Updates
January 26, 2018

Vermont Legislative Update 1-26-18

An analysis from DRM's Government & Public Affairs Team

Vermont Legislative Update Quick Links

Strict Liability Proposed for Injuries from Toxic Releases

Tax Increment Financing Criticized in New JFO Report

Committee Approves Net Neutrality Bill

Arbitration Clauses to be Banned under Senate Bill

Talent Pipeline Initiative Spurs Interest in House Committee

Proposal Would Compel Manufacturer Information Disclosure To Repair Shops

Committee Considers Broadband Connectivity Funding

State Considers  Drug Repository Program

Panel Continues Work On Prescription Drug Importation Program

Strict Liability Proposed for Injuries from Toxic Releases

The Senate Judiciary Committee continued testimony this week on a bill, S.197, that would impose strict liability on any entity that causes harm due to the release of a toxic or hazardous substance. The bill was introduced by Committee Chair Sen. Dick Sears, D-Bennington, in response to the release of the chemical PFOA in Bennington which is the subject of a pending class action case.

Sears, a litigant in the pending case, argued to witnesses on Friday that the company or companies that caused the PFOA pollution are in the best position to pay property owners for their injuries. They should not be required to prove that the companies acted negligently.

A range of witnesses argued that the bill is overly broad and would unfairly penalize manufacturers and other entities who comply with all regulatory obligations. By imposing joint and several liability, the bill would also impose full liability on a party that may have made a miniscule contribution to the toxic release. They argued that the bill would upend more than a century of tort law by creating a new class of strict liability claims.

The committee is scheduled to take additional testimony on the bill next Wednesday.

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Tax Increment Financing Criticized in New JFO Report

A report on tax increment financing prepared for the legislature concludes that Vermont’s TIF program is more tightly managed and well run than other such programs across the country, but its author questions whether statewide benefits exist that justify the costs. The report was presented on Wednesday before the House Ways and Means Committee by its principle author, Fiscal Analyst Graham Campbell.

Lawmakers called for the report in Act 69 of 2017, a bill that authorized the creation of six new TIF districts throughout the state. Within those districts, municipalities issue bonds to cover the cost of infrastructure that attracts additional capital investment from the public and private sectors. When the development adds value to the property tax base, the additional tax revenue is used over a period of 20 years to retire the bonds.

Campbell admitted that he relied on advice from Legislative Economist Tom Kavet and State Auditor of Accounts Doug Hoffer, two frequent critics of economic development programs in general and TIF financing in particular. Central to the criticism, Campbell noted, is the concept of “demand substitution,” which postulates that the same development would have occurred anyway in a nearby location, and developers only locate in the TIF district to take advantage of state subsides.

The issue for some legislators has been that a portion of the statewide property tax that funds primary and secondary education is deferred until the bond is paid off, along with most of the tax increment in the municipal tax base. TIF supporters say the growth would not have occurred “but for” establishment of the TIF district.

The Vermont Economic Progress Council of the Agency of Commerce and Community Development, which proposed and supported the change in 2017, issued a critique of the report, which is included beginning on page 72. It vigorously disputes the conclusion that there is no increase in value as a result of the TIFs and that all taxpayers share in the cost but not in the return.

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Committee Approves Net Neutrality Bill

After hearing testimony from a range of Vermont internet providers that they do not discriminate in providing internet services, the Senate Finance Committee passed a bill just to make sure. The bill, S.289, would require an internet service provider to certify that it meets net neutrality standards as a condition of entering into a contract with the State of Vermont.

The issue of net neutrality has taken on enormous political significance nationally since the FCC proposed, and ultimately voted, to repeal rules that were adopted during the Obama Administration. Vermont’s Democratic leadership in the legislature appears eager to take a stand on the politically popular issue.

The House Energy and Telecommunications Committee is considering a more far-reaching bill, H.680, that is intended to ensure the privacy of information delivered by internet service providers, as well as ensure that such providers do not discriminate against individual users. The committee is expected to hear additional testimony on its bill next week.

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Arbitration Clauses to be Banned under Senate Bill

The Senate Judiciary Committee is likely to approve a bill, S.105, that would ban the use of mandatory arbitration clauses by businesses in contracts with individuals. The bill would also prohibit clauses that impose inconvenient forums and shorten the applicable statute of limitations.

Surprisingly few business lobbyists have testified on the bill. The insurance industry has requested an exemption based on the review and approval of insurance contracts by the Department of Financial Regulation. The committee expressed a willingness to entertain that exemption. Additional testimony has not yet been scheduled.

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Talent Pipeline Initiative Spurs Interest in House Committee

The House Commerce and Economic Development Committee heard testimony this week on the Vermont Talent Pipeline Management Initiative, a project of the Vermont Business Roundtable.

Roundtable President Lisa Ventriss told the committee that the program is a collaboration between businesses and educators to develop career awareness and exploration programs to fill critical skills gaps in the Vermont workforce.

Mary Anne Sheahan, executive director of the initiative, gave the committee a more detailed look at how the program works.

Members of the Commerce Committee have long had an interest in promoting workforce development efforts, and many were intrigued by the initiative. Several committee members indicated support for providing state funding for the program.

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Proposal Would Compel Manufacturer Information Disclosure To Repair Shops

The Senate Economic Development, Housing and General Affairs reviewed several bills this week that Chair Sen. Michael Sirotkin, D-Chittenden, characterized as “level-the-playing-field bills.” Among these bills is S.180, a bill introduced by Sen. Chris Pearson, P/D-Chittenden. The bill would require original equipment manufacturers to make available to independent repair shops the same information, schematics, diagnostics and repair manuals that it makes available to manufacturer authorized repair shops. Much of the information manufacturers would be required to share is considered proprietary. The bill excludes automobiles, but does include electronic devices, kitchen appliances and farm equipment.

Most committee members present indicated support for the proposal, and Sirotkin’s comments suggest that the committee will take additional testimony on the bill.

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Committee Considers Broadband Connectivity Funding

Reflecting ongoing frustration about the lack of universal broadband access in Vermont, the House Energy and Technology Committee continued to take testimony this week on a bill, H.582, that would increase the Universal Service Fund by one-half of one percent. The increased funding, about $1.5 million, would be divided roughly evenly on projects that expand broadband connectivity and projects that support telecommunications services in high cost areas.

The increase in the USF is generally supported by carriers that would benefit from the high cost support, although several expressed concern about the increased customer charge. Others, such as Comcast and AT&T, strongly oppose the increase in the USF charge. The administration is unlikely to support the bill as it runs counter to the governor’s oft-repeated pledge not to support any new taxes or fees.

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State Considers  Drug Repository Program

The Senate Health and Welfare Committee took testimony on Thursday on S.164, a bill that would establish a statewide drug repository program that would provide low-cost medications to Vermonters who meet certain eligibility standards. Forty-two states have passed laws establishing drug redistribution programs. Many of these programs are not operational or are small, but the number of successful programs is growing.

Vermont Department of Health Senior Policy and Legal Advisor David Englander said the Scott Administration supports exploring the creation of a prescription drug donation and reuse program housed within the Agency of Human Services. Englander said before implementation of a program the agency will need to go through a rigorous rulemaking process. He said successful programs do not accept controlled substances or adulterated or misbranded medications, all medications must be unopened and in the original, sealed, tamper-evident packaging, and all drugs must be checked by a pharmacist prior to  being dispensed. Finally, liability protection for both donors and recipients is assured.

The committee heard from SafeNetRx Chief Executive Officer Jon-Michael Rosmann about Iowa’s program, which has emerged as the largest prescription and over-the-counter drug repository program in the country. Administered by the Iowa Department of Public Health, donations are received from long-term care dispensing pharmacies, medical facilities and individuals. The medications and supplies are inspected by a pharmacist, distributed to medical facilities and dispensed to Iowans in need. Rosmann said donated medications must be in their original sealed container or in tamper-evident packaging.

Vermont Retail Druggists President Jeff Hochberg told the committee that the task of maintaining product pedigree information from donated materials would be nearly impossible for retail community pharmacists. Pharmacists also are unable to test or validate the integrity of any returned products. If the committee moves forward with the proposal, he recommends that it be limited to institutional settings and not involve publicly distributed products that are dispensed from retail pharmacies.

The committee will take additional testimony next week.

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Panel Continues Work On Prescription Drug Importation Program

Voicing concern that drug importation from Canada would conflict with a current federal drug discount program, Vermont Association of Hospitals and Health Systems Vice President of Government Affairs Devon Green proposed an amendment on Friday to S.175 that would protect hospitals that participate in the 340B Drug Discount Program from being dropped from the program if they participate in the bulk purchasing program proposed in the bill. Hearings continued this week in the Senate Health and Welfare Committee on the bill, which would also require manufacturers to provide advanced notice before introducing new, high-cost drugs to the market.

The 340B program is a federal program that requires drug manufacturers to provide outpatient drugs to eligible health care organizations and covered entities at significantly reduced prices, and prohibits participants from purchasing drugs from a group purchasing program. According to Nathan Arwich, manager of pharmacy operations at the University of Vermont Health Network, the savings garnered from participation in 340B provide critical support for the hospital’s solvency. The UVM network is concerned that S.175 would put the health care organization’s eligibility for the program at risk. Green’s amendment states that the required federal waiver request for the proposed wholesale prescription drug importation program will include assurances that 340B program enrollees can participate in the proposed wholesale program without violating 340B program rules. 

Committee Chair Sen. Claire Ayer, D-Addison, told the committee that she would like to get the bill on the floor soon and has scheduled further discussion and mark-up of the bill for Tuesday.

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