Another Hectic Week

After a very busy first two days of session last week, the General Assembly returned to Raleigh this week with a fully packed agenda. Among other things, they took up fracking, regulatory reform, the omnibus tax law changes, and patent abuse. The House also met on Thursday in the old chambers of the state capital in honor of the 220th anniversary of the legislature's first meeting in Raleigh.

Looking ahead to the Memorial Day weekend, and following a pair of "skeleton sessions" this morning, lawmakers will not return to Raleigh until Tuesday. Expectations are that the Senate will release their budget next week.

Tax Law Changes

The House gave its approval on Wednesday to H1050 the "Omnibus Tax Law Changes" passing it 84-29. Following the 2013 Tax Reform, this bill would make several additional amendments to North Carolina's tax laws.

  • Corporate tax modifications
  • Cap privilege tax for cities and towns
  • Agricultural exemptions
  • University pre-paid meal plans
  • Entertainment admission taxes
  • Service contracts
  • New tax on electronic cigarettes
  • Sales tax on modular homes
  • Sales tax on short-term home rentals

Ahead of the U.S. Open in Pinehurst this year, a stand-alone tax bill was passed by the House. On Thursday, the House pushed through a piece of legislation that would impose a sales tax on short-term home rentals. This provision exists in H1050, but concerns over the time it may take for that bill to become law propelled this piece to moved forward. Differences between the House and Senate over a number of issues including the piece the House removed last week regarding the way multi-state corporations are taxed, may be an issue in the coming weeks. Both bills now await action in the Senate Finance committee.

Lawmakers speed tax bill with eye on US Open – WRAL


The bill (S786) entitled the "Energy Modernization Act" cruised through the Senate this week. It would allow permitting by the Department of Environment and Natural Resources (DENR) and the Mining and Energy Commission (MEC) for oil and gas companies to begin drilling for natural gas in North Carolina. 

On Tuesday it moved through both the Senate Commerce and Finance committees, with the agenda in Finance having been left "to be determined" in order to take up the bill immediately upon its passage in Commerce. The bill passed each committee without any dissenting votes.

On Wednesday, S786 made its way to the Senate floor where it passed second reading 33-13. It passed third reading Thursday 35-12 and awaits action in the House next week. Below are a few provisions from the bill:

  • Extends rule development deadline for MEC by three months to January 1, 2015
  • Allow DENR and MEC to issue permits for oil and gas exploration, development, and production activities using horizontal drilling and hydraulic fracturing treatments as soon as July 1, 2015
  • Establishes an Oil and Gas Commission to oversee industry
  • Requires MEC and DENR retain trade secret information with the exception of first responders and medical personnel in the event of an emergency
  • Amends provision on liability for water contamination to ½ mile radius around wellhead
  • Invalidates local ordinances that prohibit or have the effect of prohibiting oil and gas exploration, development, and production activities
  • Adjusts the tax rate for the severance of energy minerals

Map of natural NC gas deposits -  Fayetteville Observer.

Regulatory Reform

A 61 page regulatory reform bill was unveiled as a proposed committee substitute (PCS) to a bill in the Senate Agriculture/Environment/Natural Resources committee on Tuesday. The Senate brought it to the floor for second reading on Thursday where it passed 37-10 and awaits third reading next week. The bill addresses a number of topics including:

  • Repeals a requirement that small businesses have an attorney present in some administrative appeals
  • Eliminates a number of obsolete committees/commissions
  • Allows colleges with brewing courses to sell a limited supply of the malt beverages produced
  • Clarifies the Good Samaritan Law to protect the acting individual from liability
  • Lowers regulatory fees for telecommunications companies
  • Eliminates dated air quality reporting requirements
  • Increases fee for illegally parking in handicapped space from $250 max to $500 max
  • Requires landscaping contractors obtain a license

Transfers rulemaking authority for various environmental issues from the Commission for Public Health to the Environmental Management Commission

Regulatory reform heads for Senate floor - WRAL  

Medicaid Reform

The Governor's recommendations from the Medicaid Reform Advisory Group which met over the interim were filed in the House this week. The bill H1181 "Partnership for a Healthy North Carolina" outlines a model designed around Accountable Care Organizations. The Senate as of now has not filed a version of its own. Senator Pate, who sat on the Advisory Group has expressed his discontent with the recommendations in the past, saying they do not go far enough in relieving the state of risk. The drive behind reform is to control costs in Medicaid which in recent years has left large holes in the state budget.  

Patent Abuse

H1032, the Patent Abuse Bill, passed out of the House Commerce committee on Wednesday and would make bad faith assertions of patent infringement a deceptive trade practice. The bill spurs from a practice known as "patent trolling" in which people or companies misuse patents as a business strategy upon infringers in an attempt to collect licensing fees. It would authorize treble payments for targets of these practices that prevail in a case involving bad faith assertions of patent infringement.

Patent troll bill moves forward in the House - WRAL

NC Commerce Protection Act

S648, another roll over from 2013, was discussion only in the Senate Judiciary committee on Thursday for the second time this week. The bill would make various changes to statutes governing commerce in the State, including provisions to:

  • Create transparency in contingency fee contracts between the State agencies and private attorneys
  • Create transparency in claims against asbestos and silica trusts
  • Amend the laws governing products liability actions
  • Prevent the abuse of patents
  • Enforce exclusive forum provisions assented to by shareholders in derivative actions

The PCS includes the patent abuse legislation which was passed separately by a House committee on Wednesday.

Juvenile Delinquents

Currently, North Carolina is one of two states, along with New York whose criminal justice system treats 16 and 17-year-old misdemeanor offenders as adults. Late Wednesday evening however, the House sought to change that by taking up H725, the Young Offenders Rehabilitation Act. The bill, which would allow them to be treated as juveniles, carried over from last year and passed with a bipartisan vote, although far from unanimous.

House approves keeping youthful misdemeanors in juvenile court - WRAL  

Freshly Filed Legislation

All of the relevant deadlines for having legislation submitted to bill drafting have passed. Bills will continue to be filed into next week, for more information you can take a look at thebill drafting deadlines  provided by the NCGA and which types of bills do not have deadlines.

Below are a few bills of interest from the 134 bills filed this week: 

  • H1142 - Modify Film/Historic Rehab Tax Credits
  • H1176 - Increase Legislator Pay
  • H1181 - Partnership for a Healthy North Carolina 2014
  • S812 - Replace Common Core to Meet NC's Needs

Note that a number of individual bills filed that are not listed here were rolled into one of the larger scale aforementioned bills. A number of general appropriations bills were filed as well, but none have been identified as the 2014 Appropriations Act.  

Click here for 2013 bills eligible during the 2014 Short Session – NCGA