Vermont Legislative Update 03-30-2018 - An analysis from DRM's Government & Public Affairs Team

by Downs Rachlin Martin PLLC
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Senators Berate ANR Secretary over Missed Deadline

Committee Struggles with Workforce Proposal

Ride-Sharing Bill Hits Another Snag

Panel Sympathetic to Limits on Automatic Renewal of Internet Subscriptions

House Committee Likely to Approve Net Neutrality Legislation

Finance Committee Prepares to Dive into Income and Education Tax Bill

Rural Economic Development Bill is Reconstructed in House

House Concurs on Changes to Chemical Regulation Bill

Panel to Expand Prescription Drug Bill

Panel Supports Inmate Access to Prescription Drugs

Senate Approves Measure Dealing with State Airports

State Auditor Will Investigate Allocation of Sales Tax on Jet Fuel

Senators Berate ANR Secretary over Missed Deadline

Agency of Natural Resources Secretary Julie Moore said on Thursday she's learned to put requests in writing after she sought legislative permission to delay promulgation of a rule and thought she had it. The lesson was revealed on Friday as she responded to a sustained verbal attack from Sen. Chris Pearson, P-Chittenden, over the agency’s failure to adopt a rule dealing with storm water runoff by Dec. 31, 2017. It occurred during a hearing in the Senate Natural Resources and Energy Committee over H.576, a bill that would amend the storm water statute.

The agency held several informational meetings last fall over the proposed rule when Moore says she pushed the pause button and asked legislative leaders to make changes in the law. Final rule making was intended to follow the changes, which could only be made by the legislature while in session. She has been defending the agency’s actions ever since the deadline passed.

H.576 was introduced in the House and was passed by that body on Feb. 21. Among its other provisions, it moved the deadline to April, assuming that both houses would act quickly. On Thursday, it was clear that the rulemaking will be delayed again.

The 2018 draft bill would allow impact fees and offsets in areas where they were not previously allowed, adopt new standards for the Lake Memphramagog watershed and change some deadlines. Neither the bill nor the missed regulatory deadline will delay the impact of storm water regulations on parcels of three acres or more of impervious surface, which first become effective in 2023. Nevertheless, lawmakers continue to criticize the Scott Administration for missing the storm water deadline and for failing to propose new taxes or fees to address water quality issues in the Lake Champlain and Connecticut River basins.

 

Committee Struggles with Workforce Proposal

The Senate Committee on Economic Development, Housing and General Affairs spent all morning on Friday trying to understand the state’s bewildering array of workforce development programs and a House-passed bill, H.919, that attempts to coordinate them.

The bill is a recognition that the existing 57-member workforce development board has not been successful in coordinating the state’s multitude of training programs. It requires the board, after a public engagement process, to adopt “vision and goals” that would be used to create an action plan to “revitalize Vermont’s workforce development system.”

Committee Chair Sen. Mike Sirotkin, D-Chittenden, has questioned the lack of benchmarks in the bill and raised concerns that it seems to be long on process and short on outcomes. He also raised concerns that, even under H.919, there would not be one full-time employee who would serve as the point of accountability to the legislature for the board.

Lisa Ventriss, president of the Vermont Business Roundtable, testified in support of a provision in the bill that acknowledges and supports the VBR Talent Pipeline Management Program, a pilot project that will align employers’ needs with education workforce development and training programs.

Sirotkin noted that the VBR program is “doing what the rest of this bill is trying to do.”

Additional testimony is likely to be scheduled next week.

 

Ride-Sharing Bill Hits Another Snag

Forty-eight states have adopted a uniform bill that establishes insurance requirements for ride-sharing companies like Lyft and Uber. Vermont’s version, H.143, has been loaded up with Vermont-specific standards to the point that its passage may be in jeopardy.

A relatively clean version of the proposal passed the House last year. The Senate added a unique background check requirement that resulted in Uber and Lyft opposing it. Now back in the House, the Commerce and Economic Development Committee has rejected the background check requirement, but is considering amending its own bill to increase significantly the minimum insurance limits that would apply when a ride-sharing driver has an app turned on, but has not picked up a passenger. The proposed limits would be substantially higher than those imposed by any other state.

The committee plans to take testimony on the latest proposal next week.

 

Panel Sympathetic to Limits on Automatic Renewal of Internet Subscriptions

A House-passed consumer protection bill, H.593, would limit the ability of Internet-based companies to renew subscriptions automatically. The bill would require companies to obtain separate approval from consumers, after basic contract terms have been accepted, for automatic renewal provisions.

The Senate Committee on Economic Development, Housing and General Affairs spent several hours this week hearing from a representative of Match.com and a variety of technology trade associations in opposition to the proposal.

Match.com argued that consumers want hassle-free services, and the additional subscription requirement would be disruptive and inconvenient. The witness also argued that Vermont would be the first state in the country to adopt such a requirement. He was forced to acknowledge, however, that only one to two percent of Match.com’s contracts would be covered by the bill (those extending for one year or longer).

Sen. Philip Baruth, D/P-Chittenden, said he did not want to make it easy for companies to have access to consumer bank accounts. He and Committee Chair Mike Sirotkin, D-Chittenden, argued that automatic renewals generate larger profits for companies, and consumers may unwittingly agree to extended subscriptions. Baruth said he would prefer to add inconvenience for consumers to ensure they receive adequate notice.

The bill exempts insurers and banks from the “double-opt-in” automatic renewal requirement.  That exemption was questioned by Sirotkin. Phil Keller from the Department of Financial Regulation argued that these companies are heavily regulated by DFR, and additional requirements for customer renewals could result in consumers going without insurance coverage.

 

House Committee Likely to Approve Net Neutrality Legislation

Despite Gov. Phil Scott’s issuance of an executive order requiring companies to certify their compliance with net neutrality policies in order to qualify for state contracts, the House Energy and Technology Committee is likely to approve legislation that would codify net neutrality in Vermont law.

The committee spent time this week reviewing a proposal from the Attorney General’s Office that would amend a Senate-passed bill, S.289. The committee intends to import a long list of findings from a House bill, H.680, that did not make it out of committee.

The legislation is strongly opposed by telephone and cable companies, who argue that it is unnecessary, preempted by federal law, and would impose unclear regulatory burdens.

 

Finance Committee Prepares to Dive into Income and Education Tax Bill

To keep the matters clear in everybody’s minds, the Senate Finance Committee this week held separate hearings on proposed changes to the personal income tax resulting from changes in federal tax policy, and on changes to income and residential property tax policies aimed at lowering education property taxes. The two aspects of the tax proposal are both contained in a single bill, H.911.

If legislation is not passed this session, Vermont residents would pay $30 million more in state income taxes, with the bulk of the tax increases effecting middle income taxpayers. The bill that passed the House included changes in income tax policy for residents that were mostly recommended by the Scott Administration.

H.911 was amended by the House Ways and Means Committee to add a new income tax surcharge paid by all in-state and out-of-state filers. The bill would lower the property tax burden for residents only. The proposal has the Scott Administration concerned about its impact on out-of-state investors and others who pay taxes on state-earned income, but who would not benefit from reductions in the property tax.

 

Rural Economic Development Bill is Reconstructed in House

The Senate Natural Resources and Energy and Finance Committees stripped away many of the substantive provisions of a rural economic development bill, S.276, that was originally passed by the Senate Agriculture Committee. The House Agriculture Committee began its review of the bill this week by starting with the original version that was recommended by its Senate counterpart.

Among the provisions that would be restored if the committee reverts to the original bill are sales tax credits on forestry equipment and advanced wood boilers, a cap on fire and building code fees and a waiver of Act 250 review of small saw mills. Both bills contain a study of ways to limit “demand charges” by utilities and to attract investments in industrial parks located in rural areas. The committee will take additional testimony next week.

 

House Concurs on Changes to Chemical Regulation Bill

Despite a rigorous debate and two roll-call votes on the House floor on Thursday, the House voted to concur with the Senate on a bill that would remove the authority of a working group dealing with chemicals of high concern to children and set lower standards for listing and regulating the chemicals. The two provisions were included in S.103, which was mired in parliamentary procedure at the end of the 2017 session and resurrected in January.

Rep. Paul Poirier, I-Barre City, led the charge to restore policy provisions that were agreed to by adversarial parties when the legislature passed the original Chemicals of High Concern to Children program in 2014. Environmental groups have worked persistently since then to recapture concessions they made at the time. The bill as originally passed by the House created an innocuous interagency working group to recommend ways to streamline state policy regarding chemical use.

 

Panel to Expand Prescription Drug Bill

Building on the Senate’s earlier work, the House Health Care Committee this week focused on a number of bills related to prescription drugs. In addition to S.175, a drug importation bill, the committee also spent time on bills that would prohibit price gouging by manufacturers and limit their ability to offer discounts or coupons to reduce consumer out-of-pocket costs.

As passed by the Senate, S.175 would allow the state to import prescription drugs from Canada, create a state bulk purchasing program, require manufacturers to provide notice to the Attorney General before bringing a new high-cost prescription drug to market, and require health insurance companies to provide information to the Green Mountain Care Board about the impact of prescription drug spending on premium rates.

The committee also took initial testimony on H.713, a bill that prohibits prescription drug manufacturers and wholesale distributors from price gouging in the sale of essential off-patent or generic drugs. This bill is based on a Maryland law that was challenged in the courts. The trade association for generic pharmaceutical manufacturers sued the state and lost.

The committee also took testimony on H.775, a bill that prohibits prescription drug manufacturers from offering a discount, coupon, voucher, or other reduction in a consumer’s out-of-pocket expenses associated with health insurance coverage for a prescription drug if a lower cost is covered under the consumer’s health insurance plan.

The committee spent significant time on a provision in S.175 known as the “gag rule.” The bill as approved by the Senate requires that contracts between a pharmacy benefit manager (a third-party administrator of prescription drug programs) and a pharmacy not prohibit or penalize a pharmacist for disclosing information regarding the cost of the drug, the availability of any therapeutically-equivalent alternative medication, or any alternative method of purchasing the drug (including paying cash) that would be less expensive to the individual. Although representatives from Vermont’s two major health insurers say they do not utilize these clauses in their contracts, the committee supports an explicit prohibition.

 

Panel Supports Inmate Access to Prescription Drugs

The Senate Institutions Committee spent considerable time this week on H.874, a bill that would ensure an inmate who is taking medication prescribed by a provider prior to incarceration is able to continue that medication unless a licensed practitioner at the correctional facility makes the clinical judgment to discontinue the medication. The correctional facility practitioner would be required to state the reason in writing, include it in the inmate’s medical record and provide the inmate with an explanation of the decision, both orally and in writing.

The bill as passed by the House was a collaborative effort between the Department of Corrections, Centurion Health (the state’s provider of health care services for corrections), and inmate rights advocates.

Brattleboro Retreat Senior Medical Director Simha Ravven testified in support of the bill. She said in her practice she treats adults with serious mental illness in the community and in inpatient psychiatric settings. She often sees that a patient may become destabilized by stopping medication or experiencing personal loss and that symptoms of mental illness emerge. Ravven said some patients may become incarcerated when they are in crisis and they get better faster when they are able to receive medications that have been effective prior to their incarceration. Ravven said a report from the Treatment Advocacy Center indicates that there are now three times more seriously mentally ill persons in prisons than in hospitals and at least 16 percent of inmates in prisons have a serious mental illness.

The committee plans to vote on the bill next week.

 

Senate Approves Measure Dealing with State Airports

The Senate has approved a House-passed bill that calls for greater economic development at state airports. The bill, H.620, was unchanged from the House version and will now be sent to the governor for his signature.

An advisory group consisting of state and local officials, regional development corporations, regional planning commissions and chambers of commerce is charged with updating the state’s economic development plan to attract businesses involved in the development of “next generation” aeronautics technologies. The plan would also incorporate planning for renewable energy generation and electric vehicle charging stations, including airplanes powered exclusively by electricity. The plan is due in January.

 

State Auditor Will Investigate Allocation of Sales Tax on Jet Fuel

There was no resolution this week to the question of what happened to missing money from taxes on aviation jet fuel that used to accrue to the state’s Transportation Fund, but the Vermont Department of Taxes has a new theory. Sharon Asay, director of taxpayer services, told members of the House Ways and Means Committee that the amount of sales tax paid by major airlines for fuel delivered in Vermont has been commingled with other sales tax receipts on a single return. As the department learns that a vendor is in the jet fuel business, it provides a separate form. The practice has led to collection of about $973,000 in the first six months of the current fiscal year compared to $282,000 last year, according to Neil Schickner of the Joint Fiscal Office.

The committee held several hearings on the matter this week and at least two more were held in the Senate. Lawmakers and witnesses struggled to determine who pays the tax now and to whom it is paid. Airlines claim they have records proving they have paid.

On Friday, the committee asked Helena Gardner of the Office of Legislative Counsel for a plan to convert the method of taxing jet fuel from a sales tax to an excise tax and to clearly identify the responsible taxpayer. Gardner will present the draft on Tuesday. State Auditor of Accounts Doug Hoffer has agreed to conduct an audit of the matter.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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