2015 Legislative Session in Richmond Reaches Halfway Mark

Tuesday, Feb. 10 marks crossover at the General Assembly, the deadline for each chamber to act on its own bills. Crossover not only marks the mid-point of the legislative session, but also gives a clear look at legislation that was approved by at least one chamber as well as legislation that will not move forward this session.

Both the House and Senate have presented their amendments to Virginia's biennial budget, formally beginning the process by which both chambers negotiate and compromise on spending priorities. The deadline for each chamber to pass its version of the budget is Feb. 12. The 46 day session is scheduled to conclude on Feb. 28.

Specific legislation of interest to Northern Virginia's technology community includes:

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 currently expires in June 2015. NVTC is strongly supporting SB 904 (McDougle, R-Mechanicsville) and HB 1741 (Hugo, R-Centreville), which will extend the capital gains exemption until 2020. Governor McAuliffe has made this legislation a priority. SB 904 has been approved by the Senate and HB 1741 has been approved by the House.
Veterans Employment Legislation

NVTC has spent the past several months working with Admiral John Harvey, Virginia Secretary of Veterans Affairs and Homeland Security, to develop a new Veterans Employment Performance Grant incentive that encourages businesses with fewer than 300 employees to hire recent veterans returning to Virginia. 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) would provide $1,000 for each veteran hired and employed for at least 12 months by a qualified company. While SB 950 was approved by the Senate, HB 1577 was substituted in the House for language in the budget establishing a pilot program which would provide $500 for each veteran hired by businesses with fewer than 250 employees.

NVTC supports SB 1335 (Cosgrove, R-Chesapeake; Dance, D-Petersburg and Stosch, R-Glen Allen) and HB 2354 (Yancey, R-Newport News) which 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. SB 1335 has been approved by the Senate; HB 2354 has been approved by the House.
Data Center Legislation

NVTC opposed HB 1708 (Marshall, R-Manassas) which would have dealt with a specific local 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.

SB 1142 (McDougle, R-Mechanicsville) and HB 2162 (Hugo, R-Centreville) provide an incentive to 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 1142 was approved by the Senate; HB 2162 was approved by the House.

SB 1141 (McDougle, R-Mechanicsville) and HB 2160 (Hugo, R-Centreville) would have removed the June 30, 2020, sunset date for the sales and use 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 and use 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.
Energy Legislation

While the cost of solar energy has decreased over time, it is still more expensive than traditional fossil generation facilities. NVTC supports HB 2237 (Yancey, R-Newport News) which helps 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. HB 2237 was approved by the House.

SB 1349 (Wagner, R-Virginia Beach) 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. EPA's proposed Clean Power Plan, which mandates new state-specific carbon emission reductions. This 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 would not increase during this period and the legislation also would 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 would 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. SB 1349 was approved by the Senate and now advances to the House of Delegates.
Decedent Email and Social Media Accounts

SB 1452 (Chafin, R-Russell County) and HB 1477 (Leftwich, R-Chesapeake) sought to create a Uniform Fiduciary Access to Digital Assets Act 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) provides 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 was defeated in the Senate Courts of Justice Committee; HB 1477 was defeated in the House Courts of Justice Committee.

As an alternative, NVTC supports SB 1450 (Obenshain, R-Harrisonburg) 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" and "From" information from a decedents e-mail 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. This legislation, which was crafted by the technology industry, the NetChoice coalition and privacy advocates including the ACLU, protects the content of electronic communications and is consistent with federal privacy laws and service providers' terms of service agreements and privacy policies. SB 1450 was approved by the Senate.
Unmanned Aerial Vehicles/Systems (UAVs/UAS)

SB 937 (Wexton, D-Leesburg) and HB 2017 (Surovell, D-Fairfax) 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. HB 2017 was rejected by the House Courts of Justice 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 is set to expire in July of this year and NVTC believes 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. It is unlikely the Virginia legislature will allow the moratorium to expire this year unless legislation is enacted to provide a regulatory framework for public sector deployment of UAV technology. SB 1301 (McEachin, D-Richmond) and HB 2125 (Cline, R-Amherst) 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. SB 1301 was approved in the Senate; HB 2125 was approved in the House.
Center for Innovative Technology (CIT)

SB 1385 (Vogel, R-Fauquier) and HB 1799 (Greason, R-Potomac Falls) amend CIT's governance statute by i) providing for rural representation on the Board that oversees CIT, iii) specifying budget-related information and program expenditures CIT must annually disclose to policymakers, and iii) authorizing CIT to create separate legal entities to facilitate private sector sponsorship of the MACH 37 Cybersecurity Accelerator and other CIT initiatives. SB 1385 was approved by the Senate; HB 1799 was approved by the House.
Digital Identity Credentialing

SB 814 (Watkins, R-Midlothian) and HB 1562 (Rust, R-Herndon) establish the legal foundation for identity verification and credentialing rules. The legislation creates a seven-member Identity Management Standards Advisory Council which consists 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 supports this legislation which will distinguish Virginia as a leader in this area. SB 814 has been approved by the Senate and HB 1562 has been approved by the House.
Sexual Orientation Discrimination

NVTC supports SB 785 (McEachin, D-Richmond) and HB 1643 (Villanueva, R-Virginia Beach) which would prohibit public sector discrimination on the basis of sexual orientation. 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. SB 785 passed the Senate on a 19-19 vote with Lieutenant Governor Ralph Northam breaking the tie. HB 1643 was defeated in the House General Laws subcommittee.
Workforce Development

SB 1209 (Wagner, R-Virginia Beach) and HB 1677 (Byron, R-Lynchburg) establish 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. SB 1209 was approved by the Senate; HB 1677 was defeated in a House Education Subcommittee.

SB 971 (Ruff, R-Clarksville) establishes 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.

NVTC supports 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. SB 1372 was approved by the Senate; HB 1986 was approved by the House.
State Procurement

NVTC, working with the Greater Richmond Technology Council, supports 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. SB 1226 was approved by the Senate.

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

SB 1206 (Wagner, R-Virginia Beach) and HB 1959 (Toscano, D-Charlottesville) 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. SB 1206 was approved by the Senate; HB 1959 was approved by the House.
Commonwealth Research Commercialization Fund (CRCF)

SB 1038 (Hanger, R-Mount Solon) 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. SB 1038 was approved by the Senate.
For a more in-depth look at the aforementioned legislation and additional bills of interest to NVTC's membership, please check out NVTC's bill tracking index.

The General Assembly is scheduled to adjourn on Saturday, February 28. The House will spend the remainder of the session deliberating on Senate bills, as the Senate does the same with House bills.

Stay Connected with NVTC's Advocacy Team in Richmond

NVTC's public policy team is in Richmond for the duration of the session advocating for the needs of the Northern Virginia technology community and we welcome your feedback. Feel free to contact us at any time with questions, ideas or suggestions:

NVTC Vice President of Policy Josh Levi (jlevi@nvtc.org 703-904-7878 x214)

NVTC Public Policy Manager Troy Murphy (tmurphy@nvtc.org 703-904-7878 x 218)

Weekly legislative conference calls with the NVTC advocacy team will continue for the remainder of the session through Friday, February 27. Please send an email to Troy Murphy (tmurphy@nvtc.org) if you would like to receive notice and call-in information for NVTC's weekly conference calls.

For more information about NVTC's advocacy efforts, please visit us online at www.nvtc.org/advocacy and follow us on Twitter @NVTCTechPolitic.