Legislative Update: Monday, July 25, 2022

Regular session for the 151^st General Assembly adjourned in the early hours of July 1. This session brought a large volume of legislation with problematic implications for the business community in our state. The session was characterized by intraparty tension between moderate and progressive Democrats, an abundance of revenue to appropriate, and issues such as gun control, reproductive health, recreational marijuana legalization, climate change mitigation, and the highest volume of bills dealing with labor and employment in memory.  Republicans, who are in the minority in both houses played a role in stopping or amending a number of problematic bills.
 
All 62 seats are on the ballot in November in redrawn districts (based on the results of the decennial census). There are several primary races involving open seats, as well as primary challenges to a handful of incumbents. The filing deadline to run in the coming primary and general elections was July 12 (A political party can still appoint a candidate; but that is rare.) Joe Fitzgerald is working on a briefing memo on the coming election, which will be updated during the cycle, for more information, contact Joe at (302) 294-2060 or fitzgeraldj@ncccc.com.
 
The State Budget:
 
Allocations to the Chamber/EEC
 
The New Castle County Chamber of Commerce and the Chamber’s Emerging Enterprise Center secured the following allocations for FY 2023:
 

• Operating Budget Funding (SB 250):                                $250,000
• Capital Budget (CRF grant, HB 475):                               $210,000
• Grant-in-Aid Budget (SB 252):                                        $  50,000

• SB 250 - FY23 Budget Bill, the state operating budget amounts to roughly $5.1 billion. It represents a 6.9% increase (roughly $400 million) in spending over the FY 2022 budget (which expired on July 1).
   
• SB 251 - FY23 One-Time Supplement Bill: Though there was a consistent and growing structural surplus, consistent with the Carney Administration’s caution regarding building new ongoing costs in the base of the budget, a substantial number of one-time funding priorities were addressed in this $378.6 million one-time supplemental spending bill.
   
• HB 475 - FY23 Bond Bill: The capital budget, at $1.4 billion, was the largest in Delaware history. Some highlights follow:

• $331.4 million in state transportation allocations to complete road projects statewide, including additional funds to address the roads in the poorest condition.
• $285.2 million for school construction projects in the Appoquinimink, Brandywine, Caesar Rodney, Cape Henlopen, Capital, Christina, Colonial, Indian River, Milford, and Smyrna school districts, as well as funding for all three technical school districts Polytech, New Castle County Vo-Tech, and Sussex Tech school districts.
• $90 million in funding to the Community Reinvestment and Development Fund, with capital grants being allocated to nonprofit agencies and municipalities.

• SB 252 - FY23 Grants-In-Aid Bill $69.4 million was allocated for disbursement to nonprofit agencies and volunteer fire companies. Total appropriations in this bill are some $6 million higher than in 2022.

• Retailers Required to Accept Cash Payment, HB 299 w/ HA 2 (Cooke): This legislation would prohibit retailers from refusing to accept cash for in-person retail transactions. The Chamber successfully sought an amendment addressing a number of concerns about the bill, including a private right of action.  Chamber Position: Opposed prior to HA 2. Amendments (HA 2) sought successfully in House, so the Chamber’s position shifted to neutral Status: Passed Senate/awaiting action by the Governor. Note: In March, the NCC Chamber identified a number of concerns with the legislation in its original form and testified before the House Economic Development, Banking, Insurance & Commerce Committee to relate those concerns. The Chamber then worked with the sponsor and, based on member input, secured amending language. Representative Cooke was very willing to address practical concerns arising from the legislation (including a private right of action in the bill). The amendments subsequently passed the House as did the bill. The Chamber testified before the Senate Banking, Business & Insurance Committee on June 15 to thank Representative Cooke for working with us to address business concerns with an amendment, as well the Senate sponsor, Senator Jack Walsh (D-Stanton) for supporting the amendments. 
• Prohibiting surcharges on credit card purchases, HB 488 (Longhurst): This Act prohibits a seller from imposing a surcharge on a cardholder who elects to use a credit card in lieu of payment by cash, check, or similar means. Chamber Position: Opposed  Status: This legislation remains in the House Administration Committee (expired). This legislation was also introduced during the last few days of session. We heard from number of businesses and were advised that it could raise concerns for certain nonprofits. 
   
• Data Broker Legislation HB 262 w/ HA 1 and HA 2 (Griffiths): This bill would impose registration, fee and data privacy requirements on companies and nonprofits which collect data on 500 or more Delaware customers/consumers/clients and license or sell it to a third party.  Chamber Position: seeking amendments in the Senate, two amendments successfully sought in the House.  Status: Senate Banking, Business & Insurance Committee, tabled in committee on June 8/Expired Note: The Chamber testified on the bill before the Senate Banking, Business & Insurance Committee on June 8. The Chamber worked to amend the bill in both the House and the Senate. While the exemption for entities regulated under Gramm-Leach-Bliley and for activities by companies directly engaged in aiding in fraud prevention were secured via House amendments, the Chamber still sought exemptions for entities regulated under the Health Insurance Portability and Accountability Act and the Fair Credit Reporting Act, as well as the elimination of the private right of action from the legislation. The GLBA, HIPAA and FCRA exemption efforts were based on the fact that entities covered under these federal statutes are already subject to substantial data privacy regulation. There were also concerns about the regulatory requirements vis-à-vis nonprofits and small businesses.
• Consumer Protection Fund Settlement Allocations, SB 260 (Gay): From synopsis: This Act increases the maximum amount of money the Department of Justice can keep in the Consumer Protection Fund at the end of each fiscal year from $3 million to $10 million. Increasing the retention cap from $3 million to $10 million will promote greater stability in funding the Division’s operations even during periods of volatility in the amount of money the Division brings in through its investigation and enforcement work, and will reduce the risk that the Division needs to seek funding for its critical operations out of General Fund appropriations. Increasing the retention cap will not affect ASF spending authorization for the Consumer Protection Fund, which will remain subject to the existing appropriations process.  Chamber Position: Monitoring.  Status: Released from House Judiciary Committee on June 22. Passed House/awaiting action by the Governor We are monitoring the bill’s effect as substantially larger funding outside of the regular appropriations process may allow for some legislation to pass without the fiscal impact being as much of a factor in its legislative prospects. While the Chamber recognizes the importance of a sound and properly resourced consumer protection framework in Code and at the Department of Justice, policy advocacy and negotiation are important to striking an appropriate balance and avoiding regulatory overreach and undue burdens on Delaware businesses.

• Delaware Climate Change Solutions Act, SB 305 (Hansen): This Act, known as the Delaware Climate Change Solutions Act, follows the issuance of Delaware’s Climate Action Plan in 2021, and establishes a statutory requirement of greenhouse gas emissions reductions over the medium and long term to mitigate the adverse effects of climate change due to anthropogenic greenhouse gas emissions on the State, establishing a mandatory and regularly updated plan to achieve those emissions reductions and develop resilience strategies for the State, and requires State agencies to address climate change in decision-making and rulemaking. Chamber Position: Opposed. Status: In House Natural Resources Committee. Failed to gain release from committee/Expired. Note: The NCC Chamber vigorously opposed the bill in the Senate and successfully led the effort in the House to defer of the bill to next year (152^nd General Assembly) in order to address substantial concerns regarding language delegating unprecedented authority to executive branch agencies without clear parameters governing the exercise thereof. The Chamber testified against the bill in the House Natural Resources Committee on Wednesday, June 29. This legislation was developed without any input from the business community and introduced without any discussion with business or organized labor. It was introduced on June 2, heard in committee on June 8 and considered by the Senate on June 9. The bill represented the most sweeping delegation of regulatory authority to state agencies in Delaware in recent memory and generated concerns throughout the business community and in executive suites in other parts of the country. Ultimately, the administration requested that the bill be deferred until next year to allow for deliberation and revision. The House Natural Resources Committee proceeded with a hearing nonetheless. The Chamber and others were able to secure enough votes to keep the bill in committee at its June 29^th hearing. This legislation will be rewritten in the coming months, leading to January. We will be closely monitoring developments and will be advocating for our members.
• Green Amendment, HB 220 (Wilson-Anton): This legislation would serve as the first leg of an amendment to Delaware’s Constitution which would create an “inherent, indefeasible and inalienable right to a clean and healthy environment, including water, air, soil, flora, fauna, ecosystems and climate, and to the preservation of the natural, cultural, scenic and healthful qualities of the environment.” Pennsylvania has a similar amendment in their constitution which the Pennsylvania Supreme Court has interpreted as having direct bearing on industry as well as development.  
  Chamber Position: Opposed. Status:  Tabled in the House Administration Committee on June 16/Expired Note: The NCC Chamber testified in opposition to the bill before the House Administration Committee on June 15. While the Chamber shares the sponsors goal of promoting a healthy ecosystem, and furthering public health through sound environmental policy, we respectfully submit that specific statutes and associated regulations tailored to advance those objectives provide clearer guidance, less litigation, and more measurable outcomes. The language in the legislation was rife with potential unintended consequences and would open the door to substantial litigation where business regulation is concerned.
• Environmental Permits in Overburdened Communities, House Bill 466 (Johnson):  This Act defines certain facilities which will require an applicant seeking a permit for a new facility, or expansion of an existing facility, or renewal of an existing permit, located in an overburdened community, as defined in the Act, to provide an environmental justice impact report. Facility includes the following commercial or industrial business: (1) Manufacturer of animal food, meat, seafood, tobacco, manufactured home, chemicals, pharmaceuticals, petroleum, asphalt, ready-mix concrete, primary metal, nonmetallic mineral products, ammunition or transport equipment; (2) pulp, paper, paperboard and sawmills; (3) rail or water freight dock; (4) landfill, transfer station, resource recovery, scrap metal or recycle center or compost operator; (5) sewage treatment center, animal waste processor or sludge processor; (6) commercial livestock and poultry growers; (7) medical waste incinerator (with the exception of those attendant to a hospital or university intended to process self-generated medical waste); and (8) commercial or industrial businesses not contained in (1)-(7) that currently contribute or upon permit approval would contribute to the cumulative pollution in an overburdened community, as identified by the Department in conjunction with the Environmental Justice Board. For all permit applications, the environmental justice impact report would be required at least 60 days before a required public hearing. Under the Act an “overburdened community” is defined as any census tract, as delineated in the most recent U.S. Census, in which one or more of the following applies: (1) 35% of the residents are below 185% of federal poverty level. (2) At least 25% or more identify as minority or member of a state or federally recognized tribal community or immigrant. (3) 25% or more have limited English proficiency as defined by U.S. Census Bureau. (4) Geographic locations that potentially experience harms and risks as determined by the Environmental Justice Board. The Department would be required to create and post on its website a list of “overburdened communities” and update the list every 2 years. The Act establishes the Environmental Justice Board to review and make recommendations on the environmental justice impact reports, conduct public hearings, and other measures to help the Department fulfill the purpose of this chapter. The public hearing on the permit would be required to provide an opportunity for meaningful public participation by the overburdened community. Following the public hearing the Secretary would be required to consider the recommendation of the Environmental Justice Board and the testimony presented at the public hearing. The Secretary could impose conditions to the permit that may be necessary to reduce the adverse impact to the public health or to the environment in the overburdened community. The Secretary would have the authority to deny a permit application in an overburdened community upon a finding that the cumulative impact imposed by the new or expanded facility would constitute an unreasonable risk to the health of the residents of the overburdened community or to the environment in that community. The Act requires the Department to establish rules and regulations to implement the Act, in consultation with the Environmental Justice Board, within 6 months after its enactment. Chamber Position: Under Review. Status: In House Natural Resources Committee (Expired).  Note:  The Chamber will be engaging in discussions regarding this legislation in the period leading up to the 152^nd General Assembly in January. The Chamber agrees that environmental justice is a valid concern and seeks to promote a dialogue and a process that benefits communities while maintaining an important source of well-paying jobs. Sustainable operation that benefits surrounding communities is a realistic and worthy goal.

• Temporary Entrance Permits HB 484 (Bush):  This legislation would provide for the issuance of temporary entrance permits for certain development projects: 

• Craft Training Requirements in Public Works Contracts, HB 487 (Longhurst): This bill was just introduced this afternoon (June 22) and assigned to the House Administration Committee.  An initial reading of the bill and consultation with pertinent Chamber members indicate that the legislation may generate concerns. The synopsis reads as follows:

• Sick and Safe Leave Legislation, HB 409 (Morrison): Representative Eric Morrison (D-Glasgow) has introduced legislation which would require all employers in the State to provide employees with a minimum of 1 hour of paid sick time and safety leave for every 30 hours worked. Chamber Position: Opposed     Status: The bill was tabled in the House Economic Development, Banking, Insurance & Commerce Committee. Note: The Chamber testified in opposition before the committee on Tuesday, June 21. The addition of another employer mandate in the current environment is not advisable. Additionally, there is civil liability language in the bill that raises serious concerns.  Not only did the bill include a private right of action, a provision we are seeing in too many bills these days, it also would have allowed the Department of Justice and the Department of Labor to legally represent private individuals in employment disputes/actions relating to the bill’s requirements. The Chamber opposes using taxpayer resources to take sides in private legal/contractual matters.
   

• Workforce Agreement Legislation, HB 435 (Lambert): The bill requires that all large public works construction projects, utilizing state funds, are to be governed by a Community Workforce Agreement with labor organizations engaged in the construction industry to provide structure and stability and promote efficient completion. Chamber Position: Opposed Status: In House Appropriations Committee/Expired Note: The Chamber testified before the House Labor Committee in opposition to this legislation on June 7. We were joined in opposition to the bill by other business organizations and the Carney Administration. The Chamber’s opposition is informed by concerns about the potential impact on women and minority owned enterprises in Delaware (though a stated objective of the legislation is to promote inclusion of these firms, the effect of the bill as written could work contrary that end), language excluding open shop contractors from bidding on large public projects, increased capital construction costs for taxpayers, and questions regarding the potential impact on private entities utilizing Health Care Authority or Economic Development Authority bonds to finance major capital projects. This is a project labor agreement bill by another name. It would increase the cost of capital construction for the State of Delaware and others, while driving even more capital construction work to out of state companies.
• “Wage Theft” SS 1 to SB 35 (Walsh): This bill would reproduce a definition of “independent contractor” (from the Workplace Fraud Act in Ch. 35) to create a new statute in Chapter 11 of Title 19 of the Delaware Code (Labor) which would levy civil and criminal penalties for violations. Supporters of the bill assert that it is intended to address the problem of employers misclassifying employees as independent contractors in order to avoid certain tax and regulatory obligations. Based on the advice of an employment law practitioner, it is our understanding that the bill would reach beyond that and impact businesses legitimately using the services of independent contractors.  The NCC Chamber offered detailed testimony on the original bill before the Senate Labor Committee in May. The original legislation had problematic implications for Delaware corporate entities. On the substitute, the Chamber sent a communication to the sponsor and all senators expressing opposition. 
  Chamber Position:  Opposed    Status: Passed House/awaiting action by the Governor. Note: The Chamber testified in opposition to the bill before the House Labor Committee on June 21. Though the substitute, as amended, is a substantial improvement over the original legislation which the Chamber opposed in testimony before the Senate Labor Committee in May. The Chamber’s continued opposition was based on concerns about the criminal penalties in the legislation and the potential for unintended consequences for entities using the services of independent contractors in good faith.  We will monitor developments with this new statutory language in order to gauge whether corrective legislation is required.
• Paid Family and Medical Leave SS 2 to SB 1 w/ HA 1 (McBride): Paid family and medical leave legislation, sponsored by Senator Sarah McBride (D-Wilmington), has passed both houses of the General Assembly and awaits signature by the governor. Governor Carney mentioned the bill in his January State of the State Address and signed the legislation in early May. Chamber Position:  Opposed.  Status: Signed by the Governor.  This legislation represents the most substantial change to labor and employment law in decades. A summary of the bill, developed by the Chamber is available. For legal or regulatory advice on how to administer the bill’s requirements, we strongly recommend that employers consult with competent professionals. The summary does not constitute legal or regulatory advice.
• Failure to Pay Wages SS 1 to SB 208, w/ SA 1 (Walsh):  This legislation seeks to clarify that an employer is liable for liquidated damages if the employer does not make wages available on the next payday after the end of employment. There is disagreement among employment law practitioners about the effect of the bill. Based on expert member input, we read the legislation as removing an employer’s good faith defense in a wage action. Chamber Position: Opposed  Status: Passed House/awaiting action by the Governor Note:  The NCC Chamber testified against this bill in its original form before the Senate Labor Committee on January 27.  The Chamber testified before the House Labor Committee in opposition to the bill in its current form on April 12. This is another bill where we will be monitoring developments with its implementation.

• Paid Time Off to Vote HS 1 to HB 288 (Morrison): This bill would require private and public employers in the State to give any employee who is a resident of Delaware and scheduled to work at least 7.5 hours on an election day 2 hours of paid leave in order for the employee to exercise the right to vote in person.  Chamber Position: Opposed     Status: The bill remained in the House Administration Committee (expired) The legislation was broadly written, applied to general, primary, school board elections and referenda, and municipal elections. It also lacked any requirement that an employee voted, etc. It is also another example of proposed regulatory burdens which would impact employers. Additionally, with absentee, mail-in, and early voting, and the fact that the polls are open between 7 a.m. – 8 p.m. on primary and general election days, there are ample opportunities for Delawareans to vote without creating a new personnel requirement for businesses.
• Delaware EARNS Act, House Bill 205 w/ HA 3 (Lambert): This legislation would create a state-administered retirement savings program to which employees, regardless of sector, could contribute via payroll deductions. It would also create a board to administer the program. Chamber Position: Opposed     Status: Passed Senate on June 21, awaiting action by the governor. Note: The Chamber testified in opposition to the bill before the Senate Labor Committee on June 14. The Chamber views the legislation as creating unnecessary competition with the private sector on the part of state government. In other states, such programs have in may cases proven to be undersubscribed.

• CSA and Liability for Employers, HB 277 w/ HA 1 (Lynn): The bill, as originally written, would have resulted in vicarious liability for businesses, schools, and other entities which provide services that are “specifically targeted to or primarily used by children, where an employee, volunteer, or other agent of the entity engaged in an act or acts of child sexual abuse. The bill was so broadly written that it could have taken in a substantial portion of the retail, food service, social services nonprofit, health care and educational sectors. No provision was set forth in the bill to provide an affirmative defense where background checks had been undertaken, where no criminal history existed, or where policies and procedures were in place. The elements establishing grounds for liability were broad enough to include contexts and acts that would be well beyond an employer’s ability to control. The sponsor introduced House Amendment 1 (which is now a part of the bill) which narrowed the scope of the legislation to public schools and changes the standard of culpability for public schools from “gross negligence” to “negligence”, waiving their claim to limited immunity. Chamber Position: Neutral after adoption of HA 1. Status:  Passed the Senate, awaiting action by the Governor. House Amendment 1 removed private employers from the bill. The original language would have exposed numerous businesses to civil liability for circumstances beyond their control.  While this is a critically important issue area, such legislation needs to be tailored to avoid unintended consequences. In this case, the amendment did that.
• DRAFT Electric Car Charging/Residential Construction Legislation (McBride): Senator Sarah McBride is planning to introduce legislation which would mandate inclusion of an electric charging conduit for every new single-family home or townhome for new residential construction.  There would be certain requirements where apartments complexes/ and other multi-family housing construction is concerned. It would add to the cost of housing. The draft contains a private right of action which would allow legal action against homebuilders and others if new construction does not include an electric charging conduit. There would be an additional penalty of $5000 for each violation, plus attorney’s fees and actual damages.  Chamber Position: Under review/opposition likely unless amended Status: Introduction pending. We anticipate this bill’s introduction in some form in the 152^nd General Assembly. We will monitor developments and would oppose a private right of action.

• New Castle County 2022 Comprehensive Development Plan Update, Ordinance #22-024
  • In January of this year, in coordination with our colleagues at the Committee of 100, the Chamber submitted extensive written comments on the DRAFT 2022 New Castle County Comprehensive Development Plan.
     
  • On Tuesday, May 3, the Chamber offered testimony on the ordinance before the New Castle County Planning Board. The NCC Chamber submitted a joint letter with the Committee of 100. Among the Chamber’s chief concerns is language regarding rezoning parcels zoned for heavy industry, and the need for action to make infill development and redevelopment more cost effective and practical.
     
  • On Monday, July 19, the Chamber, along with the Committee of 100, participated in a call with the NCC director of Land Use, and some of his staff. On Tuesday, July 20, the Chamber testified before the New Castle County Council Land Use Committee to relate the concerns shared at the May Planning Board. The Chamber will reiterate those concerns at the Tuesday, July 25 meeting of County Council.
     

• Ordinance #22-091: This legislation would amend the New Castle County Building Code to require that commercial construction of 50,000 or more square feet to have roofs designed to accommodate a solar array. Along with the Committee of 100, the Chamber sought to have the ordinance deferred for discussion among the engineering, energy, construction, legal and other pertinent stakeholders in the business community. The ordinance was deferred at Council’s July 12 meeting. We participated in a meeting on Friday, July 22 with the Land Use Department, Councilwoman Durham and Councilman Carter which was attended by the Committee of 100, the Delaware Contractors Association, and a number of subject matter experts from the business community. Proposed amendments are due to the sponsor(s) by Wednesday of this week. Status: Amendments under consideration.

• City of Wilmington Predictive Scheduling Ordinance: Wilmington City Councilmember Shane Darby has introduced legislation which would require retail, hospitality, and food service establishments with 250 or more employees to provide advance notice of their work schedules, compensation for late changes to their schedules, rest between shifts, and first-right of refusal for additional work shifts. Chamber Position:   Opposed.  Status: Awaiting introduction, first and second reading, and consideration by Wilmington City Council Finance Committee.