Bill Summary for H 1055 (2015-2016)

Summary date: 

Jun 7 2016

Bill Information:

View NCGA Bill Details2015-2016 Session
House Bill 1055 (Public) Filed Monday, May 9, 2016
AN ACT TO MAKE VARIOUS REVISIONS TO THE STATE GOVERNMENT ETHICS ACT AND THE LOBBYING LAWS.
Intro. by Ethics.

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Bill summary

House committee substitute makes the following changes to the 1st edition.

Amends GS 138A-3(15), concerning the specified items that are not to be considered a gift under the State Government Ethics Act (Act), by changing new subdivision (g) to provide that campaign contributions properly reported under federal law (previously, properly received and reported under federal law) are not to be considered gifts under the Act. Also, adds new subdivision (h) to provide that anything of value given and received between extended family members is not to be considered a gift under the Act. Amends GS 138A-32(e)(7), which specifies exemptions from the gift prohibitions established in subsections (c), (d), and (d1) of the statute that apply to public servants, legislators, or legislative employees, by changing subdivision (7) to exempt gifts from a member of the same household of the covered person or legislative employee (previously, the exemption included gifts from the covered person's or legislative employee's extended family). Effective December 1, 2016 and applies to offenses committed on or after that date.

Amends GS 138A-10(a), concerning the powers and duties of the State Ethics Commission (Commission), by amending the fifth and sixth duties of the subsection. Provides that the Commission has the duty to conduct inquiries and investigations on alleged violations against judicial officers, legislators, and legislative employees in accordance with GS 138A-12 (previously, only provided for conducting inquiries of alleged violations). Provides that the Commission has the duty to conduct inquiries, investigations, and hearings on alleged violations against public servants in accordance with GS 138A-12 (previously, only provided for conducting inquiries on alleged violations). Makes technical changes.

Amends GS 138A-14(i), concerning the ethics education program, to set out that judicial officers otherwise serving as a public servant are not exempt from the statute.

Amends GS 138A-15(h), concerning the duties of heads of State agencies, to require that prior to (previously, as soon as reasonably practicable after) the designation, hiring, or promotion of their chief deputies, assistants, or other public servants under their supervision or control, or upon learning of the appointment or election of other public servants to a board covered under the State Government Ethics Act, all agency heads and board chairs must notify the Commission in writing of the designation, hiring, promotion, appointment or election (previously, did not specify that the notice was to be in writing) and provide copies of GS Chapter 138A and applicable financial disclosure form to those public servants.

Amends GS 138A-22(c) to provide that, notwithstanding subsection (a) of the statute, public servants, except those as defined in GS 138A-3(30)a (previously, public servants under GS 138A-3(30)j and k), who have submitted a statement of economic interest under subsection (a) may be hired, appointed, or elected provisionally prior to submission by the Commission or the Commission's evaluation of the statement in accordance with Article 3 of GS Chapter 138A (Public Disclosure of Economic Interests), subject to dismissal or removal based on the Commission's evaluation.

Amends GS 138A-24, which sets out the information required to be included about the filing person and the filing person's immediate family in the statement of economic interest. Amends subsection (a) to include a list of all stock grants, stock units, and restricted stocks, whether vested or unvested, in addition to the existing requirement to include all stock options, in a company or business not otherwise disclosed on the economic statement, to the list of each asset and liability with a value of at least $10,000 owned by the filing person and the filing person's immediate family not held in a blind trust, as required by subdivision (2). Amends subdivision (6), concerning the disclosure of regulatory and business relationships, by changing the language that specifies that the subdivision does not apply to a legislator, a judicial officer, or that legislator or judicial officer's immediate family to instead exempt all public servants, including all those who also serve, or are seeking to serve, as a legislator or judicial officer, and that public servant's immediate family from the requirement of subdivision (6). Amends subdivision (7), concerning the disclosure of social activities related to subject matter the individual has jurisdiction over, by making identical changes to the exemption provision that were made in subdivision (6), as amended. Adds new subdivision (8a) to require the statement of economic interest to include a list of all scholarships related to the filing person's public service or position valued over $200 from a person, or group of persons, acting together, if the scholarship was given by a person or group of persons not required to report under GS Chapter 120C (Lobbying).

Amends GS 138A-25, concerning a failure to file an economic statement with the State Ethics Commission, by calculating the fine based on how many days have passed since the "date of the notice" instead of since the "receipt of the notice" throughout the statute. Amends subsection (d) to direct, upon receipt of the report from the Commission on the failure by any filing person to file or complete the Statement of Economic Interest within 60 days of the date of the notice required under subsection (d), the Director of the State Bureau of Investigation to make appropriate investigation into the matter and forward a copy of the investigation to the Wake County District Attorney for possible prosecution of a Class 1 misdemeanor. Amends subsection (e), similarly to subsection (d), to direct, upon receipt of the report from the Commission on the failure by any filing person to file or complete the additional disclosure within 60 days of the date of the notice required under subsection (e), the Director of the State Bureau of Investigation to make appropriate investigation into the matter and forward a copy of the investigation to the Wake County District Attorney for possible prosecution of a Class 1 misdemeanor. Adds new subsection (f) to establish that the computation of periods of time provided for in the statute are to be calculated under the provisions of GS 1A-1, Rule 6(e), which allows three days to be added to a prescribed period whenever a party that has a right to do some act or take some proceedings within the prescribed period after service of a notice or other paper upon him and the notice or paper is served upon the party by mail.

Amends GS 138A-28, concerning the review and evaluation of statements of economic interest, to require the Commission to receive and review all statements of economic interest pursuant to GS 138A-10(a)(4) and evaluate, under subsection (b) of the statute (previously, did not specify the evaluation as under subsection (b)), whether the statements conform to the law and the rules of the Commission, and whether the financial interests and other information reported by prospective and actual covered persons and others required to file reveal actual or potential conflicts of interest (previously, did not include the financial interests and other information of others required to file). Clarifies that, beginning July 1, 2013, the Commission must establish a biennial cycle for evaluating subsequently filed statement of economic interest. Amends subsection (c), which specifies prospective and actual public servants that are to be evaluated on an annual basis, by replacing the specification of supplemental statements filed pursuant to GS Chapter 136 with Metropolitan Planning Organizations and Rural Transportation Planning Organizations subject to GS Chapter 136. Adds the North Carolina Board of Transportation, subject to Article 8 of GS Chapter 143B, to the prospective or actual public servants to be evaluated on an annual basis. Deletes subsection (e), concerning provisions for a public servant serving on more than one covered board and changing covered boards during biennial cycles. Amends subsection (f) to provide that nothing in the statute is to be construed to impair the Commission's duties and authority under GS 138A-25 (failure to file; previously, also included GS 138A-26, concerning concealing or failing to disclose material information).

Amends GS 138A-38(a) to provide that, notwithstanding GS 138A-31(a), GS 138A-36, and GS 138A-37 (previously, did not include GS 138A-31(a), which prohibits a covered person or legislative employee from knowingly using their public position for private gain), a covered person may participate in an official action or legislative action under the seven specified circumstances. Amends subdivision (a)(6) to provide that, when a public or legislative body records in its minutes that it cannot obtain a quorum in order to take the official or legislative action because the covered person is disqualified from acting under GS 138A-31(a), GS 138A-36, GS 138A-37, or the statute (previously, did not include GS 138A-31(a)), the covered person may be counted for purposes of a quorum but cannot otherwise abstain from taking any further action.

Amends GS 138A-45 to establish that any violation of GS Chapter 138A by any ethics liaison, covered person, or legislative employee is grounds for disciplinary action as specified (previously, did not include any ethics liaison). Amends subsection (b), concerning the removal of specified public servants on a board in the event of misfeasance, malfeasance, or nonfeasance, by providing that, for all other public servants (previously, for all other appointees), the Commission is to exercise discretion of whether to remove the offending public servant.

Amends GS 120C-100(a)(3), defining executive action as the term is used in GS Chapter 120C on Lobbying, to exclude from the term a public servant's communication with a person, or another person on that person's behalf, with respect to making an inquiry about or responding to a request for proposal made under GS Chapters 135 (Retirement System for Teachers and State Employees; Social Security; State Health Plan for Teachers and State Employees), 143 (State Departments, Institutions, and Commissions), or 147 (State Officers), where previously only requests made under GS Chapter 143 were specifically exempted.

Amends the revision of GS 120C-200 in Section 3 of the 1st edition, concerning the lobbyist registration procedure, by additionally amending subsection (a) to make a clarifying change to the requirement that a lobbyist file a separate registration statement for each principal the lobbyist represents with the Secretary of State. Also replaces "registering" language with "filing a registration statement," conforming with the same changes to the language in subsections (b) and (c) made in the 1st edition. Makes technical changes.

Amends GS 120C-201(a), concerning a lobbyist's registration fee, to require the fee to be due and payable at the time of filing each lobbyist registration statement (previously, due and payable at the time of each lobbyist registration).

Amends GS 120C-206(a), concerning lobbyist principal's authorizations, to require a written authorization signed by the lobby principal to be filed with the Secretary of State within the specified time after the lobbyist's registration statement is filed (previously, after the lobbyist's registration). Provides that if the written authorization is filed later than the specified time after the lobbyist's registration statement is filed (previously, after the lobbyist's registration) and before January 1 of the following year, the lobbyist registration is effective from the date the lobbyist registration statement is filed (previously, date of filing of the lobbyist registration) and all reports due under Article 4 of GS Chapter 120C are to be filed.

Amends GS 120C-401(b1), concerning reporting generally, to establish that, for purposes of subdivision (b)(5) of this statute requiring the name of any designated individual or that designated individual's immediate family member connected with the reportable expenditure, when more than 15 designated individuals benefit from or request a reportable expenditure, no names of individuals need be reported provided that the report identifies the approximate number of designated individuals benefiting or requesting and the basis for their selection, including the name of the board (previously, name of board not included), legislative body, committee, caucus, other group whose membership list is a matter of public record in accordance with G.S. 132-1, a description of the group that clearly distinguishes the designated individuals (previously, description of the group that clearly distinguishes the designated individuals not included) or including a description of the group that clearly distinguishes its purpose or composition from the general membership of the General Assembly.

Amends GS 120C-401(b2) to establish that, for purposes of subdivision (b)(5) of the statute, when the reportable expenditure is a gift given with the intent that a designated individual be an ultimate recipient (previously, that a designated individual be the ultimate recipient) and the lobbyist or lobbyist principal does not know the name or names of the designated individuals, the lobbyist or lobbyist principal must report a description of the designated individuals and those designated individuals' immediate family members connected with the reportable expenditure that clearly distinguishes its purpose or composition, and an approximate number, if known.

Section 16 of the bill amends GS 120C-601(a)concerning the powers and duties of the State Ethics Commission, making the same changes as found in Section 4 of the previous edition of the bill.

Amends GS 120C-700 concerning those exempt from the regulations governing lobbyists, making clarifying changes.

Amends GS 120C-800 concerning reportable expenditures, making conforming changes to a statutory reference. Also amends the definition of the term “scholarship” found in subsection (g), for the purposes of this statute, providing that event-related expenses such as food, beverages, registration, travel, and lodging can also be considered a scholarship.

Amends the catchline of GS 138A-12 to be Inquiries, investigations and hearings by the Commission (was, Inquiries by the Commission).  Makes changes to the process for conducting inquiries, investigations, and hearings throughout the section.  Amends one of the ways to institute an inquiry, providing that a timely, signed, and sworn complaint by an individual against a covered person or legislative employee must be filed with the Commission (previously language did not include timely requirements nor state complaint must be against a covered person or legislative employee). Amends GS 138A-12(b1) providing that investigations initiated by the Commission are now to be known as inquiries, more specifically Commission Initiated Inquiries, and provides that they are not subject to the various informational requirements found in subsection (c)(1). Also adds language providing that inquiries initiated by written request from a public servant or those responsible for hiring, appointing, or supervising public servants do not need to be sworn or verified. Amends subsection (c), making clarifying changes and amending the notice requirements of the section, now requiring the Commission to send a copy of the complaint to the subject of the complaint within 10 business days of accepting the complaint (was, within 10 business days of the filing). Specifies that a complaint is deemed accepted if it is timely, signed, sworn (if required) and against a covered person. Deletes a requirement that a copy also be sent to the employing entity. Amends process for inquiries made by the Commission providing that the Commission must initiate an inquiry into a complaint within 10 business days of acceptance of the complaint (was, within 10 business days of filing the complaint). Replaces references to “complaint inquiries” with “inquiry.” Amends GS 138A-12(f), which previously detailed the process for the dismissal of a complaint after a preliminary inquiry, now deleting the preliminary inquiry altogether and making the section detail the process for dismissal of complaints after an inquiry, no longer requiring a preliminary inquiry. Makes conforming changes and requires the Commission to conclude its inquiry within 30 business days of acceptance of the complaint (previously, preliminary inquiries were to be concluding within 30 business days). Also amends subsections (g) and (h), previously concerning commission inquiries and action on such inquiries; now sets out process for the initiation of probable cause investigations and action on probable cause investigations, providing that if the Commission wants to proceed with an investigation, written notice of the investigation and allegations must be provided to the covered person or legislative employee, employing entity and appointing authority (previously, for inquiries required notice to the individual who filed the complaint and the covered person or legislative employee).  Also now provides that the Commission will conduct investigations into complaints to the extent necessary either to dismiss the complaint for lack of probable cause or, upon a finding of probable cause, proceeding as specified in one of four ways, depending on whether the subject is a public servant, legislator, judicial officer, or legislative employee. Makes several clarifying and conforming changes.  Enacts new subsection (h1) concerning the settlement of inquiries against public servants, providing that the subject of the inquiry and Commission staff can meet by consent before the hearing to discuss settlement or even the stipulation of facts, issues of laws, or other pertinent matters. The majority of these regulations were previously found in subsection (j), which is now deleted. However, this new subsection does set out new requirements for any proposed settlement--that it is subject to the approval of the Commission, and once approved, the matter is deemed closed unless any breach of the settlement occurs. Sets out notice requirements for the Commission when a settlement is approved.  Amends subsection (i) concerning the hearings, making clarifying and technical changes.  Amends subsection (k) to Post-Hearing Dispositions (was, Disposition of Inquiries) and amends the process for proceeding  after a hearing if substantial evidence of a violation of a criminal statute is found, requiring the Commission to refer the matter to the Director of the State Bureau of Investigation, so that proper investigation can be made into the matter, with a copy of the investigation being forwarded to the District Attorney for possible prosecution (previously, the matter was referred to the Attorney General for investigation and referred to the district attorney for possible prosecution).  Amends subsection (l) concerning notice requirements of the Commission in regards to a dismissal of a complaint, adding specific notice requirements for  dismissals made under subsection (h) and subdivision (k)(2), requiring the Commission to forward copies of the complaints and notices of the dismissal  against public servants to the employing entity and appointing authority. Makes further clarifying and conforming changes to notice requirements, deleting language that provided for specific notice requirements if a copy of the complaint was issued pursuant to subsection (c)(5).  Amends subsection (m), making conforming changes and requiring the Commission’s report to consist of the complaint, response, and detailed results  of the investigation if the matter was referred under subsection (h) or subdivision (k)(2) [previously required this reporting for matters referred under subdivision (h)(2) and (3)]. Amends subsection (n) concerning confidentiality requirements, specifying that settlement agreements, referrals, and recommendations are confidential and not public record.  Enacts new subsection (n2) authorizing  Commission staff to share related information and documents with another State or local agency or authority when referring a matter. Specifies that such information and documents remain confidential and are not public records.  Makes clarifying and conforming changes to Subsection (o) concerning recommendations after a hearing. No longer limits the Commission's ability to recommend sanctions or issue rulings to instances when they were requested by the entity to which the matter was referred. Amends provisions in subsection (q) concerning continuing jurisdiction, making clarifying and conforming changes. Also provides that investigation into a matter during the period of continuing jurisdiction will be by the Director of the State Bureau of Investigation, with a requirement that a copy of the investigation be sent to the Wake County District Attorney.

Amends GS 120-103.1 concerning investigations by the Legislative Ethics Committee (Committee), making clarifying changes in subsection (a) (Institution of Proceedings). Enacts new subsection (h3), Settlement of Inquiries, providing that the legislator who is the subject of the investigation and the members of the Committee can meet by consent before the hearing to discuss settlement or even the stipulation of facts, issues of laws, or other pertinent matters. Also adds requirements for any proposed settlement, including that it is subject to the approval of the Commission and, once approved the matter is deemed closed unless any breach of the settlement occurs. Sets out notice requirements for the Commission when a settlement is approved. Amends subsection (j) concerning the disposition of investigations after a hearing, providing that after the Committee has found the alleged violation to be established by clear and convincing evidence the Committee can refer the matter to the Director of the State Bureau of Investigation, requiring appropriate investigation and also that a copy of the investigation be forwarded to the District Attorney for possible prosecution (previously, referral was to the Attorney General  for investigation and referral to the district attorney for possible prosecution). Amends subsection (l) concerning confidentiality, adding settlement agreements to the list of documents considered confidential and not public record. Enacts new subsection (l1), authorizing Committee staff to share related information and documents with another State or local agency or authority when referring a matter. Specifies that such information and documents remain confidential and are not public records.

Effective October  1, 2016 (was, effective when the act becomes law). 

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