Committee Members Press DMV on Pattern of Questionable Interpretation of Laws

A hearing that began with conflicting stories between the Department of Motor Vehicles and a vendor ended with questions of DMV’s compliance with state law. Along the way, members had many questions for DMV Commissioner Wayne Goodwin and Idemia North America Vice President for Global Corporate Relations Lisa Shoemaker during the Thursday, June 6 House Oversight and Reform hearing.

From 6:45 on February 15 to 5:45 on February 20, DMV software improperly allowed 2,136 customers to renew their licenses. By the time DMV recognized the problem, its vendor Idemia had already printed many of the requested licenses. Idemia and DMV blamed each other for the eventual decision to find and retrieve the problem cards from among 33,000 printed at the same time. Idemia halted production to conduct the search and did not resume until March 4. Over the next few weeks, the backlog from missed production days and high demand for IDs grew to more than 350,000. Some people were waiting two months to receive their credentials.

Although DMV and Idemia disputed each other’s interpretations of events, both agreed that Idemia will be back on track by June 30. In addition to the 10,000 daily units Idemia produces in Sacramento, California, the company expanded production to its Springfield, Illinois, plant on May 13.

Committee members targeted their questions on the legality of this decision. Chair Harry Warren (R-Rowan) cited Commissioner Goodwin’s May 6 letter to all members of the General Assembly. “As you know,” Goodwin wrote, “the Division of Motor Vehicles (“DMV”) is required to have all credentials produced and issued from a central location. N.C. GEN. STAT. § 20-1(c1)(5) [N.C. GEN. STAT.§207-(f)(5)].”

At the hearing, DMV debated the meaning of “central location” while also acknowledging that the law should be changed to accommodate the transition between two vendors. Chairman Warren asked Commissioner Goodwin whether he had asked for a change in the law, recognizing the challenges it presents. Rep. George Cleveland (R-Onslow) also raised concerns about DMV’s willingness to solve one problem by selectively interpreting the law. Goodwin argued that central location could mean “one company.” Cleveland responded, “When Idemia opened another facility, they broke our state law, and you, I understand, did nothing about this.”

Rep. Allen Chesser (R-Nash) joined Cleveland and Warren in questioning DMV’s interpretation of state law. Chesser asked about DMV’s contracting exemption under HB650 (SL 2021-134) and its willingness to sign a contract for driver’s license production that conflicted with General Statute §20-7(n)(4) which specifies a physical license must include a color photo. Counsel Drew Marsh wrote in his April 12 response to chairs of the Joint Legislative Transportation Oversight Committee, “…DMV had a good faith belief at the time prior to and shortly after entering the contract that the State might be amenable to amending that statute, if in fact it was necessary.”

Rep. Allen Chesser (R-Nash) discusses the new driver’s license design during the House Oversight and Reform Committee hearing Thursday, June 6, 2024.

Chesser held up a poster showing what the updated driver’s license will look like. The license includes a small color photo on the back that required purchase of $3 million in additional equipment and led to a 13% increase in price per card to $2.91 from the originally contracted price of $2.55 per card.

Although DMV’s contract with Idemia and its predecessors dated back to 1996, Goodwin said, “It was our understanding that the legislature had changed the law previously whenever there was a change with contractors.”

“Changing the law at a previous date doesn’t mean you were in compliance with the current law,” Chesser responded.

With the disputes over the meaning of “central location,” the need for a color photograph on driver’s licenses, and DMV’s exemption from Department of Information Technology contracting procedures and oversight, Chairman Warren summed up his frustration: “The department sems to have a pattern of interpreting statute as it best fits your need.”

Idemia has sued DMV over its contract award to Canadian Bank Note Secure Technology, Inc. (CBN-STI). Any judgment in the lawsuit could affect DMV’s ability to use the exemption. The transition to CBN should be complete by July 1, and with the backlog resolved, will settle for now the color photo requirement and the definition of “central location.” DMV has added another series of projects to replace its core systems for driver’s licenses and vehicle titles under the HB650 exemption, so that controversy will continue as will the possible need to amend state law.

While DMV was the focus of the hearing, members complained that other agencies have taken similar liberties with the law. “If you want to circumvent the law, counsel is a good way to go.… I see that being done. Not only in your organization, I see it in other agencies that I have the pleasure of overseeing, and it’s something that really needs to stop,” Cleveland said.