Senate committee substitute deletes the provisions of the 2nd edition, and replaces it with the following.

Includes whereas clauses.

Section 1 repeals GS 126-5(d)(2), as enacted by Sections 7 and 8 of SL 2016-125, which increased the number of exempt policymaking positions in each department headed by an elected department head, as specified, from the limit of 20, to 25 exempt positions, or from 1% to 2% of the total number of full-time positions in the department, whichever is greater; made conforming changes to exempt managerial positions; exempted DPI from the above limitations, and instead provides that the number of exempt policymaking positions designated by the Board of Education is limited to 70 exempt policymaking positions or 2% of the total number of full-time positions in the department, whichever is greater; made conforming changes to exempt managerial positions designated by DPI; and effective January 1, 2017, added the Superintendent to the specified heads of departments who may designate exempt positions in Council of State Departments and Offices, and removed the Board's authority to designate exempt positions and makes conforming changes. 

Section 2 repeals Part I of SL 2016-125, which created the Bipartisan State Board of Elections and Ethics Enforcement.

Section 3 directs the Revisor of Statutes to recodify GS Chapter 138A, GS Chapter 120C, as well as GS Chapter 163, as amended by this act, into a new GS Chapter 163A to be entitled "Elections and Ethics Enforcement Act," as enacted by Section 4 of this act. The Revisor may also recodify into the new GS Chapter 163A other existing statutory laws relating to elections and ethics enforcement located elsewhere in the General Statutes as the Revisor deems appropriate. When recodifying, the Revisor is authorized to change all references to the State Ethics Commission, to the State Board of Elections, or to the Secretary of State, to instead be references to the Bipartisan State Board of Elections and Ethics Enforcement. Allows the Revisor to make other necessary statutory changes. Requires the Revisor to consult with the State Ethics Commission, the State Board of Elections, the Secretary of State, and the new Bipartisan State Board of Elections and Ethics Enforcement on this recodification.

The organization of the new Chapter 163A is as follows:

Subchapter I establishes the Bipartisan State Board of Elections and Ethics Enforcement.

Subchapter II incorporates the provisions of Chapter 138A (ethics) and Chapter 120C (lobbying), some of which are amended elsewhere in the act.

Subchapter III incorporates the provisions of Chapter 163 (elections and election laws), some of which are amended elsewhere in the act.

Section 4 amends the General Statutes by creating a new Subchapter I, Article 1, of the new Chapter 163A establishing the Bipartisan State Board of Elections and Ethics Enforcement (the Board) and providing for the Board’s membership, powers, administration, and staff as follows.

New GS 163A-1 formally establishes the board. 

New GS 163A-2(a) sets out the membership of the Board as follows:

Eight individuals registered to vote in North Carolina, appointed by the Governor, four of whom are to be of the political party with the highest number of registered affiliates and four of whom are to be of the political party with the second highest number of registered affiliates, as reflected by the latest registration statistics published by the State Board. The Governor is to appoint four members each from a list of six nominees submitted by the State party chairs of the two political parties with the highest number of registered affiliates, as reflected by the latest registration statistics published by the State Board.

Subsections (b) and (c) provide that members of the Board serve two-year terms commencing on May 1st immediately following the gubernatorial election and may be removed by the Governor only for misfeasance, malfeasance, or nonfeasance. Under subsection (d), requires any vacancy to be filled by an individual affiliated with the same political party of the vacating member, with the Governor filling the vacancy from a list of two names submitted by the State party chair of the political party with which the vacating member was affiliated if that list is submitted within 30 days of the occurrence of the vacancy. The oath of office of the Board members is prescribed in subsection (e) of the new statute.  Subsections (f) and (g) provide for election of the Board chair, vice-chair, and secretary.  Under subsection (h), membership on the board is prohibited if the individual holds a federal, state, or local elective or appointive office; a political party office; is a candidate for elective office, campaign manager, or campaign treasurer; or has served two full consecutive terms.  In addition, Board members are prohibited from making campaign contributions to a candidate for office over which the Board has jurisdiction; registering as lobbyists; making public statements for or against identified candidates for office or referendum or ballot issue proposals; and soliciting contributions for candidates, PACs, and referendum committees.

New GS 163A-3 requires the Board to meet at least monthly at the call of its chair or by a majority of its members, and provides that five members both constitutes a quorum and is required for a majority vote. Adds that unless otherwise specifically provided in this Chapter, a majority vote of the State Board must require the following votes for the following types of actions: (1) at least five votes for any action under Subchapter III of this Chapter, Election and Election Laws, except for actions under Articles 23, 24, 25, and 26 of that Subchapter; (2) at least six votes for any action under Articles 23, 24, 25, and 26 of Subchapter III of this Chapter; (3) at least six votes for any action under Articles 5, 6, 7, and 9 of Subchapter II of this Chapter; and (4) at least a majority of those present and voting for any other action.

New GS 163A-4 sets out the powers of the Board in executing its duties, including, (1) in the performance of the duties enumerated in Article 8 of Subchapter II of this Chapter and Subchapter III of this Chapter, upon a vote of five or more of its members, with at least two votes from each political party, the power to administer oaths, issue subpoenas, summon witnesses, compel the production of evidence and (2) except as provided in subsection (a), upon a vote of five or more of its members, petition the Superior Court of Wake County for approval to issue a subpoena when necessary to conduct investigations of violations of the remainder of the Chapter.

New GS 163A-5 provides that the Board is an independent regulatory and quasi-judicial agency that may not be placed within a principal administrative department of state government, and authorizes the Board to employ staff.

New GS 163A-6 creates the position of Executive Director of the Board, who shall be appointed by the Board for a term of four years and is authorized to hire staff.  The Executive Director also serves as the chief State elections official.

Section 5 repeals five sections of Chapter 138A (GS 138A-6, establishing the State Ethics Commission; GS 138A-7, setting out the Commission’s membership; GS 138A-8, providing for meetings and quorum of the Commission; GS 138A-9, authorizing staff and administrative functions of the Commission; and GS 138A-12(r), authorizing the Commission to petition the Superior Court of Wake County for the approval to issue necessary subpoenas, and makes technical conforming changes to GS 138A-13 consistent with the establishment of the new Board.

Section 6 makes technical and conforming changes to various sections of Chapter 120C consistent with the establishment of the new Board and the organizational changes provided in this act. Makes conforming changes to GS 120C-601 (no longer authorizing the Commission to petition the Superior Court of Wake County for the approval to issue necessary subpoenas).

Section 7 makes changes to various sections of Chapter 163 (election laws) as follows.

Repeals GS 163-19 (which established the State Board of Elections).

Makes technical and conforming changes to GS 163-20 consistent with the establishment of the new Board. Requires the Board to meet at a place other than in Raleigh upon prior written request of a majority of its members (currently, any four of its members).

Repeals five sections of Chapter 163 (GS 163-21, providing for compensation of the State Board of Elections; GS 163-23, granting powers to the State Board of Elections chair; GS 163-26 and -27, creating the position of Executive Director of the State Board of Elections and setting compensation; and GS 163-28, establishing the State Board of Elections as an independent state agency).

Amends GS 163-30 to increase the membership of county boards of elections from three members to four and to require that two members be from the political party with the highest number of registered voters and the other two members be from the political party with the second highest number of registered voters.  The chairs and vice-chairs of the county boards serve for one-year terms and must be of different political parties; the political party affiliation of the chairs and vice-chairs must rotate on an annual basis. Provides that the members of the county boards of elections are to be appointed by the Board on the second Tuesday in July 2017, and in 2019, members of county boards of election are to be appointed by the Board on the last Tuesday in June, and every two years thereafter, serving two-year terms. Effective July 1, 2017.

Amends GS 163-31 to make technical and conforming changes and to provide that a majority vote requires three of the four members of the board. Effective July 1, 2017.

Amends GS 163-182.13 to require at least six members of the Board (was, four members) to agree to order a new election.

Amends GS 163-278.22(7) to require the Board to conclude all investigations of allegations of violations of campaign contributions and expenditures laws within one year from the start of the investigation unless the Board has reported the violation to the district attorney and deems additional investigation necessary. Effective May 1, 2017, and applies to investigations initiated on or after that date. 

Section 8 amends GS 120-70.141 to expand the powers of the Joint Legislative Elections Oversight Committee to include studying the Board’s budgets, programs, and policies as well as those of the county boards of elections.

Section 9 directs the chairs of the two political parties to submit a list of names to the Governor on or before April 20, 2017, and the Governor must make appointments from those lists no later than May 1, 2017. The State chairs of the two political parties cannot nominate, and the Governor cannot appoint, any individual who has served two or more full consecutive terms on the State Board of Elections or State Ethics Commission as of April 30, 2017. Effective when the act becomes law.

Section 10 directs the Governor to appoint a member of the State Board to serve as chair of the State Board until its first meeting in May 2019, at which time the State Board shall select its chairs in accordance with GS 163A‑2. Effective when the act becomes law.

Section 11 preserves the legal validity of quasi-legislative or quasi-judicial duties of the commissions being eliminated by the act that are transferred to the Board.

Section 12 preserves the validity of legal actions and proceedings pending on May 1, 2017, brought by or against the commissions being eliminated by the act and authorizes the Board to continue prosecution and defense of such proceedings. Provides that any business or other matter undertaken or commanded by any State program or office or contract transferred by this act to the Board pertaining to or connected with the functions, powers, obligations, and duties set forth, which is pending on May 1, 2017, can be conducted and completed by the Board in the same manner and under the same terms and conditions and with the same effect as if conducted and completed by the original program, office, or commissioners or directors thereof. 

Section 13 preserves the validity of any ongoing investigations or audits, and transfers to the Board any ongoing hearings or proceedings before the commissions being eliminated by the act on May 1, 2017; also preserves the legal validity of any prosecutions for offenses or violations committed before May 1, 2017, with the statutes that would be applicable but for this act remaining applicable to those prosecutions.

Section 14 preserves the validity of any rules and forms adopted by the commissions being eliminated by the act as provided in GS 150B-21.7. Provides that policies, procedures, and guidance remains in effect until amended or repealed by the Board. Establishes that the list of covered boards adopted by the Commission under GS 138A-11 as of April 30, 2017, is to continue in effect until amended or repealed by the Board.

Section 15 preserves the validity of statement of economic interest evaluations conducted by the State Ethics Commission (which is eliminated by the act).

Section 16 transfers all authority, powers, duties, functions, records, personnel, property, unexpended funds, budgeting and purchasing functions, and other administrative authorities of the commissions being eliminated by the act to the Board.

Section 17 restricts the new Board from appointing an Executive Director until May 2019. Names the current Executive Director of the State Board of Elections as of December 31, 2016, as the Executive Director of the Board until the Board appoints a new Executive Director.

Sections 18, 19, and 20 transfer the appropriations and resources of the commissions being eliminated by the act to the Board, and transfers the appropriations, resources, and personnel of the lobbying registration and enforcement functions of the Secretary of State to the Board. Section 20 of this act, transferring the appropriations and resources of the lobbying registration and enforcement functions of the Secretary of State to the Board, becomes effective October 1, 2017.

Section 21 requires the Board to report to the Joint Legislative Commission on Governmental Operations, Elections Oversight Committee, and Legislative Ethics Committee by April 1, 2018, and again by March 1, 2019, on statutory changes necessary to further implement the act.

Section 22 provides that the Board cannot administer or enforce Part 1, Part 3, or Part 6 of Article 8 of Chapter 163A of the General Statutes, and the Secretary of State is to maintain the authority to administer and enforce Articles 2, 4, and 8 of Chapter 120C of the General Statutes, as those Articles existed on May 1, 2017, until October 1, 2017. Except as otherwise provided, this act becomes effective May 1, 2017.