Opinion ID: 1353617
Heading Depth: 1
Heading Rank: 9

Heading: Monies Collected by State Agencies and Licensing Boards for Late Renewal of Licenses or Late Payment of License Fees

Text: Plaintiffs further assert that the Court of Appeals erred by holding that payments collected by state agencies and licensing boards for the late renewal of licenses or the late payment of licensing fees are not subject to Article IX, Section 7. The Court of Appeals reasoned that the record revealed that the payments were intended to compensate the collecting agency for additional operating expenses incurred in collecting money due or compelling performance of a licensing requirement. N.C. Sch. Bds. Ass'n, 160 N.C.App. at 283, 585 S.E.2d at 437. The Court of Appeals discerned no punitive intent given the small amount of the fees specified by the authorizing statutes. Id. For the reasons articulated below, we affirm the Court of Appeals as to this issue. Payments to four different licensing boards are at issue in this case. Sections 88B-20 and 88B-21 authorize the North Carolina Board of Cosmetic Art Examiners (Cosmetic Arts Board) to collect a late fee from the holder of a license for late renewal of the license and for reinstatement of an expired license. N.C.G.S. §§ 88B-20,-21 (2003). The North Carolina State Bar (State Bar) collects a late fee pursuant to section 84-34 from members of the State Bar who fail to pay an annual membership fee by a certain date. Id. § 84-34 (2003). Similarly, the State Board of Examiners of Electrical Contractors (Electrical Contractors Board) is authorized to assess an administrative fee under section 87-44 from any licensed electrical contractor who fails to renew his or her license by the expiration date established by the Electrical Contractors Board. Id. § 87-44 (2003). [3] Finally, under the current version of section 87-22, the State Board of Examiners of Plumbing, Heating, and Fire Sprinkler Contractors (Plumbing Contractors Board) shall increase the license fee by twenty-five dollars for the late renewal of a license. Id. § 87-22 (2003). We note, however, that in the version of Section 87-22 in effect when this litigation was commenced and until 6 July 2001, a person or entity who failed to renew a license in a timely fashion was charged a penalty for nonpayment in the amount of ten percent (10%) of the annual licensing fee for each month the payment was delayed, but the penalty for nonpayment [could] not exceed the amount of the annual fee. Id. § 87-22 (1999). This Court has recognized that payments to state agencies may be remedial when the payment is for particular damage or loss to it over and above its normal operating costs. Shore, 290 N.C. at 633-34, 227 S.E.2d at 559. In the statutes under consideration, the use of the term fee to describe the payments collected by the Cosmetic Arts Board, the State Bar, the Electrical Contractors Board, and the Plumbing Contractors Board after 6 July 2001 manifests the legislature's intent that these payments be remedial rather than punitive. See Mussallam, 321 N.C. at 509, 364 S.E.2d at 367. The penalty is a revocation or suspension of the license and whatever sanctions the statute may authorize for a person's continued practice of the trade or profession during the period of revocation or suspension. See, e.g., N.C.G.S. §§ 87-23, 87-47, 88B-24, and 88B-29. The fee, or in the case of plumbing and heating contractors the nonpayment penalty, is an administrative charge to cover the costs of collecting the license fees. As the record reflects, these boards are dependent upon the revenue generated from fees to perform their statutorily mandated services. As illustrated by answers to interrogatories, the late fees collected often do not cover the expense incurred in attempting to collect the license fees. Inasmuch as these late fees or penalties are not intended to punish the licensee, they are not subject to Article IX, Section 7. Defendants also argue in their brief before this Court that payments made to the Department of Commerce by credit unions for failing to file timely reports pursuant to N.C.G.S. § 54-109.15(b) and payments made to the Department of Environment and Natural Resources for the untimely payment of food and lodging establishment inspection fees pursuant to N.C.G.S. § 130A-248(d) and for the untimely payment of an annual underground storage tank operating fee pursuant to N.C.G.S. § 143-215.94C(e) are remedial. Although defendants briefed these issues in the Court of Appeals, neither the majority nor the dissent in the Court of Appeals addressed them; and defendants did not petition for discretionary review of these issues in this Court. Accordingly, these issues are not properly before this Court, N.C. R.App. P. 16(a), and we decline to address them.