Tyler Craddock
 
-  Chamber Tort Reform Package Steams Ahead. The Virginia Chamber recently presented its tort reform package to the Virginia Small Business Commission, a legislative commission tasked with examining issues that relate to the climate for small business in Virginia.

As you may recall, during the 2010 session, the Virginia Chamber advanced two proposals, HBs 309 and 310 by Delegate John O'Bannon and SBs 363 and 366 by Senator Harry Blevins.  The bills would have allowed depositions to be used in motions for summary judgment and motions to strike and would have provided for an offer of judgment process in state courts that is similar to that in federal courts. While those bills were not enacted, the two House bills were referred to the Small Business Commission for study and a possible recommendation.
 
The Chamber was blessed to have a strong team to testify in support of the bills. They included attorneys Jayne Pemberton of Sands Anderson, Richard Samet of Florence Gordon Brown and Joe Owen of Owen and Owens.
 
In the end, the Commission formed a workgroup to study the proposals and report back at the Commission's next meeting. Interestingly, when Commission member (and Delegate) Glenn Oder asked if it would be helpful for the supporters and opponents of the bills to meet and discuss their differences, the representative of the trial lawyers shook his head no, a move that Delegate Oder termed "disappointing," and one that shows just how strongly the trial lawyers will oppose even modest changes that would be helpful to Virginia's continued economic prosperity.

So that you can be informed, we encourage you to take a look at those who support the proposals and those who oppose them:

Support:

●      American Insurance Association
●      Arlington Chamber of Commerce
●      Bon Secours Virginia Health System
●      Chesterfield County Chamber of Commerce
●      Cox Communications of Virginia
●      Former Attorney General Anthony Troy
●      Lake Anna Chamber of Commerce
●      Loudoun County Chamber of Commerce
●      Mirant Mid-Atlantic, LLC
●      Norfolk Southern Corporation
●      Northrop Grumman Shipbuilding
●      The ILEX Group
●      Independent Insurance Agents of Virginia, Inc.
●      State Farm Insurance
●      Virginia Association of Defense Attorneys
●      Virginia Association of REALTORS®
●      Virginia Chamber of Commerce
●      Virginia Hospital and Healthcare Association
●      Virginia Manufacturers Association
 
Oppose:

●      Virginia Trial Lawyers Association

The fact that so many in the business community have lined up behind this proposal was not lost on at least one Commission member who commented on that very fact.

-  Virginia Chamber Small Business Committee Chair Shares Recommendations. Bob Archer, the chair of the Virginia Chamber's Small Business Committee, appeared before the Virginia Small Business Commission (he is also a member of the SBC) to share the Chamber's recommendations on how to improve the environment for small business in Virginia. You can review those recommendations by clicking here.

Cleaning Up the Chesapeake Bay - What It Means to Business

 
Last week, a General Assembly House committee held a special, almost rare summertime hearing.  The topic was the EPA's Chesapeake Bay TMDL (total maximum daily load) process.  We've discussed this issue before, but it bears some rehashing.   

No one questions that a TMDL for the Chesapeake Bay will mark an important milestone in Virginia's necessary efforts to restore the Bay.  However, it is also hard to overstate the potential effect that the TMDL process could have on the Virginia economy.

Essentially, the process involves the EPA setting the levels of three "pollutants" - phosphorus, nitrogen, and sediment - that Virginia can "discharge" into the Chesapeake Bay. Virginia is then required to impose enforceable regulations to meet these limits.  EPA imposed nutrient limits have the very real potential to become caps on business activities and economic growth.

Virginia Secretary of Natural Resources, Doug Domenech, dropped a bombshell on the Committee when he said, "I wish I could tell you that the Chesapeake Bay program is built on a system of transparent science and fairness.  But unfortunately at least part of the effort is based on outright horse-trading of pollution loads between the states, and an invitation to the EPA to get tough with Virginia and other Bay states to make us do things."

Lack of transparency and sound science combined with political horse trading and a desire to appear tough means that Virginia business likely will be required to pay more for measures that may be unworkable and unneeded.

I was also invited to testify at that hearing. Below are excerpts from my remarks that elaborate upon what EPA is doing and why it may result in more harm than good:

"Cleaning up the Bay is and well should be a priority for the EPA, Virginia, and [the business community].  The EPA, however, has set unrealistic deadlines for establishing the TMDL.  Even though the EPA itself is unable to keep to the schedule, it insists that Virginia and the other Bay states do so.  It was not until July 1 that EPA produced the draft allocation numbers for nitrogen and phosphorus and it will not be until August 15 that EPA will produce a draft allocation for sediment.  Yet EPA is demanding that states produce the first draft of their Watershed Implementation Plan (WIP) by September 1! 

Worse, we know that the draft allocation numbers are wrong.  The EPA's new model used to determine allocations is flawed ... because the model is flawed, the numbers produced using it will be wrong.  EPA proposes to deal with that issue as follows:  First, since the numbers are wrong, create a "temporary reserve" of 5 percent.  The state will create a contingency plan as part of their WIP to reduce depositions into the Bay by an additional 5 percent.  When EPA fixes the model and releases revised allocations in 2011, it will then decide whether the contingency plan needs to go into effect.  That assumes, of course, that the model is fixed on time - under present circumstances, that is a large assumption indeed.

It also assumes that the numbers can only go in one direction.  However, in the last year, Virginia's phosphorus allocation was significantly raised and then, on July 1, significantly lowered.  Where it will be after the model is repaired next year is anyone's guess.  If the allocations were to once again be raised, there is nothing in the EPA process that would allow Virginia's WIP to be amended to account for a higher allocation.
 
Having put in motion a process that we know will produce the wrong result, EPA has also been heavy handed in demanding that state WIPs contain "reasonable assurances" that they will meet the flawed targets.  EPA has made it clear that failure to provide reasonable assurance will result in adverse "consequences" for Virginia and other Bay jurisdictions.

For the Virginia TMDL ... process to be a success, it must at a minimum be thoughtful, contain necessary and cost-efficient measures, and it must represent the stable consensus of opinion of those who will live under its strictures for decades to come.  Also, once established, EPA must respect Virginia's TMDL and WIP.  Uing the permitting process as a means of effectively establishing tighter standards than required under the WIP or effectively creating lower allocations than set in the TMDL would be a serious breach of faith. It [is hard to see ]...how the process that EPA has imposed upon Virginia - a process long on flawed and tardy data but short on time for deliberation - can produce that result.  I am also sad to report that it appears EPA is already using the permit process in other states to circumvent the TMDL and WIP process.

...EPA [should act] ... to provide adequate time to produce a state WIP that is thoughtful, necessary and cost-effective, and representative of a stable consensus.  Let me emphasize here that the operative word is "adequate."  I am thinking in terms of months, not years...[T]hose of us on the Virginia side of the issue - stakeholders and policymakers alike - [should] wrest for ourselves as much control as possible.  We have a history in Virginia of working together to reach reasonable, necessary and cost effective environmental solutions.  Give enough latitude, there is no reason we cannot do so in this instance as well.  Sadly, we have been placed in a posture by the EPA that makes doing so very difficult."

Governor McDonnell Encourages Virginians to Take Advantage of Upcoming Sales Tax Holiday

Governor McDonnell recently reminded all of the state's fifth annual sales tax holiday on back-to-school items. The three-day sales tax holiday, which will occur August 6-8, is intended to relieve the financial burden on families preparing for their children to return to school.  It might even help the retailer in your community.    
 
The list of items exempt from the five percent state and local retail sales tax is the same as previous years and includes school supplies like notebooks, pencils, calculators, dictionaries, backpacks and lunchboxes priced at $20 or less each.  The tax is also waived on clothing and footwear items like jeans, shorts, dresses, raincoats, hats, sandals and sneakers priced at $100 or less each.  As long as each item qualifies, there is no limit on the quantity you can buy tax-free. And there is no requirement that the shopper be going back to school; these exemptions are available to everyone.

The complete lists of eligible items, sales tax holiday guidelines for consumers and retailers, and a list of frequently asked questions are available at www.tax.virginia.gov.  Click on the sales tax holiday logo under Announcements to go to the Sales Tax Holiday Information Center.
 
During the sales tax holiday period, retailers are also permitted to pay the sales tax themselves on any non-exempt item and pass the savings on to their customers.  It's a great time to shop. 
 
The August sales tax holiday was enacted unanimously by the 2006 General Assembly.  Virginia also holds an Energy Star and WaterSense Products Sales Tax Holiday in October, and a Hurricane Preparedness Sales Tax Holiday in May.
 
Have fun shopping. Spend a lot. 

While the United States grips with the devastating effects of a tragic offshore oil spill, states on the Atlantic coast are turning their focus toward the development of a different kind of energy off of their own shores. 
 
Offshore wind energy has the potential to provide 900,000 megawatts of power, an amount nearly equal to the United States' current total installed electric capacity.  Until recently, this energy source was largely ignored.  Now, the question is not whether offshore wind energy is going to be developed, but rather, where it will be developed, and more importantly, which states are going to manufacture and transport all of the equipment associated with it. 

Despite technological, economic, and regulatory challenges, the offshore wind industry received a strong boost when the U.S. Department of the Interior approved the nation's first offshore wind farm, Cape Wind, off the coast of Massachusetts.  Before Cape Wind, the system for regulating and leasing offshore wind projects was nonexistent.  Now it is clear that the Minerals Management Service ("MMS"), the same bureau within the U.S. Department of the Interior that leases offshore oil and gas projects, has exclusive jurisdiction over offshore renewable energy projects. 
 
Last year, the MMS issued a final rule establishing a program for issuing leases, right-of-way grants, and right-of-use and easement grants for renewable energy production on the outer continental shelf.  The rule provides a roadmap for the development of offshore wind. 
 
In December, the MMS established a Virginia Task Force to communicate and disseminate information to state and local government officials.  Pursuant to its leasing program, the MMS could publish a formal request for interest in commercial wind energy leasing off the coast of Virginia as early as this summer. 

The benefits of a thriving offshore wind energy industry could be substantial for Virginia.  This past April, the Virginia Coastal Energy Research Consortium ("VCERC"), an entity funded by the Commonwealth, published its Virginia Offshore Wind Studies Final Report.  In the report, the VCERC identified 25 lease blocks off the coast of Virginia that could generate up to 3,200 megawatts of energy and create up to 11,600 jobs within 20 years.  Virginia is also uniquely situated as an ideal hub for manufacturing and logistics thanks to Hampton Roads' natural, deep-water port.  Additionally, local shipyards are ready and able to build and/or convert vessels specifically for offshore projects.  Some estimate that the market opportunity, if the Commonwealth can lure manufacturers to Virginia, could be as much as $80 billion. Regardless of where the turbines are manufactured, the VCERC concluded that an initial 600 megawatt project would attract at least $403 million investment in the local economy. 
 
Aware of the potential economic opportunity, public and private entities within the Commonwealth are pressing forward with an aggressive plan.  Leading developers, logistics specialists, engineering firms, and shipyards have formed the Virginia Offshore

Wind Coalition ("VOW") to promote Virginia as a first rate home for wind energy related projects. 
 
This past session, VOW was the primary lobbying group in support of HB 389, which created the Virginia Offshore Wind Development Authority.  The Authority will facilitate, coordinate, and support the development of the offshore wind energy industry and associated supply chain vendors.  More recently, Governor McDonnell joined the governors of nine other states and the U.S. Department of the Interior to form the Atlantic Offshore Wind Energy Consortium. The Consortium pledged to work together to promote the development of wind energy off the Atlantic Coast. Interior Secretary Ken Salazar also announced the establishment of a new federal renewable energy office in Virginia to help states coordinate and expedite renewable energy projects off the Atlantic Coast. 

Virginia's efforts to tap into offshore wind energy have gone relatively unnoticed-until now.  Still, the Commonwealth must strive to achieve more public and private support if it is to compete in the race to build projects and to lure manufacturers and supply chain vendors.  Entities like the VOW, which continues to draft promotional material for distribution to the wind energy industry, will go a long way toward capitalizing on the opportunities presented by offshore renewable energy. 
 
(Guest writer and Chamber member Michael P. Giordano is with the energy practice group at Vandeventer Black LLP in Norfolk, VA.  He is also the author of "Offshore Windfall: What Approval of the United States' First Offshore Wind Project Means for the Offshore Wind Energy Industry," 44 U. Rich. L. Rev. 1149 (2010).)

Virginia Congressional Luncheon Set for September 22