Sine Die Die Die!

Sine Die, folks! The North Carolina General Assembly has adjourned until a new legislature convenes January 14, 2015 with the members elected this November.

Here's what happened this week:

The House passed Senate Bill 3, Version 2:

• The Senate filed a bill that provided funding for the Western Crime Lab and amended related evidence laws.
• In the Senate Appropriations Committee, a PCS for SB 3 was adopted that stripped out the contents of the original bill and substituted language that amended the JMAC program so that a grant may be awarded to Evergreen in western NC to help it convert from a coal-run manufacturing facility to natural gas.
• The Senate passed that bill to the House.
• The House substituted language that was a mini budget bill and sent it back to the Senate for concurrence. That was Version 3.
• To say the Senate did not concur would not be accurate; the Senate would not even take receipt of the bill and directed its clerk to reject delivery so the bill stayed in the House.
• Meanwhile, the JMAC provision was added to HB 1224 which was the big economic development bill in the House that also included the controversial local option sales tax changes and extended the historic tax credits. More on that.....
• With no other clear path for helping Evergreen with the JMAC program, the House reverted to the language in Version 2 of the bill -- which was what the Senate sent over.
• The House moves to reconsider the vote by which Version 3 was passed and then the bill is referred to the Rules Committee where the contents are replaced with the Version 2 contents.
• The House passes the Version 2 language.
• Because the House passed the exact version the Senate passed, the bill was ratified and now awaits the signature of the Governor.
• The ratified version of Senate Bill 3 dealing with JMAC funding is here: http://www.ncleg.net/Sessions/2013/Bills/Senate/PDF/S3v4.pdf

What about HB 1224 - the big economic development plus local sales tax changes bill?

• After the Conference Report for HB 1224 failed on the House floor earlier this week (even thought the Senate had passed it and claims House Leadership said they would pass it) there was further discussion and caucusing (arm twisting?)about how to pass that bill. Ultimately the provisions were offense enough to the political left and right that it was abandoned. This was the predicted Lazarus bill, but that turned out to be something else. The Department of Commerce did not get it's needed economic development funds, nor did they pass the crowd funding provision, nor the extension of the historic tax credits.
• So the Governor and Secretary of Commerce have a new economic development structure but lacks the funding tools they need.

Unemployment Insurance Confidentiality:

• SB 42 was ratified yesterday. It makes confidential the list of unemployment compensation records.
• You can view the ratified bill here: http://www.ncleg.net/Sessions/2013/Bills/Senate/PDF/S42v4.pdf

Coal Ash:

• The House and Senate ultimately came together on how to prioritize and rank the coal ash ponds for clean up, and then assign timelines to the categories.
• It also establishes the Coal Ash Management Commission which will be appointed by the House, Senate and Governor, and will be charged with overseeing the cleanups.
• The Governor has expressed a possible Constitutional concern with the majority of the members being legislative appointments, and he has not stated whether he will sign the bill.
• The bill includes a hefty regulatory fee for electric generators and does not permit a rate case to recover for this fee.
• The does not place meaningful restrictions on how the closure of the coal ash ponds is ultimately funded.
• The ratified bill is here: http://www.ncleg.net/Sessions/2013/Bills/Senate/PDF/S729v6.pdf

Is this really Sine Die or will they be back before January? We think the legislators have turned their attention to campaigning and fundraising for the Nov 4th elections. And if you had access to our inboxes you would share our conclusion! Legislators may not raise money from entities associated with lobbying while they are in session.

But, the Governor has 30 days from yesterday to act on the bills we just talked about. If he vetoes a bill, he must call the Legislature back to receive and consider his veto message.

Or, the Governor can call the Legislature back into session for a purpose, but history shows that if called back, the Legislature can also turn its attention to other things.

Strange political bedfellows

This long and acrimonious session has probably been a gift to Kay Hagan as she runs against NC House Speaker Thom Tillis to retain her seat in the U.S. Senate. We've heard gossip in the halls that some Republicans in the NC Senate were working against Tillis. Does that mean the NC Senate is working for Hagan? And the inability of the NC House to cobble together enough votes for a plan (or a new plan that could garner the votes) to allow the Governor and his Department of Commerce to effectively lure jobs to NC is certainly a blow for 1st-termer Governor McCrory, who we expect will be challenged by current Attorney General Roy Cooper. Does that mean the NC House is working for Cooper?

Of course we don't really believe that, but sometimes you have to get off the dance floor and take in the view from the balcony. During the 2014 Legislative Session we don't believe they ever checked the view from the balcony.

The word is "influence"

I am proud to announce that Laura DeVivo (that's me) and Womble Government Relations teammate Jimmy Broughton were yet again ranked among the most influential lobbyists in Raleigh!

Each biennium the NC Center for Public Policy Research compiles survey results from registered lobbyists, members of the Capital Press Corps, and legislators, to rank the most effective lobbyists at the General Assembly. The rankings of the top 60 (of 768) registered lobbyists were released earlier this week and can be found here:  http://www.nccppr.org/digitaleditions/2013lobbyistrankings/

Important Bill For Local Tax and Economic Development Changes is Mired in the Muck

WARNING! THIS BILL WAS NOT ENACTED!

The clock ran out on HB 1224 and we've had our fingers crossed for two weeks hoping that having the House and Senate both in session tomorrow might yield some legislative love and perhaps another look at HB 1224 -- which is somewhat controversial but contains for important provisions we'd like to see passed.

This bill was introduced in the House to make changes to the economic development fund called JMAC (Jobs Maintenance and Capital Development). Typically when the JMAC is amended it is to assist a certain manufacturer with converting its manufacturing process to change its product. For example, Domtar used to make paper in northeastern NC - I think I remember it was for the bags that dog food is sold in. It received JMAC funding to convert that process to make the paper/pulp product that is the absorption in disposable diapers. Anyhow, the latest change was to allow a manufacturing process to become more energy efficient and reduce emissions, slightly lower some employment-related thresholds, and add $10 million to the fund still capping each project award at $6 million annually. We hear it was Evergreen Packaging.

The Senate made this bill a new animal by incorporating local sales tax changes and others in what became a controversial bill. The House rejected the bill and a conference agreement was reached. The Senate adopted the Conference Report but the House referred it to its Rules Committee before it left town, adding more bad feelings to an acrimonious political atmosphere.

The conference report for HB 1224, which did not become law, does the following:

• limits the local government sales and use tax rate to 2.5%;
• allows Durham, Orange, Forsyth, Guilford, Wake and Mecklenburg Counties to retain a local sales and use cap of 2.75% if a majority of voters in those counties approve the levy of a 0.25% sales and use tax for public transportation, for public education, for general purposes, or for a combination;
• directs Revenue Study Laws Committee to study historic rehabilitation incentives;
• adds "historic rehabilitation incentives" grants;
• makes various changes to tax and economic development laws;
• clarifies the confidentiality of unemployment compensation records; and
• makes technical corrections to the revenue laws.

The politics will continue as both chambers of the General Assembly are working/meeting/fighting/ignoring/adjourning on Thursday. This bill is eligible for consideration tomorrow but we hear the House won't take it up.

Reminder! This bill has not been enacted!

Link the Conference Committee Report here: http://www.ncleg.net/Applications/BillLookUp/LoadBillDocument.aspx?SessionCode=2013&DocNum=9708&SeqNum=0

Business Court Modernization Bill is now Law

This session we've watched SB 853 - Business Court Modernization work through the legislative process and we are impressed by freshman Senator Tamara Barringer's first big effort.

All you lawyers who take on complex business litigation need to be aware of this new law and, importantly, the impact of the implementation dates which I've summarized below:

• Section 1 of the bill rewrites G.S. 7A-27 regarding appeals of right from the courts of the trial divisions. It applies to actions designated on or after October 1, 2014.
• Section 2 of the bill rewrites G.S. 7A-45.3 regarding the designation of superior court judges as business court judges to hear complex business cases. It became effective August 7, 2014.
• Section 3 of the bill rewrites G.S. 7A-45.4 regarding the designation of complex business cases. It applies to actions commenced or petitions filed on or after October 1, 2014.
• Section 4 of the bill rewrites G.S. 7A-305 to increase the cost of filing a case in the business court. It applies to actions commenced or petitions filed on or after October 1, 2014.
• Section 5 of the bill rewrites G.S. 7A-343 requires the Director of the Administrative Office of the Courts to prepare and submit a semi annual report on activities of the Business Court. It became effect August 7, 2014.
• Section 6 of the bill creates a new G.S 55-11-11 which is NC's new way to handle how mergers effect a holding company reorganization, and rewrites G.S. 55-11-06(a) regarding the effect of merger or share exchange. It applies to plans of mergers adopted on or after October 1, 2014.
• Section 7 of the bill rewrites Rule 8(a)(2). It became law on August 7, 2014 and applies to actions commenced on or after that date.
• Section 8 creates a legislative committee to study the implementation of this Act and other items it deems worthy of study.

The new law is here: http://www.ncleg.net/Sessions/2013/Bills/Senate/PDF/S853v7.pdf

Legislative Update (Not the) End of Session

Jones Street has the unsettling calm of the realization after a just-fought battle that the victory was not worth the bloodshed, and you can’t remember why you’re fighting. The North Carolina General Assembly concluded its 2014 Short Session on Saturday, August 2nd. Except that it didn’t. This year the House and Senate, both run by huge Republican majorities, have been at war; they did not agree on when to adjourn, how to adjourn, or what issues they can take up should they return to wrap-up unfinished business.  Here’s what guidance our Constitution gives us about the Legislature in Article 2, Section 20. “Each house shall be judge of the qualifications and elections of its own members, shall sit upon its own adjournment from day to day, and shall prepare bills to be enacted into laws. The two houses may jointly adjourn to any future day or other place. Either house may, of its own motion, adjourn for a period not in excess of three days.” This week the House will meet on Wednesday and the Senate on Thursday only to meet that constitutional requirement – their calendars are bare. We hear they will both be in session August 14th in case they must consider any veto message from the Governor. The next interesting constitutional issue here is the veto. When the General Assembly is in session, a ratified bill must be acted upon by the Governor within 10 days after it is presented to him – that’s August 12th. Should the General Assembly adjourn, the Governor would have 30 days from adjournment sine die to act on a bill – that’s September 1st. That longer period for the Governor’s consideration was provided in anticipation of the flurry of last minute legislation. In this case the Governor has until August 12th at the latest, and many bills were presented to him earlier than August 2nd. Some of the bills we’ve been following for you this session were ratified, but many were just left on the table in school yard bully fashion: SB 729 – Coal Ash Management Act was sent to a conference committee. Despite the spill in the Dan River being in Senate President Pro Tempore Berger’s neck of the woods, and despite the House and Senate conference leaders both being from Hendersonville, NC, no agreement was reached before the legislators left town.

HB 663 – Define Practice of Law (LegalZoom) never got out of the Senate. Lobbyists for LegalZoom and for the NC Bar worked hard to reach a compromise, the language of which was widely shared on Jones Street and can be found in an earlier “Keeping Up With Jones Street” blog entry, but legislators never rewrote the bill or took it to the full Senate for a vote. Nor was the House convinced to take it up on concurrence. HB 1101 and HB 1102 dealing with Mechanic’s Liens never received Senate consideration. SB 38 – Environmental Amendments is stuck in the Senate Clerk’s Office. SB 493 – Health and Safety Regulatory Reform never received Senate consideration. SB 734 – Regulatory Reform never received Senate consideration. HB 1224 – Local Tax Changes and Economic Development which included the controversial local sales tax provision, JDIG, JMAC, Crowd funding and other provisions was sent to conference. The Conference Report was adopted by the Senate and rejected by the House. That Conference Report is here. SB 3 – House Mini Budget was a slightly snarky attempt by the House to move some big budget items off the table before tackling others. The House used a stripped Senate bill to drop their mini budget contents into, passed it, and sent it to the Senate. The Senate returned it to the House with no action and no message (that being the message). The House sent it to the Senate again. The Senate refused to receive it. Playground. SB 763 – Revenue Laws Technical Corrections stalled in Senate Rules.  This bill contains the recommendations of a year's study of our tax laws.  Without enactment of this bill the Historic Tax Credits program expires as does the Film Credits program.

A few things we're watching for you fared better: SB 853 – Business Court Modernization was Ratified. The enacted version is here. The bill includes the threshold provisions for designation to the Business Court as well as the Delaware-style provisions for incorporation. The 2014-15 adopted budget also provides that 2 of the Special Superior Court Judges shall be converted to additional Business Court Judges when they become vacant. Details about where they will locate and how they will be supported were not included. SB 648 – Patent Trolls was Ratified. The final version of the bill includes several new sections dealing with other matters: creating transparency in contracts between the Attorney General and private attorneys, allowing shareholder assent to exclusive forum, and limit asbestos-related liabilities for certain successor corporations. The ratified bill is here. We hear the Legislature plans a lame-duck session later this fall on Medicaid Reform and may also tackle coal ash and health insurance coverage for the treatment of autism. We feel the need to clarify that items left on the table represent countless hours of work by rank and file legislators who are acting on behalf of their constituents, and their frustration is noted.