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House | July 10, 2013 | Committee Room | Regulation

Full MP3 Audio File

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certainly go away. But section 3, I'll turn over to Rep. Murry and he'll explain that to you. [SPEAKER CHANGES] Section 3 changes the deadline for the Office of State Budget Management's fiscal note certification requirement from when the rule is first published until the rule is adopted. This helps make sure that the track of the rule making process runs efficiently. It also changes the threshold of when a rule must have a fiscal note from $500,000 to $3 million. $3 million is what it was in 2011, before the regulatory reform efforts that we engaged in in last session. And so this, this just brings it back to what it was in 2011 before our regulatory reform efforts. Section 4, moving on, Section 4 of the bill is the sum and substance of House bill 74, which this committee has heard and passed, and the House has already passed as well so this is the process, the new process by which agencies can engage into help, help us cull down the 12,000 rules that are on the books and it details the process by which rules are identified to be controversial and noncontroversial, those aren't the exact terms of them, but that's the concept that we're going for. To identify rules that are obsolete and can be taken off the books. Section 5 is a recommended study from the administrative procedures oversight committee that met during the interim before the long session. If there's opportunities for consolidations of boards and commissions for licensure, this is the vehicle by which that could occur, and so this would be a comprehensive program of evaluation division study. Section 6 prohibits delayed enforcement of ordinances by local governments. It basically creates a 10 year statute of limitations so local governments can't go back after a development 10 years after the fact. Rep. Hamilton recommended this is- we've had a- many people have wanted to improve this legislation so I wanted to give credit to Rep. Hamilton for bringing this to us. Section 7 deals with equal treatment for fraternities and sororities without regard to whether they're officially approved or recognized by colleges. This includes also language from House bill 843 that allows a student to have an advocate represented in a dispute when being disciplined by a public university. The first part of section 7, the primary purpose for this is to ensure accountability for zoning decisions affecting private land and business owners statewide, specifically for fraternities and sororities to be able to count on zoning decisions affecting their private property be made by only elected officials rather than unnamed unaccountable university officials. And now I'll turn it over to Rep. Moffitt for section 9. [SPEAKER CHANGES] Section 9 deals with outdoor advertising, and essentially what we have there in the first part of that is clarification of some misinterpretations of Senate bill 183 that was quite contentious last session as members who were here then will remember, but that deals with the pruning of vegetation specifically regarding outdoor advertising assets that exist on on-ramps and off-ramps. That's part a1 of section 9b when it comes to modernization of outdoor advertising devices. This does not deal with digital modernization, this simply deals with allowing the outdoor advertising community to go from a multi-pole system to a monopole system. Section 10 deals with the disposition of medical records. And basically it allows entities who no longer provide medicaid service to transfer records to the Dept. of Health and Human Services, or destroy them after 2 years unless federal law requires a longer retention record. Section 11. Tom, that would be you. ?? [SPEAKER CHANGES] Let's see here. Alright. Section 11. I apologize, I think I misspoke when I spoke with regards to section 5. Section 5 deals with exemptions from the Administrative Procedures Oversight- directs the Administrative Procedures Oversight committee to study the exemptions by administrative agencies.

11 direct the Program Evaluation Division to deal with the occupational licensing process. Just for clarification. Section 5 deals with the exemptions that current administration agencies have from the APA. Several agencies are completely exempt from the Administrative Procedures Act. This directs the Administrative Procedures Oversight Committee to study that. Section 11 directs the Program Evaluation Division, as recommended by the Administrative Procedures Oversight Committee from the interim, to study occupational licensing boards, including the accommodation or elimination of some of those licensing boards. [SPEAKER CHANGES] Just to elaborate on that, one of the things that we accomplished last term was we made rule making more difficult, as it should be. Because when the executive branch agencies are implementing rules or adopting rules, these rules affect every citizen of our state in one way or the other. So a lot of the work that we did in Senate Bill 81 and Senate Bill 781 was exceptional work, but one of the outcomes, which you find out in subsequent years is that we’ve made rulemaking so difficult, that there have been a number of requests from agencies this year to actually exempt themselves from all or part of the APA. So it’s actually moving us in a direction that we don’t need to be moving into. However, instead of removing the exemptions in one fell swoop, we’re going to actually study that in the interim to find out what removing those exemptions actually means, what the outcome will be. Because the direction that we definitely want to move into is making rule, having an efficient and effective rule making process, but have it done in the sunlight. But also have it done and apply to everyone that would be adopting these rule and not be able to have it continue the way it’s continuing now. Section 11, actually Section 12. Section 12 amends the law of governing industrial commission to exempt the Administrator and Deputy Commissioners from the State Personnel Act. These positions are salaried positions. Most salaried positions within the state of North Carolina that have direct appointments are exempt from the State Personnel Act so this just brings that into compliance with similar positions in the State Personnel Act. Representative Brawley will handle Section 13. [SPEAKER CHANGES] Thank you, Representative Moffitt. Section 13A and B is language that has already passed the House and been sent to the Senate. This was to block efforts by some local government entities to create responsibility on the part of employers to manage the carbon footprint of their employees. So this language has just been slightly clarified and brought over. The next one is on Section 13.1, to clarify local government preemption. This language was listed from Senate Bill 612 and essentially says that if the state of the federal government is regulating something, that local governments cannot enact regulations that are more stringent than those adopted by either the federal or state government. It also makes the same thing apply to counties. And then Section 3.2 applies it to counties and then Section3.3 is repealing a protest petition. There is currently in law a provision of where adjacent land owners can require super majorities of local boards and basically take over control of the land use process. What this does is restore the responsibility to the city councils and make them responsible for deciding what is the appropriate application of their designing laws, and their normal voting procedures would continue to apply. Section 14 is one of those things that you often hear about as far as statues that are on the book that really don’t make sense. This basically allows a bed and breakfast to serve more than just breakfast to the patrons that are actually staying in the bed and breakfast. Currently in statute, a bed and breakfast can only serve breakfast. But we have a number of bed and breakfast locations that are quite a bit aways from restaurants that would actually serve lunch or dinner but they’re prohibited by statute from even offering lunch or dinner to their patrons that are actually staying there. This does not put them in the restaurant business, this just allow them to accommodate the folks that are actually staying there overnight. Section 15 would be.

Representative Murray. [SPEAKER CHANGES]Section 15 is the contents of a Senate bill that has come over to us for action in the House. It deals with Professional Employer Organizations, PEO organizations are similar to ADP, that's an example of a Professional Employer Organizations, or PEO. They help small businesses with outsourced HR, and help provide efficient, cost effective payroll services. These changes to lease a definition of a hazardous financial condition to demonstate that instead of the current definition it allows to demonstrate when current assets exceed current liabilities. It also allows for a uniform bonding requirement, $100,000, which is similar to other states that regulate PEOs. It deletes a requirement that a licensee gives assigned employees written notice when the employee ceases to be an employee. Makes changes concerning the rights of the PEO in the client's control, hire, discipline, terminate signed employees and provides that the insurance commissioner can only recover reasonable cost, examination of the licensee following disciplinary violation. And it also repeals the provision in the PEO act, giving the commissioner authority permission to discipline the licensee who has an insurance judiciary willfully fails to give notice of approved health or life insurance plan termination if the licensee is an insurance judiciary failure to prior notice remains a Class H felony under the existing law. We have people from Professional Employer Organizations, we still want to dig in and get some more information about this. Actually we do have representative from these organizations here with us today. [SPEAKER CHANGES]Section 16 applies to child care providers, and this only applies to employees that are actively employed with the child care providers. Currently a background check is required every 3rd anniversary, every 3 years of existing child care provider employees, and when the background check does take some time to go through, and during that delay, essentially the child care employees have to quit, so this allows them to move to a probationary status, and allow them to continue operating in a probationary employment status waiting on the return of the background check, and the language in there specifically say that they cannot be alone with any of the children while they're on probationary status. Section 17 is something that we're going to take out, simply because we have an agreement between the House and the Senate to where we will not be directing in-law what the LRC should be doing. That's a joint decision made between leadership in both bodies. But essentially what we're doing is one of the things I have uncovered during this regulatory reform effort is that within the Utilities Commission, they are still assessing regulatory fees on things we as a body have told them they no longer have the authority to regulate. From a public policy standpoint, I do not think it's good for the State of North Carolina and its legislature to deregulate something, but also allow it be taxed by allowing the regulatory fee to continue to be charge against that when they have no oversight responsibility. So instead of going in and actually correcting that, we would like to study that in the interim, and find out how many things we are actually charging a regulatory fee for, that we no longer regulate and put forth a plan in the short session. Section 18, I believe Representative Murray is going to amend that. Are you going to amend that? So we're going to have an amendment at the bill's presentation to take out Section 17, but I thought I was instructed to let you know what are intentions are regarding that particular subject matter. Section 18 is another one of those things that, it's brought to you, and it kind of leaves you scratching your head, but currently retired school buses, they cut the tops out of them, and they use them as transportation vehicles for produce. But the old school buses weigh 26,000 lbs. or less, the new one's weigh 26,500 lbs., and essentially if it weights under 26,000 lbs. the driver does not need to have a CDL. So what we're dong is we're moving that to 26,500 lbs., so when the newer buses are retired, they don't have to get a CDL. Now we do have some additional work being done in the background here to make sure we're not causing a problem with the US-DOT, and if there is, then we'll take it out on the floor, but from all the work we've done thus far, we don't anticipate that to be a problem. Section 19, Representative Murray. [SPEAKER CHANGES]Section 19 represents an effort to continue

North Carolina to be the most military friendly state, and it would allow private non-public employers in the state to provide employment preference to veterans and spouses of honorably discharged veterans who have service connected to the veterans. And this provision specifically provides that granting a preference is not a violation of state or local equal opportunity law. What we're doing is trying to protect employers who give a veterans preference from law suits, from discrimination law suits. So that's the purpose of section 19. Section 20 what we're referring to is the agriculture right to work piece. Basically it prohibits a contract purchases of agriculture products from forcing the farmers to hire union labor in order for their products to be bought by the contract purchaser. The next two sections, section 20, excuse me, 21 and 22, I'd like to recognize representative Jimmy Dixon to run those two parts. [SPEAKER CHANGES] And for information purposes for the committee and the public, we will vote this bill out today and we will take a vote on this bill at 11:30. [SPEAKER CHANGES] Thank you Mr. Chair. On section 21 I've been indirectly involved, you may remember that on certain instances we have increased the wight limit on certain situations. Number 8 of that section would add feed ingredients, that would be corn, soybean, corn meal and so forth as well as certain by-products. It's come to my attention this morning that this has not been as completely vetted as it should have been with the highway patrol, and so this particular part of it is in limbo until we get that worked out. The other section that he's asked me to talk about, the first part there 22-A is above my pay grade, 22-B just simply does some adjustment to the definition of agriculture and I think that number 7 there under that is very good since we do have different kinds of facilities that we are using as far as grain storage and so forth is concerned. Thank you. [SPEAKER CHANGES] Additionally on Section 11 the first section is intended to include grain dealers from the exemption for counties zoning ordinance. it adds grain and realities of grain to the list of exemptions, and the second section of this bill codifies that grain is included in our state's definition of agriculture and agricultural farming. This helps make sure that counties, that farms operating out of one county that have another farm operating in another county and transfer things between those counties don't lose their zoning in the main county they're operating in. We are on section 23 now. Section 23 deals with the presumption that taxicab drivers are independent contractors for purpose of workers compensation law. This bill passed the senate last session and has already passed the house this session and is awaiting action in the senate so we are just - this bill has already passed this committee once so we're just including it in this bill as well. [SPEAKER CHANGES] Section 25 would amend a provision enacted in 2012 which required the department of environment and natural resources to adopt rules to prohibit permitted scrap tire collectors from contracting with the scrap tire processing facility unless the processing facility documents that it has access to a facility permitted to receive scrap tires. So that's all that part does. At this point I'd like to recognize representative Becky Carney. She brought forth section 26 which deals with carbon monoxide detectors. [SPEAKER CHANGES] Thank you Mr. Chairman. First off I want to say thank you, this language has come to us by recommendation of the restaurant lodging association. Jim Hobbs got that to me. but I want to thank representative Hanes whose been involved with this and representative Jeter and also I really want to say thank you to representative Moffett and Murray for working with us to get this in here. It does exactly what it says, it would require the lodging establishments to install electrical carbon monoxide detectors in hotels. All of us are aware I'm sure of the senseless deaths that happened here in our state recently, and also the hospitalization of several people and a lot...

[Speaker Change] The people’s members up here were quite surprised that they weren’t required already. So this just moves the building code, directs them to require that in our, our lodging establishments. [Speaker Change] Section twenty seven and twenty eight will actually be handled by Representatives Catlin and Millis. But before we hear those parts of the Bill, these particular parts of the Bill have been brought to us by [??]. Essentially these are actually rules they’ve ask us to, to put in statute. And this is a result of the fact that rule making has been so arduous and difficult that this is certainly another way in order to get a rule adopted which is to have due process done here in the legislature. But it’s not the most effective way to get accomplished what we need to get accomplished in our State. However in looking at what they have asked us, we vetted this with staff. We feel comfortable that we can move these particular rules forward. And Representatives Catlin and Millis will explain these three sections. [Speaker Change] In regards to sections twenty seven to twenty eight. The Bills for me does a good job outlining what those sections entail. I just want to make out a few just quick points so this is a threshold farm issue, regarding cattle only, confined cattle. Basically if you have confined cattle over a hundred, then you are required to have a permit from the Division of Order Quality. This is a Hotel California style provision where if you go over a hundred confined cattle, you have to have a permit and if you ever drop below you can’t get out. This [??] establishes a very responsible procedure. If you drop below a hundred confined cattle you actually have an opportunity to get yourself back out. That’s basically it. I’ll stop there. [Speaker Change] This is section twenty nine which allows, it’s a [??] question. And it’s basically related to golf course irrigation, using reclaimed water, reclaimed waste water which has been treated. And as for those of you who do play golf, you know that there is always water real close to where you lose your golf ball. And if you’re going to irrigate those, those greens and those fairways, you, it’s difficult to meet the setbacks that are there now. It does still, it eliminates the setbacks but it does not eliminate the discharges to the water and it does not allow discharged water to SA waters. So, I think that it’s a good Bill. And, oh yeah, and then the, the next one is section thirty. It’s the smoking ban rules and I actually served on the State Healthcare Commission when we did the first smoking ban rules. And then I served on a local Health Commission where there was an issue with that in this restaurant called Kick Back Jacks that in Wilmington they’re not allowed to smoke and I think up here they are so there’s some confusion on interpretation of that language. This Bill asks the Commission of Public Health to clarify that language. Which I think it needs to. [Speaker Change] Thank you Representative Catlin. Last two sections, section thirty one is a separability clause which is self-explanatory. And section thirty two simply deals with the effective date as, which is basically when this is, becomes law. We do have, I am aware of two amendments. The first amendment, actually I need to act like a Bill sponsor versus a Chair. Mr. Chair that concludes my presentation. [Speaker Change] Thank you. Representative Murray is recognized to bring forth his amendments. It’s being passed out to the committee. [Speaker Change] Thank you Mr. Chairman. The purpose of this amendment is to delete section seventeen. The, we’re working with the Senate to, to get this Bill agreed to and, even though our Speaker would like to see this remain in the Bill, we’re going to remove this to help foster agreement with the Senate and take this study out with the hope and intention that a Legislative Research Commission study will, will be formed to address this issue. But for the purpose of this Bill, we didn’t want to have this study in here so I move adoption of the amendment. [Speaker Change] Members of the committee, you’ve heard the motion from Representative Murray. Any further discussion or debate regarding this amendment? If not all in favor say aye. All opposed. Motion carried. Thank you Representative Murray. [??] is adopted. [Speaker Change] Mr. Chairman, if I could, I believe we skipped over section eight which amends.

Definition of a private club and the legislation in the previous session, the definition of private club. I believe there is statutory reference in advert being left out and so and this just makes sure that the definition of private club is referred to in the appropriate statutory references and it statues. So basically it's a technical change to make sure the definition of private club is appropriately referred in statues. [SPEAKER CHANGES] Thank you. Members of committee, the next amendment, this being passed out is being offered by representative Brody. The committee will be at ease until all the members have this amendment. While that is being done, we'd like to thank you the sponsors of for bringing this simple little bill before the committee today. And we'd like to echo our thanks to Jeff Hudson and Karen Kopin Brown for their efforts in helping in composing this bill. We appreciate all the efforts that you have put in. Thank you. All members have the copies of this amendment. Representative Brody, please explain your amendment to the committee. [SPEAKER CHANGES] Thank you Mr. Chairman. The amendment basically doesn't change anything, it just basically asks q request, actually puts it in the statue to have request. North Carlina is trying to make it's way out of a economic slump especially in construction and other areas and what we are asking is that the rules review commission review the surface water quality in wetlands rule within the next year so there tends to be some dispute sometimes in that area and we figured we'll get those rules clarified as soon as possible. [SPEAKER CHANGES] Thank you representative Brody. Representative Moffitt. [SPEAKER CHANGES] Thank you Mr. Chair. I have spoken with the amendment's sponsor regarding this and the staff and this is a good amendment and a registered option. [SPEAKER CHANGES] Members of the committee, you have heard the motion on the floor by representative Moffitt. Any further discussion or debate from the committee. If not, all in favor say Aye. All opposed. Motion carried, the amendment is adopted. Thank you Mr. Brody. Representative Cunningham. [SPEAKER CHANGES] Thank you Mr. Chairman. The bill sponsor answered my question when he covered section 8, thank you. [SPEAKER CHANGES] Yes Ma'am. Representative McElraft. [SPEAKER CHANGES] Thank you Mr. Chair. I have an issue with section 13 1B which is a local government restrictions on making their ordinances. I do think sometimes the local government gets out of control but there are times when those rules need to be more stringent. For instance on the coast we have flooding issues and some of our storm model rules are 2 inches rather than the 1 and a half and it's important for us that the, I forgot what the flood board is called that you put around the bottom of the houses as a requirement at Atlantic beaches actually brought down flood insurance cost and insurance cost significantly for that town. So I'd like to say and I'd like to work with the bill sponsors into this amendment on the floor because it's gonna be a little bit long and I'll need time to develop it but I'd like to say that they are not restricted from doing an ordinance during the public hearing or after the public hearing within so many hours or so many days or whatever. They receive 10 letter of objection to this ordinance, then they would not be able to pursue the ordinance, it'd have to go back to the state agency for the waiver and then the state agency will then decide whether they had a good reason to do that ordinance or not. I think it will work for the local governments and I think this will work for a state.It'll keep control of those who are wild with their ordinance but I really think we need to give the local governments a little bit more control on that way. I did talk to bill sponsors, both in the house and the senate and they are Okay with this but I'd like to do this on the floor. [SPEAKER CHANGES] Thank you, Representative McElraft.

Representative Craig Horn. [SPEAKER CHANGES] Thank you Mr. Speaker. I just have a couple questions for, so I can understand, first is on page 12, line 22 I think it is, hold on a second, line 22 is correct. The phrase, "for the benefit of the commissioner", would someone explain that to me, please? Shouldn't it be the benefit of the commission? Or is that one and the same? [SPEAKER CHANGES] The commissioner refers to the insurance commissioner, in this case, and so that's, that's what, that's, the appropriate term is commissioner, because the insurance commissioner does have, is the entity which, where PEOs are regulated. The, in section 22, that bond is for the commissioner, not, there's not an insurance commission, it's a commissioner, that's what that bond is for.[SPEAKER CHANGE] Okay, follow up, on page 17, the explanation was that lines 43 through 47 are in limbo, if my recollection is that we passed either out of the ??? committee, or maybe out of the house, that change, and I would have thought had there been a problem from the state highway patrol that that would have been voiced by now, is there some new information? [SPEAKER CHANGES] Representative Dixon will answer that question for you, Representative Horn. [SPEAKER CHANGES] Representative Horn, the legislation that we passed increased the weight limit for feed trucks hauling processed feed. The ingredients and the additional byproducts are totally different types of circumstances, and the highway patrol is currently working with those who would like this at this time. So it's totally sepa rate from what we passed. [SPEAKER CHANGES] Thank you, just a followup question on that? So therefore, how is that gonna impact the bill if there's a piece of it that's unresolved? [SPEAKER CHANGES] Mr. Chair? If it's not resolved it will be taken out on the floor. [SPEAKER CHANGES] Okay, that's, that's, thank you. [SPEAKER CHANGES] Thank you. Representative Harrison? [SPEAKER CHANGES] Thank you, Mr. Chair, I had a couple questions for the bill sponsor, and then a comment if I could please. So, thank you, I do appreciate the need for this, but I think they may be going a little overboard, I need a clarification on the House bill 74 provisions, that might be directed to Representative Murry, or ??? or ???, because I recall that the discussion- [SPEAKER CHANGES] Representative Harrison, for the benefit of us that do not know what section you are talking about, please reference that. [SPEAKER CHANGES] Section 4. [SPEAKER CHANGES]Thank you ma'am, I appreciate it. [SPEAKER CHANGES] I recall that we have some federal, we have some federal mandates that have to ??? act and such, and because the provisions in section 4 allow for rules to expire automatically, that provision, that trouble made it in the earlier discussions in this bill, and I think you are gonna spend more time thinking about it, but we have some federal mandates, and I just don't know how that interacts, if we just let rules expire that are implementing these federal mandates related to clean air, clean order, whatever federal environmental laws, how that, how we resolve that, if we just let the state rules expire, and it might be a question for staff, because I'm just concerned on how that issue is dealt with. [SPEAKER CHANGES] I'm looking for the section. Ms. Cochrane-Brown? [SPEAKER CHANGES] Thank you Mr. Chair. The rules don't expire unless the agency fails to actually go through the process of reviewing them, so the agency has the power to prevent that from happening. In addition, there's a provision that allows the rule's review commission to subject rules to review, so that, certainly someone raised it to the rule's review commission if the agency wasn't action in a timely ???, the rule's review commission then could direct the agency to readopt the rule. This isn't supposed to happen, rules aren't supposed to expire, this basically is a process to require and enforce agencies to actually go through the process of readopting rules.

And that’s the intent, and page 4, um lines 3 through 7 the necessary without substantive public interest. A rule where the agent has not received public comment concerning the role within the past two years is being, as determined by the agents to be necessary without substantive public interest. We would expect that an agreed upon role, by members of the regulated public, that are subject to or required by the federal government because of an EPA-type situation that would likely fall under that category would not require any action by the agency to prevent expiration. A rule that has been identified by an agency that is necessary without substantive public interest would prevent that role from expiration. [SPEAKER CHANGES] And I appreciate that. What I’m sort of trying to anticipate different scenarios I can see in the agent, see that when there’s a very controversial bill that they might be hostile to the implementation to that rule and might just let it expire but the fact that Karen Concord Brown says that the rules review commission could take it up if they got the ten letters of protest gives me some comfort that that might not happen. OK, thank you, the second question I had was related to the vegetation changes because I know we’ve been dealing with this billboard issue for several years and I thought we had sort of stakeholder compromise agreed to last year. I’m just trying to figure out what, why these changes are being made. Let’s see, I’m not sure I have the section. Sections 9, A and B. [SPEAKER CHANGES] Mr. Chair. [SPEAKER CHANGES] Representative Moffitt [SPEAKER CHANGES] Thank you. In regard to Senate Bill 183 that passed last session, there’s a disagreement in regard to the interpretation and implementation of the vegetation cut. On on ramps and off ramps between the DOT and the industry. And this attempt to clarify that misinterpretation. [SPEAKER CHANGES] Thank you, and Mr Chair if I could just comment? [SPEAKER CHANGES] Yes ma’am. [SPEAKER CHANGES] I really appreciate the hard work of the bill sponsors and I’m very troubled that we’re going a bit too far. I’m concerned about the substance of House Bill 74. I still don’t have concerns about that. That are folded into this bill. I’m worried about the section that Representative McElraft mentioned about the local ordinances. I think that the federal government has provided a floor not a ceiling for protecting the public health and the natural resources of our various states and local communities. The protest petition repeal, that’s very troubling to me. That’s been very important to ?? in Greensboro. We just got it back a couple years ago through the hard work of our entire delegation. And there are other provisions as well. I’ll be vetting those. Thank you for your work on this sir. [SPEAKER CHANGES] Thank you Representative ??. Representative Holley. [SPEAKER CHANGES] Thank you, Mr. Chairman. I’ve got a, I have a question on page 6, line 33 and I’m just a little… Is this saying that a private contractor does not have to pay minimum wage? [SPEAKER CHANGES] Mr. Chair? [SPEAKER CHANGES] Representative Moffitt [SPEAKER CHANGES] No, it does not. Basically what it says is that a city or county may not impose on a vendor that it’s doing business with, a rule that it cannot impose on everyone else in regards to compensation. [SPEAKER CHANGES] But isn’t minimum wage the law? [SPEAKER CHANGES] This does not apply to minimum wage. [SPEAKER CHANGES] Thank you [SPEAKER CHANGES] Yes Ma’am. [SPEAKER CHANGES] Representative Baskerville? [SPEAKER CHANGES] Thank you, Mr. Chair. I just have a couple questions [SPEAKER CHANGES] Yes sir. [SPEAKER CHANGES] What, Representative Moffitt, thank you for doing a very, I think, detailed job on explaining these provisions to us. My question is What is a PEO? I mean, I don’t even know what that is. Can you tell me what that is, what they do? [SPEAKER CHANGES] Please identify that section if you will, for my benefit if not for everybody else’s. [SPEAKER CHANGES] 15 [SPEAKER CHANGES] 15? [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] ?? that’s page 13 [SPEAKER CHANGES] Page 12 [SPEAKER CHANGES] That’s right. Yeah, your page 13, that’s right.

I would like to- we have both representatives from the insurance commissioner's office here and a representative from PEO here with us. I would ask that, Mr. Chair, that you would recognize Rose Vaughn Wiliams with the Dept. of Insurance and then recognize the representative from the PEO, the organization after her, and I think we can hear a conversation about this section that would enlighten. Rep. Baskerville. [SPEAKER CHANGES] Thank you very much Mr. Chairman, Rep. Murry, Rep. Baskerville. My name is Rose Vaughn Williams and I'm legislative counsel to the North Carolina Dept. of Insurance, and we were tasked several years ago with the licensing and regulation of PEOs, which is short for Professional Employer Organization. A PEO can, for example, for your business, you're a small business owner, and you don't want to run all the Human Resources part of the business. You can hire a PEO to do that for you. Collect the taxes, pay the taxes, if it's a health insurance issue, collect that money and pay those premiums and that kind of thing. They can also provide staffing services as well, but a large part of their job is to take the funds of other business's employees and handle those funds in an appropriate manner, and that's the transfer that gets the government involved a little bit to make sure that it's safe. And I can answer any other questions and would love to be heard on the provision if I may. [SPEAKER CHANGES] Any further questions from Ms. Rose Vaughn Williams? [SPEAKER CHANGES] No. [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] Mr. Chairman, the changes in this section of the bill in my opinion improve the licensing oversight process for PEOs by making requirements less burdensome and costly for the PEOs, and it will- but, it still maintains, in my opinion, appropriate regulatory authority for the insurance commissioner over these entities. This balance will help our small businesses, and it will keep the costs of regulation low while helping our small businesses. And Mr. Chairman if you would recognize the representative from PEO to describe one of these sections necessary. [SPEAKER CHANGES] Please come forward to state your name for the record. [SPEAKER CHANGES] Good morning, Mr. Chairman and members. My name is Adam Peer, and I'm the director of state and government affairs to the National Association of Professional Employer Organizations. So we're a national organization ?? substantive presence here through our membership in North Carolina. Rose is correct in her description of the industry, the only thing that I would add is what a PEO does is through a statutory creative relationship co-employees those workers, it creates the nexus with those employees so that they can directly sponsor benefits such as health insurance, workers' compensation, remit UI taxes, etc. In working with the bill authors, both in the Senate bill where this language comes from as well as the office that's for the bill before this committee, it's the association's provision that these amendments are more in conformity and strike that balance between regulation and allowing us to serve our small business clients. It brings it in a little more balance and also brings certain provisions in North Carolina law more consistent and more harmonized with what your neighbors in the other states are doing to make it more of a level playing field. So I'd be happy to answer any particular questions. Thank you. [SPEAKER CHANGES] Any further questions? [SPEAKER CHANGES] Yes Mr. Chairman. [SPEAKER CHANGES] Yes sir. [SPEAKER CHANGES] If I may. [SPEAKER CHANGES] Of course. [SPEAKER CHANGES] So these PEOs are hired by small businesses to take care of their benefits for their employees, their taxes they need to pay on employees, and those- and things along those lines and this provision makes lax the reporting requirements or the educational background that these PEO accountants have to have? I'm still- I don't understand what the- I do understand what a PEO is now, but I don't understand what this law- what this section does about what the PEOs can or can't do. [SPEAKER CHANGES] Rep. Murry. [SPEAKER CHANGES] First section deals with a consistent bonding requirement of $100,000, which is similar to every other bonding requirement that any other state that regulates PEOs, we've got a consistent $100,000 bond.

The section there is some ambiguous qualification language in the current statute so this replaces this with a clear requirement for the network of a PEO to be in order to obtain and renew a license. The bill updates certain requirements that much be included in contract between the PEO and his client between rights and responsibilities of each party over covered employees. Current law permits the Insurance Commission to charge a PEO for the cost of an examination even if no violations are found. And so this permits the Commissioner to recover the cost of that examination if violations are found. This approach is consistent with neighboring states and so additionally this bill removes a reporting requirement that could force a PEO to pay a client’s insurance cost if the client chooses not to fund an insurance plan. And so if the small business doesn’t fund their insurance plan the burden of that, the decision of that shouldn’t fall back on the PEO that’s the small business owner’s decision and so this clarifies and modernizes that provision as well. This provision, this bill, Senate Bill 475 passed the Senate and is waiting action here in the House and I know the, I think that we’ve got a balanced solution here to make sure there’s appropriate regulatory oversight and maintain flexibility for these PEO’s to help benefit our small businesses. [SPEAKER CHANGES] Thank you, Mr. Chair. [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] Representative Moffitt. [SPEAKER CHANGES] Thank you, Mr. Chair. I’d like to revisit one moment House Bill 74, in regards to some reservations that Representative Harrison mentioned. In the development of that bill, I’m not sure if members will recall but we actually had all the stakeholders at the table. We had Rules Review Commission as well as the Rules Review Coordinators from our agencies and we paid particular attention to the concern that was voiced regarding any encroachment on federal regulations to make sure we would not run sideways with any action that we took in this body. So we feel comfortable that House Bill 74 was re put into this bill, which is the same that passed the House is consistent with the, has the necessary precautions in there to where we won’t run afoul of federal law. In closing, I would like to thank Senator Jackson for allowing us to use his bill, Senate Bill 112 for this regular form effort. I appreciate all the work that has gone into this bill, I appreciate staff. This is a bipartisan effort. We’ve got lots of issues in here that have been brought forward by members of the body as well as members from, citizens from our state. And with that Mr. Chair I’d like to move for a favorable report for Senate Bill 112 as amended rolled into a new Committee Substitute. [SPEAKER CHANGES] Thank you, Representative Moffit. We have a question from Senator Bumgardner.   [SPEAKER CHANGES] Thank you Mr. Chairman. I had a question about Section 30. Specifically, on page 23, line 42 and 43 it says, as though 10 or more written objections had been received by, as provided by GS150b21. Explain that please. [SPEAKER CHANGES] Mr. Chair, that if I may, I would like to redirect that to Ms. Cochrane-Brown. [SPEAKER CHANGES] Ms. Cochrane-Brown please. [SPEAKER CHANGES] Thank you, Mr. Chair. Representative Bumgardner, under current law, the AK provides a process when the rule has been adopted and reviewed and approved by the Rules Commission, which is a part of the current process. Any 10 people can submit letters objecting to that rule to the Rules Review Commission by the day after the Rules Review Commission approves it. And that rule then cannot go into effect until the 30th day of the next legislative session. Basically this is a process to subject controversial rules, and by that we mean rules that at least 10 people have some concerns with, to bring those rules back to the legislature so the legislature can determine whether there are any needed changes in the policy that need to be made before that rule can go into effect. That’s the current law and that’s the current process for all rulemaking. What this provision would do is to basically provide that these new rules that are going to be adopted under this section will be treated that way regardless if whether or not they get.

...actually get ten letters. These rules will be required to come back to the Legislature, so the Legislature can review them before they go into effect. [SPEAKER CHANGES] Follow up? [SPEAKER CHANGES] Follow up? [SPEAKER CHANGES] Is this section going to make it more or less difficult for a restaurant or a bar to have a smoking section, or not? And, what effect, if any, is it gonna have on these smoking bars that are in various places. [SPEAKER CHANGES] Representative Catlin will answer that question for you. [SPEAKER CHANGES] Thank you Mr. Chair. I'll do my best to. There is an issue in the definition of no smoking. It requires that it not have three walls, and that you don't have to pass through it if you're a non smoker, and a variety of other definitions like that. And there have been some, some local differences in how to interpret that, as I mentioned with the Kickback Jack's Restaurant. And so, I would suspect that it'll just clarify the rules, and if, and if a restaurant or a bar meets the clarified rules, then they'll be able to have smoking. If they don't, then they won't. But right now there is some confusion, confusion between the interpretation. [SPEAKER CHANGES] Further questions? [SPEAKER CHANGES] Representative Bumgardner. [SPEAKER CHANGES] Not right this minute. [SPEAKER CHANGES] Thank you. Representative Hollo. [SPEAKER CHANGES] Thank you Mr. Chairman. Real quick question. Overall, it seems we've increased the effort and time, and maybe expense for the agencies to maintain the rules they already have in place. And we, of course, cut the budgets over the past several budget cycles, and I wanna know, has there been any attempt or any statement of what the additional cost for this more periodic rule review is? And has it been allotted for in the budget? [SPEAKER CHANGES] Representative?? [SPEAKER CHANGES] Thank you. Thank you, Mr. Chair. Thank you, Representative Hollo. We have actually put a provision in the budget that allows for the Rules Review Commission to actually expand in regards to number of attorneys, as well as support personnel. [SPEAKER CHANGES] Follow up? [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] Has there been any additional funding provided to the agencies themselves, who are gonna do the internal reviews and process these on a more periodic basis? [SPEAKER CHANGES] Not that I'm aware of. I would just add, in the development process of House Bill 74 every agencies, every agency has a person dedicated for rules promulgation. Every one of those individuals was invited and participated in the stakeholdering process to develop House Bill 74. So they're aware, and they help make it less burdensome on themselves by helping make this process more clear so that not every rule is gonna be subject to continual review. They will be able to identify rules that will prevent extra work for them. But, but at the same time, I think when we're in, just to rehash some of the discussion from House Bill 74, for every rule that exists, there is, there is a person or a business that is regulated. And so the burden on the regulator and the burden on the regulated, you have to balance both of those and make sure that the rules are not overly burdensome on one end for the business and small business owners, and that the regulator has a sufficient direction from the general assembly and they aren't enforcing rules that are outdated or unnecessary. And I think the agencies are completely on board with helping make sure their job is focused on where the, where the need is. And that's, that's what this process and House Bill 74, and section 4 of this bill are intended to accomplish. [SPEAKER CHANGES] Representative Fulghum. [SPEAKER CHANGES] To that, Mr. Chairman. My understanding was that there was some staff attorneys for agencies that had been assigned to the Attorney General's office, that were back, reassigned to the staff agencies. Is that correct? For this purpose? [SPEAKER CHANGES] Representative Murry. [SPEAKER CHANGES] I know there were, has been some shifting around of attorneys in the budget process, and I'm, it is unclear to me at this point. But I think you're correct. Some attorneys from the, from the Attorney General's office are being redirected back to the agencies. I think that's mainly for hearings. For the administrative hearings process, for appeals and such like that. But, but divisional labor for the agencies from an attorney's perspective is occurring. [SPEAKER CHANGES] Representative Moffitt, you are recognized for your motion. [SPEAKER CHANGES] Thank you, Mr. Chair. I move that Senate Bill 112 as amended receive a favorable report.

Amber, I guess we created a new committee substitute members of the committee and members on the floor all In favor say I all oppose no the I's have the court stands adjourned