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Wrap Up:
2015 West Virginia Regular Session
As legislators and lobbyists catch up on their sleep, it is time to take a look back at the Session that was with this summary of bills that were – and are – of particular interest to our business clients and friends across the state, region and nation.
The West Virginia Legislature passed 261 bills during the 2015 Regular Session: 126 House bills and 135 Senate bills. This is a higher number of bills passed than in recent years, during which the number averaged under 200.
Budget Overview
Governor Tomblin has signed into law the 2015-2016 budget. This is the third of three very tough budgets for the State of West Virginia. These difficult budget years were long anticipated, and have witnessed expenditure reductions for many state agencies, boards and commissions in recent years.
Next year the state's budget picture improves considerably. Fiscal year 2015-16 will be the final year in which the State will have to commit $350 million annually to pay off a $3 billion unfunded liability for Workers' Compensation benefits which had accrued over several decades.
Paying off this unfunded liability represents a huge accomplishment for the State of West Virginia, and is the result of the work of several successive Governors and Legislatures – Democrat and Republican – over the past many years. Hats off to Governor Tomblin and all of our elected leaders for getting West Virginia's fiscal house in order!
The 2015-16 budget passed by the Legislature contemplates general revenue fund expenditures of $4.296 billion. Governor Tomblin exercised his line-item veto power to reduce expenditures authorized in the legislative budget by more than $11 million. Reductions were made in a number of areas, including healthcare, higher education and special projects.
In addition to general revenue fund appropriations, there are many federal funds and special revenue accounts that support the operation of state government and state programs. The total operating budget for state government in 2015-16 is $22.68 billion.
The original budget proposed by Governor Tomblin at the beginning of the 2015 Regular Session contemplated tapping the state's Rainy Day Fund to the tune of almost $69 million. Due to the strong investment performance of West Virginia's long term pension and other assets, which are managed by the West Virginia Investment Management Board, on two occasions during the Legislative Session Governor Tomblin lowered the estimated amount of funds needed to fund such pension programs on an actuarial basis. The success of the Investment Management Board represents another huge, long-term success for the State of West Virginia.
In the end, only $14.8 million will be drawn from the Rainy Day Fund, leaving some $840 million in the Fund for future contingencies. This amount places West Virginia in a very enviable financial position among the states, with a strong AA+ credit rating and the fourth largest rainy day fund in the nation (measured by the amount of days cash on hand to operate state government).
Energy
Energy was a major focus of the 2015 Legislature. HB 2001, repealing the Alternative and Renewable Energy Portfolio Act, was one of the first bills passed by the Legislature and signed into law by Governor Tomblin. The Act required investor-owned utilities with more than 30,000 customers to supply 25% of retail electric sales from eligible alternative and renewable energy sources by 2025, with interim targets of 10% by 2015 and 15% by 2020.
The Coal Jobs and Safety Act, SB 357, changing several aspects of mining regulation, passed both houses by a wide margin and was signed by the Governor. The bill modernizes the state's mining laws, and brings them more in line with federal laws.
One of the most significant and contentious bills of the Session – SB 423 (amendments to Aboveground Storage Tank legislation of 2014) – made it across the goal line at the end of the Session. This bill addresses and corrects certain unintended consequences of the AST bill passed in 2014. The oil and gas industry, manufacturers, farmers, municipalities and many other groups and organizations worked night and day for the past few months to craft and secure passage of SB 423. This legislation will create a more balanced and thoughtful system of regulation of ASTs across the state (which number in the tens of thousands, and which contain everything from water to hazardous chemicals).
An important bill that was expected to pass – HB 2688 (unitization of oil and gas tracts), which required only 80% of the mineral rights in a unit to be leased in order to "force" the other 20% into the unit – died late on the last night of Session on a 49-49 vote in the House of Delegates, after being passed in amended form in the Senate 24-10 earlier in the week. HB 2688 had passed the House earlier in the Session by a vote of 60-40.
Persistent active lobbying by opponents of HB 2688 during the final two weeks of the Session apparently led to the bill's demise. HB 2688 is a critically important bill to the oil and gas industry, and indeed to many industries and economic development opportunities across the state. Continued efforts to pass the bill – either in a future special session or in next year's regular session – can be expected. Stay tuned.
Education
On the education front, two of the three major bills sought to be advanced by the new legislative leadership team ultimately died – SB 14 (charter schools) and HB 2934 (repeal of Common Core standards in public education). One of the major bills favored by the new leadership team did pass, HB 2005 (alternative means of teacher certification). Of the three bills, there was far and away more business community support for, and agreement on, HB 2005 than either SB 14 or HB 2934.
SB 14 passed the Senate a couple weeks before the end of the Session on a vote of 18-16, on strict party lines. As passed by the Senate, SB 14 included many restrictions and procedural requirements on the formation of charter schools, and some observers questioned how many schools might actually be chartered under the rigorous requirements of the amended bill. The bill was never taken up in the House.
HB 2934 passed the House by a wide margin (75-19), but never gained much traction in the Senate. Even as the bill was being received by the Senate, members of the Senate leadership team publicly commented that they did not believe there was support in the Senate to pass the bill. Ultimately, the Senate passed a very watered down version of the bill, essentially requiring certain actions by the State Board of Education to formally receive and respond to complaints about Common Core standards, and revisiting the question of possibly eliminating the standards in two years. The revised bill that passed the Senate was not acted upon by the House, and died.
Labor and Employment
Arguably one of the most significant bills of the Session was SB 361 (prevailing wage), which has been signed into law by Governor Tomblin. SB 361 transfers responsibility for administration of the program and calculation of the prevailing wage from the Division of Labor to WorkForce West Virginia, with prevailing wages to be calculated by outside, independent experts (at WVU and Marshall). Additionally, projects under $500,000 are exempted from prevailing wage requirements altogether.
Estimates performed over time suggest that, as a result of this legislation, scarce State dollars will go at least 30% further on State-funded capital projects. Future projects will see an estimated $1.30 or more, as compared to each dollar historically spent by the State, with the State still paying very good, prevailing wages to workers on these projects.
SB 12 (amendments to Wage Payment and Collection Act) passed the Legislature on the last day of Session, and is expected to be signed by the Governor. This bill provides employers a more reasonable time frame in which to pay departing employees (no later than next regular payday following departure), and reduces the penalties for noncompliance.
SB 318 (providing that employees shall be paid at least twice per month; current law requires payment at least every two weeks) also passed the Legislature on the last day of Session and has been signed by Governor Tomblin.
In addition, SB 344 (creating limitations on front pay and back pay) passed the Legislature and has been signed by the Governor. This bill imposes an affirmative duty on employees to mitigate damages for past and future losses in all employment law litigation.
HB 2011 (deliberate intent) passed on the last day of the Session. HB 2011 significantly tightens the "deliberate intent" exception to employer immunity under West Virginia's workers' compensation law, imposing more rigorous standards for actions against employers by employees alleging intentional harm as a result of a workplace condition. The bill is presently awaiting action by the Governor.
Legal Reform Bills
A bill which fundamentally changes and improves the West Virginia tort system, HB 2002 (comparative fault), was signed into law a few weeks ago by Governor Tomblin. This bill provides that defendants are liable only for the share of damages a jury decides is their fault. This is major change from West Virginia's current system of joint and several liability, under which every defendant is responsible for the entire judgment amount, regardless of degree of fault or responsibility assigned to the defendant by the jury.
SB 3 (premises liability) has been signed into law by Governor Tomblin. SB 3 codifies existing common law, that a property owner may not be held liable for injury to, or death of, a trespasser.
SB 6 (Medical Professional Liability Act) clarifies and updates legislation enacted in 2001 and 2003, which established liability protections for health care professionals. The bill, having been previously vetoed by the Governor on technical grounds and corrected by the Legislature, was recently signed into law by Governor Tomblin. SB 6 was the major initiative in 2015 of all health care provider groups – doctors, hospitals, EMTs, pharmacists and many others.
SB 13 ("open and obvious" doctrine) has been signed into law by Governor Tomblin. This bill restores the "open and obvious" doctrine to West Virginia jurisprudence, overturning a recent West Virginia Supreme Court decision which itself overturned decades of precedent.
A very significant bill, SB 421 (punitive damages) was passed by the Legislature late in the Session, and has been signed by Governor Tomblin. This bill modifies current common law standards in West Virginia, and limits punitive damage awards to four times compensatory damages or $500,000, whichever is greater. Recent and relevant West Virginia Supreme Court decisions had indicated that a punitive damage award of six to seven times compensatory damages was reasonable and enforceable. Accordingly, SB 421 represents a meaningful lowering of the maximum exposure of defendants to punitive damage awards.
Another noteworthy bill from the 2015 Session is HB 2010 (nonpartisan election of judges). HB 2010 was vetoed by Governor Tomblin due to technical error, was re-passed by the Legislature during the last week of Session, and signed by Governor Tomblin. Previously, West Virginia was one of a handful of states that held partisan elections for judges. HB 2010 makes all judicial elections non-partisan.
SB 37 (Revised Uniform Arbitration Act) was passed by the Legislature on the last night of the Session, and has been signed into law by Governor Tomblin. This bill creates a more modern, appropriate and effective arbitration process.
Banking
A bill to address the Sostaric v. Marshall decision, handed down in November by the West Virginia Supreme Court of Appeals (SB 418, relating to calculation and recovery of the deficiency remaining after a deed of trust foreclosure), passed the Legislature and has been signed into law by Governor Tomblin. The bill provides that, in an action by a lender to recover a deficiency balance remaining after a trustee's sale (foreclosure), the borrower may not assert as a defense that the fair market value of the property sold was not obtained at the foreclosure sale.
SB 542 (reforms to the debt collection provisions of the West Virginia Consumer Credit and Protection Act, and to actions for damages and penalties thereunder) passed the House (61-34) on the final afternoon of the Session. Later that night, when the Senate concurred in technical amendments to the bill made by the House, its legislative journey was completed. SB 542 is awaiting signature by Governor Tomblin.
SB 542 establishes standards that define abusive and oppressive collection efforts; defines exactly how a bank creditor is to be notified by a consumer that he/she is represented by an attorney as to that debt, and gives banks 72 hours thereafter to stop collection calls to the consumer; doubles the present cap on late payment fees (from $15 to $30); reduces damages for a debt collection violation to $1,000 per violation, and caps the total aggregate damages at the greater of $175,000 or the total outstanding indebtedness; establishes a statute of limitations of four years from the violation; and provides that suits generally must be brought in the county in which the consumer resides, or where the bank lender has its principal place of business.
SB 403 (expanding the term of validity of a lien attaching to a titled motor vehicle from 10 years to 15 years, and of a renewal of such a lien from 2 years to 5 years) passed the House (99-0) two days before adjournment and has been signed into law by Governor Tomblin.
SB 545 (Reg O; exempting overdrafts by bank directors and executives from the definition of extension of credit, so that a board resolution is not required) completed its legislative journey four days prior to adjournment and has also been signed by the Governor.
HB 2926 (installment deferral fees and loan modification fees) was the last bill reported out of the Senate Finance Committee, early on the 59th day of the Session. The bill, which authorizes banks to charge a consumer loan modification fee of the greater of $250, or one percent of the outstanding balance of the loan, passed on the last day of Session and is awaiting Governor Tomblin's signature.
SB 283 (simplifying the process by which a bank may adjust the hours of operation of bank offices and shortening the period of review for new branch applications) has been signed by the Governor, and HB 2461 (granting certain priority to the FHLB of Pittsburgh, in connection with advances made by the FHLB to member insurance companies domiciled in West Virginia) is awaiting the Governor's signature.
HB 2053 (permitting the recording of a memorandum of deed of trust, instead of the entire deed of trust) passed the Legislature the last week of the session, and has been signed by Governor Tomblin. The information to be contained in a memorandum of deed of trust is set out in the new statute.
HB 2914 (voluntary dissolution of Resort Area District) includes a provision that would cap the amount of special assessments made by the Snowshoe Mountain RAD, secured by a lien attaching to real property interests in the RAD, at a level satisfactory to bankers in the area. HB 2914 has been signed into law by Governor Tomblin.
HB 2879 (decreasing from 111% to 102% the collateral required to secure deposits by state and local government), passed the Senate (31-0) on March 5. Governor Tomblin signed HB 2879 into law on Friday, March 13.
All of the bills considered by the 2015 legislature can be found here.
The West Virginia Legislature will convene its 2016 Regular Session at 12:00 noon on Wednesday, January 6, 2016.
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