shall perform the following duties, consistent with law: (1) Hear and rule on motions; (2) Grant or deny continuances; (3) Issue orders regarding prehearing matters, including directing the appearance of the parties at a prehearing conference; (4) Examine witnesses when deemed to be necessary to make a complete record and to aid in the full development of material facts in the case; (5) Make preliminary, interlocutory, or other orders as deemed to be appropriate; (6) Recommend Order a summary disposition of the case or any part thereof when there is no genuine issue as to any material fact or recommend dismissal when the case or any part thereof has become moot or for other reasons; and (7) Apply sanctions in accordance with 11 NCAC 1 .0423. Authority G.S. 58-2-40(1); 58-2-50; 58-2-55; 58-2-70; 150B-38(h). 11 NCAC 01 .0418 SETTLEMENT CONFERENCE (a) A settlement conference is for the primary purpose of assisting the parties in resolving disputes and for the secondary purpose of narrowing the issues and preparing for hearing. (b) Upon the request of any party, the hearing officer shall assign the case to another hearing officer appointed by the Commissioner under G.S. 58-2-55 for the purpose of conducting a settlement conference. Unless the parties and the other hearing officer agree, a unilateral request for a settlement conference does not constitute good cause for a continuance. The conference shall be conducted at a time and place agreeable to all parties and the hearing officer. It shall be conducted by telephone if any party would be required to travel more than 50 miles to attend, unless that party agrees to travel to the location set for the conference. It If a telephone conference is scheduled, the parties must be available by telephone at the time of the conference. (c) All parties shall attend or be represented at a settlement conference. Parties or their representatives shall be prepared to participate in settlement discussions. (d) The parties shall discuss the possibility of settlement before a settlement conference if they believe that a reasonable basis for settlement exists. (e) At the settlement conference, the parties shall be prepared to provide information and to discuss all matters required in 11 NCAC 1 .0415. (f) If, following a settlement conference, a settlement has not been reached but the parties have reached an agreement on any facts or other issues, the hearing officer presiding over the settlement conference shall issue an order confirming and approving, if necessary, those matters agreed upon. The order is binding on the hearing officer who is assigned to hear the case. Authority G.S. 58-2-40(1); 58-2-50; 58-2-55; 58-2-70; 150B-38(h). 11 NCAC 01 .0425 INTERVENTION (a) Any person not named in the notice of hearing who desires to intervene in a contested case as a party shall file a timely motion to intervene and shall serve the motion upon all existing parties. Timeliness will be determined by the hearing officer in each case based on circumstances at the time of filing. The motion shall show how the movant's rights, duties, or privileges may be determined or affected by the contested case; shall show how the movant may be directly affected by the outcome or show that the movant's participation is authorized by statute, rule, or court decision; shall set forth the grounds and purposes for which intervention is sought; and shall indicate movant's statutory right to intervene if one exists. (b) Any party may object to the motion for intervention by filing a written notice of objections with the hearing officer within five days after service of the motion if there is sufficient time before the hearing. The notice of objection shall state the party's reasons for objection and shall be served upon all parties. If there is insufficient time before the hearing for a written objection, the objection may be made at the hearing. (c) When the hearing officer deems it to be necessary to develop a full record on the question of intervention, he may conduct a hearing on the motion to determine specific standards that will apply to each intervenor and to define the extent of allowed intervention. (d) The hearing officer shall may allow intervention upon a proper showing under this Rule, unless he finds that the movant's interest is adequately represented by one or more parties participating in the case or unless intervention is mandated by PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1778 statute, rule, or court decision. An order allowing intervention shall specify the extent of participation permitted the intervenor and shall state the hearing officer's reason. An intervenor may be allowed to: (1) File a written brief without acquiring the status of a party; (2) Intervene as a party with all the rights of a party; or (3) Intervene as a party with all the rights of a party but limited to specific issues and to the means necessary to present and develop those issues. Authority G.S. 58-2-40(1); 58-2-50; 58-2-55; 58-2-70; 150B-38(h). 11 NCAC 01 .0427 RIGHTS AND RESPONSIBILITIES OF PARTIES (a) A party has the right to present evidence, rebuttal testimony, and argument with respect to the issues of law and policy, and to cross-examine witnesses, including the author of a document prepared by, on behalf of, or for use of the Department and offered in evidence. (b) A party shall have all evidence to be presented, both oral and written, available on the date for hearing. Requests for subpoenas, depositions, or continuances shall be made within a reasonable time after their needs become evident to the requesting party. In cases when the hearing time is expected to exceed one day, the parties shall be prepared to present their evidence at the date and time ordered by the hearing officer or agreed upon at a prehearing conference. (c) The hearing officer shall send copies of all orders or decisions to all parties simultaneously. Any party sending a letter, exhibit, brief, memorandum, or other document to the hearing officer shall simultaneously send a copy to all other parties. (d) All parties have the continuing responsibility to notify the hearing officer of their current addresses and telephone numbers. (e) A party need not be represented by an attorney. attorney unless the party is a corporate entity. A corporate entity shall not be represented by its President or other officers. If a party has notified other parties of that party's representation by an attorney, all communications shall be directed to that attorney. (f) With the approval of the hearing officer, any person may offer testimony or other evidence relevant to the case. Any nonparty offering testimony or other evidence may be questioned by parties to the case and by the hearing officer. (g) Before issuing a recommended decision, the hearing officer may order any party to submit proposed findings of fact and written arguments. Before issuing a final decision, the Commissioner may order any party to submit proposed findings of fact and written arguments. Authority G.S. 58-2-40(1); 58-2-50; 58-2-55; 58-2-70; 150B-38(h). 11 NCAC 01 .0429 EVIDENCE (a) The North Carolina Rules of Evidence as found in Chapter 8C of the General Statutes govern in all contested case proceedings, except as provided otherwise in this Section and G.S. 150B-41. (b) The hearing officer may admit all evidence that has probative value. Irrelevant, incompetent, immaterial, or unduly repetitious evidence shall be excluded. The hearing officer may, in his discretion, exclude any evidence if its probative value is substantially outweighed by the risk that its admission will require undue consumption of time or create substantial danger of undue prejudice or confusion. (c) Contemporaneous objections by a party or a party's attorney are not required in the course of a hearing to preserve the right to object to the consideration of evidence by the hearing officer in reaching a decision or by the court upon judicial review. (d) All evidence to be considered in the case, including all records and documents or true and accurate photocopies thereof, shall be offered and made a part of the record in the case. Except as provided in Paragraph (f) of this Rule, factual information or evidence that is not offered shall not be considered in the determination of the case. Documentary evidence incorporated by reference may be admitted only if the materials so incorporated are available for examination by the parties. (e) Documentary evidence in the form of copies or excerpts may be received in the discretion of the hearing officer or upon agreement of the parties. Copies of a document shall be received to the same extent as the original document unless a genuine question is raised about the accuracy or authenticity of the copy or, under the circumstances, it would be unfair to admit the copy instead of the original. (f) The hearing officer may take notice of judicially cognizable facts by entering a statement of the noticed fact and its source into the record. Upon a timely request, any party shall be given the opportunity to contest the facts so noticed through submission of evidence and argument. (g) A party may call an adverse party; or an officer, director, managing agent, or employee of the State or any local government, of a public or private corporation, or of a partnership or association or body politic that is an adverse party; and may interrogate that party by leading questions and may contradict and impeach that party on material matters in all respects as if that party had been called by the adverse party. The adverse party may be examined by that party's counsel upon the subject matter of that party's examination in chief under the rules applicable to direct examination, and may be cross-examined, contradicted, and impeached by any other party adversely affected by the testimony. Authority G.S. 58-2-40(1); 58-2-50; 58-2-55; 58-2-70; 150B-38(h). * * * * * * * * * * * * * * * * * * * * Notice is hereby given in accordance with G.S. 150B-21.2 that the North Carolina Department of Insurance intends to amend the rules cited as 11 NCAC 11F .0301-.0303, .0306-.0307 and repeal the rules cited as 11 NCAC 11F .0304-.0305, .0308. Proposed Effective Date: August 1, 2004 PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1779 Public Hearing: Date: May 4, 2004 Time: 10:00 a.m. Location: Dobbs Building, 3rd Floor Hearing Room, 430 N. Salisbury St., Raleigh, NC Reason for Proposed Action: To comply with changes made in the NAIC Model Laws Procedure by which a person can object to the agency on a proposed rule: The Department of Insurance will accept written objections to the changes in these Rules until the expiration of the comment period on June 14, 2004. Written comments may be submitted to: Ellen K. Sprenkel, 1201 Mail Service Center, Raleigh, NC 27699-1201, phone (919) 733-4529, fax (919) 733-6495, and email esprenke@ncdoi.net. Comment period ends: June 14, 2004 Procedure for Subjecting a Proposed Rule to Legislative Review: Any person who objects to the adoption of a permanent rule may submit written comments to the agency. A person may also submit written objections to the Rules Review Commission. If the Rules Review Commission receives written and signed objections in accordance with G.S. 150B-21.3(b2) from 10 or more persons clearly requesting review by the legislature and the Rules Review Commission approves the rule, the rule will become effective as provided in G.S. 150B-21.3(b1). The Commission will receive written objections until 5:00 p.m. on the 6th business day preceding the end of the month in which a rule is approved. The Commission will receive those objections by mail, delivery service, hand delivery, or facsimile transmission. If you have any further questions concerning the submission of objections to the Commission, please call a Commission staff attorney at 919-733-2721. Fiscal Impact State Local Substantive (>$3,000,000) None CHAPTER 11 - FINANCIAL EVALUATION DIVISION SUBCHAPTER 11F – ACTUARIAL SECTION .0300 - ACTUARIAL OPINION AND MEMORANDUM 11 NCAC 11F .0301 APPLICABILITY AND SCOPE (a) This Section applies to all life insurance companies and fraternal benefit societies doing business in this State and to all life insurance companies and fraternal benefit societies that are authorized to reinsure life insurance, annuities, or accident and health insurance business in this State. This Section shall be applied in a manner that allows the appointed actuary to utilize his or her professional judgment in performing the asset analysis and developing the actuarial opinion and supporting memoranda, consistent with relevant Actuarial Standards of Practice. However, the Commissioner shall have the authority to specify specific methods of actuarial analysis and actuarial assumptions when these specifications are necessary for an acceptable opinion to be rendered relative to the adequacy of reserves and related items. All cross references to rule numbers are to rules within this Section. (b) This Section applies to all annual statements filed with the Commissioner after December 31, 2004.December 31, 1994. Except for companies that are exempt under Rule .0304 of this Section, a A statement of opinion on the adequacy of the reserves and related actuarial items based on an asset adequacy analysis in accordance with Rule .0306 of this Section and a supporting memorandum in accordance with Rule .0307 of this Section are required each year. Any company so exempted must file an opinion under Rule .0305 of this Section. (c) The Commissioner may require any company otherwise exempt under this Section to submit an opinion and to prepare a supporting memorandum in accordance with Rules .0306 and .0307 of this Section if an asset adequacy analysis for the company is necessary because of the financial condition of the company. Authority G.S. 58-2-40; 58-24-120; 58-58-50(i); 58-58-50(j). 11 NCAC 11F .0302 DEFINITIONS (a) "Annual statement" means that statement required to be filed each year under G.S. 58-2-165. (b) "Appointed actuary" means any individual who is appointed or retained in accordance with Rule .0303(c) of this Section to provide the actuarial opinion and supporting memorandum as required by G.S. 58-58-50(i) and this Section. (c) "Asset adequacy analysis" means an analysis that meets the standards and other requirements referred to in Rule .0303(d) of this Section. Section; and includes cash flow testing, sensitivity testing, or applications of risk theory. (d) "Board" means the Actuarial Standards Board established by the American Academy of Actuaries to develop and promulgate standards of actuarial practice, and its successors. (e) "Company" means a life insurance company, fraternal benefit society, or reinsurer subject to this Section. (f) "Non-investment grade bonds" are those designated as medium to lower quality by the NAIC Securities Valuation Office. (g)(f) "Opinion" means: means the statement of actuarial opinion of an appointed actuary regarding the adequacy of the reserves and related actuarial items based on an asset adequacy analysis in accordance with Rule .0306 of this Section and with applicable actuarial standards of practice. (1) For Rules .0306, .0307, or .0308 of this Section, the statement of actuarial opinion of an appointed actuary regarding the adequacy of the reserves and related actuarial items based on an asset adequacy test in accordance with Rule .0306 of this Section and with presently accepted actuarial standards; (2) For Rule .0305 of this Section, the statement of actuarial opinion of an appointed actuary PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1780 regarding the calculation of reserves and related items, in accordance with Rule .0305 of this Section and with those presently accepted actuarial standards that specifically relate to this opinion. (h)(g) "Qualified actuary" means any individual who meets the requirements set forth in Rule .0303(b) of this Section. Authority G.S. 58-2-40; 58-24-120; 58-58-50(i); 58-58-50(j). 11 NCAC 11F .0303 GENERAL REQUIREMENTS (a) Submission of Opinion: (1) There shall be included on or attached to page 1 of the annual statement for each year beginning with calendar year 1994, 2004, the statement of an appointed actuary, entitled "Statement of Actuarial Opinion," setting forth an opinion relating to reserves and related actuarial items held in support of policies and contracts, in accordance with Rule .0306 of this Section.Section; provided, however, that any company exempted under Rule .0304 of this Section from submitting an opinion in accordance with Rule .0306 of this Section shall include on or attach to page 1 of the annual statement an opinion rendered by an appointed actuary in accordance with Rule .0305 of this Section. (2) If in the previous year a company provided an opinion in accordance with Rule .0305 of this Section, and in the current year fails the exemption criteria of Rules .0304(c)(1), .0304(c)(2), or .0305(c)(5) of this Section to again provide an opinion in accordance with Rule .0305 of this Section, the opinion in accordance with Rule .0306 of this Section shall not be required until August 1 following the date of the annual statement. In this instance, the company shall provide an opinion in accordance with Rule .0305 of this Section with appropriate qualification noting the intent to subsequently provide an opinion in accordance with Rule .0306 of this Section. (3)(2) Upon written request by the company the Commissioner may shall grant a 45-day extension of the date for submission of the opinion. In the written request, the company shall state the reason that such extension is needed. (b) A "qualified actuary" is an individual who: (1) Is a member in good standing of the American Academy of Actuaries; (2) Is qualified to sign opinions for life and health insurance company annual statements in accordance with the American Academy of Actuaries qualification standards for actuaries signing such opinions; (3) Is familiar with the valuation requirements applicable to life and health insurance companies; (4) Has not been found by the Commissioner (or if so found has subsequently been reinstated as a qualified actuary), to have: (A) Violated any provision of, or any obligation imposed by, any law or rule in the course of his or her dealings as a qualified actuary; (B) Been found by a court of competent jurisdiction to be guilty of a fraudulent or dishonest practice; (C) Demonstrated his or her incompetency, lack of cooperation, or untrustworthiness to act as a qualified actuary; Failed to comply with the Code of Professional Conduct as published by the Board; (D) Submitted to the Commissioner during the past five years, under this Section, an opinion or memorandum that the Commissioner rejected because it did not meet the provisions of this Section, including standards set by the Board; or (E) Resigned or been removed as an actuary within the past five years as a result of acts or omissions indicated in any adverse report on an examination or as a result of failure to adhere to generally acceptable actuarial standards; and (5) Has not failed to notify the Commissioner of any action taken by any insurance regulator of any other state similar to that under Subparagraph (b)(4) of this Rule. (c) An "appointed actuary" is a qualified actuary who is appointed or retained to prepare the opinion required by this Section, either directly by or by the authority of the board of directors through an exe cutive officer of the company. The company shall, within 45 days after the date of the appointment, give the Commissioner written notice of the name, title (and, in the case of a consulting actuary, the name of the firm), and manner of appointment or retention of each person appointed or retained by the company as an appointed actuary and shall state in such notice that the person meets the requirements of Paragraph (b) of this Rule. Once notice is furnished, no further notice is required for the actuary, provided that the company gives the Commissioner written notice if the actuary ceases to be appointed or retained as an appointed actuary or no longer meets the requirements of Paragraph (b) of this Rule. If any person appointed or retained as an appointed actuary replaces a previously appointed actuary, the notice shall so state and give the reasons for replacement. (d) The asset adequacy analysis required by this Section: (1) Shall conform to the standards of practice as promulgated from time to time by the Board and on any additional standards under this PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1781 Section, which standards are to form the basis of the opinion in accordance with Rule .0306 of this Section; and (2) Shall be based on methods of analysis that are deemed to be consistent with Actuarial Standards of Practice adopted appropriate for such purposes by the Board. (e) Liabilities to be Covered: (1) The opinion shall apply to all in force business on the annual statement date regardless of when or where issued, e.g., aggregate reserves for life insurance and annuity policies and contracts, aggregate reserves for accident and health contracts, aggregate reserves for deposit-type contracts, and policy and contract claims liabilities for life and accident and health policies and contracts, reserves of Exhibits 8, 9 and 10, and claim liabilities in Exhibit 11, Part 1 and equivalent items in the separate account statement or statements.. (2) If the appointed actuary determines as the result of asset adequacy analysis that a reserve should be held in addition to the aggregate reserve held by the company and calculated in accordance with methods set forth in G.S. 58-58-50(d), 58-58-50(d-1), 58-58-50(g), 58-58-50(h), and 58-58-50(k), the company shall establish such additional reserve. (3) For years ending before December 31, 1996, the company may, in lieu of establishing the full amount of the additional reserve in the annual statement for that year, set up an additional reserve in an amount not less than the following: (A) December 31, 1994, the additional reserve divided by three. (B) December 31, 1995, two times the additional reserve divided by three. (4)(3) Additional reserves established under Subparagraph (e)(2) or (e)(3) of this Rule and deemed to be unnecessary in later years may be released. Any amounts released must be disclosed in the opinion for the applicable year. The release of such reserves areis not deemed to be an adoption of a lower standard of valuation. Authority G.S. 58-2-40; 58-58-50(i); 58-58-50(j). 11 NCAC 11F .0304 REQUIRED OPINIONS (a) The opinion submitted under G.S. 58-58-50(i) shall be in accordance with the applicable provisions in this Rule. (b) For purposes of this Rule, companies are classified as follows, based on the admitted assets as of the end of the calendar year for which the actuarial opinion is applicable: (1) Category A comprises companies whose admitted assets do not exceed twenty million dollars ($20,000,000). (2) Category B comprises companies whose admitted assets exceed twenty million dollars ($20,000,000) but do not exceed one hundred million dollars ($100,000,000). (3) Category C comprises companies whose admitted assets exceed one hundred million dollars ($100,000,000) but do not exceed five hundred million dollars ($500,000,000). (4) Category D comprises companies whose admitted assets exceed five hundred million dollars ($500,000,000). (c) Exemption Eligibility Tests: (1) Any Category A company that, for any year beginning with calendar year 1994, meets all of the following criteria is eligible for exemption from submission of an opinion in accordance with Rule .0306 of this Section for the year in which these criteria are met. The ratios in Parts (c)(1)(A), (c)(1)(B), and (c)(1)(C) of this Rule shall be calculated based on amounts as of the end of the calendar year for which the opinion is applicable. (A) The ratio of the sum of capital and surplus to the sum of cash and invested assets is at least equal to .10. (B) The ratio of the sum of the reserves and liabilities for annuities and deposits to the total admitted assets is less than .30. (C) The ratio of the book value of the non-investment grade bonds to the sum of capital and surplus is less than .50. (D) The Examiner Team for the NAIC has not designated the company as a first priority company in any of the two calendar years preceding the calendar year for which the opinion is applicable, or a second priority company in each of the two calendar years preceding the calendar year for which the opinion is applicable; or the company has resolved the first or second priority status to the satisfaction of the insurance regulator of the company's state of domicile and that regulator has so notified the chair of the NAIC Life and Health Actuarial Task Force and the NAIC Staff and Support Office. (2) Any Category B company that, for any year beginning with calendar year 1994, meets all of the following criteria shall be eligible for exemption from submission of an opinion in accordance with Rule .0306 of this Section for the year in which the criteria are met. The ratios in Parts (c)(2)(A), (c)(2)(B), and (c)(2)(C) of this Rule shall be calculated based PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1782 on amounts as of the end of the calendar year for which the opinion is applicable. (A) The ratio of the sum of capital and surplus to the sum of cash and invested assets is at least equal to .07. (B) The ratio of the sum of the reserves and liabilities for annuities and deposits to the total admitted assets is less than .40. (C) The ratio of the book value of the non-investment grade bonds to the sum of capital and surplus is less than .50. (D) The Examiner Team for the NAIC has not designated the company as a first priority company in any of the two calendar years preceding the calendar year for which the opinion is applicable, or a second priority company in each of the two calendar years preceding the calendar year for which the opinion is applicable; or the company has resolved the first or second priority status to the satisfaction of the insurance regulator of the company's state of domicile and that regulator has so notified the chair of the NAIC Life and Health Actuarial Task Force and the NAIC Staff and Support Office. (3) Any Category A or Category B company that meets all of the criteria set forth in Subparagraphs (c)(1) and (c)(2) of this Rule, whichever is applicable, is exempt from having to submit an opinion under Rule .0306 of this Section unless the Commissioner specifically indicates to the company that the exemption is not to be taken. (4) Any Category A or Category B company that, for any year beginning with calendar year 1994, is not exempt under Subparagraph (c)(3) of this Rule shall submit an opinion in accordance with Rule .0306 of this Section for the year for which it is not exempt. (5) Any Category C company that, after submitting an opinion in accordance with Rule .0306 of this Section, meets all of the following criteria, shall not be required, unless required in accordance with Subparagraph (c)(6) of this Rule, to submit an opinion in accordance with Rule .0306 of this Section more frequently than every third year. Any Category C company that fails to meet all of the following criteria for any year shall submit an opinion in accordance with Rule .0306 of this Section for that year. The ratios in Parts (c)(5)(A), (c)(5)(B), and (c)(5)(C) of this Rule shall be calculated based on amounts as of the end of the calendar year for which the opinion is applicable. (A) The ratio of the sum of capital and surplus to the sum of cash and invested assets is at least equal to .05. (B) The ratio of the sum of the reserves and liabilities for annuities and deposits to the total admitted assets is less than .50. (C) The ratio of the book value of the non-investment grade bonds to the sum of the capital and surplus is less than .50. (D) The Examiner Team for the NAIC has not designated the company as a first priority company in either of the two calendar years preceding the calendar year for which the opinion is applicable, or a second priority company in each of the two calendar years preceding the calendar year for which the opinion is applicable, or the company has resolved the first or second priority status to the satisfaction of the insurance regulator of the company's state of domicile and that regulator has so notified the chair of the NAIC Life and Health Actuarial Task Force and the NAIC Staff and Support Office. (6) Any company that is not required by this Rule to submit an opinion in accordance with Rule .0306 of this Section for any year shall submit an opinion in accordance with Rule .0305 of this Section for that year unless, as provided for by Rule .0301 of this Section, the Commissioner requires an opinion in accordance with Rule .0306 of this Section. (d) Every Category D company shall submit an opinion in accordance with Rule .0306 of this Section for each year, beginning with calendar year 1994. Authority G.S. 58-2-40; 58-58-50(i); 58-58-50(j). 11 NCAC 11F .0305 OPINION WITHOUT ASSET ADEQUACY ANALYSIS (a) The opinion required by G.S. 58-58-50(i) shall comprise: (1) a paragraph identifying the appointed actuary and his or her qualifications. (2) a regulatory authority paragraph stating that the company is exempt under this Section from submitting an opinion based on an asset adequacy analysis and that the opinion, which is not bas ed on an asset adequacy analysis, is rendered in accordance with this Rule. (3) a scope paragraph identifying the subjects on which the opinion is to be expressed and describing the scope of the appointed actuary's work. PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1783 (4) an opinion paragraph expressing the appointed actuary's opinion as required by G.S. 58-58-50(i). (b) The following language provided is that which in typical circumstances would be included in an opinion in accordance with this Section. The language may be modified as needed to meet the circumstances of a particular case, but the appointed actuary shall use language that clearly expresses his or her professional judgment. However, in any event the opinion shall retain all pertinent aspects of the language provided in this Rule. (1) The opening paragraph shall indicate the appointed actuary's relationship to the company. (A) For a company actuary, the opening paragraph of the actuarial opinion shall read as follows: "I, [name of actuary], am [title] of [name of company] and a member of the American Academy of Actuaries. I was appointed by, or by the authority of, the Board of Directors of the insurer to render this opinion as stated in the letter to the Commissioner dated [insert date]. I meet the Academy qualification standards for rendering the opinion and am familiar with the valuation requirements applicable to life and health companies." (B) For a consulting actuary, the opening paragraph of the actuarial opinion shall contain a sentence such as: "I, [name and title of actuary], a member of the American Academy of Actuaries, am associated with the firm of [insert name of consulting firm]. I have been appointed by, or by the authority of, the Board of Directors of [name of company] to render this opinion as stated in the letter to the Commissioner dated [insert date]. I meet the Academy qualification standards for rendering the opinion and am familiar with the valuation requirements applicable to life and health insurance companies." (2) The regulatory authority para
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Title | North Carolina register |
Date | 2004-04-15 |
Description | Volume 18, Issue 20, (April 15, 2004) |
Digital Characteristics-A | 449 KB; 86 p. |
Digital Format |
application/pdf |
Pres Local File Path-M | \Preservation_content\StatePubs\pubs_borndigital\images_master\ |
Full Text | NORTH CAROLINA REGISTER Volume 18, Issue 20 Pages 1760 - 1841 April 15, 2004 This issue contains documents officially filed through March 24, 2004. Office of Administrative Hearings Rules Division 424 North Blount Street (27601) 6714 Mail Serv ice Center Raleigh, NC 27699-6714 (919) 733-2678 FAX (919) 733-3462 Julian Mann III, Director Camille Winston, Deputy Director Molly Masich, Director of APA Services Ruby Creech, Publications Coordinator Linda Dupree, Editorial Assistant Dana Sholes, Editorial Assistant Julie Brincefield, Editorial Assistant IN THIS ISSUE I. IN ADDITION ENR - Public Notice - Hazardous Waste...................1760 Summary of Notice of Intent to Redevelop A Brownsfield Property - St Ives 220 Commercial....1761 II. PROPOSED RULES Agriculture Board of Agriculture ..................................................1762 - 1767 Commerce State Banking Commission.......................................1768 - 1774 Environment and Natural Resources Environmental Health................................................1792 - 1793 Health and Human Services Medical Care Commission........................................1774 - 1776 Insurance ........................................................................1776 - 1791 Licensing Boards Pharmacy, Board of....................................................1793 - 1794 III. TEMPORARY RULES Expired Temporary Rules Administration ............................................................1795 DENR/Marine Fisheries Commission ....................1795 IV. CONTESTED CASE DECISIONS Index to ALJ Decisions.................................................1796 - 1803 Text of Selected Decisions 03 DHR 0903 ..............................................................1804 - 1829 04 DHR 0051 ..............................................................1830 - 1837 03 OSP 1554................................................................1838 - 1841 For the CUMULATIVE INDEX to the NC Register go to: http://oahnt.oah.state.nc.us/register/CI.pdf North Carolina Register is published semi-monthly for $195 per year by the Office of Administrative Hearings, 424 North Blount Street, Raleigh, NC 27601. North Carolina Register (ISSN 15200604) to mail at Periodicals Rates is paid at Raleigh, NC. POSTMASTER: Send Address changes to the North Carolina Register, 6714 Mail Service Center, Raleigh, NC 27699-6714. NORTH CAROLINA ADMINISTRATIVE CODE CLASSIFICATION SYSTEM The North Carolina Administrative Code (NCAC) has four major classifications of rules. Three of these, titles, chapters, and sections are mandatory. The major classification of the NCAC is the title. Each major department in the North Carolina executive branch of government has been assigned a title number. Titles are further broken down into chapters which shall be numerical in order. Subchapters are optional classifications to be used by agencies when appropriate. NCAC TITLES TITLE 21 LICENSING BOARDS TITLE 24 INDEPENDENT AGENCIES 1 ADMINISTRATION 2 AGRICULTURE & CONSUMER SERVICES 3 AUDITOR 4 COMMERCE 5 CORRECTION 6 COUNCIL OF STATE 7 CULTURAL RESOURCES 8 ELECTIONS 9 GOVERNOR 10A HEALTH AND HUMAN SERVICES 11 INSURANCE 12 JUSTICE 13 LABOR 14A CRIME CONTROL & PUBLIC SAFETY 15A ENVIRONMENT &NATURAL RESOURCES 16 PUBLIC EDUCATION 17 REVENUE 18 SECRETARY OF STATE 19A TRANSPORTATION 20 TREASURER 21* OCCUPATIONAL LICENSING BOARDS 22 ADMINISTRATIVE PROCEDURES (REPEALED) 23 COMMUNITY COLLEGES 24* INDEPENDENT AGENCIES 25 STATE PERSONNEL 26 ADMINISTRATIVE HEARINGS 27 NC STATE BAR 28 JUVENILE JUSTICE AND DELINQUENCY PREVENTION 1 Acupuncture 2 Architecture 3 Athletic Trainer Examiners 4 Auctioneers 6 Barber Examiners 8 Certified Public Accountant Examiners 10 Chiropractic Examiners 11 Employee Assistance Professionals 12 General Contractors 14 Cosmetic Art Examiners 16 Dental Examiners 17 Dietetics/Nutrition 18 Electrical Contractors 19 Electrolysis 20 Foresters 21 Geologists 22 Hearing Aid Dealers and Fitters 25 Interpreter/Transliterator (Reserved) 26 Landscape Architects 28 Landscape Contractors 29 Locksmith Licensing 30 Massage & Bodywork Therapy 31 Marital and Family Therapy 32 Medical Examiners 33 Midwifery Joint Committee 34 Funeral Service 36 Nursing 37 Nursing Home Administrators 38 Occupational Therapists 40 Opticians 42 Optometry 44 Osteopathic Examination (Repealed) 45 Pastoral Counselors, Fee-Based Practicing 46 Pharmacy 48 Physical Therapy Examiners 50 Plumbing, Heating & Fire Sprinkler Contractors 52 Podiatry Examiners 53 Professional Counselors 54 Psychology 56 Professional Engineers & Land Surveyors 57 Real Estate Appraisal 58 Real Estate Commission 60 Refrigeration Examiners 61 Respiratory Care 62 Sanitarian Examiners 63 Social Work Certification 64 Speech & Language Pathologists & Audiologists 65 Therapeutic Recreation Certification 66 Veterinary Medical 68 Substance Abuse Professionals 69 Soil Scientists 1 Housing Finance 2 Agricultural Finance Authority 3 Safety & Health Review Board 4 Reserved 5 State Health Plan Purchasing Alliance Board Note: Title 21 contains the chapters of the various occupational licensing boards and Title 24 contains the chapters of independent agencies. NORTH CAROLINA REGISTER Publication Schedule for January 2004 – December 2004 FILING DEADLINES NOTICE OF TEXT PERMANENT RULE TEMPORARY RULES Volume & issue number Issue date Last day for filing Earliest date for public hearing End of required comment period Deadline to submit to RRC for review at next meeting Earliest Eff. Date of Permanent Rule Delayed Eff. Date of Permanent Rule (first legislative day of the next regular session) 270th day from publication in the Register 18:13 01/02/04 12/08/03 01/17/04 03/02/04 03/22/04 05/01/04 05/10/04 09/28/04 18:14 01/15/04 12/19/03 01/30/04 03/15/04 03/22/04 05/01/04 05/10/04 10/11/04 18:15 02/02/04 01/09/04 02/17/04 04/02/04 04/20/04 06/01/04 01/26/05 10/29/04 18:16 02/16/04 01/26/04 03/02/04 04/16/04 04/20/04 06/01/04 01/26/05 11/12/04 18:17 03/01/04 02/09/04 03/16/04 04/30/04 05/20/04 07/01/04 01/26/05 11/26/04 18:18 03/15/04 02/23/04 03/30/04 05/14/04 05/20/04 07/01/04 01/26/05 12/10/04 18:19 04/01/04 03/11/04 04/16/04 06/01/04 06/21/04 08/01/04 01/26/05 12/27/04 18:20 04/15/04 03/24/04 04/30/04 06/14/04 06/21/04 08/01/04 01/26/05 01/10/05 18:21 05/03/04 04/12/04 05/18/04 07/02/04 07/20/04 09/01/04 01/26/05 01/28/05 18:22 05/17/04 04/26/04 06/01/04 07/16/04 07/20/04 09/01/04 01/26/05 02/11/05 18:23 06/01/04 05/10/04 06/16/04 08/02/04 08/20/04 10/01/04 01/26/05 02/26/05 18:24 06/15/04 05/24/04 06/30/04 08/16/04 08/20/04 10/01/04 01/26/05 03/12/05 19:01 07/01/04 06/10/04 07/16/04 08/30/04 09/20/04 11/01/04 01/26/05 03/28/05 19:02 07/15/04 06/23/04 07/30/04 09/13/04 09/20/04 11/01/04 01/26/05 04/11/05 19:03 08/02/04 07/12/04 08/17/04 10/01/04 10/20/04 12/01/04 01/26/05 04/29/05 19:04 08/16/04 07/26/04 08/31/04 10/15/04 10/20/04 12/01/04 01/26/05 05/13/05 19:05 09/01/04 08/11/04 09/16/04 11/01/04 11/22/04 01/01/05 01/26/05 05/29/05 19:06 09/15/04 08/24/04 09/30/04 11/15/04 11/22/04 01/01/05 01/26/05 06/12/05 19:07 10/01/04 09/10/24 10/16/04 11/30/04 12/20/04 02/01/05 05/00/06 06/28/05 19:08 10/15/04 09/24/04 10/30/04 12/14/04 12/20/04 02/01/05 05/00/06 07/12/05 19:09 11/01/04 10/11/04 11/16/04 12/31/04 01/20/05 03/01/05 05/00/06 07/29/05 19:10 11/15/04 10/22//04 11/30/04 01/14/05 01/20/05 03/01/05 05/00/06 08/12/05 19:11 12/01/04 11/05/04 12/16/04 01/31/05 02/21/05 04/01/05 05/00/06 08/28/05 19:12 12/15/04 11/22/04 12/30/04 02/14/05 02/21/05 04/01/05 05/00/06 09/11/05 EXPLANATION OF THE PUBLICATION SCHEDULE This Publication Schedule is prepared by the Office of Adminis trative Hearings as a public service and the computation of time periods are not to be deemed binding or controlling. Time is computed according to 26 NCAC 2C .0302 and the Rules of Civil Procedure, Rule 6. GENERAL The North Carolina Register shall be published twice a month and contains the following information submitted for publication by a state agency: (1) temporary rules; (2) notices of rule-making proceedings; (3) text of proposed rules; (4) text of permanent rules approved by the Rules Review Commission; (5) notices of receipt of a petition for municipal incorporation, as required by G.S. 120-165; (6) Executive Orders of the Governor; (7) final decision letters from the U.S. Attorney General concerning changes in laws affecting voting in a juris diction subject of Section 5 of the Voting Rights Act of 1965, as required by G.S. 120-30.9H; (8) orders of the Tax Review Board issued under G.S. 105-241.2; and (9) other information the Codifier of Rules determines to be helpful to the public. COMPUTING TIME: In computing time in the schedule, the day of publication of the North Carolina Register is not included. The last day of the period so computed is included, unless it is a Saturday, Sunday, or State holiday, in which event the period runs until the preceding day which is not a Saturday, Sunday, or State holiday. FILING DEADLINES ISSUE DATE: The Register is published on the first and fifteen of each month if the first or fifteenth of the month is not a Saturday, Sunday, or State holiday for emp loyees mandated by the State Personnel Commission. If the first or fifteenth of any month is a Saturday, Sunday, or a holiday for State employees, the North Carolina Register issue for that day will be published on the day of that month after the first or fifteenth that is not a Saturday, Sunday, or holiday for State employees. LAST DAY FOR FILING: The last day for filing for any issue is 15 days before the issue date excluding Saturdays, Sundays, and holidays for State employees. NOTICE OF TEXT EARLIEST DATE FOR PUBLIC HEARING: The hearing date shall be at least 15 days after the date a notice of the hearing is published. END OF REQUIRED COMMENT PERIOD An agency shall accept comments on the text of a proposed rule for at least 60 days after the text is published or until the date of any public hearings held on the proposed rule, whichever is longer. DEADLINE TO SUBMIT TO THE RULES REVIEW COMMISSION: The Commission shall review a rule submitted to it on or before the twentieth of a month by the last day of the next month. FIRST LEGISLATIVE DAY OF THE NEXT REGULAR SESSION OF THE GENERAL ASSEMBLY: This date is the first legislative day of the next regular session of the General Assembly following approval of the rule by the Rules Review Commission. See G.S. 150B- 21.3, Effective date of rules. IN ADDITION 18:20 NORTH CAROLINA REGISTER April 15, 2004 1760 Note from the Codifier: This Section contains public notices that are required to be published in the Register or have been approved by the Codifier of Rules for publication. PUBLIC NOTICE NORTH CAROLINA DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES HAZARDOUS WASTE SECTION 1646 MAIL SERVICE CENTER RALEIGH, NORTH CAROLINA 27699-1646 (919) 733-2178 Notice of proposed issuance of and public comment period for delisting petition under the Federal Resource Conservation and Recovery Act as amended by the Hazardous and Solid Waste Amendments of 1984 (PL-98-616) and the North Carolina Hazardous Waste Management Rules (15A NCAC 13A) for GlaxoSmithKline (GSK), Research Triangle Park, Durham County, North Carolina. The public comment period will begin on the date of this notice and extend for thirty (30) days thereafter. Comments regarding the delisting petition should be sent to the following address: Elizabeth W. Cannon North Carolina Hazardous Waste Section 1646 Mail Service Center Raleigh, North Carolina 27699-1646 All data submitted by the applicant is available as part of the administrative record. NC DENR will provide auxiliary aids and services for disabled persons who wish to review the GSK’s delisting petition to comply with the Americans with Disabilities Act. To receive special services, please contact Rita Umozurike at the address and phone number below as early as possible, so arrangements can be made. A copy is available for review from 9 a.m. to 4 p.m., Monday through Friday at the: Hazardous Waste Section 401 Oberlin Road, Room 150 Raleigh, North Carolina 27605 Call (919) 733-2178 ext. 311 for an appointment. Here is a summary of the delisting petition. The Hazardous Waste Section is preparing to approve GSK’s delisting petition for ash from the incinerator’s air pollution control equipment. The ash is currently considered hazardous, but analysis has shown that the ash generated at this specific facility does not contain constituents at a level that causes it to be considered hazardous waste. Data was collected over several weeks, under conditions that indicate worst-case levels of the chemical constituents. If the delisting is approved, GSK may be allowed to send this waste to a North Carolina lined municipal landfill for disposal. All comments received during the public comment will be considered in the decision-making process regarding the delisting petition. IN ADDITION 18:20 NORTH CAROLINA REGISTER April 15, 2004 1761 SUMMARY OF NOTICE OF INTENT TO REDEVELOP A BROWNFIELDS PROPERTY St. Ives 220 Commercial, LLC Pursuant to N.C.G.S. § 130A-310.34, St. Ives 220 Commercial, LLC has filed with the North Carolina Department of Environment and Natural Resources (“DENR”) a Notice of Intent to Redevelop a Brownfields Property (“Property”) in Wake Forest, Wake County, North Carolina. The Property consists of approximately 33 acres and is located at 12415 Capitol Boulevard. Environmental contamination exists on the Property in soil and groundwater. St. Ives 220 Commercial, LLC has committed itself to redevelop the Property for mixed commercial, retail, conference/convention/events center/flex space/warehousing and office space uses. The Notice of Intent to Redevelop a Brownfields Property includes: (1) a proposed Brownfields Agreement between DENR and St. Ives 220 Commercial, LLC, which in turn includes (a) a map showing the location of the Property, (b) a description of the contaminants involved and their concentrations in the media of the Property, (c) the above-stated description of the intended future use of the Property, and (d) proposed investigation and remediation; and (2) a proposed Notice of Brownfields Property prepared in accordance with G.S. 130A-310.35. The full Notice of Intent to Redevelop a Brownfields Property may be reviewed at the Wake Forest Town Manager’s Office, 401 Elm Street, Wake Forest, NC 27587 by contacting Joyce Wilson, Town Clerk at 919.554.6190; or at 401 Oberlin Rd., Raleigh, NC 27605 by contacting Shirley Liggins at that address, at shirley.liggins@ncmail.net, or at (919) 733-2801, ext. 336, where DENR will provide auxiliary aids and services for persons with disabilities who wish to review the documents. Written public comments may be submitted to DENR within 60 days after the date this Notice is published in a newspaper of general circulation serving the area in which the brownfields property is located, or in the North Carolina Register, whichever is later. Written requests for a public meeting may be submitted to DENR within 30 days after the period for written public comments begins. All such comments and requests should be addressed as follows: Mr. Bruce Nicholson Brownfields Program Manager Division of Waste Management NC Department of Environment and Natural Resources 401 Oberlin Road, Suite 150 Raleigh, North Carolina 27605 PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1762 This Section contains the text of proposed rules. At least 60 days prior to the publication of text, the agency published a Notice of Rule-making Proceedings. The agency must accept comments on the proposed rule for at least 30 days from the publication date, or until the public hearing, or a later date if specified in the notice by the agency. The required comment period is 60 days for a rule that has a substantial economic impact of at least five million dollars ($5,000,000). Statutory reference: G.S. 150B-21.2. TITLE 2 – DEPARTMENT OF AGRICULTURE & CONSUMER SERVICES Notice is hereby given in accordance with G.S. 150B-21.2 that the NC Board of Agriculture intends to amend the rule cited as 02 NCAC 52B .0406. Proposed Effective Date: August 1, 2004 Instructions on How to Demand a Public Hearing: (must be requested in writing within 15 days of notice): Any person may request a public hearing on the proposed rule by submitting a request in writing no later than April 30, 2004, to David S. McLeod, Secretary, NC Board of Agriculture, 1001 Mail Service Center, Raleigh, NC 27699-1001. Reason for Proposed Action: This rule establishes requirements for testing horses and other equine for equine infectious anemia (EIA). Proposed changes would clarify responsibilities for checking EIA test papers of equine in public places such as horse shows, and make technical changes. Procedure by which a person can object to the agency on a proposed rule: Any person may object to the proposed rule by submitting a written statement of objection(s) to David S. McLeod, Secretary, NC Board of Agriculture, 1001 Mail Service Center, Raleigh, NC 27699-1001. Written comments may be submitted to: David S. McLeod, Secretary, NC Board of Agriculture, 1001 Mail Service Center, Raleigh, NC 27699-1001, Phone (919)733-7125 ext. 249, Fax (919) 716-0105, email david.mcleod@ncmail.net. Comment period ends: June 14, 2004 Procedure for Subjecting a Proposed Rule to Legislative Review: Any person who objects to the adoption of a permanent rule may submit written comments to the agency. A person may also submit written objections to the Rules Review Commission. If the Rules Review Commission receives written and signed objections in accordance with G.S. 150B-21.3(b2) from 10 or more persons clearly requesting review by the legislature and the Rules Review Commission approves the rule, the rule will become effective as provided in G.S. 150B-21.3(b1). The Commission will receive written objections until 5:00 p.m. on the 6th business day preceding the end of the month in which a rule is approved. The Commission will receive those objections by mail, delivery service, hand delivery, or facsimile transmission. If you have any further questions concerning the submission of objections to the Commission, please call a Commission staff attorney at 919-733-2721. Fiscal Impact State Local Substantive (>$3,000,000) None SECTION .0400 - EQUINE INFECTIOUS ANEMIA (EIA) 02 NCAC 52B .0406 EIA TEST REQUIRED (a) All equine more than six months of age entering North Carolina for any purpose other than for immediate slaughter shall be accompanied by a copy of the certificate of test from a laboratory approved by the USDA showing the animal to be negative to an approved test for equine infectious anemia (EIA) within the past 12 months, except as provided in 02 NCAC 52B .0410. (See 02 NCAC 52B .0206 for other importation requirements.) (b) No equine more than six months of age shall be sold, offered for sale, traded, given away, or moved for the purpose of change of ownership unless accompanied by the original official negative test for EIA administered within 12 months prior to sale or movement, except that equine which are offered for sale at auction markets or sales may have a blood sample drawn at the market by the market's veterinarian at the seller's expense. In such cases, the equine may be sold and transferred contingent upon receipt of an official negative EIA test. Until receipt of an official negative EIA test, the equine must be isolated in accordance with standards for isolation of positive reactors, pursuant to 02 NCAC 52B .0408(c)(2). (c) All equine brought to or kept at any public stables or other public place for exhibition, recreation or assembly shall be accompanied by either the original or a copy of an official negative test for EIA administered within the previous 12 months. The owner, operator or person in charge of any public stables or other public place where equine are brought or kept for exhibition, recreation or assembly shall not permit an equine to remain on the premises without the test required by this Rule. (d) A person in possession or control of an equine in a public place shall, upon the request of an authorized person, present the original or a copy of the test required by this Rule and shall assist in identifying the equine. A person in possession or control of an equine who does not have an original or a copy of the test required by this Rule shall remove the equine from the premises within two hours of receiving written notification to leave from an authorized person. As used in this Rule, "authorized person" means the person in charge of the premises, or the State Veterinarian or his representative. Authority G.S. 106-405.17; S.L. 1999-237, s. 13.6. * * * * * * * * * * * * * * * * * * * * Notice is hereby given in accordance with G.S. 150B-21.2 that the NC Board of Agriculture intends to adopt the rule cited as 02 PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1763 NCAC 52J .0104 and amend the rules cited as 02 NCAC 52J .0101-0103, .0201-.0207, .0209-.0210, .0302. Proposed Effective Date: January 1, 2005 Instructions on How to Demand a Public Hearing: (must be requested in writing within 15 days of notice): Any person may request a public hearing on the proposed rule by submitting a request in writing no later than April 30, 2004, to David S. McLeod, Secretary, NC Board of Agriculture, 1001 Mail Service Center, Raleigh, NC 27699-1001. Reason for Proposed Action: Proposed changes would clarify existing rules by making requirements more specific, add requirements for drainage of facilities, acceptable impervious surfaces for sanitation, fencing of outdoors areas, and other changes to improve quality of facilities and care provided by licensees. Procedure by which a person can object to the agency on a proposed rule: Any person may object to the proposed rule by submitting a written statement of objection(s) to David S. McLeod, Secretary, NC Board of Agriculture, 1001 Mail Service Center, Raleigh, NC 27699-1001. Written comments may be submitted to: David S. McLeod, Secretary, NC Board of Agriculture, 1001 Mail Service Center, Raleigh, NC 27699-1001, Phone (919)733-7125 ext. 249, Fax (919) 716-0105, email david.mcleod@ncmail.net. Comment period ends: June 14, 2004 Procedure for Subjecting a Proposed Rule to Legislative Review: Any person who objects to the adoption of a permanent rule may submit written comments to the agency. A person may also submit written objections to the Rules Review Commission. If the Rules Review Commission receives written and signed objections in accordance with G.S. 150B-21.3(b2) from 10 or more persons clearly requesting review by the legislature and the Rules Review Commission approves the rule, the rule will become effective as provided in G.S. 150B-21.3(b1). The Commission will receive written objections until 5:00 p.m. on the 6th business day preceding the end of the month in which a rule is approved. The Commission will receive those objections by mail, delivery service, hand delivery, or facsimile transmission. If you have any further questions concerning the submission of objections to the Commission, please call a Commission staff attorney at 919-733-2721. Fiscal Impact State Local Substantive (>$3,000,000) None CHAPTER 52 - VETERINARY DIVISION SUBCHAPTER 52J - ANIMAL WELFARE SECTION SECTION .0100 - RECORD KEEPING AND LICENSING 02 NCAC 52J .0101 RECORDS; ANIMAL SHELTERS, ETC. Operators of all animal shelters, pet shops, public auctions, and dealers shall maintain records on all dogs and cats showing the following: (1) origin of animals (including names and addresses of consignors) and date animals were received; (2) description of animals including species, age, sex, breed, and color markings; (3) location of animal if not kept at the licensed or registered facility; (3)(4) disposition of animals including name and address of person to whom animal is sold, traded or adopted; adopted and the date of such transaction; in the event of death, the record shall show the date, signs of illness, or cause of death if identified; if euthanized, the record will shall show date and type of euthanasia; and (4)(5) record of veterinary care including treatments treatments, immunization and immunization; date, time, description of medication (including name and dosage), and initials of person administering any product or procedure. (5) maintain records on file for a period of one calendar year. Authority G.S. 19A-24. 02 NCAC 52J .0102 RECORDS; BOARDING KENNELS Operators of boarding kennels shall maintain records of all dogs and cats showing the following: (1) name and address of owner or person responsible for animal, the date of entry and signature and address of individual to whom animal is released; released and the date of release; (2) description of animal including breed, sex, age and color marking; and (3) record of veterinary care including treatment provided while boarded, which shall include date, times, description of medication (including name and dosage) and immunization; initials of person administering product or procedure. (4) records on file must be maintained for a period of one calendar year. Authority G.S. 19A-24. 02 NCAC 52J .0103 INSPECTION OF RECORDS All operators of animal shelters, pet shops, boarding kennels, public auctions, and persons operating as dealers will shall make all required records available to the director or his authorized representative on request. request, during the business and PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1764 cleaning hours listed on the license application. The operator must be able to match each animal to its record upon request. Records shall be maintained for a period of one year after the animal is released. Authority G.S. 19A-24; 19A-25. 02 NCAC 52J .0104 DEFINITIONS As used in this Subchapter: (1) "Accessories" means any objects used in cleaning and sanitizing primary enclosures, exercise areas, or objects to which an animal may have access, including, but not limited to toys, blankets, food and water utensils, and bedding. (2) "Adequate" means a condition which, when met, does not jeopardize an animal's comfort, safety or health. (3) "Cage" means a primary enclosure which is enclosed on all sides and also on the top and bottom. (4) "Husbandry" means the practice of daily care administered to animals. (5) "Isolation" means the setting apart of an animal from all other animals, food, and equipment in the facility for the sole purpose of preventing the spread of disease. (6) "License period" means July 1 through June 30. (7) "Long term care" means the housing of an animal for a period of more than 30 consecutive days. (8) "Properly cleaned" means the removal of carcasses, debris, food waste, excrement, or other organic material with adequate frequency. (9) "Social interaction" means friendly physical contact or play between animals of the same species or with a person. (10) "Suitable method of drainage" means drainage that allows for the elimination of water and waste products, prevents contamination of animals, allows animals to remain dry, and complies with applicable building codes and local ordinances. (11) "Supervision of animals" means one person (at least 16 years of age) present, at all times, able to directly view each enclosure or common area. Authority G.S. 19A-24. SECTION .0200 - FACILITIES AND OPERATING STANDARDS 02 NCAC 52J .0201 GENERAL (a) Housing facilities for dogs and cats shall be structurally sound and maintained in good repair to protect the animals from injury, contain the animals and restrict the entrance of other animals and people. (b) All light fixtures and electrical outlets in animal areas shall be in compliance with the State Building Code. (b) (c) Reliable and adequate safe electric power, if required, power is required to comply with other provisions of the Animal Welfare Act and adequate potable water shall be available. Act. (c) (d) Supplies of food and bedding shall be stored in facilities which adequately protect such supplies against infestation or contamination by vermin. vermin and insects. All open bags of food shall be stored in airtight containers with lids. Refrigeration shall be provided for supplies of perishable food. (d) (e) Provisions shall be made for the daily removal and disposal of animal and food waste, bedding and debris, debris from the housing facility in accordance with local ordinances, to assure facility will be maintained in a clean and sanitary manner. (e) (f) Hot and cold running, potable water must be available. Facilities such as washroom, basin or sink shall be provided to maintain cleanliness among animal caretakers caretakers, animals, and animal food and water receptacles. (f) (g) Ambient temperature shall be measured and read outside the primary enclosure at a distance not to exceed three feet from any one of the external walls and on a level parallel to the bottom of the primary enclosure at a point approximately half the distance between the top and bottom of such enclosure. Facility shall have ability to confirm ambient temperature. (h) A separate five-foot perimeter fence is required if any animals have access to an outdoor enclosure, including unsupervised exercise areas. (i) An adequate drainage system must be provided for the housing facility. (j) All areas of a facility are subject to review or inspection by North Carolina Department of Agriculture and Consumer Services employees during normal business hours (8:00 a.m. through 5:30 p.m. Monday through Friday). (k) All animals in a facility are subject to these standards, regardless of ownership. (l) A licensee or registrant shall comply with all federal, state and local laws, rules and ordinances relating to or affecting the welfare of dogs and cats in its facility. (m) No dog or cat shall be in a window display except during business hours and then only in compliance with standards set forth in this Section. Authority G.S. 19A-24. 02 NCAC 52J .0202 INDOOR FACILITIES (a) Indoor housing facilities for dogs and cats shall be sufficiently adequately heated and cooled when necessary to protect the dogs and cats from cold and excessive heat and provide for their health and comfort. The ambient temperature shall not be allowed to fall below 50 degrees F. for dogs and cats not acclimated to lower temperatures. or exceed 85 degrees F. (b) Indoor housing facilities for dogs and cats shall be adequately ventilated to provide for the health and comfort of the animals at all times. Such The facilities shall be provided with fresh air either by means of windows, doors, vents or air conditioning and shall be ventilated so as to minimize drafts, drafts. Air flow shall be adequate to minimize odors and moisture condensation. Ventilation shall be provided when PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1765 ambient temperature is 85 degrees F. or higher. (c) Indoor housing facilities for dogs and cats shall have ample light by natural or artificial means or both, of good quality and well distributed. Such light shall provide uniformly distributed illumination of sufficient light intensity to permit routine inspection and cleaning during the entire working period. Primary enclosures shall be so placed as to protect the dogs and cats from excessive illumination. adequate illumination to permit routine inspections, maintenance, cleaning and housekeeping of the facility and observation of the animals. Illumination shall provide regular diurnal lighting cycles of either natural or artificial light, uniformly diffused throughout the animal facilities. (d) Interior building surfaces of indoor facilities with which animals come in contact shall be constructed and maintained so that they are substantially impervious to moisture, so that it may and can be readily sanitized. (e) A suitable method of drainage shall be provided to rapidly eliminate excess water from an indoor housing facility. If closed drain systems are used, they shall be equipped with traps and installed to prevent odors and backup of sewage. The drainage system shall be constructed to prevent cross-contamination among animals. Authority G.S. 19A-24. 02 NCAC 52J .0203 OUTDOOR FACILITIES (a) When sunlight is likely to cause overheating and discomfort, sufficient shade shall be provided to allow all dogs and cats kept outdoors to protect themselves from the direct rays of the sun. Primary enclosures and walkways with which an animal comes in contact shall be constructed of sealed concrete or other surfaces impervious to moisture. Gravel may be used if maintained at a minimum depth of six inches and kept in a sanitary manner. (b) Dogs and cats kept outdoors shall be provided with access to shelter housing to allow them to remain dry and comfortable during inclement weather. Housing shall be constructed of material which is impervious to moisture, and which can be disinfected. One house shall be available for each animal within each enclosure. (c) In addition to housing, the enclosure shall provide protection from excessive sun and inclement weather. (d) Animal owners shall be advised at the time of reservation and admission if the animal will be kept in outside facilities. (c) (e) A suitable method of drainage shall be provided to rapidly eliminate excess water. The drainage system shall be constructed to prevent cross-contamination among animals. Authority G.S. 19A-24. 02 NCAC 52J .0204 PRIMARY ENCLOSURES (a) Primary enclosures shall be constructed so as to prevent contamination from waste and wastewater from animals in other enclosures. All surfaces with which an animal comes in contact shall be impervious to moisture. For primary enclosures placed into service on or after January 1, 2005, no wood can be within the animal's reach. For primary enclosures in use in a licensed or registered facility prior to January 1, 2005, any damaged wood must be replaced in a manner that does not permit contact with wood by the animal. (a) (b) Primary enclosures for dogs and cats shall be structurally sound and maintained in good repair and in a manner to prevent injury to animals and keep other animals out. Primary enclosures shall be constructed so as to provide sufficient space to allow each dog or cat to walk, turn about freely freely, and to easily stand, sit, or lie in a comfortable, normal natural position. The height of a primary enclosure other than a cage shall be no less than five feet. All enclosures shall be constructed to prevent the escape of animals. (c) Each primary enclosure shall be provided with a solid resting surface or surfaces adequate to comfortably hold all occupants of the primary enclosure at the same time. All resting surfaces must be of a non-porous or easily sanitized material, such as a towel, or a disposable material such as newspaper. The resting surface or surfaces shall be elevated in primary enclosures housing two or more cats. (b) (d) In addition to Paragraph (a) (b) of this Regulation, Rule, each dog shall be provided a minimum square footage of floor space equal to the mathematical square of the sum of the length of the dog in inches, as measured from the tip of its nose to the base of its tail, plus six inches. inches, then divide the product by 144. The calculation is: (length of dog in inches + 6) x (length of dog in inches + 6) = required floor space in square inches. Required floor space in square inches ÷ 144 = required floor space in square feet. The calculation shall be expressed in square feet. Not more than 12 four adult dogs shall be housed in the same primary enclosure. enclosure without supervision. (length of dog in inches + 6") (length of dog in inches + 6") required area inches =required square feet144 (e) If more than four dogs are housed in a common area or enclosure, then there must be at least one supervisor for each 12 dogs housed within each enclosure or common area. No more than 36 dogs may be housed in any enclosure or common area at any time. (c) (f) In addition to Paragraph (a) (b) of this Regulation, Rule, each adult cat housed in any primary enclosure shall be provided a minimum of two and one-half four square feet of floor space. space which may include elevated resting surfaces. Each kitten shall be provided 1.5 square feet. Not more than 12 adult cats shall be housed in the same primary enclosure. (d) In all enclosures having a solid floor, a receptacle containing sufficient clean litter shall be provided for excreta. Each primary enclosure shall be provided with a solid resting surface or surfaces adequate to comfortably hold all occupants of the primary enclosures at the same time. Such resting surface or surfaces shall be elevated in primary enclosures housing two or more cats. (g) In all cat enclosures, a receptacle containing sufficient clean litter shall be provided for waste. A minimum of one receptacle per three cats is required. Authority G.S. 19A-24. 02 NCAC 52J .0205 FEEDING (a) Dogs and cats shall be fed at least once each day 24-hour PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1766 period except as otherwise might be required to provide adequate veterinary care. Food shall be commercially prepared food which complies with laws applicable to animal feed or the food shall be provided by the owner. The food shall be free from contamination, wholesome, palatable, and of sufficient adequate quality and quantity appropriate for the given size, age, and nutritive value condition of an animal to meet the normal daily requirements for the condition and size of the dog or cat. nutritional value. Puppies and kittens less than six months of age shall be fed at least twice in each 24 hour 24-hour period. An eight hour eight-hour interval between feedings is required if only two feedings are offered in a 24 hour 24-hour period. (b) Food receptacles shall be accessible to all dogs or cats and shall be located so as to minimize contamination by excreta. Feeding pans waste. For every adult animal, there must be at least one food receptacle offered. Food receptacles shall be durable and shall be kept clean and sanitized. Damaged receptacles shall be replaced. Disposable food receptacles may be used but must be discarded after each feeding. Self feeders may be used for the feeding of dry food, and they shall be sanitized regularly to prevent molding, deterioration or caking of feed. (c) Food and water receptacles in outdoor facilities shall be protected from the elements. Authority G.S. 19A-24. 02 NCAC 52J .0206 WATERING If potable water is not accessible to the dogs and cats at all times, potable water shall be offered to such animals at least twice daily for periods of not less than one hour, Animals shall have continuous access to fresh water, except as might otherwise be required to provide adequate veterinary care. Watering receptacles shall be durable and kept clean and sanitized. Damaged receptacles shall be replaced. Authority G.S. 19A-24. 02 NCAC 52J .0207 SANITATION (a) Excreta Waste shall be removed from primary enclosures as often as necessary and exercise areas to prevent contamination of the dogs or cats contained therein and to reduce disease hazards and odors. Enclosures and exercise areas for dogs and cats must be properly cleaned a minimum of two times per day. The animal must be able to walk or lie down without coming in contact with any waste or debris. When a hosing or flushing method is used for cleaning a primary enclosure commonly known as a cage, any dog an enclosure, dogs or cat cats contained therein shall be removed from such enclosure during the cleaning process, and adequate measures shall be taken to protect the animals in other such enclosures from being contaminated with water and other wastes. (b) Sanitization of primary enclosures Sanitation shall be as follows: (1) Prior to the introduction of dogs or cats into empty primary enclosures previously occupied, such enclosures and accessories shall be sanitized in the manner provided in Subparagraph (3) of this Paragraph. (2) Primary In addition to primary enclosures for dogs or cats shall be sanitized often enough to prevent an accumulation being properly cleaned a minimum of debris or excreta, or a disease hazard, provided, however, that such two times per day, enclosures and accessories shall be sanitized at least a minimum of once every two weeks seven days in the manner provided in Subparagraph (3) of this Paragraph. Paragraph if the same animal is housed in the same enclosure more than seven days. (3) Cages, rooms and hard-surfaced pens or runs shall be sanitized by: (A) washing them with hot water (180 degrees F.) and soap or detergent as in a mechanical cage washer; or (B) washing all soiled surfaces with a detergent solution to remove all organic matter followed by or in conjunction with application of a safe and effective disinfectant approved by the director; disinfectant; or (C) cleaning all soiled surfaces with live steam. (4) Food and water receptacles shall be sanitized daily with hot water, detergent, and approved disinfectant. (5) Soiled linens and cloth products shall be mechanically washed with detergent and sanitized. (6) Any area accessible to multiple animals shall be kept clean and sanitary. (c) Premises (buildings and grounds) shall be kept clean and in good repair in order to protect the animals from injury and to facilitate the prescribed husbandry practices set forth in this Rule. Premises shall remain free of accumulations of trash. trash, junk, waste products, and discarded matter. Weeds, grasses, and bushes must be controlled so as to facilitate cleaning of the premises and to improve pest control, and to protect the health and well-being of the animals. (d) An effective program for the control of insects, ectoparasites, and avian and mammalian pests shall be established and maintained. (e) No dog or cat shall be in a window display except during business hours and then only in compliance with standards set forth in 2 NCAC 52J .0200. Authority G.S. 19A-24. 02 NCAC 52J .0209 CLASSIFICATION AND SEPARATION Animals housed in the same primary enclosure shall be maintained in compatible groups, with the following additional restrictions: (1) Females in season (estrus) shall not be housed in the same primary enclosure with males, except for planned breeding purposes. Breeding shall not be allowed in animal PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1767 shelters. (2) In boarding kennels, animals of different owners shall not have contact with other animals, unless written permission is obtained from the animal's owner. Any dog or cat exhibiting a vicious an aggressive disposition shall be housed individually in a primary enclosure. (3) Puppies or kittens less than six four months of age shall not be housed in the same primary enclosure with adult dogs or cats other than their dams, except when permanently maintained in breeding colonies. colonies, or if requested in writing, by the animals' owner, as in a boarding kennel. Puppies or kittens between 4 and 16 weeks of age shall have daily access to human social interaction, excluding animals which pose a danger to humans or other animals. (4) Dogs shall not be housed in the same primary enclosure with cats, nor shall dogs or cats be housed in the same primary enclosure with any other species of animals. Exceptions will be allowed at boarding kennels, if requested in writing by the animals' owner. (5) All facilities shall designate an isolation area for animals being treated or observed for communicable diseases. Dogs or cats under quarantine or treatment in isolation that are being treated for a communicable disease shall be separated from other dogs or cats and other suspectable susceptible species of animals in such a manner as to minimize dissemination of such disease. A sign shall be posted at the cage or isolation area when in use, giving notice of a communicable disease. (6) Animals in long term care which are intended for adoption or sale must be provided the following: (a) Daily access to both human and same species social interaction. (b) Daily access to space other than the primary enclosure. (c) A species and size-appropriate toy, unless it poses a health threat. (7) All animals shall be confined in primary enclosures or exercise areas. Authority G.S. 19A-24. 02 NCAC 52J .0210 VETERINARY CARE (a) Programs A written program of veterinary care to include disease control and prevention, vaccination, euthanasia, and adequate veterinary care shall be established and maintained under with the supervision and assistance of a licensed veterinarian. (b) If there is a severe or persistent disease problem at the facility, the facility operator shall obtain a veterinarian's written recommendations for correcting the problem. (b) (c) Each dog and cat shall be observed daily by the animal caretaker in charge, or by someone under his direct supervision. Sick or diseased, injured, lame, or blind dogs or cats shall be provided with veterinary care or be humanely disposed of unless such action is inconsistent with the research purposes for which such animal was obtained and is being held, provided, however, euthanized, provided that the provision this shall not effect affect compliance with any state or local law requiring the holding, for a specified period, of animals suspected of being diseased. Obviously sick, diseased, or deformed animals will not be offered for sale or adoption. If euthanasia is performed at a facility, a list of personnel approved to perform euthanasia shall be maintained on a Letter of Euthanasia Certification form and kept on file at the facility. Diseased or deformed animals shall be sold or adopted only under the policy set forth in the "Program of Veterinary Care." Full written disclosure of the medical condition of the animal shall be provided to the new owner. (d) All animals in a licensed or registered facility shall be in compliance with the North Carolina rabies law, G.S. 130A, Article 6, Part 6. Authority G.S. 19A-24. 02 NCAC 52J .0302 PRIMARY ENCLOSURES USED IN TRANSPORTING DOGS AND CATS (a) Primary enclosures such as compartments or transport cages, cartons, or crates used to transport cats and dogs shall be well constructed, well ventilated and designed to protect the health and insure the safety of the animals. Such enclosures shall be constructed or positioned in the vehicle in such a manner that: (1) Each animal in the vehicle has sufficient fresh air for normal breathing. (2) The openings of such enclosures are easily accessible for emergency removals at all times. (3) The animals are adequately protected from the elements. The ambient temperature shall not be allowed to exceed 95 maintained between 50 degrees F. F at any time nor to exceed 85 degrees F. for a period of more than four hours. The ambient temperature will not be allowed to fall below 50 and 85 degrees F. unless animals are acclimated to lower temperatures. (b) Animals transported in the same primary enclosure shall be of the same species. Puppies or kittens less than six four months of age shall not be transported in the same primary enclosure with adult dogs and cats other than their dams. (c) Primary enclosures used to transport dogs and cats shall be large enough for each animal to stand erect, turn about freely freely, and to easily stand, sit, or lie down in a normal natural position. (d) Animals shall not be placed in primary enclosures over other animals in transit unless such enclosure is constructed so as to prevent animal excreta from entering lower enclosures. (e) All primary enclosures used to transport dogs and cats shall be sanitized between use for shipments. Authority G.S. 19A-24. PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1768 TITLE 04 – DEPARTMENT OF COMMERCE Notice is hereby given in accordance with G.S. 150B-21.2 that the State Banking Commission, Commissioner of Banks intends to adopt the rules cited as 04 NCAC 03B .0219-.0228, .0301- .0304; amend the rules citied as 04 NCAC 03B .0101-.0103, .0105 and repeal the rules cited as 04 NCAC 03B .0201-.0206, .0209-.0218. Proposed Effective Date: August 1, 2004 Public Hearing: Date: April 30, 2004 Time: 9:00 a.m. Location: 316 W. Edenton Street, Raleigh, NC Reason for Proposed Action: To update the agency's address in several rules; to incorporate statutory revisions into and otherwise update the agency's rules governing administrative hearings and appeals to the full Banking Commission in contested cases. Procedure by which a person can object to the agency on a proposed rule: Objections may be submitted in writing to William H. Finlay, Agency Legal Specialist, 4309 Mail Service Center, Raleigh, NC 27699-4309, or by email, wfinlay@nccob.org. Objections may also be made in person at the public hearing. Written comments may be submitted to: William H. Finlay, Agency Legal Specialist, 4309 Mail Service Center, Raleigh, NC 27699-4309, phone (919)715-0082, Fax (919)733-6918, and email wfinlay@nccob.org. Comment period ends: June 14, 2004 Procedure for Subjecting a Proposed Rule to Legislative Review: Any person who objects to the adoption of a permanent rule may submit written comments to the agency. A person may also submit written objections to the Rules Review Commission. If the Rules Review Commis sion receives written and signed objections in accordance with G.S. 150B-21.3(b2) from 10 or more persons clearly requesting review by the legislature and the Rules Review Commission approves the rule, the rule will become effective as provided in G.S. 150B-21.3(b1). The Commission will receive written objections until 5:00 p.m. on the 6th business day preceding the end of the month in which a rule is approved. The Commission will receive those objections by mail, delivery service, hand delivery, or facsimile transmission. If you have any further questions concerning the submission of objections to the Commission, please call a Commission staff attorney at 919-733-2721. Fiscal Impact State Local Substantive (>$3,000,000) None SUBCHAPTER 3B - RULE-MAKING AND CONTESTED CASES SECTION .0100 - RULE-MAKING 04 NCAC 03B .0101 PETITIONS (a) Any person wishing to submit a petition requesting the adoption, amendment, or repeal of a rule by the Banking Commission shall address a petition to: Office of The Commissioner of Banks P.O. Box 10709 4309 Mail Service Center Raleigh, North Carolina 27605-0709. 27699-4309. Attention: Rule-making Coordinator (b) The Commissioner of Banks will determine, based on a study of the facts stated in the petition, whether the public interest will be served by granting it. He will consider all the contents of the submitted petition, plus any additional information he deems relevant. Authority G.S. 53-92; 150B-20. 04 NCAC 03B .0102 NOTICE (a) Any person or agency desiring to be placed on the mailing list for Banking Commission rule-making notices may file a request in writing, furnishing their name and mailing address to: Office of The Commissioner of Banks P.O. Box 10709 4309 Mail Service Center Raleigh, North Carolina 27605-0709. 27699-4309. Attention: Rule-making Coordinator The request must state the subject areas within the authority of the Banking Commission for which notice is requested. (b) Persons desiring information in addition to that provided in a particular rule -making notice may contact: Office of The Commissioner of Banks P.O. Box 10709 4309 Mail Service Center Raleigh, North Carolina 27605-0709. 27699-4309. Attention: Rule-making Coordinator Authority G.S. 53-92; 150B-20. 04 NCAC 03B .0103 HEARINGS (a) Unless otherwise stated in a particular rule-making notice, hearings before the Banking Commission shall be held in Raleigh, North Carolina, at regular scheduled or special called meetings of the Banking Commission. (b) Any person desiring to present oral data, views, or arguments on the proposed rule must, before the hearing, file a notice with: Office of The Commissioner of Banks P.O. Box 10709 4309 Mail Service Center Raleigh, North Carolina 27605-0709. 27699-4309. Attention: Rule-making Coordinator Any person permitted to make an oral presentation shall submit a written copy of the presentation to the above-named person prior to or at the hearing. (c) A request to make an oral presentation must contain a brief summary of the individual's views with respect thereto, and a statement of the length of time the individual wants to speak. PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1769 Presentations may not exceed 15 minutes unless, upon request, either before or at the hearing, the Commissioner of Banks or the presiding officer should determine that fundamental fairness and procedural due process require an extension of time. (d) Upon receipt of a request to make an oral presentation the Commissioner of Banks shall acknowledge receipt of the request, and inform the person requesting of the imposition of any limitations deemed necessary to the end of a full and effective public hearing on the proposed rule. (e) Upon receipt of such written comments prompt acknowledgment shall be made including a statement that the comments therein shall be considered fully by the Banking Commission. (f) The presiding officer at the hearing shall have complete control of the proceedings, including: extensions of any time requirements, recognition of speakers, time allotments for presentations, direction of the flow of the discussion, and the management of the hearing. The presiding officer, at all times, shall take care that each person participating in the hearing is given a fair opportunity to present views, data, and comments. Authority G.S. 53-92; 150B-21.2. 04 NCAC 03B .0105 DECLARATORY RULINGS (a) Any person substantially affected by a statute administered or rule promulgated by the Commissioner of Banks or the Banking Commission may request a declaratory ruling as to: (1) whether, and if so how, the statute or rule applies to a given factual situation; or (2) whether a particular agency rule is valid. All decisions of the Commissioner of Banks relative to declaratory rulings shall be subject to review by the Banking Commission upon written application of any aggrieved party. (b) The Commissioner of Banks will have the sole power to make such declaratory rulings. All requests for declaratory rulings shall be written and mailed to: Office of The Commissioner of Banks P.O. Box 10709 4309 Mail Service Center Raleigh, North Carolina 27605-0709. 27699-4309. Attention: Legal Division (c) All requests for a declaratory ruling must include the following information: (1) name and address of petitioner; (2) statute or rule to which petition relates; (3) concise statement of the manner in which petitioner is aggrieved by the rule or statute or its potential application to him; (4) a statement of whether an oral hearing is desired, and if so the reasons for such an oral hearing. (d) Whenever the Commissioner of Banks believes for good cause that the issuance of a declaratory ruling is undesirable, he may refuse to do so. When good cause for refusing to issue a declaratory ruling is deemed to exist, the Commissioner of Banks will notify the petitioner of his decision in writing, stating reasons for the denial of a declaratory ruling. (e) Where a declaratory ruling is deemed appropriate, the Commissioner of Banks will issue the ruling within 60 days of receipt of the petition. (f) A declaratory ruling procedure may consist of written submissions, oral hearings, or such other procedures as may be appropriate in a particular case. Authority G.S. 53-92; 150B-17. SECTION .0200 - CONTESTED CASES 04 NCAC 03B .0201 BANKING COMMISSION HEARINGS The regular or called meetings of the Banking Commission shall be the forum for all contested cases involving the Banking Commission. In addition to those contested cases automatically subject to hearing by the Banking Commission, the agenda for meetings of the Banking Commission shall provide for the hearing of any appeal by an interested party of any decision or action of the Commissioner of Banks, as well as any specific dispute which any party may have with the Commissioner of Banks or with the Banking Commission. Authority G.S. 53-92; 150B-2(2). 04 NCAC 03B .0202 HEARINGS BEFORE THE COMMISSIONER OF BANKS Whenever, pursuant to statute, the Commissioner of Banks is authorized or required to hold a hearing, the Commissioner of Banks shall be the hearing officer and such hearing shall be conducted in compliance with and subject to the provisions of Section .0200 of Subchapter 3B of these rules. Authority G.S. 53-92; 150B-2(2). 04 NCAC 03B .0203 REQUEST FOR HEARING (a) Whenever a person believes his rights, duties, or privileges have been affected by action of the Commissioner of Banks and he has not been notified of a right to a hearing, he may request an administrative hearing. (b) Before a hearing request can be made, a person must first make reasonable efforts to resolve the problem with the Commissioner of Banks informally. This requirement will be satisfied by contacting: The Commissioner of Banks P.O. Box 951 Raleigh, North Carolina 27602. (c) Following such informal contact with the Commissioner of Banks, if still dissatisfied, the person may file a written request with: The Commissioner of Banks P.O. Box 951 Raleigh, North Carolina 27602. Such request must contain the following information: (1) name and address of petitioner, (2) a concise statement of the agency action being challenged, (3) a concise statement of the way in which the petitioner has been aggrieved, (4) a clear and specific demand for a hearing. (d) Such request will be acknowledged within 30 days after submission of the request and a hearing scheduled promptly. PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1770 Authority G.S. 53-92; 150B-38. 04 NCAC 03B .0204 NOTICE (a) Notice of a hearing shall be given reasonably in advance of the hearing so as to allow the party affected reasonable time to prepare for the hearing, and will not be less than 15 days, except as authorized for emergencies. (b) Notice of a hearing shall include: (1) a statement of the date, hour, place, and nature of the hearing; (2) a reference to the particular sections of the statutes and rules involved; (3) a short and plain statement of the factual allegations. Authority G.S. 53-92; 150B-38(b). 04 NCAC 03B .0205 WRITTEN ANSWERS TO NOTICE Any person receiving notice of a contested case hearing may file a written answer. Such answer must be filed at least 30 days prior to commencement of the hearing by delivering or mailing it to person indicated in the notice. Authority G.S. 53-92; 150B-38. 04 NCAC 03B .0206 REPRESENTATION BY AN ATTORNEY The administrative hearing is especially designed to give any person the opportunity to effectively represent himself to protect his rights, duties, and privileges. However, if a party desires, he may employ an attorney to represent him at the administrative hearing. Authority G.S. 53-92; 150B-38. 04 NCAC 03B .0209 DISCOVERY Any aggrieved party may discover any information from the Banking Commission or the Commissioner of Banks which may be available, except records related solely to the internal procedures of the agency or those which have been properly classified as confidential under statutory authority. Authority G.S. 53-92; 53-99; 53-125; 150B-39. 04 NCAC 03B .0210 RULES OF EVIDENCE The rules of evidence as applied in the Superior and District Court Divisions of the Genera l Court of Justice shall be followed in any proceeding before the Banking Commission or the Commissioner of Banks involving a contested case. Irrelevant, immaterial, and unduly repetitious evidence shall be excluded. Authority G.S. 53-92; 150B-41. 04 NCAC 03B .0211 PRE-HEARING CONFERENCE (a) In any contested cases, the hearing officer, the Commissioner of Banks, or such other person or persons as the Banking Commission may designate may hold a conference in advance of holding the hearing and require attendance of all parties. (b) This conference will be informal in nature. (c) This conference will be noted in the notice of hearing or in a subsequent notice if a conference is later determined to be necessary by the hearing officer. (d) The purposes of this conference will be to discuss: (1) the possibility of simplification of issues, (2) stipulation of facts or findings, (3) identification of areas where evidence will be needed, (4) indications of depositions or subpoenas needed, (5) the need for consolidation of cases or joint hearings, (6) any other matters which will reduce costs or save time or otherwise aid expeditious disposition of the contested cases. Authority G.S. 53-92; 150B-40. 04 NCAC 03B .0212 PLACE AND FORUM FOR CONTESTED CASES All administrative hearings conducted by the Commissioner of Banks or by the Banking Commission shall be held at the location stipulated in the notice. Authority G.S. 53-92; 150B-24. 04 NCAC 03B .0213 FAILURE TO APPEAR FOR A CONTESTED CASE If a party served with notice fails to appear without having notified the hearing officer and no continuance, adjournment, or like disposition is ordered, the hearing officer may proceed with the hearing in the party's absence. Authority G.S. 53-92; 150B-40. 04 NCAC 03B .0214 CONSOLIDATION OF CONTESTED CASES (a) In appropriate cases, i.e., when there is a common question of law or fact, when the same or related parties are involved, or to avoid unnecessary cost and delay, the hearing officer may order the cases consolidated into one hearing. (b) When such an order is made, the Commissioner of Banks shall give notice to the parties involved of the consolidation. Authority G.S. 53-92; 150B-38. 04 NCAC 03B .0215 INTERVENTION OF A NEW PARTY INTO A CONTESTED CASE (a) A petition to intervene as of right or permissively as provided in North Carolina Rules of Civil Procedure, Rule 24, will be granted if the petitioner meets the criteria of Rule 24 and is timely. It will be deemed untimely if a grant would cause substantial prejudice to the rights of the parties, substantial added expense, or compellingly serious inconvenience to the parties or the Banking Commission. PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1771 (b) A person desiring to intervene in a contested case must file a written petition with: The Commissioner of Banks P.O. Box 951 Raleigh, North Carolina 27602. (c) The petition must be made on Form 22 which can be obtained from the Commissioner, which form includes the following information: (1) a citation to any statutory or nonstatutory grounds for intervention (if any; if not, so state); (2) a statement of the claim or defense in respect of which intervention is sought; (3) name and address; (4) business or occupation; (5) full identification of the hearing in which petitioner is seeking to intervene; (6) summary of the arguments or evidence petitioner seeks to present. (d) In the event the Commissioner of Banks determines to allow intervention, notification of that decision will be issued promptly to all parties and to the petitioner. In cases of discretionary intervention, such notification will include a statement of the limitations, if any, of time, subject matter, evidence, or whatever else is deemed necessary, which are imposed on the intervenor. (e) In the event the Commissioner's decision is to deny intervention, the petitioner will be notified promptly. Such notice will be in writing, will state all reasons for the decision, and will be issued to the petitioner and to all parties. Authority G.S. 53-92; 150B-38(f). 04 NCAC 03B .0216 DISQUALIFICATION OF HEARING OFFICER (a) If for any reason the hearing officer determines that personal bias or other factors would keep him from being able to conduct the hearing and perform all duties in an impartial manner, he shall submit in writing to the Commissioner of Banks his disqualification and the reasons therefor. (b) If for any reason any party in a contested case believes that the hearing officer is personally biased or otherwise unable to conduct the hearing and perform all duties in an impartial manner, the party may file a sworn, notarized, affidavit with the Commissioner of Banks. (c) The affidavit must state all facts the party deems relevant to the disqualification of the hearing officer. (d) An affidavit of disqualification will be considered timely if filed before commencement of the hearing. Any other affidavit may be found timely provided it is filed at the first opportunity after the party becomes aware of facts which give rise to a reasonable belief the officer may be disqualified under this rule. (e) Procedure. The Banking Commission shall decide whether to disqualify the person in the following manner: (1) The allegations of the affidavit shall be investigated by the Commissioner of Banks. (2) The person whose disqualification is to be determined will not participate in the decision but may be called on to furnish information to the Commissioner of Banks. (3) The Commissioner of Banks will report his findings and his recommendations to the Banking Commission who will then decide whether to disqualify the challenged individual. (4) A record of proceedings and the reasons for decisions reached will be maintained as part of the contested case record. (f) Resumption of Hearing. When a hearing officer is disqualified or otherwise is unable to continue the hearing, another hearing officer will replace him and that hearing will be resumed except as follows: (1) When oral testimony has already been given, and it is determined by the successor hearing officer that the viewing of the witness is an important element of the case, that portion of the testimony and evidence will be repeated. (2) When continuation of the hearing would result in substantial prejudice, for whatever reasons, to the rights of the parties, either a new hearing will be initiated or the case will be dismissed without prejudice. (g) The determination of whether resuming and continuing the case will result in substantial prejudice is to be made by the new hearing officer. (h) Determinations of decisions of disqualification, continuation of the hearing, rehearing of a portion or all of a contested case, or dismissal of a case without prejudice, together with a statement of reasons, will be part of the record of the case and communicated to all parties promptly. Authority G.S. 53-92; 150B-40. 04 NCAC 03B .0217 SUBPOENAS (a) The hearing officer is empowered to issue subpoenas in the Banking Commissioner's name. (b) Subpoenas requiring the attendance of witnesses, or those to produce documents, evidence, or things, will be issued promptly by the hearing officer after receipt of a request from a party to the case for such subpoena, except as stated herein. (c) The hearing officer will have the discretion to refuse a request for the issuance of a subpoena if, clearly, on its face, the request is objectionable or unreasonable. (d) Except as may be otherwise stated in a particular subpoena, any person receiving a subpoena from the Banking Commission may object thereto by filing a written objection to the subpoena with: The Commissioner of Banks P.O. Box 951 Raleigh, North Carolina 27602. Such request must include a concise but complete statement of reasons why the subpoena should be revoked or modified. These reasons may include lack of relevancy of the evidence requested, lack of particularity in the description of the evidence sought, or any other reason sufficient in law for holding the subpoena invalid, such as that the evidence is privileged, that appearance or production would be so disruptive as to be unreasonable in light of the significance of the evidence sought, or other undue hardships. PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1772 (e) The person subpoenaed must simultaneously with filing his objection with the agency serve his objection on the party who requested the subpoena. (f) The party requesting the subpoena, in such time as may be granted by the hearing officer, may file a written response to the objection. The response shall be served in like manner as the objection. (g) After receipt of the objection and a response thereto, if any, the hearing officer shall issue a notice to the party who requested the subpoena and the party challenging the subpoena and may notify all other parties of an open hearing, to be scheduled as soon as practicable, at which time evidence and testimony may be presented limited to the questions raised by the objection and response, if any. (h) Promptly after the close of such hearing, the officer will rule on the challenge and issue a written decision. A copy of his decision will be issued to all parties and made a part of the record. (i) The request for subpoena must include the following information: (1) name of agency and contested case, (2) name of party requesting the subpoena, (3) name of person subpoenaed and person on whose behalf he is to testify, (4) specification of the materials requested. (j) The subpoena must include: (1) name of agency and contested case, (2) name of person subpoenaed and person on whose behalf he is to testify, (3) specification of the materials requested, (4) notice that the agency can apply to the courts for an order of contempt if the subpoenaed person does not comply. Authority G.S. 53-92; 150B-39. 04 NCAC 03B .0218 PUBLIC INSPECTION OF FILES Files containing the material listed herein shall be maintained and shall be available for public inspection during normal business hours at the office of: The Commissioner of Banks P.O. Box 951 Raleigh, North Carolina 27602. (1) all rules and all other written statements of policy or interpretations formulated, adopted, or used by the Commissioner of Banks and the Banking Commission in the discharge of its functions; (2) all final orders, decisions, and opinions made after February 1, 1976, together with all materials that were before the deciding officers at the time the final order, decision, or opinion was made, except materials properly for good cause held confidential. Authority G.S. 53-92; 53-99. 04 NCAC 03B .0219 DEFINITIONS As used in this Subchapter: (1) "Appellate Panel" means an appellate review panel appointed pursuant to G.S. 53-92(d). (2) "Commission" means the North Carolina State Banking Commission. (3) "Commissioner" means the North Carolina Commissioner of Banks. (4) "Court" means a North Carolina District or Superior Court. (5) "Day" means a calendar day, other than a Saturday, Sunday or North Carolina state holiday. (6) "Hearing officer" means the Commissioner or an individual appointed by the Commissioner pursuant to G.S. 53-93. (7) "Rules of Civil Procedure " means the North Carolina Rules of Civil Procedure, G.S. 1A-1, et seq., as the same may be amended from time to time. (8) Terms used herein which are defined by G.S. 150B shall be defined as in G.S. 150B. Authority G.S. 53-92; 53-93; 150B-38(h). 04 NCAC 03B .0220 HEARINGS Whenever the Commissioner is authorized or required by law to hold a hearing, the hearing officer shall conduct the hearing in accordance with the applicable provisions of law, the Rules of Civil Procedure, the Rules of Evidence and the procedures set forth in this Subchapter. Authority G.S. 53-92; 53-93; 53-186; 53-208.10; 53-208.23; 53-224.25; 53-228; 53-233.16; 53-243.12; 53-251; 53-271(c); 53-284; 53 321; 53-327; 53-369; 53-370; 53-412; 150B-38(h). 04 NCAC 03B .0221 APPLICATION OF THE RULES OF CIVIL PROCEDURE Except as otherwise provided in this Subchapter or in G.S. 150B, the Rules of Civil Procedure shall apply in hearings and prehearing proceedings governed by this Subchapter to the same extent as though the hearing or prehearing proceeding was pending in a Court. Authority G.S. 53-93; 150B-38(h). 04 NCAC 03B .0222 FILING OF DOCUMENTS (a) All requests for hearing, written answers, motions, responses to motions or other papers required or permitted to be filed in any contested case shall be signed by the party or the party's attorney and the original thereof filed with the Commissioner addressed as follows: If filed via the United States Postal Service: Office of the Commissioner of Banks 4309 Mail Service Center Raleigh, NC 27699-4309 Attn: Legal Division If filed via a private overnight mail service or via hand delivery: Office of the Commissioner of Banks 316 W. Edenton Street PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1773 Raleigh, NC 27603-1716 Attn: Legal Division (b) A copy of any papers filed with the Commissioner, together with any attachments, shall be served upon all parties in any manner permitted by the Rules of Civil Procedure. (c) Any paper required or permitted to be filed pursuant to this Rule shall be considered filed on the date it is actually received at the address above. Authority G.S. 53-93; 150B-38(h). 04 NCAC 03B .0223 REQUEST FOR A HEARING (a) A person aggrieved may request a hearing, which shall be conducted by a hearing officer. The request shall be made in writing, state all statutory or other legal bases for the request, describe the events or circumstances giving rise to the request and shall include a copy of any supporting documents or other papers supporting the request. If applicable, the request may (but need not) include a statement of pertinent legal issues or questions. (b) If the Commissioner determines that it is appropriate to do so, he may direct his staff to schedule a hearing, notwithstanding the fact that no request for a hearing has been received. In such cases, the Commissioner's direction shall be treated as a request for a hearing. Authority G.S. 53-93; 53-208.10(c); 53-208.23; 53-243.12(b); 150B-38(h). 04 NCAC 03B .0224 DATE, TIME AND LOCATION OF HEARING; MOTIONS TO CONTINUE (a) The date, time and location of any hearing under this Subchapter shall be set forth in the notice of hearing or other paper which commences the hearing process. (b) Any party may move to continue the hearing. (c) The hearing officer shall rule on any motion to continue. Unless oral argument is requested by the hearing officer, motions to continue shall be decided based upon the written submissions of the parties. Authority G.S. 53-93; 150B-38(h). 04 NCAC 03B .0225 MOTIONS (a) Any party may file any motion which would be permitted under the Rules of Civil Procedure if the contested case was pending in a Court. (b) The opposing party may file such response as is permitted by the Rules of Civil Procedure to any such motion within five days of the date that it is filed with the Commissioner. (c) The hearing officer shall promptly rule on any such motion. The hearing officer may rule on any motion with or without oral argument. If the hearing officer determines that oral argument is appropriate, he shall notify the parties of the date for such argument. The notice shall indicate whether the argument is to be conducted in person or by conference call. Authority G.S. 53-93; 150B-38(h). 04 NCAC 03B .0226 PRE-HEARING CONFERENCE (a) If the hearing officer determines that to do so would aid in the prompt and efficient resolution of any contested case, the hearing officer may order that the parties attend a pre-hearing conference. The notice of the conference shall either be included in the document referred to in Rule .0224(a) of this Subchapter or in a separate written order. The purpose of a pre-hearing conference is to: (1) explore any grounds upon which a contested case may be resolved without the need for a hearing; (2) determine the scope of discovery each party wishes to pursue; (3) exchange exhibits and other evidence; (4) reach stipulations or other agreements; and (5) pursue any other matters which will reduce the cost, save time, simplify the issues to be heard, or otherwise aid in the expeditious disposition of the matters to be addressed by the hearing. (b) The pre-hearing conference may be conducted informally between the parties. At the request of either party, the pre-hearing conference may be conducted by a member of the Commissioner's legal staff. Authority G.S. 53-93; 150B-38(h); 150B-41(c). 04 NCAC 03B .0227 HEARINGS (a) Prior to the commencement of a hearing, the hearing officer shall rule on any outstanding motions. (b) Once a hearing has begun the hearing officer, may adjourn the hearing and reconvene the same at a later time or date. (c) Hearings are open to the public, except as to any testimony or other evidence regarding matters made confidential by law. (d) Hearings shall be conducted in a manner which conforms to the extent reasonably possible to the Rules of Civil Procedure and the Rules of Evidence. The order of evidence shall be determined by the hearing officer. (e) Persons permitted to intervene pursuant to the Rules of Civil Procedure shall be permitted to participate in the hearing only to the extent the hearing officer determines is necessary for a full and fair adjudication of the case. Authority G.S. 53-92(d); 53-93; 150B-38(h). 04 NCAC 03B .0228 STIPULATIONS Parties may by written stipulation agree upon the facts or any portion thereof and their stipulation may be regarded and used as evidence at the hearing. However, the hearing officer shall not be precluded from requiring or allowing the introduction of additional evidence concerning the issues to which the parties have stipulated. Authority G.S. 53-93; 150B-38(h). SECTION .0300 - APPEALS TO THE STATE BANKING COMMISSION 04 NCAC 03B .0301 APPOINTMENT OF APPELLATE PANEL PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1774 In the event the Chairman of the Commission, pursuant to G.S. 53-92(d), appoints an Appellate Panel to consider an appeal and make a recommended decision to the State Banking Commission, the Commissioner's staff shall send all parties written notice of that appointment. Authority G.S. 53-92(c); 53-92(d); 53-95; 53-107.2(a); 53-115; 53-215; 53-224.30; 53-231; 53-232.17; 53-243.02; 53-252; 53-272; 53-289; 53-350; 53-410; 53-412; 150B-38(h). 04 NCAC 03B .0302 RECORD ON APPEAL; HEARING DATE; MEMORANDA OF LAW (a) The record on appeal shall consist of the official agency record as set forth in G.S. 150B-42. (b) The Commissioner's counsel, after consulting with the chair of the Commission or Appellate Panel, shall provide each party with written instructions setting forth the deadlines by which memoranda of law shall be filed by the parties, when the appeal will be considered by the Commission or Appellate Panel, and whether oral argument will be heard. Authority G.S. 53-92(c); 53-92(d); 150B-38(h). 04 NCAC 03B .0303 ORAL ARGUMENT (a) The decision to hear oral argument in an appeal to the Commission shall be in the discretion of the Commission or Appellate Panel. If oral argument is permitted, the chair of the Commission or Appellate Panel shall notify the Commissioner, who shall notify all parties and set a date and time for same. (b) If oral argument is permitted, each party shall be allowed a maximum of 30 minutes for oral argument, including rebuttal arguments. Authority G.S. 53-92; 53-95; 150B-38(h). 04 NCAC 03B .0304 COMMISSION REVEW OF APPELLATE PANEL'S RECOMMENDED DECISION (a) If an appeal is heard by an Appellate Panel, that Appellate Panel, after reviewing the record on appeal, memoranda of law and hearing oral arguments, if any, shall make a recommended decision to the Commission. The Commission shall, by a vote of the majority of its members present and voting at any regular or special meeting, either affirm, affirm with modifications or reject the recommended decision of the Appellate Panel. (b) If the Commission rejects the Appellate Panel's recommended decision, it shall specify the actions the Appellate Panel or the Commissioner shall take with regard to the appeal. (c) A decision to affirm or to affirm with modifications shall be considered a "final agency decision" for purposes of G.S. 150B- 42. Authority G.S. 53-92; 53-95; 150B-38(h). TITLE 10A – DEPARTMENT OF HEALTH AND HUMAN SERVICES Notice is hereby given in accordance with G.S. 150B-21.2 that the NC Medical Care Commission intends to amend the rules cited as 10A NCAC 13B .3401-.3402, .3405, .6204 and repeal the rules cited as 10A NCAC 13B .3403-.3404. Proposed Effective Date: October 1, 2004 Public Hearing: Date: June 3, 2004 Time: 10:00 a.m. Location: Council Building, Room 201, Dorothea Dix Campus, 701 Barbour Dr., Raleigh, NC Reason for Proposed Action: The NC Medical Care Commission has approved to initiate permanent rulemaking for these Rules. The "Notice of Text" is the first step in the permanent rule-making process. These rules pertain to the licensure of hospitals. The changes include, but are not limited to, an omission of amending a rule regarding neonatal services organization with rule amendments effective April 1, 2003, technical changes rules to reflect the current Federal Government name designation for the Small Rural Hospital Flexibility Program and repealing rules that no longer apply to hospitals participating in the Small Rural Health Flexibility Program in accordance with 42 CFR 485 Subpart F. Procedure by which a person can object to the agency on a proposed rule: A person may object to the agency on the proposed rules by submitting written comments on the proposed rules. They may also object by attending the public hearing and personally voice their objections during that time. Written comments may be submitted to: Nadine Pfeiffer, NCDFS, 2711 Mail Service Center, Raleigh, NC 27699-2711, phone (919) 733-7461, fax (919) 733-8274, and email nadine.pfeiffer@ncmail.net. Comment period ends: June 14, 2004 Procedure for Subjecting a Proposed Rule to Legislative Review: Any person who objects to the adoption of a permanent rule may submit written comments to the agency. A person may also submit written objections to the Rules Review Commission. If the Rules Review Commission receives written and signed objections in accordance with G.S. 150B-21.3(b2) from 10 or more persons clearly requesting review by the legislature and the Rules Review Commission approves the rule, the rule will become effective as provided in G.S. 150B-21.3(b1). The Commission will receive written objections until 5:00 p.m. on the 6th business day preceding the end of the month in which a rule is approved. The Commission will receive those objections by mail, delivery service, hand delivery, or facsimile transmission. If you have any further questions concerning the submission of objections to the Commission, please call a Commission staff attorney at 919-733-2721. Fiscal Impact State Local Substantive (>$3,000,000) None PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1775 CHAPTER 13 – NC MEDICAL CARE COMMISSION SUBCHAPTER 13B –LICENSING OF HOSPITALS SECTION .3400 - SUPPLEMENTAL RULES FOR THE LICENSURE OF CRITICAL ACCESS HOSPITALS 10A NCAC 13B .3401 SUPPLEMENTAL RULES The rules of this Section pertain only to designated Primary Care Hospitals or Federally Certified Primary Care Hospitals.Critical Access Hospitals in accordance with 42 CFR 485 Subpart F. The general requirements of this Subchapter shall apply to such facilities except where they are specifically waived or modified by the rules of this Section. Authority G.S. 131E-79. 10A NCAC 13B .3402 DEFINITIONS The following definitions shall apply throughout this Section, unless context otherwise clearly indicates to the contrary: (1) "Available" means provided directly by the facility or by written agreement with a qualified provider of the service within one hour. hour driving time . (2) "Designated Primary Care Hospital" "Critical Access Hospital" means a facility designated by the North Carolina Office of Research, Demonstrations and Rural Health Development in accordance with G.S. 131E- 76(6).42 CFR 485 Subpart F. (3) "Federally Certified Primary Care Hospital" means a hospital which has been designated and certified as a Federally Certified Rural Primary Care Hospital under the Essential Access Community Hospital Program administered through the North Carolina Office of Research, Demonstrations and Rural Health Development in accordance with P.L. 101-239 and P.L. 101-508. (4) "Primary Care Inpatient Services" means that the hospital provides acute care inpatient services appropriate to the level of service at the facility up to a maximum annual average daily census of 15 patients per day. In addition, the facility may also provide long term care in "swing bed" or distinct part status and psychiatric distinct part beds. Authority G.S. 131E-79. 10A NCAC 13B .3403 LICENSURE APPLICATION An application from a facility seeking to be licensed under the rules of this Section must be accompanied by written certification from the North Carolina Office of Research, Demonstrations and Rural Health Development that the facility is a Designated Primary Care Hospital or a Federally Certified Primary Care Hospital. Authority G.S. 131E-79. 10A NCAC 13B .3404 FEDERALLY CERTIFIED PRIMARY CARE HOSPITAL (a) The requirements of 10A NCAC 13B .3500 through .5206 shall be waived for a facility which the North Carolina Office of Research, Demonstrations and Rural Health Development certified as a designated Federally Certified Primary Care Hospital, and Rule .6227 (f) and (g) of that Subchapter shall not apply to such facilities which do not provide emergency room service or maintain any life support systems. (b) The Division may conduct any validation survey or investigation of a specific complaint in facilities which choose to be licensed as a Federally Certified Primary Care Hospital. Authority G.S. 131E-79. 10A NCAC 13B .3405 DESIGNATED CRITICAL ACCESS HOSPITALS The requirements of 10A NCAC 13B shall apply to Designated Primary Care Hospitals Critical Access Hospitals with the following modifications: (1) Autopsy facilities required in Rule .4907 of this Subchapter are not required for a Designated Primary Care Hospital, provided that the facility has in effect a written agreement with another facility meeting Rule .4907 of this Subchapter for providing autopsy services. (2) Radiological services required in Section .4800 of this Subchapter are not required for Designated Primary Care Hospitals provided that the facility has radiological equipment on site and a written agreement with another licensed facility meeting the requirements of Section .4800 of this Subchapter which makes radiological service available. (3) Emergency services required in Rules .4102 - .4110Section .4100 of this Subchapter are not required.required for Designated Primary Care Hospitals. Emergency response capability set forth in Rule .4101 of this Subchapter shall be provided. Medical staff of a Designated Primary Care Hospital shall participate in training facility personnel in require that facility personnel are capable of initiating life-saving measures at a first-aid level of response for any patient or person in need of such services. This shall include: (a) Establishing protocols or agreements with any facility providing emergency services; (b) Initiating basic cardio-respiratory cardio-pulmonary resuscitation according to the American Red Cross or American Heart Association standards; PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1776 (c) Availability of intravenous fluids and supplies required to establish intravenous access; and (d) Availability of first-line emergency drugs as specified by the medical staff. (4) Anesthesia services required in Section .4600 of this Subchapter are not required in Designated Primary Care Hospitals hospitals not offering outpatient surgery services. (5) Food services required in Section .4700 of this Subchapter shall be provided for inpatients of Designated Primary Care Hospitals either directly or made available through contractual arrangements. Authority G.S. 131E-79. SECTION .6200 - CONSTRUCTION REQUIREMENTS 10A NCAC 13B .6204 NEONATAL LEVEL III AND LEVEL IV NURSERY (a) Units shall be accessible to post-partum nursing and delivery units. (b) The nursery shall be located and arranged to preclude unrelated traffic through the nursery. (c) Each nursery shall contain the following: (1) Lavatory located within 20 feet travel distance of each bassinet; (2) Emergency calling system; and (3) Charting facilities. (d) There shall be six feet between bassinets for Neonatal Level III IV units and five feet between bassinets for Neonatal Level II III units. Neonatal Level III IV nurseries shall have 80 square feet per bassinet not including corridors and cabinets. Neonatal Level II III nurseries shall have 50 square feet per bassinet not including cabinets and corridors. Corridors or aisles shall have at least eight feet of clear width for access to bassinets. (e) Each nursery shall be served by a connecting workroom. It shall contain gowning facilities at the entrance for staff and housekeeping personnel, lavatory, and storage. One workroom may serve more than one nursery. The workroom may be omitted if equivalent work area and facilities are provided within the nursery. Gowning and hand washing facilities shall be provided at the entrance to each nursery. (f) Space for examination and treatment shall be provided and shall contain a counter, storage, and lavatory. It may serve more than one nursery room and may be located in a workroom. (g) If commercially prepared formula is not used, space and equipment to accommodate the handling, storage, and preparation of formula shall be provided. (h) A janitor's closet for the exclusive use of the housekeeping staff in maintaining the nursery suite shall be provided. It shall contain a floor receptor or service sink and storage space for housekeeping equipment and supplies. (i) Doors to nurseries shall be no less than three feet wide. If doors are provided directly from nurseries to public corridors or public spaces, they shall be equipped with "one-way" hardware for exit only to prevent unauthorized entry. (j) Smoke detection shall be provided in each nursery bed space. Authority G.S. 131E-79. TITLE 11 – DEPARTMENT OF INSURANCE Notice is hereby given in accordance with G.S. 150B-21.2 that the NC Department of Insurance intends to amend the rules cited as 11 NCAC 01 .0403 .0416, .0418, .0425, .0427, .0429. Proposed Effective Date: August 1, 2004 Public Hearing: Date: May 4, 2004 Time: 10:00 a.m. Location: Dobbs Building, 3rd Floor Hearing Room, 430 N. Salisbury St., Raleigh, NC Reason for Proposed Action: The amendments are technical in nature and are just being updated. Procedure by which a person can object to the agency on a proposed rule: The Department of Insurance will accept written objections to these Rules until the expiration of the comment period (June 14, 2004). Objections need to be specific and sent to the attention of the APA Coordinator. Written comments may be submitted to: Ellen K. Sprenkel, 1201 Mail Service Center, Raleigh, NC 27699-1201, phone (919) 733-4529, fax (919) 733-6495, and email esprenke@ncdoi.net. Comment period ends: June 14, 2004 Procedure for Subjecting a Proposed Rule to Legislative Review: Any person who objects to the adoption of a permanent rule may submit written comments to the agency. A person may also submit written objections to the Rules Review Commission. If the Rules Review Commission receives written and signed objections in accordance with G.S. 150B-21.3(b2) from 10 or more persons clearly requesting review by the legislature and the Rules Review Commission approves the rule, the rule will become effective as provided in G.S. 150B-21.3(b1). The Commission will receive written objections until 5:00 p.m. on the 6th business day preceding the end of the month in which a rule is approved. The Commission will receive those objections by mail, delivery service, hand delivery, or facsimile transmission. If you have any further questions concerning the submission of objections to the Commission, please call a Commission staff attorney at 919-733-2721. Fiscal Impact State Local Substantive (>$3,000,000) None CHAPTER 1 - DEPARTMENTAL RULES PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1777 SECTION .0400 - ADMINISTRATIVE HEARINGS 11 NCAC 01 .0403 REQUEST FOR HEARING (a) A request for an administrative hearing under 11 NCAC 1 .0401 must be in writing and shall contain the following information: (1) name and address of the person requesting the hearing, (2) a concise statement of the departmental action being challenged, (3) a concise statement of the manner in which the petitioner is aggrieved, and (4) a clear and specific demand for a public hearing. (b) The request for hearing shall be filed with: Commissioner of Insurance, ATTENTION: Deputy Commissioner, Hearings Office, N.C. Department of Insurance, Post Office Box 26387, Raleigh, North Carolina 27611. General Counsel, N.C. Department of Insurance, 1201 Mail Service Center, Raleigh, NC 27699-1201. Authority G.S. 58-2-40; 150B-38. 11 NCAC 01 .0416 DUTIES OF THE HEARING OFFICER In conjunction with the powers in this Section, in General Statute Chapter 58, and in Article 3A of General Statute Chapter 150B, the hearing officer shall perform the following duties, consistent with law: (1) Hear and rule on motions; (2) Grant or deny continuances; (3) Issue orders regarding prehearing matters, including directing the appearance of the parties at a prehearing conference; (4) Examine witnesses when deemed to be necessary to make a complete record and to aid in the full development of material facts in the case; (5) Make preliminary, interlocutory, or other orders as deemed to be appropriate; (6) Recommend Order a summary disposition of the case or any part thereof when there is no genuine issue as to any material fact or recommend dismissal when the case or any part thereof has become moot or for other reasons; and (7) Apply sanctions in accordance with 11 NCAC 1 .0423. Authority G.S. 58-2-40(1); 58-2-50; 58-2-55; 58-2-70; 150B-38(h). 11 NCAC 01 .0418 SETTLEMENT CONFERENCE (a) A settlement conference is for the primary purpose of assisting the parties in resolving disputes and for the secondary purpose of narrowing the issues and preparing for hearing. (b) Upon the request of any party, the hearing officer shall assign the case to another hearing officer appointed by the Commissioner under G.S. 58-2-55 for the purpose of conducting a settlement conference. Unless the parties and the other hearing officer agree, a unilateral request for a settlement conference does not constitute good cause for a continuance. The conference shall be conducted at a time and place agreeable to all parties and the hearing officer. It shall be conducted by telephone if any party would be required to travel more than 50 miles to attend, unless that party agrees to travel to the location set for the conference. It If a telephone conference is scheduled, the parties must be available by telephone at the time of the conference. (c) All parties shall attend or be represented at a settlement conference. Parties or their representatives shall be prepared to participate in settlement discussions. (d) The parties shall discuss the possibility of settlement before a settlement conference if they believe that a reasonable basis for settlement exists. (e) At the settlement conference, the parties shall be prepared to provide information and to discuss all matters required in 11 NCAC 1 .0415. (f) If, following a settlement conference, a settlement has not been reached but the parties have reached an agreement on any facts or other issues, the hearing officer presiding over the settlement conference shall issue an order confirming and approving, if necessary, those matters agreed upon. The order is binding on the hearing officer who is assigned to hear the case. Authority G.S. 58-2-40(1); 58-2-50; 58-2-55; 58-2-70; 150B-38(h). 11 NCAC 01 .0425 INTERVENTION (a) Any person not named in the notice of hearing who desires to intervene in a contested case as a party shall file a timely motion to intervene and shall serve the motion upon all existing parties. Timeliness will be determined by the hearing officer in each case based on circumstances at the time of filing. The motion shall show how the movant's rights, duties, or privileges may be determined or affected by the contested case; shall show how the movant may be directly affected by the outcome or show that the movant's participation is authorized by statute, rule, or court decision; shall set forth the grounds and purposes for which intervention is sought; and shall indicate movant's statutory right to intervene if one exists. (b) Any party may object to the motion for intervention by filing a written notice of objections with the hearing officer within five days after service of the motion if there is sufficient time before the hearing. The notice of objection shall state the party's reasons for objection and shall be served upon all parties. If there is insufficient time before the hearing for a written objection, the objection may be made at the hearing. (c) When the hearing officer deems it to be necessary to develop a full record on the question of intervention, he may conduct a hearing on the motion to determine specific standards that will apply to each intervenor and to define the extent of allowed intervention. (d) The hearing officer shall may allow intervention upon a proper showing under this Rule, unless he finds that the movant's interest is adequately represented by one or more parties participating in the case or unless intervention is mandated by PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1778 statute, rule, or court decision. An order allowing intervention shall specify the extent of participation permitted the intervenor and shall state the hearing officer's reason. An intervenor may be allowed to: (1) File a written brief without acquiring the status of a party; (2) Intervene as a party with all the rights of a party; or (3) Intervene as a party with all the rights of a party but limited to specific issues and to the means necessary to present and develop those issues. Authority G.S. 58-2-40(1); 58-2-50; 58-2-55; 58-2-70; 150B-38(h). 11 NCAC 01 .0427 RIGHTS AND RESPONSIBILITIES OF PARTIES (a) A party has the right to present evidence, rebuttal testimony, and argument with respect to the issues of law and policy, and to cross-examine witnesses, including the author of a document prepared by, on behalf of, or for use of the Department and offered in evidence. (b) A party shall have all evidence to be presented, both oral and written, available on the date for hearing. Requests for subpoenas, depositions, or continuances shall be made within a reasonable time after their needs become evident to the requesting party. In cases when the hearing time is expected to exceed one day, the parties shall be prepared to present their evidence at the date and time ordered by the hearing officer or agreed upon at a prehearing conference. (c) The hearing officer shall send copies of all orders or decisions to all parties simultaneously. Any party sending a letter, exhibit, brief, memorandum, or other document to the hearing officer shall simultaneously send a copy to all other parties. (d) All parties have the continuing responsibility to notify the hearing officer of their current addresses and telephone numbers. (e) A party need not be represented by an attorney. attorney unless the party is a corporate entity. A corporate entity shall not be represented by its President or other officers. If a party has notified other parties of that party's representation by an attorney, all communications shall be directed to that attorney. (f) With the approval of the hearing officer, any person may offer testimony or other evidence relevant to the case. Any nonparty offering testimony or other evidence may be questioned by parties to the case and by the hearing officer. (g) Before issuing a recommended decision, the hearing officer may order any party to submit proposed findings of fact and written arguments. Before issuing a final decision, the Commissioner may order any party to submit proposed findings of fact and written arguments. Authority G.S. 58-2-40(1); 58-2-50; 58-2-55; 58-2-70; 150B-38(h). 11 NCAC 01 .0429 EVIDENCE (a) The North Carolina Rules of Evidence as found in Chapter 8C of the General Statutes govern in all contested case proceedings, except as provided otherwise in this Section and G.S. 150B-41. (b) The hearing officer may admit all evidence that has probative value. Irrelevant, incompetent, immaterial, or unduly repetitious evidence shall be excluded. The hearing officer may, in his discretion, exclude any evidence if its probative value is substantially outweighed by the risk that its admission will require undue consumption of time or create substantial danger of undue prejudice or confusion. (c) Contemporaneous objections by a party or a party's attorney are not required in the course of a hearing to preserve the right to object to the consideration of evidence by the hearing officer in reaching a decision or by the court upon judicial review. (d) All evidence to be considered in the case, including all records and documents or true and accurate photocopies thereof, shall be offered and made a part of the record in the case. Except as provided in Paragraph (f) of this Rule, factual information or evidence that is not offered shall not be considered in the determination of the case. Documentary evidence incorporated by reference may be admitted only if the materials so incorporated are available for examination by the parties. (e) Documentary evidence in the form of copies or excerpts may be received in the discretion of the hearing officer or upon agreement of the parties. Copies of a document shall be received to the same extent as the original document unless a genuine question is raised about the accuracy or authenticity of the copy or, under the circumstances, it would be unfair to admit the copy instead of the original. (f) The hearing officer may take notice of judicially cognizable facts by entering a statement of the noticed fact and its source into the record. Upon a timely request, any party shall be given the opportunity to contest the facts so noticed through submission of evidence and argument. (g) A party may call an adverse party; or an officer, director, managing agent, or employee of the State or any local government, of a public or private corporation, or of a partnership or association or body politic that is an adverse party; and may interrogate that party by leading questions and may contradict and impeach that party on material matters in all respects as if that party had been called by the adverse party. The adverse party may be examined by that party's counsel upon the subject matter of that party's examination in chief under the rules applicable to direct examination, and may be cross-examined, contradicted, and impeached by any other party adversely affected by the testimony. Authority G.S. 58-2-40(1); 58-2-50; 58-2-55; 58-2-70; 150B-38(h). * * * * * * * * * * * * * * * * * * * * Notice is hereby given in accordance with G.S. 150B-21.2 that the North Carolina Department of Insurance intends to amend the rules cited as 11 NCAC 11F .0301-.0303, .0306-.0307 and repeal the rules cited as 11 NCAC 11F .0304-.0305, .0308. Proposed Effective Date: August 1, 2004 PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1779 Public Hearing: Date: May 4, 2004 Time: 10:00 a.m. Location: Dobbs Building, 3rd Floor Hearing Room, 430 N. Salisbury St., Raleigh, NC Reason for Proposed Action: To comply with changes made in the NAIC Model Laws Procedure by which a person can object to the agency on a proposed rule: The Department of Insurance will accept written objections to the changes in these Rules until the expiration of the comment period on June 14, 2004. Written comments may be submitted to: Ellen K. Sprenkel, 1201 Mail Service Center, Raleigh, NC 27699-1201, phone (919) 733-4529, fax (919) 733-6495, and email esprenke@ncdoi.net. Comment period ends: June 14, 2004 Procedure for Subjecting a Proposed Rule to Legislative Review: Any person who objects to the adoption of a permanent rule may submit written comments to the agency. A person may also submit written objections to the Rules Review Commission. If the Rules Review Commission receives written and signed objections in accordance with G.S. 150B-21.3(b2) from 10 or more persons clearly requesting review by the legislature and the Rules Review Commission approves the rule, the rule will become effective as provided in G.S. 150B-21.3(b1). The Commission will receive written objections until 5:00 p.m. on the 6th business day preceding the end of the month in which a rule is approved. The Commission will receive those objections by mail, delivery service, hand delivery, or facsimile transmission. If you have any further questions concerning the submission of objections to the Commission, please call a Commission staff attorney at 919-733-2721. Fiscal Impact State Local Substantive (>$3,000,000) None CHAPTER 11 - FINANCIAL EVALUATION DIVISION SUBCHAPTER 11F – ACTUARIAL SECTION .0300 - ACTUARIAL OPINION AND MEMORANDUM 11 NCAC 11F .0301 APPLICABILITY AND SCOPE (a) This Section applies to all life insurance companies and fraternal benefit societies doing business in this State and to all life insurance companies and fraternal benefit societies that are authorized to reinsure life insurance, annuities, or accident and health insurance business in this State. This Section shall be applied in a manner that allows the appointed actuary to utilize his or her professional judgment in performing the asset analysis and developing the actuarial opinion and supporting memoranda, consistent with relevant Actuarial Standards of Practice. However, the Commissioner shall have the authority to specify specific methods of actuarial analysis and actuarial assumptions when these specifications are necessary for an acceptable opinion to be rendered relative to the adequacy of reserves and related items. All cross references to rule numbers are to rules within this Section. (b) This Section applies to all annual statements filed with the Commissioner after December 31, 2004.December 31, 1994. Except for companies that are exempt under Rule .0304 of this Section, a A statement of opinion on the adequacy of the reserves and related actuarial items based on an asset adequacy analysis in accordance with Rule .0306 of this Section and a supporting memorandum in accordance with Rule .0307 of this Section are required each year. Any company so exempted must file an opinion under Rule .0305 of this Section. (c) The Commissioner may require any company otherwise exempt under this Section to submit an opinion and to prepare a supporting memorandum in accordance with Rules .0306 and .0307 of this Section if an asset adequacy analysis for the company is necessary because of the financial condition of the company. Authority G.S. 58-2-40; 58-24-120; 58-58-50(i); 58-58-50(j). 11 NCAC 11F .0302 DEFINITIONS (a) "Annual statement" means that statement required to be filed each year under G.S. 58-2-165. (b) "Appointed actuary" means any individual who is appointed or retained in accordance with Rule .0303(c) of this Section to provide the actuarial opinion and supporting memorandum as required by G.S. 58-58-50(i) and this Section. (c) "Asset adequacy analysis" means an analysis that meets the standards and other requirements referred to in Rule .0303(d) of this Section. Section; and includes cash flow testing, sensitivity testing, or applications of risk theory. (d) "Board" means the Actuarial Standards Board established by the American Academy of Actuaries to develop and promulgate standards of actuarial practice, and its successors. (e) "Company" means a life insurance company, fraternal benefit society, or reinsurer subject to this Section. (f) "Non-investment grade bonds" are those designated as medium to lower quality by the NAIC Securities Valuation Office. (g)(f) "Opinion" means: means the statement of actuarial opinion of an appointed actuary regarding the adequacy of the reserves and related actuarial items based on an asset adequacy analysis in accordance with Rule .0306 of this Section and with applicable actuarial standards of practice. (1) For Rules .0306, .0307, or .0308 of this Section, the statement of actuarial opinion of an appointed actuary regarding the adequacy of the reserves and related actuarial items based on an asset adequacy test in accordance with Rule .0306 of this Section and with presently accepted actuarial standards; (2) For Rule .0305 of this Section, the statement of actuarial opinion of an appointed actuary PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1780 regarding the calculation of reserves and related items, in accordance with Rule .0305 of this Section and with those presently accepted actuarial standards that specifically relate to this opinion. (h)(g) "Qualified actuary" means any individual who meets the requirements set forth in Rule .0303(b) of this Section. Authority G.S. 58-2-40; 58-24-120; 58-58-50(i); 58-58-50(j). 11 NCAC 11F .0303 GENERAL REQUIREMENTS (a) Submission of Opinion: (1) There shall be included on or attached to page 1 of the annual statement for each year beginning with calendar year 1994, 2004, the statement of an appointed actuary, entitled "Statement of Actuarial Opinion," setting forth an opinion relating to reserves and related actuarial items held in support of policies and contracts, in accordance with Rule .0306 of this Section.Section; provided, however, that any company exempted under Rule .0304 of this Section from submitting an opinion in accordance with Rule .0306 of this Section shall include on or attach to page 1 of the annual statement an opinion rendered by an appointed actuary in accordance with Rule .0305 of this Section. (2) If in the previous year a company provided an opinion in accordance with Rule .0305 of this Section, and in the current year fails the exemption criteria of Rules .0304(c)(1), .0304(c)(2), or .0305(c)(5) of this Section to again provide an opinion in accordance with Rule .0305 of this Section, the opinion in accordance with Rule .0306 of this Section shall not be required until August 1 following the date of the annual statement. In this instance, the company shall provide an opinion in accordance with Rule .0305 of this Section with appropriate qualification noting the intent to subsequently provide an opinion in accordance with Rule .0306 of this Section. (3)(2) Upon written request by the company the Commissioner may shall grant a 45-day extension of the date for submission of the opinion. In the written request, the company shall state the reason that such extension is needed. (b) A "qualified actuary" is an individual who: (1) Is a member in good standing of the American Academy of Actuaries; (2) Is qualified to sign opinions for life and health insurance company annual statements in accordance with the American Academy of Actuaries qualification standards for actuaries signing such opinions; (3) Is familiar with the valuation requirements applicable to life and health insurance companies; (4) Has not been found by the Commissioner (or if so found has subsequently been reinstated as a qualified actuary), to have: (A) Violated any provision of, or any obligation imposed by, any law or rule in the course of his or her dealings as a qualified actuary; (B) Been found by a court of competent jurisdiction to be guilty of a fraudulent or dishonest practice; (C) Demonstrated his or her incompetency, lack of cooperation, or untrustworthiness to act as a qualified actuary; Failed to comply with the Code of Professional Conduct as published by the Board; (D) Submitted to the Commissioner during the past five years, under this Section, an opinion or memorandum that the Commissioner rejected because it did not meet the provisions of this Section, including standards set by the Board; or (E) Resigned or been removed as an actuary within the past five years as a result of acts or omissions indicated in any adverse report on an examination or as a result of failure to adhere to generally acceptable actuarial standards; and (5) Has not failed to notify the Commissioner of any action taken by any insurance regulator of any other state similar to that under Subparagraph (b)(4) of this Rule. (c) An "appointed actuary" is a qualified actuary who is appointed or retained to prepare the opinion required by this Section, either directly by or by the authority of the board of directors through an exe cutive officer of the company. The company shall, within 45 days after the date of the appointment, give the Commissioner written notice of the name, title (and, in the case of a consulting actuary, the name of the firm), and manner of appointment or retention of each person appointed or retained by the company as an appointed actuary and shall state in such notice that the person meets the requirements of Paragraph (b) of this Rule. Once notice is furnished, no further notice is required for the actuary, provided that the company gives the Commissioner written notice if the actuary ceases to be appointed or retained as an appointed actuary or no longer meets the requirements of Paragraph (b) of this Rule. If any person appointed or retained as an appointed actuary replaces a previously appointed actuary, the notice shall so state and give the reasons for replacement. (d) The asset adequacy analysis required by this Section: (1) Shall conform to the standards of practice as promulgated from time to time by the Board and on any additional standards under this PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1781 Section, which standards are to form the basis of the opinion in accordance with Rule .0306 of this Section; and (2) Shall be based on methods of analysis that are deemed to be consistent with Actuarial Standards of Practice adopted appropriate for such purposes by the Board. (e) Liabilities to be Covered: (1) The opinion shall apply to all in force business on the annual statement date regardless of when or where issued, e.g., aggregate reserves for life insurance and annuity policies and contracts, aggregate reserves for accident and health contracts, aggregate reserves for deposit-type contracts, and policy and contract claims liabilities for life and accident and health policies and contracts, reserves of Exhibits 8, 9 and 10, and claim liabilities in Exhibit 11, Part 1 and equivalent items in the separate account statement or statements.. (2) If the appointed actuary determines as the result of asset adequacy analysis that a reserve should be held in addition to the aggregate reserve held by the company and calculated in accordance with methods set forth in G.S. 58-58-50(d), 58-58-50(d-1), 58-58-50(g), 58-58-50(h), and 58-58-50(k), the company shall establish such additional reserve. (3) For years ending before December 31, 1996, the company may, in lieu of establishing the full amount of the additional reserve in the annual statement for that year, set up an additional reserve in an amount not less than the following: (A) December 31, 1994, the additional reserve divided by three. (B) December 31, 1995, two times the additional reserve divided by three. (4)(3) Additional reserves established under Subparagraph (e)(2) or (e)(3) of this Rule and deemed to be unnecessary in later years may be released. Any amounts released must be disclosed in the opinion for the applicable year. The release of such reserves areis not deemed to be an adoption of a lower standard of valuation. Authority G.S. 58-2-40; 58-58-50(i); 58-58-50(j). 11 NCAC 11F .0304 REQUIRED OPINIONS (a) The opinion submitted under G.S. 58-58-50(i) shall be in accordance with the applicable provisions in this Rule. (b) For purposes of this Rule, companies are classified as follows, based on the admitted assets as of the end of the calendar year for which the actuarial opinion is applicable: (1) Category A comprises companies whose admitted assets do not exceed twenty million dollars ($20,000,000). (2) Category B comprises companies whose admitted assets exceed twenty million dollars ($20,000,000) but do not exceed one hundred million dollars ($100,000,000). (3) Category C comprises companies whose admitted assets exceed one hundred million dollars ($100,000,000) but do not exceed five hundred million dollars ($500,000,000). (4) Category D comprises companies whose admitted assets exceed five hundred million dollars ($500,000,000). (c) Exemption Eligibility Tests: (1) Any Category A company that, for any year beginning with calendar year 1994, meets all of the following criteria is eligible for exemption from submission of an opinion in accordance with Rule .0306 of this Section for the year in which these criteria are met. The ratios in Parts (c)(1)(A), (c)(1)(B), and (c)(1)(C) of this Rule shall be calculated based on amounts as of the end of the calendar year for which the opinion is applicable. (A) The ratio of the sum of capital and surplus to the sum of cash and invested assets is at least equal to .10. (B) The ratio of the sum of the reserves and liabilities for annuities and deposits to the total admitted assets is less than .30. (C) The ratio of the book value of the non-investment grade bonds to the sum of capital and surplus is less than .50. (D) The Examiner Team for the NAIC has not designated the company as a first priority company in any of the two calendar years preceding the calendar year for which the opinion is applicable, or a second priority company in each of the two calendar years preceding the calendar year for which the opinion is applicable; or the company has resolved the first or second priority status to the satisfaction of the insurance regulator of the company's state of domicile and that regulator has so notified the chair of the NAIC Life and Health Actuarial Task Force and the NAIC Staff and Support Office. (2) Any Category B company that, for any year beginning with calendar year 1994, meets all of the following criteria shall be eligible for exemption from submission of an opinion in accordance with Rule .0306 of this Section for the year in which the criteria are met. The ratios in Parts (c)(2)(A), (c)(2)(B), and (c)(2)(C) of this Rule shall be calculated based PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1782 on amounts as of the end of the calendar year for which the opinion is applicable. (A) The ratio of the sum of capital and surplus to the sum of cash and invested assets is at least equal to .07. (B) The ratio of the sum of the reserves and liabilities for annuities and deposits to the total admitted assets is less than .40. (C) The ratio of the book value of the non-investment grade bonds to the sum of capital and surplus is less than .50. (D) The Examiner Team for the NAIC has not designated the company as a first priority company in any of the two calendar years preceding the calendar year for which the opinion is applicable, or a second priority company in each of the two calendar years preceding the calendar year for which the opinion is applicable; or the company has resolved the first or second priority status to the satisfaction of the insurance regulator of the company's state of domicile and that regulator has so notified the chair of the NAIC Life and Health Actuarial Task Force and the NAIC Staff and Support Office. (3) Any Category A or Category B company that meets all of the criteria set forth in Subparagraphs (c)(1) and (c)(2) of this Rule, whichever is applicable, is exempt from having to submit an opinion under Rule .0306 of this Section unless the Commissioner specifically indicates to the company that the exemption is not to be taken. (4) Any Category A or Category B company that, for any year beginning with calendar year 1994, is not exempt under Subparagraph (c)(3) of this Rule shall submit an opinion in accordance with Rule .0306 of this Section for the year for which it is not exempt. (5) Any Category C company that, after submitting an opinion in accordance with Rule .0306 of this Section, meets all of the following criteria, shall not be required, unless required in accordance with Subparagraph (c)(6) of this Rule, to submit an opinion in accordance with Rule .0306 of this Section more frequently than every third year. Any Category C company that fails to meet all of the following criteria for any year shall submit an opinion in accordance with Rule .0306 of this Section for that year. The ratios in Parts (c)(5)(A), (c)(5)(B), and (c)(5)(C) of this Rule shall be calculated based on amounts as of the end of the calendar year for which the opinion is applicable. (A) The ratio of the sum of capital and surplus to the sum of cash and invested assets is at least equal to .05. (B) The ratio of the sum of the reserves and liabilities for annuities and deposits to the total admitted assets is less than .50. (C) The ratio of the book value of the non-investment grade bonds to the sum of the capital and surplus is less than .50. (D) The Examiner Team for the NAIC has not designated the company as a first priority company in either of the two calendar years preceding the calendar year for which the opinion is applicable, or a second priority company in each of the two calendar years preceding the calendar year for which the opinion is applicable, or the company has resolved the first or second priority status to the satisfaction of the insurance regulator of the company's state of domicile and that regulator has so notified the chair of the NAIC Life and Health Actuarial Task Force and the NAIC Staff and Support Office. (6) Any company that is not required by this Rule to submit an opinion in accordance with Rule .0306 of this Section for any year shall submit an opinion in accordance with Rule .0305 of this Section for that year unless, as provided for by Rule .0301 of this Section, the Commissioner requires an opinion in accordance with Rule .0306 of this Section. (d) Every Category D company shall submit an opinion in accordance with Rule .0306 of this Section for each year, beginning with calendar year 1994. Authority G.S. 58-2-40; 58-58-50(i); 58-58-50(j). 11 NCAC 11F .0305 OPINION WITHOUT ASSET ADEQUACY ANALYSIS (a) The opinion required by G.S. 58-58-50(i) shall comprise: (1) a paragraph identifying the appointed actuary and his or her qualifications. (2) a regulatory authority paragraph stating that the company is exempt under this Section from submitting an opinion based on an asset adequacy analysis and that the opinion, which is not bas ed on an asset adequacy analysis, is rendered in accordance with this Rule. (3) a scope paragraph identifying the subjects on which the opinion is to be expressed and describing the scope of the appointed actuary's work. PROPOSED RULES 18:20 NORTH CAROLINA REGISTER April 15, 2004 1783 (4) an opinion paragraph expressing the appointed actuary's opinion as required by G.S. 58-58-50(i). (b) The following language provided is that which in typical circumstances would be included in an opinion in accordance with this Section. The language may be modified as needed to meet the circumstances of a particular case, but the appointed actuary shall use language that clearly expresses his or her professional judgment. However, in any event the opinion shall retain all pertinent aspects of the language provided in this Rule. (1) The opening paragraph shall indicate the appointed actuary's relationship to the company. (A) For a company actuary, the opening paragraph of the actuarial opinion shall read as follows: "I, [name of actuary], am [title] of [name of company] and a member of the American Academy of Actuaries. I was appointed by, or by the authority of, the Board of Directors of the insurer to render this opinion as stated in the letter to the Commissioner dated [insert date]. I meet the Academy qualification standards for rendering the opinion and am familiar with the valuation requirements applicable to life and health companies." (B) For a consulting actuary, the opening paragraph of the actuarial opinion shall contain a sentence such as: "I, [name and title of actuary], a member of the American Academy of Actuaries, am associated with the firm of [insert name of consulting firm]. I have been appointed by, or by the authority of, the Board of Directors of [name of company] to render this opinion as stated in the letter to the Commissioner dated [insert date]. I meet the Academy qualification standards for rendering the opinion and am familiar with the valuation requirements applicable to life and health insurance companies." (2) The regulatory authority para |
OCLC number | 13686205 |