NVTC's 2015 General Assembly Session Wrap-Up

On February 27th, the Virginia General Assembly adjourned sine die concluding the 2015 legislative session. NVTC's specific legislative priorities for the 2015 Legislative Session were outlined in a letter to policymakers before the session began. NVTC maintained a full-time presence in Richmond throughout the session to actively advocate on behalf of Northern Virginia's technology community.

During the 45-day short session, the General Assembly tackled more than 1,900 bills related to a broad array of issues and policies. The General Assembly is scheduled to convene for a one-day Veto Session on Wednesday, April 15. In the interim, Gov. McAuliffe will be reviewing more than 800 bills and resolutions that were approved by the General Assembly. When the Veto Session convenes, legislators will have an opportunity to act on bills that may be vetoed or amended by the governor.

Issues of specific interest to NVTC members that were considered by the General Assembly during the 2015 session include:

Capital Gains Tax Exemption for Investment in Tech Startups

In 2010, NVTC promoted legislation to encourage and stimulate high-potential startup companies by providing a 100 percent state capital gains tax exclusion for founders of and investors (individual, corporate or institutional) in qualified technology, energy and biotechnology startups. The exemption promotes immediate investment in new company formation and job creation in Virginia. It also provides the Commonwealth with a competitive advantage tax favorability compared to other states, so that entrepreneurs will consider launching or expanding their startups in Virginia. More than 40 technology startups have qualified under this incentive to date and there is no cost to the Commonwealth unless those startups become successful Virginia businesses. The capital gains exemption was set to expire in June 2015. However, NVTC advocated for and the General Assembly approved SB 904 (McDougle, R-Mechanicsville) and HB 1741 (Hugo, R-Centreville; Filler-Corn, D-Fairfax Station), which will extend the capital gains exemption until 2020. Governor McAuliffe made this legislation a priority and is expected to sign it into law.

Veterans Employment Legislation

NVTC spent several months prior to session working with Virginia Secretary of Veterans Affairs and Homeland Security Admiral John Harvey to develop a new Veterans Employment Performance Grant incentive that provides businesses with fewer than 300 employees with a $1,000 grant per each recent veteran returning to Virginia that they hire. NVTC strongly supported SB 950 (Lewis, D-Accomac; Puller, D-Mount Vernon; Reeves, R-Spotsylvania and Stosch, R-Glen Allen) and HB 1577 (Watts, D-Annandale; Murphy, D-McLean; Simon, D- Falls Church), which were introduced to establish the Veterans Employment Performance Grant. Rather than proceed with the legislation, the General Assembly instead approved the new program as part of their biennial budget and included $500,000 in funding, which will support 500 new veteran hires.

Separately, the General Assembly approved SB 1335 (Cosgrove, R-Chesapeake; Dance, D-Petersburg and Stosch, R-Glen Allen) and HB 2354 (Yancey, R-Newport News), which will require the State Board for Community Colleges to adopt a policy for the award of academic credit to students who successfully completed a military training course or program that is applicable to the student's certificate of degree requirement. This legislation will expedite the ability of veterans to graduate from Virginia community colleges and transition to the business workforce.

Center for Innovative Technology (CIT)

The General Assembly approved SB 1385 (Vogel, R-Fauquier) and HB 1799 (Greason, R-Potomac Falls), which amend the Center for Innovative Technology's (CIT) governance statute by i) ) authorizing CIT to create separate legal entities to facilitate private sector sponsorship of the MACH37 Cybersecurity Accelerator and other CIT initiatives, ii) specifying budget-related information and program expenditures CIT must annually disclose to policymakers, and iii) providing for rural representation on the Board that oversees CIT. The General Assembly also approved an additional $2 million for CIT to use in supporting MACH37 while CIT seeks private sector sponsorship of the program.

Commonwealth Research Commercialization Fund (CRCF)

The General Assembly approved SB 1038 (Hanger, R-Mount Solon), which makes changes to Virginia's Commonwealth Research Commercialization Fund (CRCF) by i) providing that the length of time a business has been incorporated does not affect award eligibility, ii) allowing federal research facilities to qualify for awards, iii) providing that the Governor and General Assembly appoint the five citizen members on the Research and Technology Investment Advisory Committee, and iv) providing that the Innovation and Entrepreneurship Investment Authority consult with the Secretary of Technology in developing CRCF award guidelines.

Decedent Email and Social Media Accounts

The General Assembly considered SB 1452 (Chafin, R-Russell County) and HB 1477 (Leftwich, R-Chesapeake), which sought to create a Uniform Fiduciary Access to Digital Assets Act (UFADA) in Virginia, which would allow personal representatives administering estates to access, from third party electronic service providers, a decedent's emails, text messages, social media and other electronic content. NVTC opposed this legislation, which was supported by the Trusts and Estates Bar, because it: i) conflicts with federal privacy law prohibiting service providers from sharing content of electronic communications absent a warrant or consent, thereby forcing technology businesses to choose between conflicting federal and state law, ii) nullifies existing privacy protections in service providers' terms of service and privacy policies that limit the ability of third parties to access these accounts, iii) creates uncertainty in Virginia by invalidating existing contracts between customers and providers including Choice of Law provisions and iv) creates a presumption that subscribers do not want their email and other electronic communications kept private after they die. SB 1452 and HB 1477 were both defeated in committee.

As an alternative to UFADA, NVTC supported and the General Assembly approved SB 1450 (Obenshain, R-Harrisonburg; Leftwich, R-Chesapeake), which creates the Privacy Expectation Afterlife and Choices Act. This legislation establishes a framework that allows personal representatives administering estates to access, from third party electronic service providers, the "To", "From", and "date" information from a decedent's email accounts, which is necessary to settle an estate. Using this information, a personal representative can determine the various financial and other institutions a decedent had been corresponding with in order to send letters of administration and close out accounts. It also establishes a framework for personal representatives to access the content of a decedent's e-mail or electronic accounts for purposes of administering an estate provided the decedent consented to posthumous disclosure through a will or through an election with the service provider. The legislation, which was crafted by the technology industry, the NetChoice coalition and privacy advocates, protects the content of electronic communications and is consistent with federal privacy laws and service providers' terms of service agreements and privacy policies.

Data Center Legislation

NVTC opposed HB 1708 (Marshall, R-Manassas), which would have dealt with a specific local electrical transmission line issue that arose in Prince William County by requiring local zoning ordinances across the state to provide that data centers be located only in areas zoned for industrial use. The legislation further provided that any electrical transmission lines required by a data center outside an industrial zone be undergrounded at the expense of the data center owner. NVTC messaged to legislators that i) data centers are a critical component of our statewide economy, ii) Virginia has emerged as a globally competitive destination for data center investment and high paying jobs, and iii) this legislation runs directly counter to recent efforts by NVTC and policymakers to attract data center development and expansion by enacting a targeted sales tax exemption. In addition to this bill, Delegate Marshall introduced several other bills that attempted to address the transmission line issue in his jurisdiction. He struck this legislation when a more targeted bill failed to gain traction in the House Commerce and Labor Committee.

The General Assembly approved SB 1142 (McDougle, R-Mechanicsville) and HB 2162 (Hugo, R-Centreville), which establish a new data center incentive for certain enterprise data centers by allowing them to use a formula for apportioning taxable income to the Commonwealth based on multiplying their income by a single sales factor. This apportionment formula only applies to enterprise data centers that have entered into a memorandum of understanding with the Virginia Economic Development Partnership to make a new capital investment of at least $150 million on or after July 1, 2015.

SB 1141 (McDougle, R-Mechanicsville) and HB 2160 (Hugo, R-Centreville) would have removed the June 30, 2020 sunset date for the sales tax exemption for computer equipment and software used in certain data centers. The bill also would have increased, from $150 million to $500 million, the minimum amount of new capital investment a data center must make to be eligible for the sales tax exemption, effective June 30, 2020. NVTC had concerns about raising the minimum investment amount to $500 million. The legislation did not move forward in the Senate or in the House. NVTC will be advocating next year for an extension of the sales tax exemption that maintains the $150 million threshold.

Energy Legislation

While the cost of solar energy has decreased over time, it is still more expensive than traditional fossil generation facilities. NVTC supported and the General Assembly approved HB 2237 (Yancey, R-Newport News) which will help Virginia utilities move forward in the development of solar energy in the Commonwealth by encouraging large utility-scale solar generation in Virginia. Dominion recently proposed the first such utility-scale solar project in Fauquier County, which will provide 20MW. HB 2237 declares large utility-scale solar installations (above 1MW) to be in the public interest, provides language allowing utilities to benefit from federal tax credits to reduce the cost of solar facilities, and allows solar developers to enter into power purchase agreements with utilities to provide for further development of the solar industry in the Commonwealth.

The General Assembly Approved and Governor McAuliffe signed into law SB 1349 (Wagner, R-Virginia Beach), which was introduced as a way to minimize the potential adverse impact on Virginia ratepayers of significant cuts in carbon emissions from existing power plants under the U.S. Environmental Protection Agency's proposed Clean Power Plan, which mandates new state-specific carbon emission reductions. The legislation is intended to freeze Dominion Virginia Power's base rates by barring the State Corporation Commission (SCC) from conducting a biennial review of the rates, terms and conditions for any service of Dominion Virginia Power for five years beginning Jan. 1, 2015, and ending Dec. 31, 2019. Base rates will not increase during this period and the legislation also will prevent the SCC from making a determination and ordering refunds/credits in the event Dominion Virginia Power has more earnings than authorized by the SCC during this period. While base rates will remain frozen, fuel costs that are passed through to ratepayers can still rise or fall during this period and ratepayers also could see an impact on the power bills due to any riders that are approved to provide for new generation facilities. As part of the compromise that led to Senate passage of this legislation, Dominion will absorb $82 million in fuel costs, which would otherwise be passed along to Virginia ratepayers. The legislation also contains provisions specific to Appalachian Power. The legislation was amended on the Senate floor to include language identical to HB 2237 (above) authorizing utilities to recover, through a rate adjustment clause, the costs of constructing or purchasing solar energy facilities.  

Unmanned Aerial Vehicles/Systems (UAVs/UAS)

The General Assembly considered SB 937 (Wexton, D-Leesburg) and HB 2017 (Surovell, D-Fairfax), which would have allowed local governments across Virginia to regulate UAVs within their jurisdictions. Additionally, SB 751 (Black, R-Leesburg) would have specifically authorized the Town of Leesburg to do the same. NVTC opposed these bills and explained to the bill sponsors that a patchwork of municipal "no fly-zones" and other restrictions would inhibit the adoption and deployment of UAV technology in Virginia as the FAA moves forward in permitting certain types of commercial use and as Virginia entrepreneurs and researchers continue to work on new UAV innovations and applications. SB 937 and SB 751 were stricken at the request of the bill sponsors and HB 2017 was rejected in committee.

In 2013, Virginia passed a two year moratorium barring state and local government use of UAV technology except under a very narrow set of circumstances. The moratorium was set to expire in July of this year. NVTC advocated that it is important to Virginia's competitiveness and reputation that the drone moratorium not be extended. While Virginia spent the last two years with a ban in place, 13 other states moved forward in passing laws establishing rules for public sector use of UAV technology. The General Assembly ultimately approved SB 1301 (McEachin, D-Richmond) and HB 2125 (Cline, R-Amherst), which will lift the moratorium by providing a framework concerning how and when state and local agencies in Virginia can procure and deploy UAV technology for law enforcement, regulatory activity and other purposes. At NVTC's request, both bill sponsors agreed to include language in the legislation specifying that it does not impact or prevent commercial, recreational or private UAV activities.

Digital Identity Credentialing

The General Assembly approved SB 814 (Watkins, R-Midlothian) and HB 1562 (Rust, R-Herndon), which establish the legal foundation for identity verification and credentialing rules. The legislation creates a seven-member Identity Management Standards Advisory Council consisting of subject matter experts to recommend to Virginia's Secretary of Technology technical standards for the verification and authentication of identity. It also i) establishes remedies and limitations of liability for identity credential providers and identity proofers that meet the Commonwealth's strict identity management standards and ii) provides a process for public involvement in the development of the proposed standards. NVTC supported this legislation that will distinguish Virginia as a leader in this area.

Sexual Orientation Discrimination

NVTC supported SB 785 (McEachin, D-Richmond) and HB 1643 (Villanueva, R-Virginia Beach), which would have prohibited public sector discrimination on the basis of sexual orientation. NVTC believes that this legislation fosters fair treatment in the workplace, benefits technology employers by promoting employment and retention of a critical talent pool and benefits higher education institutions in their recruitment and retention of faculty and researchers who train the workforce and help drive our innovation economy. While SB 785 passed the Senate on a 19-19 vote with Lieutenant Governor Ralph Northam breaking the tie, both SB 785 and HB 1643 were defeated in the House General Laws subcommittee.

Workforce Development

NVTC supported and the General Assembly approved SB 1372 (Ruff, R-Clarksville) and HB 1986 (Byron, R-Lynchburg), which i) make several changes to the Virginia Board of Workforce Development including a duty to provide policy advice to the governor to create a business-driven system that increases the rates of attainment of workforce credentials and jobs, (ii) establish a full-time director position to be supervised by the Governor's Chief Workforce Development Advisor and dedicated to supporting the Board's operations, (iii) require each agency administering any publicly funded career and technical education and workforce development program to submit to the Governor a report detailing the program's performance against state-level metrics established by the Governor's Chief Workforce Development Advisor, and iv) require the Governor's Chief Workforce Development Advisor, the Commissioner of the Virginia Employment Commission (VEC), and the Chancellor of the Virginia Community College System (VCCS) to enter into a memorandum of understanding that sets forth the roles and responsibilities of each of these publicly funded entities.

The General Assembly considered SB 1209 (Wagner, R-Virginia Beach) and HB 1677 (Byron, R-Lynchburg), which would have established a program to provide grants of $1,000 to students successfully completing a noncredit workforce training program and earning the related credential in a high-demand field. Both bills were defeated in the House.

SB 971 (Ruff, R-Clarksville) would have established the Community College Workforce Training Grant Program to provide a $1,000 incentive payment to a community college for each student who has successfully completed a noncredit workforce training program at the community college and subsequently obtains an industry-recognized certification or license in a high employer demand field. SB 971 was approved by the Senate and defeated in the House.

State Procurement

NVTC, working with the Greater Richmond Technology Council, supported and the General Assembly approved SB 1226 (Reeves, R-Spotsylvania), which increases transparency by providing that Requests for Proposal (RFPs) in Virginia specify how a proposal will be evaluated, whether it will be scored numerically and the relative weight of the evaluation criteria.

NVTC also is working with the Greater Richmond Technology Council in supporting a study of SB 1420 (Reeves, R-Spotsylvania) and HB 2336 (Peace, R-Mechanicsville). The study would determine whether the state should include reasonable limitations of liability for state contractors in the terms and conditions contained in any solicitation for the procurement of information technology goods or services. The study was recommended by the legislature and should take place this summer.

Intellectual Property Commercialization

The General Assembly approved SB 1206 (Wagner, R-Virginia Beach) and HB 1959 (Toscano, D-Charlottesville), which will require the president or governing board of each public institution of higher education to include in their six-year plan the following information for the prior fiscal year: (i) the assignment during the year of any intellectual property interests to a person or entity with a physical presence in Virginia by the institution, any foundation supporting the intellectual property research performed by the institution, or any entity affiliated with the institution; (ii) the value of externally sponsored research funds received during the year from a person or entity with a physical presence in Virginia and (iii) the number and types of patents awarded during the year that were developed in whole or part from externally sponsored research provided by a person or entity with a physical presence in Virginia.

NVTC's Public Policy Advocacy Team included NVTC Vice President of Policy Josh Levi, NVTC Public Policy Manager Troy Murphy, and Myles Louria, Senior Director of Governmental Affairs of Hunton & Williams LLP. NVTC's public policy advocacy was supplemented by strong participation from NVTC technology executives and other leaders with many NVTC members providing ongoing advice and feedback.

Information Technology Projects and Services in the Commonwealth

The General Assembly approved HB 2323 which clarifies responsibilities related to information technology in the Commonwealth. The bill provides the Chief Information Officer (CIO) with the authority to approve and make decisions related to information technology projects, procurements, and standards without requiring the routine approval of the Secretary of Technology. The bill provides that the Secretary of Technology is responsible for overseeing enterprise information technology projects and communicating regularly with the Governor and other Secretaries regarding information technology services, initiatives, and investments in the Commonwealth. The bill also requires that agency and department heads follow policies and procedures put in place by the CIO regarding the security of government information and establishes requirements ensuring that procurement provisions are followed regarding the purchase of information technology.