A BILL TO BE ENTITLED
AN ACT to restore public confidence in the election process by requiring that all voting systems permit all voters to verify their votes on paper; by providing statutory guidance as to counting; by providing checks on electronic voting system vendors, including multiparty review of source code, by authorizing the state board of elections to promote uniformity in voting systems by standardizing purchasing of voting systems in north carolina, by empowering the STate Board of elections to control the testing and support of voting systems; by requiring postelection testing of voting systems, including a paper sample‑count; by expanding the right to a hand‑to‑eye recount of paper ballots; by appropriating state funds for voting system acquisition to prevent imposing unfunded mandates upon counties; and by appropriating funds to the state board of elections to implement its expanded duties with regard to voting systems.
The General Assembly of North Carolina enacts:
SECTION 1.  Effective January 1, 2006, Article 14A of Chapter 163 of the General Statutes is amended by adding a new section to read:
"§ 163‑165.9B. Voting systems: permitted voting systems; paper ballot required; counting.
(a)	Permitted Voting Systems. – The State allows three voting systems: (i) paper ballots; (ii) optical scan; and (iii) direct record electronic (DRE). Paper ballots are inherent to paper ballots and optical scan voting systems. In order to provide a paper ballot in a DRE, each DRE shall generate a paper ballot which can be verified by the voter before the vote is cast. 
(b)	Counting on Voting Systems. – In counties that use optical scan or DRE voting systems, subject to the sample counts under G.S. 163‑182.1 and G.S. 163‑182.2, and of a hand‑to‑eye recount under G.S. 163‑182.7 and G.S. 163‑182.7A, a board of elections shall rely in its canvass on the mechanical or electronic count of the vote rather than the full hand‑to‑eye recount of the paper ballots. In the event of a discrepancy between the electronic or mechanical count and a hand‑to‑eye count, the hand‑to‑eye count shall control, except where it is reasonable to conclude that the hand‑to‑eye count for whatever reason is not the true count." 
SECTION 2.(a)  Part 2 of Article 14A of Chapter 163 of the General Statutes is amended by adding a new section to read:
"§ 163‑165.9A. Voting systems: requirements for voting systems vendors; penalties.
(a)	Duties of Vendor. – Every vendor that has a contract to provide a voting system in North Carolina shall do all of the following:
(1)	The vendor shall place in escrow with an independent escrow agent approved by the State Board of Elections a copy of all source code relevant to the recording or counting of votes and related documentation, together with updates as they become known or available. The documentation shall include a system configuration and a sworn affidavit that the source code includes all relevant program statements in low‑level and high‑level languages. As used in this section, 'source code' does not include variable codes created for specific elections.
(2)	The vendor shall notify the State Board of Elections of any change in source code or any change in the foundation operating system.
(3)	The vendor shall make accessible for review all source code relevant to the recording or counting of votes by the State Board of Elections; the Office of Information Technology Services; the State chairs, or one designee of each chair, of each political party recognized under G.S. 163‑96; and the purchasing county board of elections.
(4)	The chief executive officer of the vendor shall sign a sworn affidavit that the source code in escrow is the same being used in its voting systems in this State. The chief executive officer shall ensure that the statement is true on a continuing basis.
(5)	The vendor shall notify the State Board of Elections and the county board of elections of any county using its voting system of any defect in the same system known to have occurred anywhere. 
(6)	The vendor shall maintain an office in North Carolina with staff to service the contract.
(b)	Penalties. – Willful and fraudulent violation of any of the duties in subsection (a) of this section is a Class I felony. Substitution of source code into an operating voting system without notification as provided by subdivision (a)(2) of this section is a Class I felony. In addition to any other applicable penalties, violations of this section are subject to a civil penalty of up to {Insert dollar amount} dollars ($) per violation."
SECTION 2.(b)  This section applies with respect to any county that upgrades a voting system or acquires a new voting system on or after July 1, 2005.
SECTION 3.(a)  Effective July 1, 2005, and applicable with respect to all voting systems upgraded or acquired on or after that date, G.S. 163‑165.7 reads as rewritten:
"§ 163‑165.7.  Voting systems: powers and duties of State Board of Elections.
(a)	Certification of Voting Systems. – Only voting systems that have been certified by the State Board of Elections shall be used to conduct elections under this Chapter, and the  certified voting systems shall be valid in any election or referendum held in any county or municipality. The use of paper ballots counted by hand is a certified voting system. The State Board shall certify additional voting systems through the use of a request for proposal process. In consultation with the Office of Information Technology Services, the State Board of Elections shall develop the requests for proposal subject to the provisions of this Chapter and other applicable State laws. The request for proposal shall require at least all of the following:
(1)	That the vendor must post a bond or letter of credit to cover damages resulting from defects in the voting. Damages include the cost of a new election.
(2)	That the voting system comply with all federal requirements for voting systems.
(3)	That the voting system have the capacity to include in precinct returns the votes cast by voters outside of the voter's precinct.
(4)	For all voting systems utilizing electronic means, accessibility to review all source code relevant to the recording or counting of votes by the State Board of Elections; the Office of Information Technology Services; the State chairs, or one designee of each chair, of each political party recognized under G.S. 163‑96; and the purchasing county board of elections.
(5)	That the vendor state a statewide uniform price for each unit of the equipment.
The State Board shall have as its goal in its request for proposals and its negotiations with vendors the eventual establishment of a uniformity of features within type throughout the State such that each optical scan voting system shall have substantially identical features to all other optical scan voting systems, and each direct record electronic voting system shall have substantially identical features to all other direct record electronic systems. A uniformity of features within type does not necessarily mean there will be only one vendor per type. 
(b)	Decertification of Voting Systems. – The State Board may also, upon notice and hearing, disapprove types, makes, and models of voting systems. Upon disapproving a type, make, or model of voting system, the State Board shall determine the process by which the disapproved system is discontinued in any county. A county may appeal a decision by the State Board concerning discontinuance of a voting system to the Superior Court of Wake County. The county has 30 days from the time of the State Board's decision on discontinuance to make that appeal.
(c)	Monitoring Duties of the State Board. – The State Board of Elections shall review, or designate an independent expert to review, all source code escrowed by vendors pursuant to G.S. 163‑165.9A, and shall publish or otherwise make available its findings in accordance with Chapter 132 of the General Statutes. The State Board shall facilitate the review of the escrowed source code by the other entities provided for in G.S. 163‑165.9A(a)(3). All source code made available for review pursuant to the provisions of this Chapter shall be deemed a trade secret of the vendor, and any person responsible for the misuse or unauthorized release of the source code shall be subject to the provisions of G.S. 14‑75.1 and Article 24 of Chapter 66 of the General Statutes. The State Board shall monitor vendor compliance with all contractual agreements and with all provisions of G.S. 163‑165.9A.
(d)	Rules. – Subject to the provisions of this Chapter, the State Board of Elections shall prescribe rules for the adoption, handling, operation, and honest use of certified voting systems, including, but not limited to, the following:
(1)	Procedures for county boards of elections to utilize when recommending the purchase of a certified voting system for use in that county. 
(2)	Form of official ballot labels to be used on voting systems.
(3)	Operation and manner of voting on voting systems. The rules shall comply with G.S. 163‑165.9B.
(4)	Instruction of precinct officials in the use of voting systems.
(5)	Instruction of voters in the use of voting systems.
(6)	Assistance to voters using voting systems.
(7)	Duties of custodians of voting systems.
(8)	Examination and testing of voting systems before and after use in an election.
Any rules adopted under this section shall be in conjunction with procedures and standards adopted under G.S. 163‑182.1, are exempt from Chapter 150B of the General Statutes, and are subject to the same procedures for notice and publication set forth in G.S. 163‑182.1.
(e)	Training and Support of Voting Systems. – The State Board of Elections, with the assistance of other State agencies, shall provide training and support of the certified voting systems, so that no county board of elections must rely on a vendor for primary support."
SECTION 3.(b)  Section 11 of S.L. 2003‑226, which would have made amendment to G.S. 163‑165.7 effective January 1, 2006, is repealed.
SECTION 3.(c) In order to carry forward the first of two amendments that would have been made by Section 11 of S.L. 2003‑226 to the old version of G.S. 163‑165.7, effective January 1, 2006, G.S. 163‑165.7 as rewritten by subsection (a) of this section is amended by adding the following new subsection:
"(a1)	Federal Assistance. – The State Board may use guidelines, information, testing reports, certification, decertification, recertification, and any relevant data produced by the Election Assistance Commission, its Standards Board, its Board of Advisors, or the Technical Guidelines Development Committee as established in Title II of the Help America Vote Act of 2002 with regard to any action or investigation the State Board may take concerning a voting system. The State Board may use, for the purposes of voting system certification, laboratories accredited by the Election Assistance Commission under the provisions of section 231(2) of the Help America Vote Act of 2002."
SECTION 3.(d)  In order to carry forward the second of two amendments that would have been made by Section 11 of S.L. 2003‑226 to the old version of G.S. 163‑165.7, effective January 1, 2006, G.S. 163‑165.7(d) as rewritten by subsection (a) of this section is amended by adding the following new subdivision:
"(9)	Compliance with section 301 of the Help America Vote Act of 2002."
SECTION 3.(e)  G.S. 163‑132.5G reads as rewritten:
"§ 163‑132.5G.  Voting data maintained by precinct.
To the extent that it can do so without compromising the secrecy of an individual's ballot, each county board of elections shall maintain voting data by precinct so that precinct returns for each item on the ballot shall include the votes cast by residents of the precinct who voted by absentee ballot, both mail and one‑stop. The county board shall not be required to report absentee voting data by precinct until 60 days after the election. The State Board of Elections shall adopt rules for the enforcement of this section with the goal that all voting data shall be reported by precinct by the  2008 election. Those rules shall provide for exemptions where the expense of compliance would place a financial hardship on a county and shall provide an exemption if the current voting system cannot be programmed to provide such information, but any new voting system acquired after July 1, 2005, must have the ability to provide such information. Those rules shall provide for compliance by 2004 for counties the State Board determines are capable of complying by that year."
SECTION 4.  Effective July 1, 2005, G.S. 163‑165.8 reads as rewritten:
"§ 163‑165.8.  Voting systems: powers and duties of board of county commissioners.
The board of county commissioners, with the approval of the county board of elections, may adopt and purchase or lease for reimbursement by the State only a voting system of a type, make, and model certified by the State Board of Elections for use in some or all voting places in the county at some or all elections.
The board of county commissioners may decline to adopt and purchase or lease any voting system recommended by the county board of elections but may not adopt and purchase or lease any voting system that has not been approved by the county board of elections. Article 8 of Chapter 143 of the General Statutes does not apply to county boards of commissioners purchasing voting systems certified by the State Board of Elections."
SECTION 5.  Effective July 1, 2005, G.S. 163‑165.9 reads as rewritten:
"§ 163‑165.9.  Voting systems: powers and duties of county board of elections.
Before approving the adoption and purchase or lease of any voting system by the board of county commissioners, the county board of elections shall do all of the following:
(1)	Recommend to the board of county commissioners which type of voting system should be acquired by the county.
(2)	Witness a demonstration, in that county or at a site designated by the State Board of Elections, of the type of voting system to be recommended and also witness a demonstration of at least one other type of voting system certified by the State Board of Elections.
(3)	Test, during an election, the proposed voting system in at least one precinct in the county where the voting system would be used if adopted."
SECTION 6.(a)  G.S. 163‑182.1(b) reads as rewritten:
"(b)	Procedures and Standards. – The State Board of Elections shall adopt uniform and nondiscriminatory procedures and standards for voting systems. The standards shall define what constitutes a vote and what will be counted as a vote for each category of voting system used in the State. The State Board shall adopt those procedures and standards at a meeting occurring not earlier than 15 days after the State Board gives notice of the meeting. The procedures and standards adopted shall apply to all elections occurring in the State and shall be subject to amendment or repeal by the State Board acting at any meeting where notice that the action has been proposed has been given at least 15 days before the meeting. These procedures and standards shall not be considered to be rules subject to Article 2A of Chapter 150B of the General Statutes. However, the State Board shall publish in the North Carolina Register the procedures and standards and any changes to them after adoption, with that publication noted as information helpful to the public under G.S. 150B‑21.17(a)(6). Copies of those procedures and standards shall be made available to the public upon request or otherwise by the State Board. For optical scan and direct record electronic voting systems, and for any other voting systems in which ballots are counted other than on paper by hand and eye, those procedures and standards shall do both of the following:
(1)	Provide for a sample hand‑to‑eye count of the paper official ballots of a sampling of statewide ballot items in every county, always including the presidential ballot item. The sample chosen by the State Board shall be of full precincts, full counts of absentee ballots, and full counts of one‑stop early voting sites. The size of the sample of each category shall be chosen to produce a statistically significant result and shall be chosen after consultation with a statistician. The actual units shall be chosen at random. In the event of a discrepancy between the electronic or mechanical count and a hand‑to‑eye count, the hand‑to‑eye count shall control, except where it is reasonable to conclude that the hand‑to‑eye count for whatever reason is not the true count. If the discrepancy between the hand‑to‑eye count and the mechanical or electronic count is significant, a complete hand‑to‑eye count shall be conducted.
(2)	Provide that if the voter selects votes for more than the number of candidates to be elected or proposals to be approved in a ballot item, the voting system shall do all the following:
a.	Notify the voter that the voter has selected more than the correct number of candidates or proposals in the ballot item.
b.	Notify the voter before the vote is accepted and counted of the effect of casting overvotes in the ballot item.
c.	Provide the voter with the opportunity to correct the official ballot before it is accepted and counted."
SECTION 6.(b)  G.S. 163‑182.2 reads as rewritten:
"§ 163‑182.2.  Initial counting of official ballots.
(a)	The initial counting of official ballots shall be conducted according to the following principles:
(1)	Vote counting at the precinct shall occur immediately after the polls close and shall be continuous until completed.
(2)	Vote counting at the precinct shall be conducted with the participation of precinct officials of all political parties then present. Vote counting at the county board of elections shall be conducted in the presence or under the supervision of board members of all political parties then present.
(3)	Any member of the public wishing to witness the vote count at any level shall be allowed to do so. No witness shall interfere with the orderly counting of the official ballots. Witnesses shall not participate in the official counting of official ballots.
(4)	Provisional official ballots shall be counted by the county board of elections before the canvass. If the county board finds that an individual voting a provisional official ballot is not eligible to vote in one or more ballot items on the official ballot, the board shall not count the official ballot in those ballot items, but shall count the official ballot in any ballot items for which the individual is eligible to vote.
(5)	Precinct officials shall provide a preliminary report of the vote counting to the county board of elections as quickly as possible. The preliminary report shall be unofficial and has no binding effect upon the official county canvass to follow.
(b)	The State Board of Elections shall promulgate rules for the initial counting of official ballots. All election officials shall be governed by those rules. In promulgating those rules, the State Board shall adhere to the following guidelines:
(1)	For each voting system used, the rules shall specify the role of precinct officials and of the county board of elections in the initial counting of official ballots.
(1a)	For optical scan and direct record electronic voting systems, and for any other voting systems in which ballots are counted other than on paper by hand and eye, those rules shall provide for a sample hand‑to‑eye count of the paper official ballots of a sampling of statewide ballot items in every county, always including the presidential ballot item. The sample chosen by the State Board shall be of full precincts, full counts of absentee ballots, and full counts of one‑stop early voting sites. The size of the sample of each category shall be chosen to produce a statistically significant result and shall be chosen after consultation with a statistician. The actual units shall be chosen at random. In the event of a discrepancy between the electronic or mechanical count and a hand‑to‑eye count, the hand‑to‑eye count shall control, except where it is reasonable to conclude that the hand‑to‑eye count for whatever reason is not the true count. If the discrepancy between the hand‑to‑eye count and the mechanical or electronic count is significant, a complete hand‑to‑eye count shall be conducted.
(2)	The rules shall provide for accurate unofficial reporting of the results from the precinct to the county board of elections with reasonable speed on the night of the election.
(3)	The rules shall provide for the prompt and secure transmission of official ballots from the voting place to the county board of elections.
The State Board shall direct the county boards of elections in the application of the principles and rules in individual circumstances."
SECTION 6.(c)  G.S. 163‑182.5 reads as rewritten:
"§ 163‑182.5.  Canvassing votes.
(a)	The Canvass. – As used in this Article, the term "canvass" means the entire process of determining that the votes have been counted and tabulated correctly, culminating in the authentication of the official election results. The board of elections conducting a canvass has authority to send for papers and persons and to examine them and pass upon the legality of disputed ballots.
(b)	Canvassing by County Board of Elections. – The county board of elections shall meet at 11:00 A.M. on the seventh day after every election to complete the canvass of votes cast and to authenticate the count in every ballot item in the county by determining that the votes have been counted and tabulated correctly. If, despite due diligence by election officials, the initial counting of all the votes has not been completed by that time, the county board may hold the canvass meeting a reasonable time thereafter. The canvass meeting shall be at the county board of elections office, unless the county board, by unanimous vote of all its members, designates another site within the county. The county board shall examine the returns from precincts, from absentee official ballots, from the sample hand‑to‑eye paper ballot counts, and from provisional official ballots and shall conduct the canvass.
(c)	Canvassing by State Board of Elections. – After each general election, the State Board of Elections shall meet at 11:00 A.M. on the Tuesday three weeks after election day to complete the canvass of votes cast in all ballot items within the jurisdiction of the State Board of Elections and to authenticate the count in every ballot item in the county by determining that the votes have been counted and tabulated correctly. After each primary, the State Board shall fix the date of its canvass meeting. If, by the time of its scheduled canvass meeting, the State Board has not received the county canvasses, the State Board may adjourn for not more than 10 days to secure the missing abstracts. In obtaining them, the State Board is authorized to secure the originals or copies from the appropriate clerks of superior court or county boards of elections, at the expense of the counties."
SECTION 6.(d)  This section becomes effective January 1, 2006.
SECTION 7.(a)  G.S. 163‑182.7 reads as rewritten:
"§ 163‑182.7.  Ordering recounts.
(a)	Discretionary Recounts. – The county board of elections or the State Board of Elections may order a recount when necessary to complete the canvass in an election. The county board may not order a recount where the State Board of Elections has already denied a recount to the petitioner.
(b)	Mandatory Recounts for Ballot Items Within the Jurisdiction of the County Board of Elections. – In a ballot item within the jurisdiction of the county board of elections, a candidate shall have the right to demand a recount of the votes if the difference between the votes for that candidate and the votes for a prevailing candidate is not more than one percent (1%) of the total votes cast in the ballot item, or in the case of a multiseat ballot item not more than one percent (1%) of the votes cast for those two candidates. The demand for a recount must be made in writing and must be received by the county board of elections by 5:00 P.M. on the first day after the canvass. The recount shall be conducted under the supervision of the county board of elections.
(c)	Mandatory Recounts for Ballot Items Within the Jurisdiction of the State Board of Elections. – In a ballot item within the jurisdiction of the State Board of Elections, a candidate shall have the right to demand a recount of the votes if the difference between the votes for that candidate and the votes for a prevailing candidate are not more than the following:
(1)	For a nonstatewide ballot item, one percent (1%) of the total votes cast in the ballot item, or in the case of a multiseat ballot item, one percent (1%) of the votes cast for those two candidates.
(2)	For a statewide ballot item, one‑half of one percent (0.5%) of the votes cast in the ballot item, or 10,000 votes, whichever is less.
The demand for a recount must be in writing and must be received by the State Board of Elections by noon on the second Thursday after the election. If on that Thursday the available returns show a candidate not entitled to a mandatory recount, but the Executive Director determines subsequently that the margin is within the threshold set out in this subsection, the Executive Director shall notify the eligible candidate immediately and that candidate shall be entitled to a recount if that candidate so demands within 48 hours of notice. The recount shall be conducted under the supervision of the State Board of Elections.
(d)	Rules for Conducting Recounts. – The State Board of Elections shall promulgate rules for conducting recounts. Those rules shall be subject to the following guidelines:
(1)	The rules shall specify, with respect to each type of voting system, when and to what extent the recount shall consist of machine recounts and hand‑to‑eye recounts. Hand‑to‑eye recounts shall also be ordered as provided by G.S. 163‑182.7A.(2)	The rules shall provide guidance in interpretation of the voter's choice.
(3)	The rules shall specify how the goals of multipartisan participation, opportunity for public observation, and good order shall be balanced."
SECTION 7.(b)  Article 15A of Chapter 163 of the General Statutes is amended by adding a new section to read:
"§ 163‑182.7A. Additional provisions for hand‑to‑eye recounts.
(a)	The rules promulgated by the State Board of Elections for recounts shall provide that if the initial recount is not hand‑to‑eye, and if the recount does not reverse the results, the candidate who had originally been entitled to a recount may, within 24 hours of the completion of the first recount, demand a second recount on a hand‑to‑eye basis in a sample of precincts. If the initial recount was not hand‑to‑eye and it reversed the results, the candidate who had initially been the winner shall have the same right to ask for a hand‑to‑eye recount in a sample of precincts.
That sample shall be all the ballots in three percent (3%) of the precincts casting ballots in each county in the jurisdiction of the office, rounded up to the next whole number of precincts. For the purpose of that calculation, each one‑stop (early) voting site and the mail‑in absentee ballots shall be considered to be a precinct. The precincts to be recounted by a hand‑to‑eye count shall be chosen at random within each county. If the results of the hand‑to‑eye recount differ from the previous results within those precincts to the extent that extrapolating the amount of the change to the entire jurisdiction (based on the proportion of ballots recounted to the total votes cast for that office) would result in the reversing of the results, then the State Board of Elections shall order a hand‑to‑eye recount of the entire jurisdiction in which the election is held. There shall be no cost to the candidate for that recount in the entire jurisdiction.
(b)	Recounts under this section shall be governed by rules adopted under G.S. 163‑182.7(d).
(c)	No complete hand‑to‑eye recount shall be conducted under this section if one has already been done under another provision of law."
SECTION 7.(c)  This section becomes effective January 1, 2006.
SECTION 8. To meet the goals of uniformity and equity, and to avoid placing unfunded mandates upon the counties, there is appropriated from the General Fund to the State Board of Elections the sum of                 for the 2005‑2006 fiscal year and the sum of         for the 2006‑2007 fiscal year (minus Help America Vote Act funds available for the same purpose) for the purpose of reimbursing counties for the lesser of the following expenses:
(1)	Upgrading an existing direct record electronic system used in that county to comply with this act (if it is possible to upgrade).
(2)	Acquiring a direct record electronic system (DRE) that complies with this act.
(3)	Acquiring an optical‑scan system that complies with this act.
SECTION 9.  There is appropriated from the General Fund to the State Board of Elections the sum of                 for the 2005‑2006 fiscal year and the sum of
         for the 2006‑2007 fiscal year for the purpose of meeting its expanded duties under this act with regard to voting systems.
SECTION 9.1.  There will be appropriated from the General Fund to the State Board of Elections an appropriate sum in the 2005‑2006 fiscal year and the 2006‑2007 fiscal year for the purpose of reimbursing counties for costs incurred for conducting postelection verification or any other hand‑eye counting or recounting of votes.
SECTION 10.  The State Board of Elections shall recommend a model code of ethics for members and employees of county boards of elections and of the State Board of Elections. The code shall address the appropriate relations between those members and staff and vendors who do business or seek to do business with boards of elections in North Carolina. It shall address how to avoid both the reality and the appearance of conflicts of interest and impropriety. The State Board shall report its recommended code to the Joint Select Committee on Electronic Voting Systems no later than 60 days after this act becomes law.
SECTION 11.  Sections 8 and 9 of this act become effective July 1, 2005. Except as otherwise provided herein, the remainder of this act is effective when it becomes law.