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Raleigh, North Carolina
April 13, 2007
It's "Nightmare on Jones Street " as we continue to see the flood of bills pouring out of the bill drafting division at the NC General Assembly. Its 13 topics of interest for you on this Friday the 13th as we relay the highlights of this week at the NC General Assembly.
Legislative Efficiency?: Senator David Hoyle (D-Gaston) introduced legislation that would set up early, organizational session to elect leaders, allowing lawmakers to launch directly into legislative business when they return to Raleigh a few weeks later. The bill passed the Senate this week and now heads to the House for consideration. Currently, the General Assembly convenes its regular session in late January and elects its leaders, but it usually takes weeks before those leaders appoint committees and those committees begin meeting. Hoyle's bill would have legislators come into session on the first Monday in January for up to three days and elect their leaders. Then, lawmakers would go home for three weeks while the leaders appoint committees and assign office space. During that three-week interim, legislators could still file bills.
Session Limits: The early organizational session is part of a package of reforms that Hoyle has pushed for years in an attempt to shorten legislative sessions. The other part of the package is a proposed constitutional amendment to limit the number of days that the General Assembly could remain in session. Under that proposal, the General Assembly could meet for up to 135 calendar days in odd-numbered years and up to 60 calendar days in even-numbered years.
The session-limits proposal, which is designed to give lawmakers some certainty about when they'll have to be in the state capital, has passed the Senate on several occasions, but has never made it out of the House. Hoyle said that he may talk with supporters in the House to get a feel for how well it might do but does not sense much enthusiasm for the initiative this year.
On the flip side - House Speaker Joe Hackney has been regularly referring bills to more than one committee in order to increase scrutiny of bills by having more eyes and ears over each piece of legislation. The downside is it might take longer to pass new laws and could extend this year's legislative work.
Lottery: An article ran in the Charlotte Observer this week to announce that about 500 machines carrying 24 types of scratch-off tickets are being installed statewide at supermarkets including Food Lion and Lowes Foods. As a part of the article, to help prevent underage ticket sales, the state "strongly recommends" that stores place the machines where clerks can monitor them, Alice Garland, the lottery deputy executive director, said. Also, the machines come with a remote power switch that allows clerks to shut them down if underage players try to play. North Carolina periodically tests stores in undercover operations to see if they sell tickets to underage players, Garland said.
Inspectors found 202 violations for underage selling in 847 inspections since the lottery debuted a year ago, she said. Maryland has sold lottery tickets through vending machines since 1998, and Virginia has used them since 1990. In South Carolina , lottery vending machines are illegal.
Please read through hot topics of the week and let us know how these issues do or do not affect you and whether you want us to amend, pass or kill. This Retail Week in Review at the NCGA is packed with information that affects you.
1. Lose drivers license for aiding/abetting underage drinking - fixed before committee hearing this week
2. Gift Card Fees- follow-up meeting with sponsor this week, recruiting other interested stakeholders
3. Allowing plaintiffs more challenges in Jury Selection - postponed AGAIN!
4. Statute of Repose - working with State Chamber coalition in opposition
5. Below Cost Gas/Drain' Em Dry - hearing that a bill will be introduced next week
6. Scanner Error - got to issue before bill was introduced
7. Energy Efficiency - Met with working group this week/another meeting scheduled for next
8. Bottle Bill - combating articles in regional papers this week
9. Pseudoephedrine Schedule 5 Controlled Substance Bill - Thank you for your phone calls!
10. Local Shopping Cart Ordinances - update on meetings with city
11. Peanut Allergy Legislation - introduced in House
12. Cigarette Tax Stamps - companion bill introduced in House
13. ORT/Amend Larceny Laws - companion bill introduced in House
1. DRIVER'S LICENSE REVOCATION FOR ABC VIOLATION -- HB 1277: Representatives Ty Harrell (D-Wake) and Linda Coleman (D-Wake)
http://www.ncga.state.nc.us/Sessions/2007/Bills/House/HTML/H1277v2.html
Earlier this week we provided you information on a bill (HB 1277) NCRMA fixed in Committee that would take the drivers' license of a person that "gives" alcohol to a minor for one year. This bill was being pushed by the Distilled Spirits Council and was getting a big push from Wake County legislators because of a number of deaths related to underage drinking.
In the bill, we split out the offense of "giving" alcohol from the "sale" of alcohol so that the offense would not apply to the retail clerk. As one legislator who is a defense attorney told us, "Boy, you guys really carved your folks out." Needless to say we also got a lot of pats on the back from legislators for being cooperative on what is a very sensitive issue. The bill has a long way to go and may very well get chewed up in the House Judiciary Committee that is full of lawyers. The link to the newest edition is above for your review and comments.
2. PROHIBIT GIFT CARD MAINTENANCE FEES -- SB 1517 - Senator Robert Atwater (D-Chatham) http://www.ncleg.net/Sessions/2007/Bills/Senate/HTML/S1517v1.html
SB 1517 is a bill driven by Senate staff to prohibit the use of maintenance or dormancy fees on gift cards or gift certificates. A violation would be an unfair and deceptive trade practice. The bill would be effective October 1 of this year and violation of the provision is punishable by a $1,000 civil penalty. The bill applies to gift cards sold on or after that date.
We met again with Senator Atwater this week to further illustrate the effect this legislation would have on our members and how the gift card system operates. We are also trying to get the banks and the phone companies involved with this legislation. We made the following points in our follow-up meeting with Senator Atwater:
When we were pushed to leave gift cards without an expiration date, it creates the problem of retailers having an open-ended liability on their books. Additionally, the fee is often charged because the retailer must pay a third-party company a monthly fee to manage and maintain these dormant gift cards.
Many banks issue gift cards through Visa, American Express and MasterCard that carry upfront fees of up to $5.00 at the time of purchase and dormancy or maintenance fees that begin after six months and run from $1.50 to $2.50 per month.
Florida, West Virginia and Alabama, like North Carolina, currently have no laws restricting gift cards. Georgia, South Carolina and Maryland require that any fees be disclosed while Tennessee does not allow dormancy or maintenance fees to be charged for two years.
The most analogous example is depositing $50 into a bank account. The bank charges the customer a service fee every month to maintain that balance or to use an ATM to get a portion of the $50 except that these service fees start the first month the money is deposited into the bank account. With a gift card, the retailer or issuer is charging a similar fee to maintain this gift card amount except that the dormancy or maintenance fee is not being charged until, in most cases, there has been no activity on the card in twenty-four months.
Other issues are of concern with this legislation:
A retailer that operates in multiple states will not know which state the gift card was purchased in and therefore which law applies. If the customer buys the card in Danville, VA but lives in Yanceyville, NC, the retailer has no idea that he is not permitted to charge a dormancy fee.
Similarly, a retailer could sell a card in Danville but the customer could "reload the card" in Greensboro. The retailer again has no way of knowing which law applies.
What if the card is not purchased but is instead given to a customer as a prize. Does the same law apply?
What if the retailer sells the card on behalf of another issuer (i.e. the retailer sells the card of a restaurant). Is the retailer in violation of the law if the restaurant eventually charges the dormancy fee?
3. CIVIL JURY SELECTION/EQUAL CHALLENGES -- HB 244 - Representative Bill Faison (D-Orange) http://www.ncleg.net/Sessions/2007/Bills/House/HTML/H244v2.html
HB 244 was again pulled from the House calendar this week by Representative Bill Faison. Faison, trial attorney from Orange County , introduced HB 244 which has now been pulled twice from the House calendar due to the rallying of the business community lobby against this bill.
The bill, which enjoyed bipartisan sponsorship including that of Minority Leader Paul "Skip" Stam (R-Wake), would require that when judges allow multiple defendants to double or triple the number of presumptive challenges of jurors that single plaintiffs bringing the cases be allowed to challenge the same number of jurors. Under current law, a judge may award up to six challenges to each defendant, while a single plaintiff gets only six. The change would likely have an affect on product liability and medical malpractice cases where multiple defendants are typical - the types of cases in which Faison has been a very successful trial attorney.
NCRMA joined with the North Carolina Chamber, the N.C. Medical Society and others to lobby House members hard Tuesday causing the vote postponement. We explained that while plaintiffs enter into a suit voluntarily with the same interest - multiple defendants, possibly with differing interests, are brought into a case together involuntarily and need the individual discretion if they have antagonistic views. This bill also takes away the discretion that is currently provided to a judge in this situation.
4. STATUTE OF REPOSE -- SB 969, Senator Janet Cowell (D-Wake)
HB 1343, Representatives Rick Glazier (D-Cumberland) and Jimmy Love (D-Lee)
http://www.ncleg.net/Sessions/2007/Bills/Senate/HTML/S969v1.html
A statute of repose establishes a time period after which the producer of a good can no longer be held liable for the performance of a product. This statute is a legal recognition that products will eventually fail to perform as well as they did when they were new and establishes that the owner of the product bears the responsibility for upkeep and routine maintenance.
Currently, NC law provides that all products liability actions must be brought within 6 years from the date of purchase, but now that legal standard is under attack. As a part of the growing national trend of increase in liability of employers - this bill would more than double the time period to 15 years, plus it would apply retroactively to cover purchases made since 1992.
These two bills would more than double the amount of time during which products liability actions can be brought against manufacturers, as well as distributors and everyone else along the product chain from manufacturer to consumer and would cause North Carolina become one of three states with the longest period for filing product liability claims. Such a dramatic and unnecessary change would not only deter businesses from staying here, but would also serve as a disincentive for new businesses in deciding whether to come to our state.
SB 969 bill has been referred to the Senate Judiciary I committee, chaired by Senator Martin Nesbitt (D-Buncombe) and HB 1343 has been referred to House Representative Dan Blue's (D-Wake) Judiciary II committee.
5. BELOW COST GAS / DRAIN' EM DRY -- The North Carolina Petroleum Marketers Association and the North Carolina Convenience Store Association will be introducing legislation next week to try and address the below-cost gasoline issue by stating that a retailer cannot limit the amount of gasoline a purchaser may buy. This would allow a competitor to come to a competing retailer's store who is supposedly selling below cost and "drain'em dry" which would supposedly force the retailer to raise their prices.
The Bill sponsors will be former Speaker of the House Harold Brubaker (R-Randolph) and Nelson Cole (D-Rockingham). When the legislation was introduced in 2003 it looked like this:
§ 75-88. Public disclosure.disclosure; quantity of motor fuel available for sale.
(a) Any refiner or terminal supplier computing prevailing price under the provisions of
G.S. 75-81(4)(a)(i) or (ii) G.S. 75-81(4) shall be required to publicly disclose said this price.
(b) No entity that is selling motor fuel below cost shall limit the quantity of motor fuel sold or offered for sale from a motor fuel pump to any one customer to a quantity less than the entire supply that is owned or possessed by the seller and that the seller is authorized to sell at the place of sale or offering for sale unless preempted by a State or federal state of emergency.
(c) Motor fuel purchased under this section shall be dispensed into a container approved by the fire prevention code, the State Building Code as authorized under G.S. 143-139, or a containment vehicle approved by the Department of Transportation.
(d) Each act violating this section shall constitute a separate offense, and is subject to a civil penalty. The civil penalty for each offense shall be not more than five thousand dollars ($5,000). Upon a proper showing by the Attorney General or the Commissioner of Agriculture, further violations may be temporarily or permanently enjoined. The clear proceeds of civil penalties provided for in this section shall be remitted to the Civil Penalty and Forfeiture Fund in accordance with G.S. 115C-457.2."
We recognize that there are safety issues involved with this bill and have already alerted the state fire marshal. Additionally, we cannot figure out how this will impact Code 96 invoked by Visa or Mastercard - where credit card companies limit sales to $50 by Visa and $75 by Mastercard and if the retailer allows a sale to exceed $50 then the credit card company does not pay the retailer a penny.
Look for a link to the legislation next week.
6. SCANNER ERROR -- News & Observer Article: http://www.newsobserver.com/711/story/562398.html
A recent article in the Raleigh News & Observer spurred conversation amongst legislators and their constituents that could have led to legislation on scanner errors. The article referred to the state of Maryland where they have a law that entitles the customer to one of that item free if the scan is wrong. We explained that in today's world of retailing where some stores stock hundreds of thousands of items and change prices on a weekly basis, or even a weekend basis to meet competition, it is inevitable and unfortunate that there will be some pricing errors. Additionally, some of the price changes for some national retailers are made from a home-office through a centralized computer system rather than at the store level and the corresponding signage may not be properly changed at the store level to reflect the change in prices.
We also relayed that the North Carolina Department of Agriculture and Consumer Services recently increased penalties to retailers for scanner errors whether the error is an undercharge in favor of the consumer or an overcharge to the detriment of the consumer. In fact, 25% of the scanner errors in North Carolina in 2006 were instances where the consumer was undercharged due to an error. Retailers are certainly paying a high price for scanner errors as evidenced by the record $88,105 in fines paid by 55 merchants in 2006 - an average of $1,600 per fine.
The inspection process in North Carolina is quite rigorous. During the first inspection, an inspector will randomly select 100 items from all over the store and scan these items. If more than two items ring up incorrectly, the store fails the inspection and receives an official notice that a second inspection will occur where 300 randomly selected items will be similarly tested. If more than six of the 300 items ring up incorrectly, the store will be fined $150 plus $15 for every item on the shelves of the item that rang up incorrectly. The fine then increases by $500 for any subsequent failed inspection plus $15 per item on the shelves that rings up incorrectly, up to a maximum penalty of $5,000.
In situations such as this, we are grateful to have the opportunity to offer information to legislators that can help thwart the introduction of unnecessary legislation that would be detrimental to you.
7. ENERGY EFFICIENCY -- SB 3 - Senator Charlie Albertson (D-Duplin)
http://www.ncleg.net/Sessions/2007/Bills/Senate/HTML/S3v1.html
The working group on Senate Bill 3 continued work this week to attempt to resolve differences between the utilities, enviros and those of us left with the bill. SB 3 is the energy bill that calls for more renewable energy sources and restructures the way utilities recoup the costs of new plant construction. Your NCRMA staff attended the working group meeting yesterday at the legislative building with more than 60 other stakeholders to run through amendments to the legislation. 15 amendments were submitted but the lion's share of the time was spent on two amendments - neither of which received a definitive up or down vote. The conversation ran in circles around the structure and implementation of a Public Benefits Fund before the group took a break to try to get their minds wrapped around the discussion. Most discussion resulted in the amendments being placed aside for further sidebar discussions due to fiscal implications or disagreements between parties.
Senate leadership is pushing for the working group to wrap up negotiations. George Givens, legislative staff attorney, who is chairing the committee, recognized yesterday that the meeting did not move along as quickly as it had hoped but that it is time for us to submit our specific requests for changes. He is pushing for a much more productive discussion next week.
To submit changes to the legislation, please make all changes in the original statute. Due to its length, the statute could not be attached, but it can be found online at NCRMA's website: http://www.ncrma.org/Rates%20of%20Public%20Utilities.pdf
The next meeting of interested parties is still scheduled to meet Thursday, April 19 at 2:00pm in Room 544 of the Legislative Office Building , which is located at: 300 North Salisbury Street, Raleigh, NC 27603-5925.
8. BOTTLE BILL -- Articles ran in the Greensboro News & Record as well as the Asheville Citizen Times this week about Senator Doug Berger's (D-Franklin) "Bottle Bill." The Asheville article actually supported the legislation. A link to the article is below:
http://www.citizen-times.com/apps/pbcs.dll/article?AID=200770411153
There is a great deal of confusion out there in terms of those supporters touting the percentage of litter that would be reduced and the level of efficiency of this proposed program. However, Senator Berger continues working feverishly to garnish support for SB 215, "Litter Reduction Act of 2007." The legislation is most akin to the California-model but has many moving parts and is fairly complex as far as bottle bills go. His bill imposes a 10¢ deposit per container which would put North Carolina on the map with one of the most expensive Bottle deposits/taxes in the country and a very cumbersome system to collect bottles which would inevitably hurt the recycling programs already in place in North Carolina. Berger is very optimistic regarding the potential for this bill to pass with new House leadership and a House member, Representative Lucy Allen (D-Franklin), chairing the House Environment committee.
9. PSEUDOEPHEDRINE/SCHEDULE V DRUG -- SB 1104 - Senator Julia Boseman (D-New Hanover) http://www.ncleg.net/Sessions/2007/Bills/Senate/HTML/S1104v1.html
SB 1104 adds pseudoephedrine to the list of Schedule V Controlled Substances effective December 1, 2007.
After meeting with Senator Boseman as well as Senators Walter Dalton (D-Rutherford) and John Snow (D-Cherokee) (who sponsored the meth legislation in 2005) - we feel that we have made progress in bringing this legislation to a halt. Dalton and Snow both agreed that this was unnecessary as most of the methamphetamine problem is now tied directly to meth super-labs in Mexico and California rather than mom and pop labs that make meth out of cold medicine bought at stores. This bill sits in the Senate Judiciary I committee, Chaired by Senator Martin Nesbitt (D-Buncombe) but has not yet been scheduled for a committee hearing.
Our efforts have been greatly assisted by your phone calls to the bill sponsor and to Senator Nesbitt. Many thanks to Ingles, CVS, Kerr Drug, Walgreens, Eckerd and Mike James for making calls regarding SB1104. You help is needed and much appreciated!
10. NC LOCAL ORDINANCES - SHOPPING CARTS -- Monday morning-NCRMA and representatives of NCRMA-member companies Kroger, Walgreens and Eckerd met with Raleigh City Attorney Tom McCormack, Assistant City Manager Julian Prosser and Director of Solid Waste Services Fredrick Battle concerning the implementation of voluntary shopping cart program rather than a city ordinance. The City of Raleigh officials were very impressed with what NCRMA was able to put together with the City of Durham and are interested in creating a similar program in Raleigh . NCRMA informed the City Officials that NCRMA would provide a copy of the guidelines for the final City of Durham program as soon as it was received in a finalized form. NCRMA also offered to create a contact list for Solid Waste Services so that the City could have a single contact person for each company who would in turn be responsible for ensuring the cart was picked up. Julian Prosser will make a report to the Law and Safety Committee on Tuesday that Prosser believes a voluntary program rather than an ordinance would be the path for the City to take.
We are awaiting the finalized version of the voluntary program from the City of Durham.
If you have not done so already, please provide us contact information for the designated person in charge of abandoned shopping carts in your company for the City of Raleigh and the City of Durham so that we may compile this list for the Cities. This is in your company's best interest to do so since the voluntary program is being substituted for an ordinance.
RETAIL BILLS OF INTEREST FILED THIS WEEK
11. HB 1377 - Peanut Allergies - Representative Martha Alexander (D-Mecklenburg)
http://www.ncga.state.nc.us/Sessions/2007/Bills/House/HTML/H1377v1.html
Representative Martha Alexander has again filed legislation requiring the Public Health Division of the Department of Health and Human Services to adopt rules requiring stores that prepare or serve food (grocery delis) containing peanuts or tree nuts to post a consumer advisory in a conspicuous place where it may be readily observed by the public prior to consumption of the food. The advisory shall explain peanut and tree nut allergies and health-related consequences to individuals with peanut or tree nut allergies who are exposed to food items that contain or are prepared with peanuts or tree nut products. In addition to the consumer advisory, the establishment shall include in or with its menu an advisory statement about peanut and tree nut allergies and shellfish allergies. If we remember correctly, federal law already requires that allergens be included on the label of many prepared foods. Representative Alexander had a young constituent die from a reaction to peanuts contained in Chinese food at a mall food court a couple of years ago which has made this a hot-button issue for her.
12. CIGARETTE TAX STAMPS -- HB 1475 - Restore Cigarette Tax Stamps - Representative Dan Blue (D-Wake)
http://www.ncleg.net/Sessions/2007/Bills/House/HTML/H1475v0.html
Representative Dan Blue (D-Wake) filed HB 1475, a companion bill to Senator Fletcher Hartsell's SB 1411, which would require that North Carolina tobacco wholesalers affix an excise stamp to cigarettes prior to distribution. This bill was introduced at the request of Philip Morris and has the effect of causing retailers who act as their own wholesalers a tremendous amount of money. Lorillard and RJ Reynolds oppose the legislation.
Currently, NC doesn't require a tax stamp to be affixed to cigarettes sold in NC. If we have to start affixing stamps to the cigarette packs, we will have to maintain a very costly stamp inventory. The stamping of cigarettes is far from being a perfect process, costs additional employee time and will make it much harder for trucks to leave on time with the cigarette orders.
Your staff has already been working on this issue in the Senate and are working to keep the bill in Senate Finance.
13. ORGANIZED RETAIL THEFT (ORT) -- HB 1379 - Amend Larceny Laws, Representative Van Braxton (D-Lenoir)
http://www.ncleg.net/Sessions/2007/Bills/House/HTML/H1379v1.html
Representative Van Braxton (D-Lenoir) has introduced HB 1379 - a House companion bill to SB 1270, introduced by Senator John Snow (D-Cherokee). This is an Association initiative and is an omnibus package that seeks to address Organized Retail Theft in North Carolina.
This bill amends various larceny statutes and creates criminal offenses of theft of infant formula and organized retail theft. The bill amends GS 14-71 (receiving stolen goods) to provide that the offense occurs regardless of whether the item had been feloniously stolen or taken. Amends the felony threshold for property involved in a larceny from $1,000 to $500. Makes parallel changes to felonious receiving and possession of stolen goods. Amends the shoplifting statute, to include within the scope of the price substitution provision the use of false product codes that identify the sales price. Also adds new subsections providing that if while engaged in shoplifting the person uses a specified exit door or removes, destroys, or deactivates a component of an anti-shoplifting or inventory control device, the offense is elevated to a Class H felony. The bill creates a new Class H felony for the theft of more than $100 in infant formula and adds a new Article 16A to GS Chapter 14 pertaining to Organized Retail Theft - creating a new Class G felony for organized retail theft, and Class G felonies for receiving and possessing retail property obtained by organized retail theft. Effective December 1, 2007.
As previously mentioned, Senator Fletcher Hartsell (R-Cabarrus), Judiciary II Chairman invited us to present ORT issues to his committee earlier this month. We provided committee members with background information and suggested ORT legislation on the issues of: retailer-provided property for sting operations, reducing the larceny threshold, switching of bar codes on products, utilizing exit doors, removal of security devices, larceny of infant formula and the aggregation of theft amounts. Senator Hartsell appointed a subcommittee to study ORT with Senators John Snow (Chair), Stan Bingham (R-Davidson), Eddie Goodall (R-Union), Ed Jones (D-Halifax) and Bob Atwater (D-Chatham). We spoke with Senator Snow this week about scheduling a subcommittee meeting in the next week.
It is our pleasure to work on your behalf. Thank you for allowing us to continue to represent the retail perspective before the North Carolina General Assembly since 1902.
Until next week.
Fran Preston (franp@ncrma.org)
Andy Ellen (andye@ncrma.org)
Elizabeth Dalton (elizabethd@ncrma.org)
Lindsey Kueffner (lindseyk@ncrma.org)
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