GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 1997

SESSION LAW 1998-169
HOUSE BILL 1304

AN ACT TO REFORM THE BOARD OF TRANSPORTATION BY ALTERING ITS GOVERNANCE STRUCTURE, AUTHORIZING A NEW ETHICS POLICY, REQUIRING DISCLOSURE OF POLITICAL CONTRIBUTIONS BY BOARD MEMBERS, INCREASING PUBLIC PARTICIPATION IN ITS DECISIONS, AND CHANGING THE PENALTIES FOR MISUSE OF A DOT BOARD POSITION.

The General Assembly of North Carolina enacts:

Section 1.  G.S. 143B-350 is amended by adding the following new subsections:
"(i)	Disclosure of Contributions. – Any person serving on the Board of Transportation or as Secretary of Transportation on December 1, 1998, shall disclose on that date any contributions the person or the person's immediate family made to the political campaign of the appointing Governor in the two years preceding December 1, 1998.  A person appointed to the Board of Transportation and a person appointed as Secretary of Transportation after December 1, 1998, shall disclose at the time the appointment of the person is officially made public any contributions the person or the person's immediate family made to the political campaign of the appointing Governor in the two years preceding the date of appointment.  The term 'immediate family', as used in this subsection, means a person's spouse, children, parents, brothers, and sisters.  Disclosure forms shall be filed with the Governor or the Governor's designee and in a manner as prescribed by the Governor.  Disclosure forms shall not be a public record under the provisions of Chapter 132 of the General Statutes until such time as the appointment of the person filing the statement is officially made public.
(j)	Disclosure of Campaign Fund-Raising. – A person appointed to the Board of Transportation on or after January 1, 2001, and a person appointed as Secretary of Transportation on or after January 1, 2001, shall disclose at the time the appointment of the person is officially made public any contributions the person personally acquired in the two years prior to appointment for: any political campaign for a statewide or State legislative elected office in North Carolina; any political party executive committee or political committee acting on behalf of a candidate for statewide or State legislative office.  Disclosure forms shall be filed with the Governor or the Governor's designee and in a manner as prescribed by the Governor.  Disclosure forms shall not be a public record under the provisions of Chapter 132 of the General Statutes until such time as the appointment of the person filing the statement is officially made public.
(k)	Ethics Policy. – The Board shall adopt by December 1, 1998, a code of ethics applicable to members of the Board, including the Secretary.  Any code of ethics adopted by the Board shall be supplemental to any other code of ethics that may be applicable to members of the Board or to the Secretary.  A code of ethics adopted pursuant to this subsection shall:
(1)	Include a prohibition against a member taking action as a Board member when a conflict of interest, or the appearance of a conflict of interest, exists.  The ethics policy adopted pursuant to this subsection shall specify that a conflict of interest exists when the use of the Board member's position, or any official action taken by the Board member, would result in financial benefit, direct or indirect, to the Board member, a member of the Board member's immediate family, or an individual with whom, or business with which, the Board member is associated.  The ethics policy adopted pursuant to this subsection shall specify that an appearance of a conflict of interest exists when a reasonable person would conclude from the circumstances that the Board member's ability to protect the public interest, or perform public duties, would be compromised by personal interest, even in the absence of an actual conflict of interest.  The performance of usual and customary duties associated with the public position or the advancement of public policy goals or constituent services, without compensation, shall not constitute the use of the Board member's position for financial benefit. The conflict of interest provision of the ethics policy adopted pursuant to this subsection shall not apply to financial or other benefits derived by a Board member that the Board member would enjoy to an extent no greater than that which other citizens of the State would or could enjoy.
(2)	Require the filing of a statement of economic interest.  The statement of economic interest shall include a listing of the appointee's legal, equitable, or beneficial interest in real estate holdings in the State, and a statement of the appointee's financial interest in any business related to the State's transportation system. The statement of economic interest shall be filed with the Governor, or the Governor's designee, and in a manner as prescribed by the Governor.
(3)	Require the filing of a statement of association. The statement of association shall include a statement of the appointee's membership or other affiliation with, including offices held, in societies, organizations, or advocacy groups pertaining to the State's transportation system.  The statement of association shall be filed with the Governor, or the Governor's designee, and in a manner as prescribed by the Governor.
Board members and the Secretary serving on December 1, 1998, shall file the statement of economic interest and statement of association on that date.  Board members and the Secretary appointed after December 1, 1998, shall file the statement of economic interest and statement of association at the time the appointment of the person is officially made public. The statement of economic interest and the statement of association shall not be a public record under the provisions of Chapter 132 of the General Statutes until the appointment of the person filing the statement is officially made public.
(l)	Additional Requirements for Disclosure Statements. – All disclosure statements required under subsections (i), (j), and (k) of this section must be sworn written statements.
(m)	Ethics and Board Duties Education. – The Board shall institute by January 1, 1999, and conduct annually an education program on ethics and on the duties and responsibilities of Board members.  The training session shall be comprehensive in nature and shall include input from the Institute of Government, the North Carolina Board of Ethics, the Attorney General's Office, the University of North Carolina Highway Safety Research Center, and senior career employees of the various divisions of the Department. This program shall include an initial orientation for new members of the Board and continuing education programs for Board members at least once each year."
Section 2.  Part 2 of Article 8 of Chapter 143B of the General Statutes, as amended by Section 1 of this act, reads as rewritten:
"Part 2.  Board of  
Transportation.
"§ 143B-350.  Board of Transportation – organization; powers and duties, etc.
				(a)	Board of Transportation. – There is hereby created a Board of Transportation.  The Board shall carry out its duties consistent with the needs of the State as a whole. The diversity and size of the State require that regional differences be considered by Board members as they develop transportation policy and projects for the benefit of the citizens of the State.
(b)	Membership of the Board. –
(1)	Number, appointment. – The Board of Transportation shall have 19 voting members.  Fourteen of the members shall be division members appointed by the Governor.  Five shall be at-large members appointed by the Governor.  At least three members of the Board shall be registered voters of a political party other than the political party of the Governor.  The Secretary of Transportation shall serve as an ex officio nonvoting member of the Board.  No more than two members of the Board may reside in the same highway division.
(2)	Division members. – One member shall be appointed from and be a resident of each of the 14 highway divisions. The Governor, in selecting division members, shall consider for appointment persons suggested by the Transportation Advisory Committees located within each division. Division members shall direct their primary effort to developing transportation policy and addressing transportation problems in the region they represent.  Division members shall regularly consult with and consider the views of local government units and Transportation Advisory Committees in the region they represent.
(3)	At-large members. – Five members shall be appointed by the Governor from the State at large. At-large members appointed pursuant to this subdivision shall develop transportation policy and address transportation problems with a statewide perspective.  At-large members appointed under this subdivision shall possess the following qualifications:
a.	One at-large member shall be a person with expertise in environmental issues affecting the State;
b.	One at-large member shall be a person familiar with the State ports and aviation issues;
c.	One at-large member shall be a person residing in a rural area of the State with broad knowledge of and experience in transportation issues affecting rural areas;
d.	One at-large member shall be a person residing in an urban area with broad knowledge of and expertise in mass transit;
e.	One at-large member shall be a person with broad knowledge of and expertise in government-related finance and accounting.
(c)	Staggered Terms. – The terms of all Board members serving on the Board prior to January 15, 2001, shall expire on January 14, 2001. A new board of 19 members shall be appointed with terms beginning on January 15, 2001.  The Board shall serve the following terms: division members representing divisions 1, 3, 5, 7, 9, 11, and 13 and the three at-large members filling the positions designated in sub-subdivisions (b)(3)a., b., and e. of this section shall serve four-year terms beginning on January 15, 2001, and four-year terms thereafter; and division members representing divisions 2, 4, 6, 8, 10, 12, and 14 and the two at-large members filling the positions designated in sub-subdivisions (b)(3)c. and d. of this section shall serve two-year terms beginning January 15, 2001, and four-year terms thereafter.
(d)	Holdover Terms; Vacancies; Removal. – Members shall continue to serve until their successors are appointed.  The Governor may appoint a member to serve out the unexpired term of any Board member.  The Governor may remove any member of the Board for any cause the Governor finds sufficient.  The Governor shall remove any member of the Board upon conviction of a felony, conviction of any offense involving a violation of the Board member's official duties, or for a violation of the provisions of subsections (i), (j), and (k) of this section or any other code of ethics applicable to members of the Board as determined by the Governor or the Governor's designee.
(e)	Organization and Meetings of the Board. – Within 60 days after January 15, 2001, and thereafter within 60 days following the beginning of the regular term of the Governor, the Governor or his designee shall call the Board into session.  The Board shall select a chair and vice-chair from among its membership for two-year terms. The Board may select a chair or vice-chair for one additional two-year term. The Board of Transportation shall meet once in each 60 days at such regular meeting times as the Board may by rule provide and at any place in the State as the Board may provide. The Board may hold special meetings at any time at the call of the chairman or any three members. The Board shall have the power to adopt and enforce rules and regulations for the government of its business and proceedings. The Board shall keep minutes of its meetings, which shall at all times be open to public inspection. The majority of the Board shall constitute a quorum for the transaction of business. Board members shall receive per diem and necessary travel and subsistence expenses in accordance with G.S. 138-5 and G.S. 138-6, as appropriate.
(f)	Duties of the Board. – The Board of Transportation shall have duties and powers:
(1)	To formulate policies and priorities for all modes of transportation under the Department of Transportation;
(2)	To advise the Secretary on matters to achieve the maximum public benefit in the performance of the functions assigned to the Department;
(3)	To ascertain the transportation needs and the alternative means to provide for these needs through an integrated system of transportation taking into consideration the social, economic and environmental impacts of the various alternatives;
(4)	To approve a schedule of all major transportation improvement projects and their anticipated cost for a period of seven years into the future. This schedule is designated the Transportation Improvement Program; it must be published and copies must be available for distribution. The document that contains the Transportation Improvement Program, or a separate document that is published at the same time as the Transportation Improvement Program, must include the anticipated funding sources for the improvement projects included in the Program, a list of any changes made from the previous year's Program, and the reasons for the changes;
(5)	To consider and advise the Secretary of Transportation upon any other transportation matter that the Secretary may refer to it;
(6)	To assist the Secretary of Transportation in the performance of his duties in the development of programs and approve priorities for programs within the Department;
(7)	To allocate all highway construction and maintenance funds appropriated by the General Assembly as well as federal-aid funds which may be available;
(8)	To approve all highway construction programs;
(9)	To approve all highway construction projects and construction plans for the construction of projects;
(10)	To review all statewide maintenance functions;
(11)	To award all highway construction contracts;
(12)	To authorize the acquisition of rights-of-way for highway improvement projects, including the authorization for acquisition of property by eminent domain;
(13)	To promulgate rules, regulations, and ordinances concerning all transportation functions assigned to the Department.
(f1)	Municipal Participation. – The ability of a municipality to pay in part or whole for any transportation improvement project shall not be a factor considered by the Board of Transportation in its development and approval of a schedule of major State highway system improvement projects to be undertaken by the Department under G.S. 143B-350(f)(4).
(g)	Delegation of Board Duties. – The Board of Transportation may, in its discretion, delegate to the Secretary of Transportation the authority:
(1)	To approve all highway construction projects and construction plans for the construction of projects;
(2)	To award all highway construction contracts;
(3)	To promulgate rules, regulations, and ordinances concerning all transportation functions assigned to the Department.
The Secretary may, in turn, subdelegate these duties and powers.
(h)	Consultation of Board Members. – Each member of the Board of Transportation who is appointed to represent a transportation engineering division or who resides in a division shall be consulted before the Board makes a decision affecting that division.
(i)	Disclosure of Contributions. – Any person serving on the Board of Transportation or as Secretary of Transportation on December 1, 1998, shall disclose on that date any contributions the person or the person's immediate family made to the political campaign of the appointing Governor in the two years preceding December 1, 1998.  A person appointed to the Board of Transportation and a person appointed as Secretary of Transportation after December 1, 1998, shall disclose at the time the appointment of the person is officially made public any contributions the person or the person's immediate family made to the political campaign of the appointing Governor in the two years preceding the date of appointment.  The term 'immediate family', as used in this subsection, means a person's spouse, children, parents, brothers, and sisters.  Disclosure forms shall be filed with the Governor or the Governor's designee and in a manner as prescribed by the Governor.  Disclosure forms shall not be a public record under the provisions of Chapter 132 of the General Statutes until such time as the appointment of the person filing the statement is officially made public.
(j)	Disclosure of Campaign Fund-Raising. – A person appointed to the Board of Transportation on or after January 1, 2001, and a person appointed as Secretary of Transportation on or after January 1, 2001, shall disclose at the time the appointment of the person is officially made public any contributions the person personally acquired in the two years prior to appointment for: any political campaign for a statewide or legislative elected office in North Carolina; any political party executive committee or political committee acting on behalf of a candidate for statewide or legislative office.  Disclosure forms shall be filed with the Governor or the Governor's designee and in a manner as prescribed by the Governor.  Disclosure forms shall not be a public record under the provisions of Chapter 132 of the General Statutes until such time as the appointment of the person filing the statement is officially made public.
(k)	Ethics Policy. – The Board shall adopt by December 1, 1998. a code of ethics applicable to members of the Board, including the Secretary.  Any code of ethics adopted by the Board shall be supplemental to any other code of ethics that may be applicable to members of the Board or to the Secretary.  A code of ethics adopted pursuant to this subsection shall:
(1)	Include a prohibition against a member taking action as a Board member when a conflict of interest, or the appearance of a conflict of interest, exists.  The ethics policy adopted pursuant to this subsection shall specify that a conflict of interest exists when the use of the Board member's position, or any official action taken by the Board member, would result in financial benefit, direct or indirect, to the Board member, a member of the Board member's immediate family, or an individual with whom, or business with which, the Board member is associated.  The ethics policy adopted pursuant to this subsection shall specify that an appearance of a conflict of interest exists when a reasonable person would conclude from the circumstances that the Board member's ability to protect the public interest, or perform public duties, would be compromised by personal interest, even in the absence of an actual conflict of interest.  The performance of usual and customary duties associated with the public position or the advancement of public policy goals or constituent services, without compensation, shall not constitute the use of the Board member's position for financial benefit. The conflict of interest provision of the ethics policy adopted pursuant to this subsection shall not apply to financial or other benefits derived by a Board member that the Board member would enjoy to an extent no greater than that which other citizens of the State would or could enjoy.
(2)	Require the filing of a statement of economic interest.  The statement of economic interest shall include a listing of the appointee's legal, equitable, or beneficial interest in real estate holdings in the State, and a statement of the appointee's financial interest in any business related to the State's transportation system. The statement of economic interest shall be filed with the Governor, or the Governor's designee, and in a manner as prescribed by the Governor.
(3)	Require the filing of a statement of association. The statement of association shall include a statement of the appointee's membership or other affiliation with, including offices held, in societies, organizations, or advocacy groups pertaining to the State's transportation system.  The statement of association shall be filed with the Governor, or the Governor's designee, and in a manner as prescribed by the Governor.
Board members and the Secretary serving on December 1, 1998, shall file the statement of economic interest and statement of association on that date.  Board members and the Secretary appointed after December 1, 1998, shall file the statement of economic interest and statement of association at the time the appointment of the person is officially made public. The statement of economic interest and the statement of association shall not be a public record under the provisions of Chapter 132 of the General Statutes until the appointment of the person filing the statement is officially made public.
(l)	Additional Requirements for Disclosure Statements. – All disclosure statements required under subsections (i), (j), and (k) of this section must be sworn written statements.
(m)	Ethics and Board Duties Education. – The Board shall institute by January 1, 1999. and conduct annually an education program on ethics and on the duties and responsibilities of Board members.  The training session shall be comprehensive in nature and shall include input from the Institute of Government, the North Carolina Board of Ethics, the Attorney General's Office, the University of North Carolina Highway Safety Research Center, and senior career employees of the various divisions of the Department. This program shall include an initial orientation for new members of the Board and continuing education programs for Board members at least once each year.
(n)	Review of Appointments by the Joint Legislative Transportation Oversight Committee. – The Governor shall submit the names of all proposed Board of Transportation appointees, along with the disclosure statements required under subsections (i), (j), and (k) of this section, to the Joint Legislative Transportation Oversight Committee prior to Board members' taking office.  The Committee shall have 30 days to review and submit comments to the Governor on the proposed appointees before they take office.  The Governor shall consider the views expressed by the Committee concerning the appointees to the Board.  If the Committee does not review or submit comments to the Governor on the proposed Board appointees within the 30 days, the Governor may proceed to appoint the proposed members to the Board."
Section 3.  Article 1 of Chapter 136 is amended by adding a new section to read:
"§ 136-11.1.  Local consultation on transportation projects.
Prior to any action of the Board on a transportation project, the Department shall inform all municipalities and counties affected by a planned transportation project and request each affected municipality or county to submit within 45 days a written resolution expressing their views on the project.  A municipality or county may designate a Transportation Advisory Committee to submit its response to the Department's request for a resolution.  Upon receipt of a written resolution from all affected municipalities and counties or their designees, or the expiration of the 45-day period, whichever occurs first, the Board may take action.  The Department and the Board shall consider, but shall not be bound by, the views of the affected municipalities and counties on each transportation project.  The failure of a county or municipality to express its views within the time provided shall not prevent the Department or the Board from taking action. The Department shall not be required to send notice under this section if it has already received a written resolution from the affected county or municipality on the planned transportation project.  'Action of the Board', as used in this section, means approval by the Board of: the Transportation Improvement Program and amendments to the Transportation Improvement Program; the Secondary Roads Paving Program and amendments to the Secondary Roads Paving Program; and individual applications for access and public service road projects, contingency projects, small urban projects, and spot safety projects that exceed one hundred fifty thousand dollars ($150,000).  The 45-day notification provision may be waived upon a finding by the Secretary of Transportation that emergency action is required.  Such findings must be reported to the Joint Legislative Transportation Oversight Committee."
Section 4. G.S. 136-14 reads as rewritten:
"§ 136-14.  Members not eligible for other employment with Department; no sales to Department by employees; members not to sell or trade property with Department; profiting from official position; misuse of confidential information by Board members.
(a)	No Board member shall be eligible to any other employment in connection with the Department.
(b)	No Board member or any salaried employee of the Department shall furnish or sell any supplies or materials, directly or indirectly, to the Department.
(c)	No Board member shall, directly or indirectly, engage in any transaction involving the sale of or trading of real or personal property with the Department.
(d)	No Board member shall profit in any manner by reason of the Board member's official action or official position, except to receive salary, fees and allowances as by law provided.
(e)	No Board member shall take any official action or use the Board member's official position to profit in any manner the Board member's immediate family, a business with which the Board member or the Board member's immediate family has a business association, or a client of the Board member or the Board member's immediate family with whom the Board member, or the Board member's immediate family, has an existing business relationship for matters before the Board.
(f)	No Board member shall attempt to profit from a proposed project of the Department if the profit is greater than that which would be realized by other persons living in the area where the project is located.  If the profit under this subsection would be greater for the Board member than other persons living in the area where the project is located not only shall the member abstain from voting on that issue, but once the conflict of interest is apparent, the member shall not discuss the project with any other Board member or other officer or employee of the Department except to state that a conflict of interest exists. Under this subsection a Board member is presumed to profit if the profit would be realized by a Board member's immediate family, a business with which the Board member or the Board member's immediate family has a business association, or a client of the Board member or the Board member's immediate family with whom the Board member, or the Board member's immediate family, has an existing business relationship for matters before the Board.  Violation of this subsection shall be a Class I felony.
(g)	No Board member, in contemplation of official action by the Board member, by the Board, or in reliance on information that was made known to the Board member in the Board member's official capacity and that has not been made public, shall commit any of the following acts:
(1)	Acquire a pecuniary interest in any property, transaction, or enterprise or gain any pecuniary benefit that may be affected by such information or official action; or
(2)	Intentionally aid another to do any of the above acts.
(h)	As used in this section, the following terms mean:
(1)	'Board'. – The Board of Transportation.
(2)	'Board member'. – A member of the Board of Transportation.
(3)	'Business association'. – A director, employee, officer, or partner of a business entity, or owner of more than ten percent (10%) interest in any business entity.
(4)	'Department'. – The Department of Transportation.
(5)	'Immediate family'. – Spouse, children, parents, brothers, and sisters.
(6)	'Official action'. – Actions taken while a Board member related to or in connection with the person's duties as a Board member including, but not limited to, voting on matters before the Board, proposing or objecting to proposals for transportation actions by the Department or the Board, discussing transportation matters with other Board members or Department staff or employees in an effort to further the matter after the conflict of interest has been discovered, or taking actions in the course and scope of the position as a Board member and actions leading to or resulting in profit.
(7)	'Profit'. – Receive monetary or economic gain or benefit, including an increase in value whether or not recognized by sale or trade.
(i)	Except as otherwise provided in this section, a violation of this section shall be a Class H felony which may include a fine of not more than twenty thousand dollars ($20,000), or three times the value of the transaction, whichever amount is greater."
Section 5. (a)  The Board of Transportation, with the assistance of the Secretary and the Department of Transportation, shall study realignment and reorganization of the 14 Transportation Divisions of the State to more closely match the urban and rural regions that have developed in the State over the past 40 years and to improve the efficiency of the operations of the Department.  The Board shall give primary consideration to the boundaries of the metropolitan planning regions of the State as it considers realignment of the Transportation Divisions. The Board or its designee shall report its findings to the Joint Legislative Transportation Oversight Committee and the Joint Legislative Commission on Governmental Operations on or before December 31, 1998.
(b)	The Board and the Secretary shall report to the Joint Legislative Transportation Oversight Committee and the Joint Legislative Commission on Governmental Operations on any proposed changes to the current Transportation Division and District system prior to implementing any changes.
Section 6.  The Board of Transportation, with the assistance of the Secretary and the Department of Transportation, shall develop a plan to establish Rural Transportation Planning Organizations (RPOs) as a counterpart to the existing Metropolitan Planning Organizations (MPOs).  The Board or its designee shall report its plan to establish these organizations to the Joint Legislative Transportation Oversight Committee and the Joint Legislative Commission on Governmental Operations on or before December 31, 1998.
Section 7. The Board of Transportation, with the assistance of the Secretary and the Department of Transportation, shall study the backlog of maintenance needs for the State's highways and suggest methods for addressing this issue, including sources of funds.  The Board or its designee shall report its findings and recommendations to the Joint Legislative Transportation Oversight Committee and the Joint Legislative Commission on Governmental Operations on or before December 31, 1998.
Section 8.  The Board of Transportation, assisted by the Secretary and the Department, shall develop a plan to ensure that Board members have additional appropriate technical assistance to allow them to be fully informed and active participants at each Board meeting.  The Board or its designee shall submit a report on its plan to the Joint Legislative Transportation Oversight Committee and the Joint Legislative Commission on Governmental Operations on or before December 1, 1998, and a report on the implementation of the plan on October 1, 1999.
Section 9.  Section 1 of this act becomes effective December 1, 1998.  Section 2 of this act becomes effective January 1, 2001. Section 3 of this act becomes effective January 1, 1999, and applies to actions taken by the Board of Transportation on or after March 1, 1999.  Section 4 of this act becomes effective December 1, 1998, and applies to offenses committed on or after that date.  The remainder of this act becomes effective October 1, 1998.  Members of the Board of Transportation serving on and before January 14, 2001, shall continue to serve until the date their successors are appointed in accordance with this act.
In the General Assembly read three times and ratified this the 24th day of September, 1998.
s/	Marc Basnight
President Pro Tempore of the Senate

s/	Harold J. Brubaker
Speaker of the House of Representatives

s/	James B. Hunt, Jr.
Governor

Approved 10:05 a.m. this 2nd day of October, 1998