Journal of the Senate ______MONDAY, MAY 8, 2000 The Senate was called to order by the President. Devotional Exercises A moment of silence was observed in lieu of devotions. Pledge of Allegiance The President then led the members of the Senate in the Pledge of Allegiance. Message from the House A message was received from the House of Representatives by Mr. Bertrand, its Second Assistant Clerk, as follows: Mr. President: I am directed to inform the Senate the House has considered a bill originating in the Senate of the following title: S. 76. An act relating to the crime of hazing. And has passed the same in concurrence with proposal of amendment in the adoption of which the concurrence of the Senate is requested. The Governor has informed the House of Representatives that on the fifth day of May, 2000, he approved and signed bills originating in the House of the following titles: H. 598. An act designating the state song. H. 848. An act relating to zoning of registered or licensed family child care homes. H. 849. An act relating to penalties, dairy sheep, nonpoint source water pollution and large farm operations. Joint Resolution Placed on Calendar Joint Senate resolution of the following title was offered, read the first time and is as follows: By Senator Sears,

1037 Printed on 100% Recycled Paper 14 JOURNAL OF THE SENATE J.R.S. 108. Joint resolution designating December 15 of each year as Bill of Rights Day. Whereas, the first ten Amendments to the Constitution of the United States of America, known collectively as the Bill of Rights, were ratified on December 15, 1791, and Whereas, the Bill of Rights recognizes, affirms and protects fundamental human and civil rights for which persons of all races have struggled for thousands of years, and Whereas, to preserve the rights and freedoms secured by the Bill of Rights, our forefathers, and subsequently hundreds of thousands of men and women serving in the police agencies and armed forces of the United States, have sacrificed, suffered and died, and Whereas, the rights and freedoms guaranteed by the United States Bill of Rights deserve perennial celebration, and the sacrifices made to protect the Bill of Rights deserve eternal remembrance, and Whereas, in the state of Vermont, there has not been a special day designated to annually commemorate the ratification of the Bill of Rights, and Whereas, several of the original 13 states refused to ratify the United States Constitution without a commitment that an express Bill of Rights would be added, and Whereas, the commemoration of the Bill of Rights with a designated special day would honor the fundamental rights it enshrines, and the sacrifices made to create and preserve these rights, and Whereas, a designated Bill of Rights Day would annually proclaim these rights to the citizens of Vermont, to our nation and the entire world, now therefore be it RESOLVED BY THE SENATE AND HOUSE OF REPRESENTATIVES: That the General Assembly designates December 15 of each year, beginning in the year 2000, as Bill of Rights Day, and be it further RESOLVED: That all agencies and departments of state government and the public schools of Vermont are encouraged to commemorate this day in a manner that reflects the meaning and importance of each of the constitutional amendments contained in the Bill of Rights, and be it further RESOLVED: That the Secretary of State be directed to send a copy of this resolution to Secretary of Administration Kathy Hoyt, to Chief Justice Jeffrey Amestoy and to Commissioner of Education David Wolk. MONDAY, MAY 8, 2000 15 Thereupon, in the discretion of the Chair, under Rule 51, the joint resolution was placed on the Calendar for action the next legislative day. Joint Resolutions Placed on Calendar Joint resolution originating in the House of the following title was read the first time and is as follows: J.R.H. 263. Joint resolution congratulating the Burlington Seahorses 1999 Division II football champions. Whereas, the Burlington High School Football Seahorses suited up for their Division II Championship game against their rivals from across the municipal line, South Burlington, boasting an impressive 9-1 season record, and Whereas, co-captain and running back Nate Long immediately ignited the first of his five stupendous touchdown efforts as he personally gained 307 yards and concluded the season with an amazing grand total of 3,232 yards, the 10th highest ever recorded for a high school player, and Whereas, as a result of the Seahorses’ overpowering offensive performance, the gridiron men from the state’s largest city won the game by a score of 41- 14, and earned Burlington High School’s first football championship title in nearly three decades, and Whereas, an outstanding 31-yard touchdown pass by Mujahid Karim to co- captain Willie Kinley exemplified the high caliber of play that this historic squad, also consisting of co-captains Jason Daignault and Mike Alvanos, and team members Saeed Hammond, Bajro Pasic, Nick Thayer, Kestrel Linder, Derrick Brown, Husain Karim, Brian McMahon, Luke Collins, Ricky Beaudin, Vinnie Bassett, Ryan Kirby, Cory Walsh, Eric McMahon, Jay Cheeseman, David Barch, Michael Weiss, Jay Carmen, Travis Gokey, Jason Myers, Justin Bonilla, Chris Hubbard, Colin Barch, Chuck Cline, Steve Davison, Matt Smith, Ben Eley, Brian Anderson, Tom Walsh, Cory Loudon, Brendan Mahoney and Brian Monje, and supported by team managers Damien McGennis and Alex Hodgetts demonstrated throughout the contest, and Whereas, Head Coach Bob McCarthy, and his able assistant coaches Torry Allard, Shane Cheeseman, Wayne Courcy, Mike Interlandi, David Baldwin and Ryan Echo, provided superb guidance to these talented young athletes, now therefore be it RESOLVED BY THE SENATE AND HOUSE OF REPRESENTATIVES: That the General Assembly extends its congratulations to the Burlington High School Seahorses, the 1999 Division II Football Champions, and be it further

16 JOURNAL OF THE SENATE RESOLVED: That the Secretary of State be directed to send a copy of this resolution to Head Coach Bob McCarthy at Burlington High School. Thereupon, in the discretion of the President, under Rule 51, the joint resolution was placed on the Calendar for action the next legislative day. Joint resolution originating in the House of the following title was read the first time and is as follows: J.R.H. 264. Joint resolution commending the staff of the Sergeant-at-Arms and the Legislative Council for their extraordinary work performance during the 2000 legislative session. Whereas, the Office of the Sergeant-at-Arms is directed, pursuant to section 62 of Title 2 of the Vermont Statutes Annotated, to perform many important legislative duties, including the maintenance of order among spectators in the House and Senate chambers, scheduling the use of rooms for committee meetings, and other tasks assigned by the legislative leadership, and Whereas, pursuant to section 70 of Title 2 of the Vermont Statutes Annotated, the Capitol Police Department, which is under the jurisdiction of the Sergeant-at-Arms, is directed to keep the peace, and provide security within the State House and on its adjacent grounds, and Whereas, the unusually large crowds that have attended committee meetings and legislative sessions at the State House during the 2000 session, and the extraordinarily large amounts of traditional and electronic mail, and phone messages, that have inundated the office of the Sergeant-at-Arms, have all in combination placed unexpected pressures on the Sergeant-at-Arms and his relatively small staff, and Whereas, the professional and support staffs of the legislative council have been working under unusually hectic conditions, fielding many more inquiries and performing extra tasks at a level far exceeding a typical legislative session, and Whereas, despite these extraordinary and unprecedented circumstances, the Sergeant-at-Arms and legislative council staffs have performed their duties professionally, efficiently, and with good cheer, now therefore be it RESOLVED BY THE SENATE AND HOUSE OF REPRESENTATIVES: That the General Assembly commends the outstanding performance during the 2000 legislative session, especially during the third week of March, Sergeant-at-Arms Kermit Spaulding and his excellent staff, including Assistant Sergeant-at-Arms Jean Herring and primary office staffer Gerry Tousignant; Head Doorkeeper Cornelius Reed, and Assistant Doorkeepers MONDAY, MAY 8, 2000 17 Roger Lissor, James E. Ross and Teresa Randall; Capitol Police Chief David Janawicz and his very able assistants; day custodial staff Roger Bowley, Gus Gola, Sid MacRitchie, and night custodial staff Heidi L. Coon and Glenn M. Dixon who are employed through the Patton Janitorial Service; and last but hardly least, the 30 pages who have worked during the 2000 legislative session under circumstances unimagined by any of their predecessors, and be it further RESOLVED: That the General Assembly commends the extraordinary effort during this time put forth by Chief Counsel Bill Russell, Chief of Operations Claudette Marinelli, and professional and support staffs of the Legislative Council, and be it further RESOLVED: That the Clerk of the House shall prepare a copy of this resolution for display in the office of the Sergeant-at-Arms and the Legislative Council. Thereupon, in the discretion of the President, under Rule 51, the joint resolution was placed on the Calendar for action the next legislative day. Joint resolution originating in the House of the following title was read the first time and is as follows: J.R.H. 265. Joint resolution in memory of Harold B. Bensen. Whereas, Harold Bensen was a proud Vermonter by choice, and Whereas, after honorable service in the United States Army during World War II, Harold Bensen attended Rensselaer Polytechnical Institute and Siena College, and working around New England, in 1957 he permanently settled in Vermont, and Whereas, he embarked on a career that led to his assuming a leading role in the real estate industry both in Vermont and nationally, and Whereas, as a leading realtor, Harold Bensen was elected to the presidency of the Vermont Board of Realtors, was a member of the board of the National Association of Realtors for 18 years and was elected Vice President of that association, and Whereas, he was the first Vermonter to become a Certified Commercial Investment Member of the Realtors National Marketing Institute, and Whereas, Harold Bensen, when not acting in his vocational role, was active in the civic and political affairs of his hometown, South Burlington, and Whereas, in this avocational capacity, he served as a justice of the peace in South Burlington and chaired the South Burlington School Board, and

18 JOURNAL OF THE SENATE Whereas, Harold Bensen was an active member and chair of the South Burlington Republican Party, and Whereas, his community activities included two terms on the board of the former Medical Center Hospital of Vermont, and Whereas, Harold Bensen was a charter member and past president of the South Burlington Kiwanis Club, and Whereas, he was married to Eleanor Bensen and they were the parents of two sons, the Rev. Dr. Craig Bensen and Clark Bensen, and one daughter Charlene Sundheim, and the proud grandparents of six grandchildren, and Whereas, Harold Bensen will be fondly remembered by his many friends and colleagues in South Burlington, now therefore be it RESOLVED BY THE SENATE AND HOUSE OF REPRESENTATIVES: That the General Assembly extends its sincere sympathies to the family of the late Harold B. Bensen, and be it further RESOLVED: That the Secretary of State be directed to send a copy of this resolution to Eleanor Bensen in South Burlington. Thereupon, in the discretion of the President, under Rule 51, the joint resolution was placed on the Calendar for action the next legislative day. Joint resolution originating in the House of the following title was read the first time and is as follows: J.R.H. 266. Joint resolution congratulating Representative Marion Milne on her designation as the women’s caucus’ 2000 woman legislator of the year. Whereas, since 1921, when former Representative Edna Louisa Beard was sworn into office, the women members of the General Assembly have produced an indelible record of outstanding leadership, innovation and creativity, and Whereas, no woman member has so forthrightly and courageously served her constituents, and all the citizens of Vermont, than Representative Marion Milne, the member from Washington, and Whereas, Marion Milne proudly graduated from Goddard College at the ripe young age of 40 and commenced her career as the proprietress of the highly successful Milne-American Express Travel Agency, and Whereas, she could have had a full life between her business, her children and her grandchildren, and MONDAY, MAY 8, 2000 19 Whereas, always looking for new challenges, in 1994 she successfully stood for election to the House of Representatives from the legislative district encompassing her adopted home town of Washington and the other Orange County municipalities of Chelsea, Orange, Tunbridge, Vershire and Williamstown, and Whereas, she quickly emerged as a leader of the new legislative women’s caucus and one year sparked the fuse that helped to conclude a lingering closing session that appeared to have lost its path towards a timely adjournment, and Whereas, as a member of the Committee on Ways and Means, she has proven to be an effective and diligent colleague, and Whereas, most importantly, in the Well of the House, Marion Milne has eloquently implored the General Assembly to pay heed to those Vermonters most in need of a voice of their own, and Whereas, she truly speaks from her heart, ever conscientious of the British political theorist Edmund Burke’s edict that a legislator must perform her duties as she believes to be in the public’s best interest even if her legislative opinions and votes place her in the center of a controversy, and Whereas, in recognition of these many outstanding attributes, the legislative women’s caucus is designating Representative Marion Milne as its 2000 woman legislator of the year, now therefore be it RESOLVED BY THE SENATE AND HOUSE OF REPRESENTATIVES: That the General Assembly is pleased to congratulate Representative Marion Milne, the member from Washington, on her designation as the legislative women’s caucus’ 2000 woman legislator of the year, and be it further RESOLVED: That the Secretary of State be directed to send a copy of this resolution to Representative Marion Milne. Thereupon, in the discretion of the President, under Rule 51, the joint resolution was placed on the Calendar for action the next legislative day. House Proposal of Amendment Not Concurred In; Committee of Conference Requested; House proposal of amendment to Senate bill entitled: S. 76. An act relating to the crime of hazing. Was taken up.

20 JOURNAL OF THE SENATE The House proposes to the Senate to amend the bill by striking out all after the enacting clause and inserting in lieu thereof the following: Sec. 1. STATEMENT OF POLICY The general assembly has been made increasingly aware that harassment and hazing have become a major and pervasive problem within our schools, and that students who are continually filled with apprehension and anxiety are unable to learn and unlikely to succeed. Therefore, it is the policy of the state of Vermont that all Vermont educational institutions provide safe, orderly, civil and positive learning environments. Harassment, hazing and bullying have no place and will not be tolerated in Vermont schools. No Vermont student should feel threatened or be discriminated against while enrolled in a Vermont school. Sec. 2. 16 V.S.A. § 11(a)(30) is added to read: (30) “Hazing” means any act committed by a person, whether individually or in concert with others, against a student in connection with pledging, being initiated into, affiliating with, holding office in, or maintaining membership in any organization which is affiliated with an educational institution; and which is intended to have the effect of, or should reasonably be expected to have the effect of, humiliating, intimidating or demeaning the student or endangering the mental or physical health of a student. Hazing also includes soliciting, directing, aiding, or otherwise participating actively or passively in the above acts. Hazing may occur on or off the campus of an educational institution. Hazing shall not include any activity or conduct that furthers legitimate curricular, extracurricular, or military training program goals, provided that: (1) the goals are approved by the educational institution; and (2) the activity or conduct furthers the goals in a manner that is appropriate, contemplated by the educational institution, and normal and customary for similar programs at other educational institutions. The definitions of educational institution, organization, pledging, and student shall be the same as those in section 151 of this title. Sec. 3. 16 V.S.A. § 164 is amended to read: § 164. STATE BOARD, GENERAL POWERS AND DUTIES The state board shall have supervision over, and management of the department of education and the public school system, except as otherwise provided; and shall: * * * MONDAY, MAY 8, 2000 21 (17) Report annually on the condition of education statewide and on a school by school basis. The report shall include information on attainment of standards for student performance adopted under subdivision 164(9) of this section, number and types of complaints of harassment or hazing made pursuant to section 565 of this title and responses to the complaints, financial resources and expenditures, and community social indicators. The report shall be organized and presented in a way that is easily understandable by the general public and that enables each school to determine its strengths and weaknesses. The commissioner shall use the information in the report in determining whether students in each school are provided educational opportunities substantially equal to those provided in other schools pursuant to subsection 165(b) of this title. * * * Sec. 4. 16 V.S.A. § 165 is amended to read: § 165. STANDARDS OF QUALITY FOR PUBLIC SCHOOLS; EQUAL EDUCATIONAL OPPORTUNITIES (a) In order to carry out Vermont's policy that all Vermont children will be afforded educational opportunities which are substantially equal in quality, each Vermont public school, including each technical center, shall meet the following school quality standards: (1) The school shall, through a process including parents, teachers, students and community members, develop and, implement, and annually update a comprehensive action plan to improve student performance within the school. The plan shall include goals and objectives for improved student learning and educational strategies and activities to achieve their goals. The plan shall also address the effectiveness of efforts made since the previous action plan to ensure the school maintains a safe, orderly, civil and positive learning environment which is free from harassment, hazing and bullying. The school shall assess student performance under the plan using a method or methods of assessment developed under subdivision 164(9) of this title. * * * (8) The school maintains a safe, orderly, civil and positive learning environment, which is free from hazing, harassment and bullying, and based on sound instructional and classroom management practices and clear discipline policies that are consistently and effectively enforced. * * * (e) If the commissioner determines at any time that the failure of a school to meet the school quality standards listed in subsection (a) of this section is

22 JOURNAL OF THE SENATE severe or pervasive, potentially results in physical or emotional harm to students or significant deprivation of equal education opportunities, and the school has either unreasonably refused to remedy the problem or its efforts have proved ineffective, he or she may recommend to the state board one or more of the actions listed in subsection (b) of this section. The state board shall then follow the procedure of subsection (c) of this section. Sec. 5. 16 V.S.A. § 166(e) is amended to read: (e) The board of trustees of an independent school operating in Vermont shall adopt harassment and hazing prevention policies, establish procedures for dealing with harassment and hazing of students and provide notice of these as provided in . The provisions of section 565 of this title for public schools shall apply to this subsection, except that the board shall follow its own procedures for adopting policy. Sec. 6. 16 V.S.A. § 565 is amended to read: § 565. HARASSMENT POLICY AND HAZING PREVENTION POLICIES (a) It is the policy of the state of Vermont that all Vermont educational institutions provide safe, orderly, civil and positive learning environments. Harassment, hazing and bullying have no place and will not be tolerated in Vermont schools. No Vermont student should feel threatened or be discriminated against while enrolled in a Vermont school. (b) Each school board shall develop, adopt, ensure the enforcement of, and make available in the manner described under subdivision 563(1) of this title a harassment policy which includes harassment and hazing prevention policies which shall be at least as stringent as model policies developed by the commissioner. In this section, the definitions of educational institution, organization, pledging, and student shall be the same as those in section 151 of this title. (1) The harassment prevention policy shall include: (A) A statement prohibiting unlawful harassment of a student. (2)(B) The definition of harassment pursuant to subdivision 11(a)(26) of this title. (3)(C) Consequences and appropriate remedial action for staff or students who commit harassment. (D) A procedure that directs students and staff how to report violations and file complaints. MONDAY, MAY 8, 2000 23 (E) A procedure for investigating reports of violations and complaints. (F) A description of how the board will ensure that teachers and other staff members receive training in preventing, recognizing and responding to harassment. (2) The hazing prevention policy shall include: (A) A statement that hazing, as defined in subdivision 11(a)(30) of this title, is prohibited. (B) A procedure that directs students and staff how to report violations and file complaints. (C) A procedure for investigating reports of violations and complaints. (D) Circumstances under which hazing may be reported to a law enforcement agency. (E) Appropriate penalties or sanctions, or both, for violation of the hazing prevention policy. (F) A description of how the board will ensure that teachers and other staff members receive training in preventing, recognizing and responding to hazing. (b)(c) Each school district shall establish rules setting forth procedures for dealing with harassment and hazing of students. The rules shall which include: (1) Procedures for reporting harassment of students, including annual Annual designation of two or more people within the institution to receive complaints and a procedure for publicizing those people's availability. (2) A procedure for publicizing the availability of the Vermont human rights commission and the federal Department of Education's Office of Civil Rights and other appropriate state and federal agencies to receive complaints of harassment. (3) A statement that acts of retaliation for reporting of harassment or for cooperating in an investigation of harassment is unlawful pursuant to subdivision 4503(a)(5) of Title 9. (c)(d) The school board shall provide notice of the policy policies and procedures developed under this section to students, custodial parents or guardians of students, and staff members. Notice to students shall be in age- appropriate language and should include examples of harassment and hazing. At a minimum, this notice shall appear in any publication of the school district

24 JOURNAL OF THE SENATE that sets forth the comprehensive rules, procedures and standards of conduct for the school. The board shall use its discretion in developing and initiating age-appropriate programs to effectively inform students and staff about the substance of the policy and procedures in order to help prevent harassment, and hazing. The harassment policies and procedures shall be implemented by August 1, 1995. (d) For purposes of this section, staff means teachers, support staff, administrators, agents of the school, board members and unpaid volunteers. (e) The commissioner shall develop and, from time to time, update model harassment and hazing prevention policies. Sec. 7. 16 V.S.A. § 2182 is amended to read: § 2182. HARASSMENT POLICY AND HAZING PREVENTION POLICIES (a) The board of trustees of the Vermont state colleges shall adopt and ensure the enforcement of a policy which establishes that harassment as defined in section subdivision 11(a)(26) of this title is a form of unlawful discrimination and therefore prohibited. The board shall also require the establishment of procedures for the handling of complaints of discriminatory harassment and the initiation of educational programs designed to prevent such conduct. The policies and procedures shall be in effect by January 1, 1996. (b) The board of trustees of the Vermont state colleges shall adopt and ensure the enforcement of a policy prohibiting hazing which contains a definition of hazing that is at least as stringent as the definition contained in subdivision11(a)(30) of this title. The policy shall include appropriate penalties or sanctions, or both, for organizations which or individuals who engage in hazing; revocation or suspension of an organization’s permission to operate or exist within the institution’s purview if that organization knowingly permits, authorizes, or condones hazing; and clear delineation of circumstances under which hazing will be reported to a law enforcement agency. A summary of the policy shall be distributed to all students at least annually. Sec. 8. 16 V.S.A. § 2284 is amended to read: § 2284. HARASSMENT POLICY AND HAZING PREVENTION POLICIES (a) The board of trustees shall adopt and ensure the enforcement of a policy which establishes that harassment as defined in section subdivision 11(a)(26) of this title is a form of unlawful discrimination and therefore prohibited. The board shall also require the establishment of procedures for the handling of MONDAY, MAY 8, 2000 25 complaints of discriminatory harassment and the initiation of educational programs designed to prevent such conduct. The policies and procedures shall be in effect by January 1, 1996. (b) The board of trustees shall adopt and ensure the enforcement of a policy prohibiting hazing which contains a definition of hazing that is at least as stringent as the definition contained in subdivision 11(a)(30) of this title. The policy shall include appropriate penalties or sanctions, or both, for organizations which or individuals who engage in hazing; revocation or suspension of an organization’s permission to operate or exist within the institution’s purview if that organization knowingly permits, authorizes, or condones hazing; and clear delineation of circumstances under which hazing will be reported to a law enforcement agency. A summary of the policy shall be distributed to all students at least annually. Sec. 9. 16 V.S.A. chapter 1, subchapter 9 is added to read: Subchapter 9. Hazing § 151. DEFINITIONS As used in this subchapter: (1) “Educational institution” means a Vermont public or independent school, or a postsecondary school which offers or operates a program of college or professional education for credit or a degree in Vermont. (2) “Organization” means a fraternity, sorority, athletic team, association, corporation, order, society, corps, cooperative, club, or other similar group, whose members primarily are students at an educational institution, and which is affiliated with the educational institution. (3) “Pledging” means any action or activity related to becoming a member of an organization. (4) “Student” means any person who: (A) is registered in or in attendance at an educational institution; (B) has been accepted for admission at the educational institution where the hazing incident occurs; or (C) intends to attend an educational institution during any of its regular sessions after an official academic break. § 152. UNLAWFUL CONDUCT (a) For purposes of this subchapter, “hazing” means any intentional, knowing or reckless act committed by a student, whether individually or in concert with others, against another student:

26 JOURNAL OF THE SENATE (1) in connection with pledging, being initiated into, affiliating with, holding office in, or maintaining membership in any organization which is affiliated with the educational institution; and (2) which is intended to have the effect of, or should reasonably be expected to have the effect of, endangering the mental or physical health of the student. (b) Hazing shall not include any activity or conduct that furthers legitimate curricular, extracurricular, or military training program goals, provided that: (1) the goals are approved by the educational institution; and (2) the activity or conduct furthers the goals in a manner that is appropriate, contemplated by the educational institution, and normal and customary for similar programs at other educational institutions. (c) It shall be unlawful to: (1) engage in hazing; (2) solicit, direct, aid, or attempt to aid, or abet another person engaged in hazing; or (3) knowingly fail to take reasonable measures within the scope of the person’s authority to prevent hazing. (d) It is not a defense in an action under this subchapter that the person against whom the hazing was directed consented to or acquiesced in the hazing activity. § 153. CIVIL PENALTY; JUDICIAL BUREAU; WAIVER PENALTY (a) A person who commits an unlawful act under this subchapter shall be subject to a civil penalty of not more than $5,000.00. (b) Any law enforcement officer may issue a summons and complaint for an act of hazing, which shall be heard by the judicial bureau pursuant to the procedures provided in chapter 29 of Title 4. (c) The court administrator shall appoint a panel of judicial bureau hearing officers to establish a waiver penalty for an act of hazing. (d) Nothing in this section shall limit or affect the right of an educational institution to enforce its own penalties against hazing. § 154. CRIMINAL PROSECUTION AND CIVIL ACTION Nothing in this subchapter shall limit or preclude a criminal prosecution or any criminal or civil action based on any act that may constitute hazing. MONDAY, MAY 8, 2000 27 Sec. 10. 4 V.S.A. § 1102(b)(7) is added to read: (7) violations of 16 V.S.A. chapter 1, subchapter 9, related to hazing. Sec. 11. EFFECTIVE DATES (a) On or before January 1, 2001, the commissioner of education shall develop and disseminate to school districts, model harassment and hazing prevention policies and procedures. (b) On or before August 1, 2001, each school district board shall adopt revised harassment prevention policies if necessary, to come into compliance with the model policy adopted by the commissioner. On or before August 1, 2001, each school district board shall adopt hazing prevention policies at least as stringent as the model policy adopted by the commissioner. Sec. 13. DISTRIBUTION OF ACT Within 30 days of passage of this act, the commissioner shall distribute to each school district: (1) a copy of the act; (2) a summary of the act’s provisions; and (3) answers to frequently asked questions about hazing and harassment in schools. And the House further recommends that after passage, the title of the bill be amended to read: AN ACT RELATING TO THE ENCOURAGEMENT OF A SAFE, CIVIL AND RESPECTFUL LEARNING ENVIRONMENT IN VERMONT EDUCATIONAL INSTITUTIONS. Thereupon, pending the question, Shall the Senate concur in the House proposal of amendment? On motion of Senator Chard, the Senate refused to concur in the House proposal of amendment and requested a Committee of Conference. House Proposal of Amendment Not Concurred In; Committee of Conference Requested House proposal of amendment to Senate bill entitled: S. 203. An act relating to public school choice in grades 9 - 12. Was taken up. The House proposes to the Senate to amend the bill by striking out all after the enacting clause and inserting in lieu thereof the following::

28 JOURNAL OF THE SENATE Sec. 1. PURPOSE The purpose of the act is to establish public high school choice as a way to expand educational opportunities for students while continuing to improve public schools through education reform and maintaining the quality of educational services. It is also the purpose of this act to establish school choice in a way that enables school districts to craft a system that works best for their communities. Therefore, it is the intent of the general assembly that each participating school district shall determine a way to provide choice to its students, and that the department of education and the general assembly shall carefully monitor the outcomes for students, parents and schools in order to gather information that may facilitate increased public school choice in the future. Sec. 2. ESTABLISHMENT OF PUBLIC HIGH SCHOOL CHOICE REGIONS (a) This section applies to a high school district which maintains a high school. (b) In this section, “high school” means a school or that portion of a school which offers grades 9, 10, 11 or 12; “high school district” refers to a school district which maintains a high school; and wherever the context so indicates, “student” refers to the student if the student is not a minor, and to the student’s parent or guardian if the student is a minor or under guardianship. (c) A school district board may petition the commissioner for an exemption from participation in a public high school choice region. The commissioner’s decision under this subsection shall be final. The commissioner may grant an exemption for any of the following reasons: (1) The high school district is geographically isolated. (2) The school is small and could be harmed if students choose to transfer and it is unlikely that they would be replaced by other students transferring into the school. (3) The school does not have the capacity to accept transfer students. (4) The school would suffer a measurable adverse financial impact. (d) On or before September 1, 2001, each high school district shall enter into an agreement with at least one other high school district to establish a public high school choice region. A high school district may belong to more than one public high school choice region. On or before October 15, 2001, the commissioner of education shall assign any high school district which has not entered into an agreement by September 1 to a region or regions, and the MONDAY, MAY 8, 2000 29 assigned school shall comply with the terms and conditions of the agreement entered into by the districts in that region. A decision of the commissioner shall be final. (e) Beginning on July 1, 2002, a student may choose to attend any public high school within the public high school choice region of residence subject to the constraints of this section. (f) Unless all the school district boards within the public high school choice region have agreed to a different arrangement, the high school boards within a public high school choice region shall not charge or pay tuition or other costs, except as provided in this subsection, for a student who transfers under this section. However, the sending district shall pay special education or technical education costs pursuant to the provisions of Title 16. (g) If a student who is eligible for and receiving special education services chooses to enroll in a school district other than the district of residence under this subsection, the receiving school district shall carry out the individualized education plan, including placement, developed by the sending district. If the receiving district thinks that a student not on an individualized education plan may be eligible for special education services or that an existing individualized education plan should be altered, it shall notify the sending district. When a sending district considers eligibility, development of an individualized education plan or changes to a plan, it shall give notice of meetings to the receiving district and provide an opportunity for representatives of the district to attend the meetings and participate in the decision-making. (h) For school year 2002-2003, a high school board may refuse to allow more than three percent of the students enrolled or six students, whichever is fewer, to transfer from one school to another school under this section in one year. Following school year 2002-2003, a high school board may refuse to allow more than five percent of the students enrolled or 10 students, whichever is fewer, to transfer from one school to another school under this section in one year. (i) Prior to accepting applications under this section, each public high school district board in a choice region shall define its capacity to accept students and shall annually review and redefine its capacity limits. The commissioner shall develop guidelines for consideration by the boards when they define capacity limits. Guidelines may include limits based on the capacity of the program, class, grade, school building or measurable adverse financial impact.

30 JOURNAL OF THE SENATE (j) If more than the allowable number of students wishes to transfer to or from a school under this section, the board shall devise a nondiscriminatory lottery system for determining which students may transfer. (k) A school is not required to provide services to a student during a period of suspension or expulsion imposed in another school district. (l) An enrolled nonresident student shall be permitted to remain enrolled in the nonresident high school without renewed applications in subsequent years unless one of the following occurs: (1) The student graduates. (2) The student is no longer a Vermont resident. (3) The student is expelled from school in accordance with adopted school policy. (m) The superintendents of schools in school districts in a public high school choice region shall establish a clearinghouse for families needing information about transportation options that will help them to exercise school choice. (n) The state board of education may adopt rules as necessary to implement this section. Sec. 3. DUTIES OF THE COMMISSIONER OF EDUCATION (a) The commissioner, upon request of two or more school boards, shall provide technical assistance in developing a public high school choice agreement. (b) Annually, on or before January 15, the commissioner shall report to the senate and house committees on education on the implementation of this act. (1) The January 2005 report shall include: (A) recommendations for equitable financial arrangements between school districts in a public school choice region that would not adversely affect any district; (B) a recommendation concerning whether due to economies of scale, average daily membership weights should be added or subtracted as student enrollment numbers change; (C) a recommendation as to how a school district which designates a high school might be included in a choice region; (D) an evaluation of whether the quality of educational services has been maintained, the impact of expanded educational opportunities on MONDAY, MAY 8, 2000 31 students, and recommendations regarding continuation of public school choice; and (E) an examination of whether public school choice should be increased and extended beyond regional limits for grades 9-12, and extended to middle or junior high schools and to elementary schools. (2) In order to gather information for these annual reports, the commissioner shall develop and send to each public high school board which belongs to a public school choice region, a form which requests specified information at a specific time. Examples of information the commissioner may gather include: (A) Whether transportation needs presented a barrier to choice. (B) How many pupils exercised choice and how many pupils wished to exercise choice but were unable to do so. (C) Reasons why students and parents made choice decisions. (D) How choice has affected the stratification of student populations with respect to social and economic factors. (E) How satisfied were those students who chose to attend a different school and those who remained in the assigned school. (F) How satisfied were parents, teachers, administrators and board members with the choice system in their regions. (G) Whether special education students and other students with special needs are receiving equal access to choice and whether their needs were accommodated. (H) The effect of the system on access to technical centers and transition to work programs. (I) Whether the quality of education is improving, decreasing or unaffected in districts experiencing a net loss of students under the choice system. (J) Whether the choice system is affecting support for local school budgets. (K) Whether the choice system is affecting the amount of parental involvement. (L) How the system has affected small schools. (M) The structures of the different regional choice collaboratives. (N) Whether there are any unintended outcomes.

32 JOURNAL OF THE SENATE (0) The extent to which the implementation of this act adds administrative costs to school districts. Sec. 4. REPEAL This act is repealed on July 1, 2007. Thereupon, pending the question, Shall the Senate concur in the House proposal of amendment? On motion of Senator Chard, the Senate refused to concur in the House proposal of amendment and requested a Committee of Conference. House Proposal of Amendment Concurred In House proposal of amendment to Senate bill entitled: S. 303. An act relating to treatment of opiate addiction. Was taken up. The House proposes to the Senate to amend the bill as follows: First: In Sec. 3a, in the first sentence, after “January 15, 2001,” by inserting the following: “the commissioner of health and” Second: In Sec. 3a, by striking out subdivision (2) in its entirety and inserting in lieu thereof a new subdivision (2) to read as follows: (2) The committee shall consider opiate addiction treatment delivery systems that would support the integration of such treatments into the comprehensive medical care of addiction patients. Thereupon, the question, Shall the Senate concur in the House proposal of amendment? was decided in the affirmative. House Proposal of Amendment to Senate Proposal of Amendment Concurred In House proposal of amendment to Senate proposal of amendment to House bill entitled: H. 629. An act relating to containing special education costs while continuing to meet the needs of all Vermont students. Was taken up. The House proposes to the Senate to amend the Senate proposal of amendment by striking out Sec. 2 in its entirety and renumbering the remaining sections to be numerically correct. MONDAY, MAY 8, 2000 33 Thereupon, the question, Shall the Senate concur in the House proposal of amendment to the Senate proposal of amendment? was decided in the affirmative. Report of Committee of Conference Accepted and Adopted on the Part of the Senate Senator Sears, for the Committee of Conference, submitted the following report: To the Senate and House of Representatives: The Committee of Conference to which were referred the disagreeing votes of the two Houses upon Senate bill entitled: S. 214. An act relating to disarming a law enforcement officer. Respectfully report they have met and considered the same and recommend that the bill be amended by striking out all after the enacting clause and inserting in lieu thereof the following: Sec. 1. 13 V.S.A. § 3019 is added to read: § 3019. DISARMING A LAW ENFORCEMENT OFFICER (a) As used in this section: (1) “Firearm” means any weapon, whether loaded or unloaded, which will expel a projectile by the action of an explosive, and includes any weapon commonly referred to as a pistol, revolver, rifle, gun, machine gun or shotgun. (2) “Law enforcement officer” means: (A) a person certified by the Vermont criminal justice training council as having satisfactorily completed the approved training programs required to meet the minimum training standards applicable to that person pursuant to section 2358 of Title 20; or (B) a constable who has not been prohibited from exercising law enforcement authority under section 1936a of Title 24 and who has been certified by the Vermont criminal justice training council as having successfully completed a course of training pursuant to section 2358 of Title 20; or (C) a person certified as a member of the capitol police under section 70 of Title 2. (b) A person is guilty of disarming a law enforcement officer if: (1) the person knowingly:

34 JOURNAL OF THE SENATE (A) removes a firearm from the person of a law enforcement officer; or (B) deprives a law enforcement officer of the use of a firearm; and (2) the officer is acting within the lawful scope of the officer’s duties; and (3) the person has reasonable cause to know or knows the individual is a law enforcement officer. (c) A person who is convicted of a violation of this section shall be imprisoned not more than 10 years or fined not more than $10,000.00, or both. Sec. 2. 13 V.S.A. § 3001 is amended to read: § 3001. IMPEDING PUBLIC OFFICERS (a) A person who hinders an executive, judicial, law enforcement, civil or military officer acting under the authority of this state or any subdivision thereof, or who removes a weapon from the person of a law enforcement officer, or who deprives a law enforcement officer of the use of a weapon, shall be imprisoned not more than three years or fined not more than $500.00, or both. For purposes of this section, law enforcement officer is defined under section 3019 of this title. (b) As used in this section, “weapon” means any device, instrument, material or substance, whether animate or inanimate, excluding a firearm as defined in section 3019 of this title, which, in the manner it is used or is intended to be used, is known to be capable of producing death, serious bodily injury or temporary disability. Sec. 3. 13 V.S.A. § 1025 is amended to read: § 1025. RECKLESSLY ENDANGERING ANOTHER PERSON A person who recklessly engages in conduct which places or may place another person in danger of death or serious bodily injury shall be imprisoned for not more than one year or fined not more than $1,000.00 or both. Recklessness and danger shall be presumed where a person knowingly points a firearm at or in the direction of another, whether or not the actor believed the firearm to be loaded, and whether or not the firearm actually was loaded. RICHARD W. SEARS, JR. JOHN H. BLOOMER, JR. ANN E. CUMMINGS Committee on the part of the Senate MONDAY, MAY 8, 2000 35 THOMAS A. LITTLE JOHN R. EDWARDS ALICE W. NITKA Committee on the Part of the House Thereupon, the question, Shall the Senate accept and adopt the report of the Committee of Conference? was decided in the affirmative.

36 JOURNAL OF THE SENATE House Proposal of Amendment Not Concurred In; Committee of Conference Requested House proposal of amendment to Senate bill entitled: S. 300. An act relating to fair pricing of prescription drugs. Was taken up. The House proposes to the Senate to amend the bill by striking out all after the enacting clause and inserting in lieu thereof the following: Part A. Therapeutic and Cost-Effective Utilization of Prescription Drugs Sec. 1. 33 V.S.A. § 1998 is added to read: § 1998. THERAPEUTIC AND COST-EFFECTIVE UTILIZATION OF PRESCRIPTION DRUGS The commissioner of social welfare shall develop a therapeutic and cost- effective prescription drug education and utilization system designed to promote therapeutic and cost-effective utilization of prescription drugs by patients. In developing the system the commissioner may request the participation of the commissioner of banking, insurance, securities, and health care administration, the commissioner of health, Vermont physicians, hospitals used by Vermont patients, Vermont pharmacists, public and private health benefit plans, consumer representatives, the board of medical practice, the board of osteopathic physicians and surgeons, the board of nursing, the board of pharmacy, any other appropriate licensing boards, and any other interested party. The commissioner is authorized to solicit, accept and spend public and private grants, contributions and other funds to match public funds appropriated to carry out the purposes of this section. The system may include: (1) the establishment of an electronic database or other information resources containing information indicating which equally effective prescription drug or drugs within the same therapeutic class are the least costly for the consumer and the consumer’s health plan. The electronic data base may also include the capability of creating, for the purpose of promoting medically appropriate and cost-effective prescription drug utilization, a confidential, individual prescription drug record for participating patients, including the identity of prescribing health care professionals and dispensing pharmacies, within a secure communications network connecting physicians, pharmacists and patients. The database shall be designed for use by physicians, hospitals, pharmacists, consumers, private health insurance plans and public health benefit plans; MONDAY, MAY 8, 2000 37 (2) the development of a uniform formulary of prescription drugs for use by physicians, hospitals, pharmacists, consumers, private health insurance plans and government health insurance plans. The formulary developed by the commissioner pursuant to this subdivision shall incorporate the following elements: (A) The formulary shall incorporate the database developed under subdivision (1) of this section, and shall contain standards and procedures for patient access to medically necessary alternatives to the formulary, and for patient choice of higher cost alternatives to the formulary. (B) The standards and procedures regulating prescription drug formularies set forth in Rule 10 of the division of health care administration, “Quality Assurance Standards and Consumer Protections for Managed Care Plans,” as amended, shall apply to the use of any formulary developed pursuant to this subdivision by any health insurance plan, except that the commissioner may establish separate standards and procedures as necessary to comply with federal Medicaid laws and regulations. (C) The formulary developed pursuant to this subdivision shall not be required of any health insurance plan, or any beneficiary of a health insurance plan, without the approval of the general assembly, except that the commissioner of social welfare may implement the formulary developed pursuant to this subdivision by rule for programs administered by or through agencies or instrumentalities of the state in accordance with section 1999 of this title, after presenting an implementation plan to a joint hearing of the House and Senate Committees on Health and Welfare. (D) As used in this subdivision, “health insurance plan” means a health benefit plan offered or administered by a health insurer, as defined by section 9402(7) of Title 18; (3) a program to identify the computer and software needs of professionals involved in the process of prescribing and dispensing drugs, if necessary to ensure access to the therapeutic and cost-effective prescription drug utilization database; (4) a program of academic detailing and consumer counter-detailing that educates physicians and consumers on the therapeutic and cost-effective utilization of prescription drugs, developed in a manner designed to counteract the marketing efforts of pharmaceutical companies directed at physicians, and to counteract direct-to-consumer advertising, and developed in coordination with similar programs administered throughout the state;

38 JOURNAL OF THE SENATE (5) recommendations for continuing medical education opportunities and requirements for Vermont physicians and other health care professionals who prescribe, dispense or administer prescription drugs; and (6) any other program or activity designed to ensure optimal therapeutic and cost-effective utilization of prescription drugs by patients. Sec. 2. 26 V.S.A. § 2032(a) is amended to read: (a) The board shall adopt rules necessary for the performance of its duties, including: (1) scope of the practice of pharmacy; (2) qualifications for obtaining licensure; (3) explanations of appeal and other rights given to licensees, applicants and the public;. (4) standards and procedures permitting the dispensing of drugs prescribed by authorized practitioners by facsimile machine, or by e-mail communications, with suitable safeguards relating to verification and other health and safety issues; and (5) standards and procedures to monitor and require the maximum practicable use of medically appropriate generic substitution of prescription drugs authorized under section 4605 of Title 18. Sec. 3. 26 V.S.A. § 1353(a)(13) is added to read: (a) The board shall have the following powers and duties: * * * (13) To adopt standards and procedures requiring a licensee, when relevant to the individual’s scope of practice in Vermont as determined by the board, to complete an appropriate program of continuing medical education relating to therapeutic and cost-effective prescribing, dispensing or administering prescription drugs, consistent with the recommendations of the commissioner of social welfare under section 1998(4) of Title 33. Sec. 3a. 26 V.S.A. § 1972(a)(4) is added to read: (a) In addition to its other powers and duties, the board shall: * * * (4) adopt standards and procedures requiring a licensee, when relevant to the individual’s scope of practice in Vermont as determined by the board, to complete an appropriate program of continuing education relating to therapeutic and cost-effective prescribing, dispensing or administering MONDAY, MAY 8, 2000 39 prescription drugs, consistent with the recommendations of the commissioner of social welfare under section 1998(4) of Title 33. Sec. 4. 8 V.S.A. § 4089h-1 is added to read: § 4089h-1. PRESCRIPTION DRUG FORMULARIES (a) The standards and procedures regulating prescription drug formularies set forth in Rule 10 of the division of health care administration, “Quality Assurance Standards and Consumer Protections for Managed Care Plans”, as amended, shall apply to any formulary used by a health insurance plan. (b) As used in this section, “health insurance plan” means a health benefit plan offered or administered by a health insurer, as defined by section 9402(7) of Title 18. (c) This section shall apply to any health insurance policy, subscriber contract and other health benefits plan offered, issued or renewed after October 1, 2000 Sec. 5. REPORT ON THERAPEUTIC AND COST-EFFECTIVE UTILIZATION OF PRESCRIPTION DRUGS; APPROPRIATIONS (a) The commissioner of social welfare shall report to the governor and the general assembly on or before January 1, 2001 with an assessment of the success of the separate programs of the commissioner’s therapeutic and cost- effective utilization of prescription drugs system under Sec. 1 of this act, together with an estimate of the costs and benefits of funding such programs on a statewide basis. (b) The board of pharmacy shall report to the general assembly on or before January 1 in the year 2001 and in each of the succeeding three years with an evaluation of its success in implementing the provisions of section 2032(a) of Title 26. (c) The sum of $150,000.00 is appropriated from the insurance regulatory and supervision fund to the commissioner of social welfare in fiscal year 2001 to carry out the purposes of Sec. 1 of this act. Funds allocated for academic detailing and consumer counter-detailing may be matched with federal Medicaid funds to be spent for these purposes. Part B. Federally Qualified Health Centers Sec. 6. FEDERALLY QUALIFIED HEALTH CENTERS (a) It is the purpose of this section to assist Vermonters to purchase prescription drugs at the lowest possible cost and to advance Vermont’s goal of affordable access to quality health care for all Vermonters through the expansion and development of federally qualified health centers throughout

40 JOURNAL OF THE SENATE this state. The general assembly finds that an appropriate expansion of federally qualified health centers can: (1) empower communities to create a system of universal access to primary health care that people need; (2) create a partnership between Vermonters who use health care services and Vermonters who provide those services; (3) reduce health care costs for patients through administration of an income-based sliding scale fee schedule for primary health care services; (4) expand access to health care in medically underserved areas, and reduce cost shifting to private health insurance plans through a service-based reimbursement schedule for primary health care providers that is determined by the reasonable cost of the services provided; and (5) reduce health care costs for individuals, businesses and government through access to the federal supply schedule’s substantially discounted prescription drug prices. (b) Within 45 days of passage of this act, the governor is directed to request from the federal government medically underserved area designations, and any other designation or approval needed to establish federally qualified health centers or other entities permitted to access the federal supply schedule for prescription drugs in all appropriate regions of the state of Vermont not so designated on the effective date of this act, and shall take all steps necessary to secure such designations and approvals. (c) Within 30 days of passage of this act, the department of health shall award a contract to implement the provisions of this section, and shall award to the contractor such funds as are appropriated by the general assembly to carry out the purpose of this section. (d) The contract awarded by the department of health to carry out the purposes of this section shall provide for the following: (1) the development and implementation of a plan to create an appropriate number of federally qualified health center administrative entities statewide, with such satellite facilities as the federally qualified health center administrative entities may determine are necessary to meet the health care needs of the community; (2) technical assistance, by contract or other means, to rural health centers and health care providers seeking federal approval as a federally qualified health center; MONDAY, MAY 8, 2000 41 (3) grants not to exceed $10,000.00 to rural health centers and health care providers, matched by the grant recipient at 50 percent of the grant amount, to support all or a portion of the expenses associated with conversion to a federally qualified health center; (4) grants not to exceed $10,000.00 to nonprofit community organizations, matched by the grant recipient at 50 percent of the grant amount, to support all or a portion of the expenses associated with the establishment of federally qualified health center administrative entities; and (5) the development and implementation of plans to ensure that each federally qualified health center operating in this state provides access to prescription drugs to patients of the center at federal supply schedule prices, through contracts with existing pharmacies in the community, or through a health center dispensary if a contract with a community pharmacy is not feasible. (e) The commissioner of health and its contractor shall report to the general assembly on January 1 of each year with its progress in implementing the provisions of this section, and with an accounting of its use of grant funds. (f) Vermont’s Congressional Delegation is urged to take all actions necessary and desirable in securing designations, approvals and other actions by the federal government required to carry out the purposes of this section. (g) The commissioner of health may exercise sole source contracting authority to carry out the provisions of this section. Sec. 7. APPROPRIATIONS; FEDERALLY QUALIFIED HEALTH CENTERS The sum of $277,000.00 is appropriated to the department of health from the general fund in fiscal year 2001 as a fiscal year 2001 one-time appropriation pursuant to Sec. 253 of H.842 of the 2000 session of the general assembly, to support a contract to carry out the purposes of Sec. 6 of this act. The department of health and the Bi-State Primary Care Association shall report to the general assembly on or before January 1, 2001 identifying the funds necessary to carry out the purposes of Sec. 6 of this act in fiscal year 2002. Part C. V-Script Coverage of Catastrophic Expenses; VHAP Pharmacy Expansion; V-Script Buy-In for Medicare Beneficiaries Sec. 8. 33 V.S.A. § 1991(3) is amended to read: (3) "Drug" means a drug that may not be dispensed unless prescribed by a health care provider as defined by section 9402(6) of this title acting within

42 JOURNAL OF THE SENATE the scope of the provider's license. A drug shall always be the lowest cost brand available to the pharmacist unless the health care provider writing the prescription specifies otherwise. The term includes insulin, an insulin syringe and an insulin needle. The term excludes: (A) a drug determined less than effective under the federal Food, Drug and Cosmetics Act; (B) except for purposes of the accruing of prescription drugs expenses for recipients eligible under section 1993(a)(2) of this title, a drug within therapeutic classifications primarily associated with the treatment of acute medical conditions; and (C) a central nervous system agent other than: (i) agents used for treatment of convulsive disorders; (ii) nonsteroidal anti-inflammatory agents for arthritis; and (iii) agents used primarily for control of psychotic conditions diagnosed under current classifications of the Diagnostic Statistical Manual. Sec. 9. 33 V.S.A. § 1992(e) is amended to read: (e) Any manufacturer of prescription drugs purchased by persons receiving assistance under this chapter shall pay to the commissioner, as a condition of participation in the program, a rebate in an amount at least as favorable as the rebate paid to the commissioner in connection with the Medicaid program. Agreements with participating manufacturers may also include provisions for the coordination of benefits between pharmaceutical manufacturer patient assistance programs and the prescription drug benefits provided through programs administered by the department, financial support from pharmaceutical manufacturers for the catastrophic prescription drug expense program authorized by section 1994(e) of this title, and any other provisions determined by the commissioner to be necessary or desirable for the cost- effective operation of the prescription drug benefit programs administered by the department. Sec. 10. 33 V.S.A. § 1993 is amended to read: § 1993. ELIGIBILITY (a)(1) A person shall be eligible for assistance under this chapter if: (A) he or she is a resident of Vermont at the time of application for benefits, as defined by the commissioner by rule and has been such, continuously, for the 12 months immediately preceding application; and MONDAY, MAY 8, 2000 43 (B)(1) he or she is at least 65 years of age or disabled, and receives Social Security disability benefits (SSDI), or is a Medicare beneficiary; and (C) the person's household income, when calculated in accordance with the rules adopted for the Vermont health access plan under Act No. 14 of the Acts and Resolves of the 1995 Session of the general assembly, as amended, is no greater than 225 percent of the federal poverty level.;or (2)(A) he or she is at least 65 years of age or disabled and receives Social Security disability benefits (SSDI), or is a Medicare beneficiary, and the person’s household income, when calculated in accordance with the rules adopted for the Vermont health access plan under Act No. 14 of the Acts and Resolves of the 1995 Session of the general assembly, as amended, is greater than 175 percent of the federal poverty level and less than or equal to 300 percent of the federal poverty level; or (B) he or she is not eligible for assistance under subdivision (1) of this subsection, or under subdivision (2)(A) of this subsection, or under the Vermont Health Access Plan, and the person’s household income, when calculated in accordance with the rules adopted for the Vermont health access plan under Act No. 14 of the Acts and Resolves of the 1995 Session of the general assembly, as amended, is less than or equal to 300 percent of the federal poverty level. (2)(b) A person shall be eligible for assistance with prescription drug expenses covered under this chapter upon payment of the cost sharing amount required by section 254 1994 of this title. (b)(c) A person whose prescription drug expenses are paid or reimbursable, either in whole or in part, by any plan of assistance or insurance, other than Title XVIII of the Social Security Act (Medicare), shall not be eligible for pharmaceutical assistance under this chapter subdivision (a)(1) of this section. No assistance shall be provided under this chapter with respect to an individual drug purchase that may be covered in whole or in part by Title XVIII of the Social Security Act (Medicare). (d)(1) Notwithstanding any other provision of law, no general fund amounts appropriated for Vermont’s pharmaceutical assistance programs under this chapter, as amended, and the pharmaceutical benefits program component of the Vermont health access plan under Act No. 14, Sec. 14(a)(6) of the Acts and Resolves of the 1995 Session of the general assembly, as amended may be spent if federal funds in such amounts are made available and are spent on benefits for the beneficiaries of such programs. (2) To the greatest extent feasible, in the event of the enactment after the effective date of this section of any federal program, or expansion of an

44 JOURNAL OF THE SENATE existing federal program which is designed to provide pharmaceutical assistance to individuals receiving assistance under this chapter, or under the pharmaceutical benefits program component of the Vermont health access plan under Act No. 14, Sec. 14(a)(6) of the Acts and Resolves of the 1995 Session of the general assembly, as amended, general funds which would otherwise be spent for such state programs shall be used to supplement general funds appropriated for such state programs. (3) The commissioner shall work with the Vermont’s congressional delegation to help ensure that Vermont’s share of any new federal monies appropriated for beneficiaries of state pharmaceutical assistance programs can be used to address the unmet pharmaceutical needs of such beneficiaries, and will not replace existing funding for such programs. Sec. 11. 33 V.S.A. § 1994(a) is amended to read: (a) Benefits under this chapter shall be subject to payment of a co-payment or coinsurance amount by the recipient in accordance with the provisions of this section: (1) In the case of recipients eligible for assistance under subdivision 1993(a)(1) of this title with income of less than 176 or equal to 175 percent of the federal poverty level, such co-payment shall be the same co-payment requirements that exist under the pharmaceutical benefits component of the Vermont health access plan under Act No. 14, Sec. 14(a)(6) of the Acts and Resolves of the 1995 Session of the general assembly, as amended. (2) In the case of recipients eligible for assistance under subdivision 1993(a)(1) of this title whose household income is 176 greater then 175 percent of the federal poverty level or more and no greater than and less than or equal to 225 percent of the federal poverty level the coinsurance payment shall be 50 percent of the cost of the drug. (3)(A) In the case of recipients eligible for assistance under subdivision 1993(a)(2)(A) of this title: (i) For recipients subject to the provisions of subdivision (2) of this section, the coinsurance payment shall be 50 percent of the cost of the drug until such time during each coverage period as the recipient’s unreimbursed household expenditures for drugs covered under this chapter exceed the amount provided for in subsection (e) of this section, after which time any such coinsurance shall be the same coinsurance requirements that exist under the pharmaceutical benefits component of the Vermont health access plan under Act No. 14, Sec. 14(a)(6) of the Acts and Resolves of the 1995 Session of the general assembly, as amended; and MONDAY, MAY 8, 2000 45 (ii) For recipients not subject to the provisions of subdivision (2) of this section, the coinsurance payment shall be 100 percent of the cost of the drug, or the coinsurance payment required by the recipient’s private or public prescription drug benefit plan until such time during each coverage period as the recipient’s unreimbursed household expenditures for drugs covered under this chapter exceed the amount provided for in subsection (e) of this section, after which time any such coinsurance shall be 50 percent of the cost of the drug, or 50 percent of any applicable coinsurance payment required by the recipient’s private or public prescription drug benefit plan. (B) In the case of recipients eligible for assistance under subdivision 1993(a)(2)(B) of this title, the coinsurance payment shall be 100 percent of the cost of the drug, or the coinsurance payment required by the recipient’s private or public prescription drug benefit plan, as applicable, until such time during each coverage period as the recipient’s unreimbursed household expenditures for drugs covered under this chapter exceed the amount provided for in subsection (e) of this section, after which time any such coinsurance shall be 50 percent of the cost of the drug, or 50 percent of any applicable coinsurance payment required by the recipient’s private or public prescription drug benefit plan. Sec. 12. 33 V.S.A. § 1994(e) is added to read: (e)(1) For individuals eligible for assistance under subdivision 1993(a)(2) of this title, the initial period for accruing expenditures for covered drugs shall begin on January 1, 2000 and end on December 31, 2000, provided that only expenditures for covered drugs incurred after July 1, 2000 shall be eligible for assistance under this subsection, and provided further that only expenditures incurred in any coverage period after the date of the individual’s application and enrollment shall be eligible for assistance under this subsection. During such six-month period and during each subsequent coverage period beginning on January 1 and ending on December 31 of each year, no co-payment shall be required for the remainder of such period in excess of the co-payment requirements provided for in section 1994(a)(3) of this title by any eligible recipient whose unreimbursed household expenditures for drugs covered under this chapter, when aggregated with the unreimbursed household expenditures for covered drugs of the other members of the household exceed six percent of the individual’s household income. (2) For the purpose of determining the percent limit for unreimbursed household expenditures for drugs, the commissioner may establish, by rule, income groups. The program shall pay the remainder of such recipient’s unreimbursed household expenditures for covered drugs upon application and

46 JOURNAL OF THE SENATE information provided by the recipient sufficient to satisfy the requirements of this subsection at any time during the coverage period. (3) The department shall monitor enrollment on a monthly basis in the catastrophic benefits element of the program provided for under this subsection. In the event that appropriations in any fiscal year are not sufficient to support the payment of benefits for all otherwise eligible individuals under this subsection, the department shall limit enrollments, amend the eligibility criteria to increase the applicable percentage of the recipient’s household income that must be spent on prescription drugs before benefits are paid by the program, prorate benefits provided for under this subsection, or take any other administrative actions necessary to ensure that expenditures do not exceed appropriations for such benefits in any fiscal year. Sec. 13. VHAP PHARMACY PROGRAM EXPANSION; VSCRIPT BUY- IN PROGRAM (a) Waiver request. The commissioner of social welfare is authorized to seek from the federal government any Medicaid waiver amendment or additional Medicaid waivers necessary and desirable to expand the VHAP pharmacy program of the Vermont health access plan to include as beneficiaries individuals without other affordable health insurance coverage for prescription drug expenses, individuals with coverage for prescription drugs under 33 V.S.A. chapter 19 (VScript), and any other Vermonters. The commissioner may adopt such rules as are necessary to carry out the VHAP pharmacy program expansion authorized by this section. The waiver amendment or additional waiver requested by the commissioner shall include the following elements; however, the commissioner may exercise discretion in her negotiations with the federal Health Care Financing Administration to achieve all feasible purposes of this section: (1) All Medicare-eligible Vermonters with household income above 175 percent of federal poverty level with no Medigap policy that covers prescription drugs, and other Vermonters with household incomes up to 300 percent of the federal poverty level who do not have an insurance program that includes a prescription drug benefit shall be included as potential beneficiaries of an expanded, unsubsidized VHAP Pharmacy program that secures for enrolled beneficiaries the benefits of Medicaid discounts and rebates, or any other discount, rebate or utilization strategy . (2) All Vermont residents shall be included as potential beneficiaries in an expanded, unsubsidized VHAP pharmacy program that secures for enrolled beneficiaries the benefits of Medicaid discounts and rebates, or any other discount, rebate or utilization strategy. Any individual Vermonter or Vermont purchaser of group health insurance coverage may choose to participate in this MONDAY, MAY 8, 2000 47 portion of the program, including individuals currently receiving coverage for other health care benefits through any other health insurance plan in accordance with rules adopted by the commissioner of banking, insurance, securities and health care administration, and any health insurance plan offered by the state of Vermont or any instrumentality of the state in accordance with rules adopted by the secretary of administration. (3) The expanded VHAP pharmacy program shall include the expanded VScript program beneficiaries authorized by the 1999 Session of the general assembly. (4) The expanded VHAP pharmacy program shall include the catastrophic prescription drug expense program established in Secs. 8 through 12 of this act. (5) The VHAP pharmacy program as authorized by this section shall be designed so as not to affect the budget neutrality provisions of the Vermont Health Access Plan waiver, in order to demonstrate the cost and feasibility of a Medicare pharmacy benefit. (b) VScript “Buy-In” Program. (1) In the event that the federal government does not approve a waiver amendment permitting the VHAP pharmacy expansion program authorized by subsection (a)(1) of this section, the commissioner of social welfare shall establish a VScript prescription drug insurance program for Medicare beneficiaries on July 1, 2001. (2) Eligible individuals under the VScript prescription drug insurance program shall be Vermont residents who are at least 65 years of age or disabled and who are eligible to receive Medicare or Social Security disability benefits. Benefits covered by the program shall be defined by section 1991(3) of Title 33. The program shall require the recipient to pay a premium established by the commissioner, and a 50 percent coinsurance amount. The premium shall be calculated from a sliding scale formula based on the recipient’s income, in an amount and for such periods as the commissioner shall establish. Premium amounts shall be established so that total premium revenue is sufficient to pay for the cost of benefits for such recipients, including such reserves as the commissioner determines are needed to account for adverse selection, administrative costs, and other unanticipated costs. The program may adjust premiums annually to account for any change in the cost of benefits. The commissioner shall establish an enrollment period for applications for coverage under this subdivision. Sec. 14. 33 V.S.A. § 1999 is added to read:

48 JOURNAL OF THE SENATE § 1999. VERMONT PRESCRIPTION DRUG PRICE AND COST CONTROLS The commissioner may establish by rule one or more of the following prescription drug cost control, utilization, and price reduction mechanisms, for the purpose of increasing the affordability of medically necessary prescription drugs for Vermonters: (1) The commissioner may negotiate discounts and receive manufacturer rebates for the benefit of the beneficiaries of the VHAP pharmacy program, and any other pharmacy assistance program administered by or on behalf of the state of Vermont. (2) The commissioner may negotiate and contract with prescription drug manufacturers, wholesale suppliers, or any other entity, separately or in concert with any public or private health benefit plan or prescription drug purchasing entity within or outside of this state for the establishment of prescription drug price schedules, discounts, rebates and any other cost control mechanism, for the benefit of the beneficiaries of the VHAP pharmacy program, and any other pharmacy assistance program administered by or on behalf of the state of Vermont. (3)(A) The commissioner may contract with a third party, separately or in concert with any public or private health benefit plan or prescription drug purchasing entity within or outside of this state, to administer a pharmacy benefit management program for purposes including the following: (i) education for health care providers, pharmacists and patients designed to improve the quality and cost-effectiveness of prescription drug therapies; (ii) the establishment of a formulary to purchase medically necessary prescription drugs at the lowest possible cost; and (iii) utilization review of prescription drug purchases. (B) The pharmacy benefit management program may be established for the benefit of the beneficiaries of the VHAP pharmacy program, any other pharmacy assistance program administered by or on behalf of the state of Vermont, and any other public or private health benefit plan within or outside of this state. (C) The standards and procedures developed for the system of therapeutic and cost-effective utilization of prescription drugs established by the commissioner under section 1998 of this title shall be used to carry out the purposes of this subdivision (3). MONDAY, MAY 8, 2000 49 (4) The commissioner may establish a mail order or internet purchasing program for use at the voluntary option of beneficiaries of the VHAP pharmacy program, and any other pharmacy assistance program administered by or on behalf of the state of Vermont, for the purpose of empowering beneficiaries to lower the cost of their medically necessary prescription drugs. The commissioner shall establish quality standards for mail order and internet vendors permitted to participate in the program established by this subdivision. Sec. 15. PROGRAM IMPLEMENTATION; APPROPRIATIONS; CONTRACTING AUTHORITY; EXPEDITED RULES; REPORT ON PHARMACEUTICAL MANUFACTURER CONTRIBUTIONS; PROGRAM ADMINISTRATION REPORT; CONSUMER GUIDE; POSITIONS AUTHORIZED (a)(1) The commissioner of social welfare shall implement the provisions of Secs. 8 through 12 of this act (catastrophic prescription drug expenses program) for individuals eligible under 33 V.S.A. § 1993(a)(2)(A) (Medicare- eligible individuals up to 300 percent of the federal poverty level) on or before July 1, 2000. (2) The commissioner of social welfare shall implement the provisions of Secs. 8 through 12 of this act (catastrophic prescription drug expenses program) for individuals eligible under 33 V.S.A. § 1993(a)(2)(B) (non- Medicare-eligible individuals up to 300 percent of the federal poverty level) beginning July 1, 2000, by income levels from the lowest income level to the highest, as funds become available to support assistance to such individuals, including: (A) Federal Medicaid funds, including funds received in connection with the waiver requested by the governor under Sec. 13(a) of this act; (B) Financial support pursuant to rebate agreements with participating pharmaceutical manufacturers in accordance with 33 V.S.A. § 1992(e); or (C) Any other funds available for such purposes. (b)(1) The amount of $45,000.00 is appropriated from the general fund to the commissioner of social welfare in fiscal year 2001 to support the administrative costs necessary to carry out the purposes of Secs. 8 through 14 of this act. Any unexpended funds from such appropriation may be carried forward and spent by the commissioner for such purposes in fiscal year 2002. (2)(A) The amount of $1,962,527.00 is appropriated from the general fund to the department of social welfare in fiscal year 2001 as the first priority of general fund fiscal year 2001 one-time appropriations pursuant to Sec. 253

50 JOURNAL OF THE SENATE of H.842 of the 2000 session of the general assembly to support catastrophic prescription drug expense assistance to individuals eligible under 33 V.S.A. § 1993(a)(2)(A) (Medicare-eligible individuals up to 300 percent of the federal poverty level). (B) If sufficient federal revenue, pharmaceutical manufacturer rebate revenue, or revenue from other sources is received to support catastrophic prescription drug expense assistance to individuals eligible under 33 V.S.A. § 1993(a)(2)(B) (non-Medicare-eligible individuals up to 300 percent of the federal poverty level), and in accordance with the provisions of subdivision (a) (2) of this section, the commissioner of social welfare is hereby appropriated and may spend such revenue in fiscal year 2001 to support assistance to such individuals. (c) The commissioner may exercise sole source contracting authority in order to implement the catastrophic prescription drug expenses program authorized in Secs. 8 through 12 of this act in a timely manner. (d) Notwithstanding the provisions to the contrary of 3 V.S.A. chapter 25, the commissioner of social welfare is authorized to adopt rules under the expeditious rule-making procedures provided in this subsection in order that changes reflected in Secs. 8 through 12 of this act may be implemented by July 1, 2000. Such rules may be adopted by filing them in final proposed form with the secretary of state and the legislative committee on administrative rules under 3 V.S.A. § 841, after the agency of human services’ publication, in the three daily Vermont newspapers of highest average circulation, of a notice that lists all rules to be adopted by this process and provides for a seven-day public comment period. The legislative committee on administrative rules shall review and may approve or object to the final proposed rules under the provisions of 3 V.S.A. § 842, except that its action shall be completed within 15 days or by June 23, 2000, whichever is sooner. Rules so adopted may be effective as soon as five days after adoption and have the full force and effect of rules adopted pursuant to 3 V.S.A. chapter 25 and may supersede or amend existing rules. Any such rules filed by the secretary of human services with the secretary of state and the legislative committee on administrative rules shall be deemed to be in full compliance with 3 V.S.A. § 843 and shall be accepted by the secretary of state if filed with a certification by the secretary of human services that the rule is required to meet the purposes of this section. (e) The commissioner of social welfare shall report to the health access oversight committee each month until January 1, 2001 with the results of the commissioner’s negotiations and agreements with participating manufacturers pursuant to Sec. 9 of this act, including agreements for financial support from pharmaceutical manufacturers for the catastrophic prescription drug expense MONDAY, MAY 8, 2000 51 program authorized by section 1994(e) of Title 33. The commissioner also shall report to the health access oversight committee each month for 24 months following the commissioner’s exercise of any of the prescription drug price and cost control powers granted pursuant to section 1999 of Title 33. (f) On or before January 1, 2001, the commissioner of social welfare shall review all state and federal programs intended to facilitate access or provide assistance to purchasers of prescription drugs, including all programs created or amended by this act, and report to the general assembly on recommendations to combine, merge or consolidate such programs to improve their administration and their effectiveness in providing benefits to the people of the state. (g) The commissioner of social welfare shall prepare by January 1, 2001 and annually thereafter a consumer’s guide to public and private prescription drug assistance programs, and shall solicit funds from pharmaceutical manufacturers to support the preparation and distribution of such guides. (h) The following position is authorized in the department of social welfare in fiscal year 2001: (1) eligibility specialists. Part D. Pharmaceutical Manufacturer Patient Assistance Programs Sec. 16. PHARMACEUTICAL MANUFACTURER PATIENT ASSISTANCE PROGRAMS (a) The general assembly finds that pharmaceutical manufacturer patient assistance programs have the potential to benefit a larger number of low income, uninsured and underinsured Vermonters; however, the current way that such programs are administered has resulted in low participation by health care providers and their patients, and few Vermonters benefiting from these programs. (b) The commissioner of social welfare shall request proposals from community health centers or other nonprofit organizations to administer a statewide program to improve coordination and implementation of pharmaceutical manufacturer patient assistance programs, provided that the commissioner has successfully secured funds from pharmaceutical companies sufficient to support the costs of the program, including the costs of a staff person to administer the program, and including a plan to inform the public concerning patient assistance programs. (c) The goal of proposals authorized by this section shall be to develop systems to facilitate access to pharmaceutical manufacturer patient assistance programs. The grant recipient shall assist the commissioner in negotiating with pharmaceutical companies to develop a simplified system to assist low income Vermonters in accessing such programs. Components of the simplified

52 JOURNAL OF THE SENATE system may include a simplified, single application process, a voucher system for dispensing drugs through local pharmacies, and coordination with and supplementation of the Vermont health access plan pharmacy assistance program. After a simplified system has been developed, the grant recipient shall administer a statewide program to assist health care providers in establishing a program for their patients, to provide consultation to participating health care providers regarding changes to the program, to provide patients with information regarding their eligibility for pharmaceutical manufacturer patient assistance programs, and to work with representatives of pharmaceutical manufacturers to improve the program. (d) The grant recipient and the commissioner shall report to the general assembly on the results of the program established by this section on or before January 1, 2001, including information concerning the number of Vermonters benefited by patient assistance programs, the value of benefits provided through such programs, and any other relevant information. Sec. 16a. STATEMENT OF LEGISLATIVE POLICY CONCERNING STATE REGULATION OF PRESCRIPTION DRUG PRICES The State of Vermont should pursue its goal of lowering prescription drug costs for all Vermonters by means other than the regulation of prescription drug prices for the following reasons: (1) The Commerce Clause of the United States Constitution does not permit a state to regulate directly the prices manufacturers charge for prescription drugs, since virtually all of these sales involve commercial transactions that take place outside of the state. (2) The Commerce Clause of the United States Constitution may limit the ability of a state to regulate retail prices of prescription drugs if such regulation places an undue burden on interstate commerce, and legislation establishing a price regulation mechanism would likely involve the state in litigation with an uncertain outcome. (3) Even if Vermont could regulate constitutionally Vermont retail sales of prescription drugs, such regulation would most likely be ineffective in addressing the fundamental problems concerning manufacturer prices, since manufacturers would be under no obligation to sell to Vermont wholesale and retail pharmacies at a price that complies with the prices established by Vermont regulators. (4) Price regulation relating to Vermont retail prescription drug sales could result in severe harm to Vermont retail pharmacies. MONDAY, MAY 8, 2000 53 (5) Price regulation relating to Vermont retail prescription drug sales may reduce consumers’ access to medically necessary medicines. (6) Price regulation relating to Vermont wholesale prescription drug sales would apply only to Vermont’s one drug wholesaler, who might relocate to another state in order to remain commercially viable, thereby resulting in the loss of about 150 jobs in Vermont. (7) The fundamental problems concerning manufacturer prices for prescription drugs are national problems that require a national solution. Sec. 17. JOINT LEGISLATIVE COMMITTEE ON REGIONAL COOPERATION REGARDING PRESCRIPTION DRUGS (a) The joint legislative committee on regional cooperation regarding prescription drugs is created, consisting of four representatives appointed by the speaker of the house, and four senators appointed by the committee on committees. No political party shall constitute a majority of the members from either body. (b) Committee members may meet no more than 6 times each year, and for such meetings shall receive per diem compensation and reimbursement of expenses as provided in section 406 of Title 2. Staff of the legislative council and the joint fiscal office, and of any other agency of state government at the request of the committee chair, shall provide clerical and professional assistance to the committee. (c) The committee may: (1) explore strategies by which Vermont and other states might work cooperatively to reduce prescription drug costs and prices for their citizens; (2) develop proposals for uniform legislation, interstate compacts, and any other legislative proposals relating to prescription drugs, for introduction in the legislatures of the several states; (3) consider the formation of a multi-state purchasing consortium to use the full purchasing power of the states who are members of the consortium to obtain lower prices for prescription drugs; (4) report to the general assembly by December 1 of each year on the committee’s activities, together with any findings and recommendations relating to prescription drugs; and (5) conduct any other activity necessary or desirable in carrying out the purposes of this section. (d) The committee shall cease to exist on December 31, 2001.

54 JOURNAL OF THE SENATE Part E. Effective Date Sec. 18. EFFECTIVE DATE This act shall take effect on passage. Thereupon, pending the question, Shall the Senate concur in the House proposal of amendment? On motion of Senator Riehle, the Senate refused to concur in the House proposal of amendment and requested a Committee of Conference. Proposal of Amendment; Third Reading Ordered; Consideration Interrupted by Recess Senator Rivers, for the Committee on Finance, to which was referred House bill entitled: H. 628. An act relating to health insurance coverage of mental health and substance abuse services. Reported recommending that the Senate propose to the House to amend the bill by striking out all after the enacting clause and inserting in lieu thereof the following: Sec. 1. 8 V.S.A. § 4089b(f) and (g) are added to read: (f) On or before October 1 of each year the five largest health insurance companies doing business in Vermont as measured by covered lives shall file with the commissioner, in accordance with standards, procedures, and forms approved by the commissioner: (1) A report card on the health insurance plan’s performance in relation to quality measures for the care, treatment, and treatment options of mental health and substance abuse conditions covered under the plan, pursuant to standards and procedures adopted by the commissioner by rule, and without duplicating any reporting required of such companies pursuant to Rule 10 of the division of health care administration, “Quality Assurance Standards and Consumer Protections for Managed Care Plans”, as amended, including: (A) the discharge rates from inpatient mental health and substance abuse care and treatment of insureds; (B) the average length of stay and number of treatment sessions for insureds receiving inpatient and outpatient mental health and substance abuse care and treatment; (C) the percentage of insureds receiving inpatient and outpatient mental health and substance abuse care and treatment; MONDAY, MAY 8, 2000 55 (D) the number of insureds denied mental health and substance abuse care and treatment, including the total number of denials per insured’s lifetime; (E) the number of denials appealed by patients reported separately from the number of denials appealed by providers; (F) the rates of readmission to inpatient mental health and substance abuse care and treatment for insureds with a mental health condition; (G) the level of patient satisfaction with the quality of the mental health and substance abuse care and treatment provided to insureds under the health insurance plan; and (H) any other quality measure established by the commissioner. (2) The health insurance plan’s revenue loss and expense ratio relating to the care and treatment of mental health conditions covered under the health insurance plan. The expense ratio report shall list amounts paid in claims for services and administrative costs separately. (g) The commissioner shall establish a task force to develop performance quality measures and address oversight issues for managed behavioral health care organizations. The task force shall include the following: (1) the commissioner of developmental and mental health services or a designee; (2) the director of the office of Vermont health access or a designee; (3) the commissioner of banking, insurance, securities, and health care administration or a designee; (4) thirteen additional members appointed by the commissioner of banking, insurance, securities, and health care administration, including: (A) four representatives of the health insurance and behavioral managed care organization industry; (B) two consumers, after consultation with the health care ombudsman; (C) one psychologist, after consultation with the Vermont psychological association; (D) one psychiatrist, after consultation with the Vermont psychiatric association; (E) one social worker, after consultation with the National Association of Social Workers, Vermont Chapter;

56 JOURNAL OF THE SENATE (F) one mental health counselor, after consultation with the Vermont mental health counselors association; (G) one drug and alcohol counselor, after consultation with the Vermont association of drug and alcohol counselors; (H) one representative from a consumer or citizen’s organization; and (I) one representative from the business community. Sec. 2. 18 V.S.A. § 9419 is added to read: § 9419. CHARGES FOR ACCESS TO MEDICAL RECORDS (a) A custodian may impose a charge that is no more than a flat $5.00 fee or no more than $0.50 per page, whichever is greater, for providing copies of an individual’s health care record. A custodian shall provide an individual or the authorized recipient with an itemized bill for the charges assessed. A custodian shall not charge for providing copies of any health care record requested to support a claim or an appeal under any provision of the Social Security Act or for any other federal or state needs-based benefit or program. (b) A custodian may charge an individual a fee, reasonably related to the associated costs, for providing copies of x-rays, films, models, disks, tapes, or other health care record information maintained in other formats. (c) As used in this section: (1) “Custodian” means any person who maintains health care information for any lawful purpose, including a health care provider, a health care facility, or a health insurer. (2) “Health care record” means all written and recorded health care information about an individual maintained by a custodian. (3) “Individual” means a natural person, alive or dead, who is the subject of health care information and includes, when appropriate, the individual’s attorney-in-fact, legal guardian, health care agent, as defined in 14 V.S.A. chapter 121, executor or administrator. Sec. 3. STUDY OF HEALTH INSURANCE ACCOUNTABILITY The commissioner of banking, insurance, securities and health care administration shall report to the General Assembly on or before December 1, 2000, with a comprehensive survey of and recommendations concerning the options for legislative, administrative and other nonjudicial mechanisms to enhance the accountability of health insurance plans for decisions on coverage of medically necessary care to beneficiaries. The report’s survey of and recommendations concerning accountability mechanisms shall include the MONDAY, MAY 8, 2000 57 patient protection measures agreed to by Aetna U.S. Health Care in its April 2000 Consent Decree with the State of Texas which are not provided for under Vermont laws and regulations. In preparing her report the commissioner shall consult with Vermont’s health insurers, the Vermont Medical Society, the Vermont Trial Lawyers’ Association, and the Vermont Health Care Ombudsman. And that the bill ought to pass in concurrence with such proposal of amendment. Senator Spaulding, for the Committee on Appropriations, to which the bill was referred, reported that the bill ought to pass in concurrence with such proposals of amendment recommended by the Committee on Finance. Senator Riehle, for the Committee on Health and Welfare, to which the bill was referred, reported recommending that the bill be amended as follows: First: In Sec. 1, in 8 V.S.A. § 4089b(f), by striking out the word “October” and inserting in lieu thereof the word “March” Second: In Sec. 1, in 8 V.S.A. § 4089b(f), by striking out subdivision (2) in its entirety and inserting in lieu thereof a new subdivision (2) to read as follows: (2) The health insurance plan’s revenue loss and expense ratio relating to the care and treatment of mental health conditions covered under the health insurance plan. The expense ratio report shall list amounts paid to health care providers for direct services and administrative costs separately. Third: In Sec. 1, in 8 V.S.A. § 4089b(g), after the period at the end of the first sentence, by inserting the following: “The task force shall report to the committees on health and welfare of the senate and the house of representatives on or before December 1 of each year with a report on the activities and recommendations of the task force.” Fourth: In Sec. 1, in 8 V.S.A. § 4089b(g)(4), by striking out the word “thirteen” and inserting in lieu thereof the word “fourteen”, and by striking out subdivisions (H) and (I) in their entirety and inserting in lieu thereof new subdivision (H), (I) and (J) to read as follows: (H) one representative from a consumer or citizen’s organization; (I) one representative from the business community; and (J) one representative of community mental health centers. Fifth: By striking out Secs. 2 and 3 in their entirety and inserting in lieu thereof nine new sections to be numbered Secs. 2, 3, 4, 5, 6, 7, 8, 9, and 10 to read as follows:

58 JOURNAL OF THE SENATE Sec. 2. REPORT OF MEDICAID EXPENDITURES On or before January 15, 2001, 2002, and 2003, the agency of human services shall report the Medicaid program expenditures for behavioral health services, by major category for the most recently completed fiscal year, to the committees on health and welfare of the senate and house of representatives. Sec. 3. 18 V.S.A. chapter 221, subchapter 9 is added to read: Subchapter 9. Health Care Information Practices § 9461. DEFINITIONS For the purposes of this subchapter: (1) “Amend” means to indicate one or more disputed entries in a health care record or to change the entry without obliterating or removing the original record. (2) “Custodian” means any person who maintains a health care record for any lawful purpose, and who is a health care provider or a health care facility that creates, controls or retains health care information. The term includes a natural person only when the health care information is obtained in the course of the person’s employment, agency or performance of services or activities for a custodian. The term also includes a health insurer to the extent that the health insurer maintains health care records in connection with the adjudication of health insurance claims. (3) “Health care” means any preventive, diagnostic, therapeutic, rehabilitative, surgical, maintenance or palliative care, counseling, service or procedure provided to an individual for the individual’s physical or mental condition or the structure or function of any part of the human body, including the sale or dispensing of medication or durable goods pursuant to a prescription. (4) “Health care facility” means any business organization and its employees, including a facility or institution, whether public or private, proprietary or not - for - profit, that offers health care to two or more unrelated persons, in an inpatient, outpatient or ambulatory care setting. (5) “Health care information” or “information” means any data or information, whether oral or recorded, in any form or medium, that relates to the individual’s health history, health care or health status, and was initially obtained by a health care provider in the course of providing health care, or by a health care facility, or a health insurer in the course of processing a claim, or by an agent or employee, and contains information or other means that permits identification of the individual or can reasonably identify the individual by MONDAY, MAY 8, 2000 59 reference to publicly available information. “Health care information” does not include information that has been made anonymous by the removal of personal identifiers and any other means of directly identifying or contacting the individual by encrypting the identifiers or replacing the identifiers with a code that prevents identification of the individual, so that the individual’s identity may be determined by using the encryption key or decoding system. (6) “Health care provider” or “provider” means a natural person who is licensed, certified or authorized by law to provide professional health care in this state to an individual during that person’s health care, treatment or confinement, and includes an employee or an agent of the health care provider who, in the course of employment, obtains health care information for the health care provider or any natural person who is providing direct health care to the individual under the supervision of a health care provider. (7) “Health care record” means any health care information that is written or recorded in any form or medium about an individual maintained by a custodian. (8) “Individual” means a natural person, alive or dead, who is the subject of a health care record and includes, when appropriate, the individual’s attorney-in-fact, legal guardian, health care agent, as defined in 14 V.S.A. chapter 141, executor or administrator. § 9462. INDIVIDUAL RIGHT TO ACCESS HEALTH CARE RECORD; CHARGES (a) A custodian shall release or provide any health care record upon request to the individual and to any other person pursuant to a valid authorization executed by the individual. (b) Except where circumstances beyond the reasonable control of the custodian do not permit it: (1) A custodian shall permit an individual to inspect his or her health care records maintained by the custodian at reasonable times and places, but in no event more than four business days after the custodian receives a written or oral request. (2) If the record is stored off the custodian’s premises, the custodian shall provide the record for inspection as soon as possible, but in no event later than seven business days after receipt of the oral or written request. (c) No later than ten business days after receipt of a written request from an individual or from a person authorized to receive a copy of the individual’s health care records, a custodian shall:

60 JOURNAL OF THE SENATE (1) Provide to the individual, in the format requested, a copy of the requested record. If a custodian does not maintain the record in the format requested, the custodian is not required to reformat an existing health care record. (2) Notify the individual that the custodian does not have access to the record and, if known, the name and address of the custodian of the requested record; or if access to the record is delayed due to circumstances beyond the control of the custodian, when the record will be available, which shall not be later than an additional 20 business days after receipt of the request. (d) A custodian shall explain any code, abbreviation, term or notation used by that custodian in the health care record on request by the individual. (e) The custodian may impose a charge that is no more than a flat $5.00 fee or no more than $0.50 per page, whichever is greater, for providing copies of the individual’s health care record. The custodian shall provide the individual or the authorized recipient with an itemized bill for the charges assessed. A custodian shall not charge for providing copies of any health care record requested to support a claim or an appeal under any provision of the Social Security Act or for any other federal or state needs-based benefit or program. (f) A custodian may charge a fee, reasonably related to the associated costs, for providing copies of x-rays, films, models, disks, tapes, or other health care records maintained in other formats. § 9463. RIGHT TO AMEND HEALTH CARE RECORD (a) In connection with an amendment made pursuant to this section, a custodian shall not delete, erase or obliterate health care information in a health care record that the custodian controls or maintains. Nothing in this section shall be construed to limit the ability of a custodian to destroy records for lawful purposes. (b) An individual may request in writing that a custodian amend the individual’s health care record in order to improve the accuracy or completeness of the information, provided that the original information is not deleted, erased or obliterated from the health care record. Within 30 days after receipt of a written request from an individual to amend the health care record, a custodian shall do one of the following: (1) Amend the record as requested. (2) Notify the individual that the request has been denied, the reason for the denial, and that the individual may file a concise statement of what the individual believes to be the correct information. The custodian shall include and maintain in the individual’s health care record the individual’s request to MONDAY, MAY 8, 2000 61 amend the statement, and shall disclose the individual’s statement at the same time that the disputed information is disclosed. § 9464. REMEDIES An individual who is aggrieved by a violation of this subchapter may bring a civil action for the following: (1) Actual damages for a negligent violation. (2) Actual damages and exemplary damages for violations caused by willful or intentional conduct. (3) Temporary, preliminary, and equitable relief as the court deems appropriate; in which case, the court shall not require the moving party to obtain a bond, unless the court finds that the granting of equitable relief may cause substantial financial harm to the other party. Sec. 4. 12 V.S.A. § 1612 is amended to read: § 1612. PATIENTS' PRIVILEGE (a) Confidential information privileged. Unless the patient waives the privilege or unless the privilege is waived by an express provision of law, a person authorized to practice medicine, chiropractic or dentistry, a registered professional or licensed practical nurse, or a mental health professional as defined in 18 V.S.A. § 7101(13) health care provider, as defined in 18 V.S.A. § 9461, shall not be allowed to disclose any health care information, as defined in 18 V.S.A. § 9461, acquired in attending a patient in a professional capacity, including joint or group counseling sessions, and which was necessary to enable the provider to act in that capacity. (b) Identification by dentist; crime committed against patient under sixteen 16. A dentist shall be required to disclose information necessary for identification of a patient. A physician, dentist, chiropractor or nurse shall be required to disclose information indicating that a patient who is under the age of sixteen 16 years has been the victim of a crime. (c) Mental or physical condition of deceased patient. A physician, chiropractor or nurse shall be required to disclose any information as to the mental or physical condition of a deceased patient privileged under subsection (a), except information which would tend to disgrace the memory of the decedent, either in the absence of an objection by a party to the litigation or when the privilege has been waived: (1) by the personal representative, or the surviving spouse, or the next of kin of the decedent; or

62 JOURNAL OF THE SENATE (2) in any litigation where the interests of the personal representative are deemed by the trial judge to be adverse to those of the estate of the decedent, by any party in interest; or (3) if the validity of the will of the decedent is in question, by the executor named in the will, or the surviving spouse or any heir-at-law or any of the next of kin or any other party in interest. Sec. 5. 12 V.S.A. § 1909(d) is amended to read: (d) A patient shall be entitled to a reasonable answer to any specific question about foreseeable risks and benefits, and a medical practitioner shall not withhold any requested health care information except to the extent that a reasonable medical practitioner would withhold the information because the manner and extent of such disclosure could reasonably be expected to adversely and substantially affect the patient's condition, in which case the medical practitioner shall provide the information to a member of the immediate family, if reasonably available, notwithstanding the provisions of 12 V.S.A. § 1612(a), as defined in 18 V.S.A. § 9461, which shall be disclosed in accordance with the provisions of subchapter 9 of chapter 221 of Title 18. Sec. 6. 18 V.S.A. § 7103 is amended to read: § 7103. DISCLOSURE OF INFORMATION (a) All certificates, applications, records and reports, other than an order of a court made for the purposes of this part of this title, and directly or indirectly identifying a patient or former patient or an individual whose hospitalization or care has been sought under this part, together with clinical information relating to such persons shall be kept confidential and shall not be disclosed by any person except insofar: (1) as the individual identified or his the individual’s legal guardian, if any (or, if he be the individual is a minor, his the minor’s parent or legal guardian), shall consent in writing; or (2) as disclosure may be necessary to carry out any of the provisions of this part; or (3) as a court may direct upon its determination that disclosure is necessary for the conduct of proceedings before it and that failure to make disclosure would be contrary to the public interest. (b) Nothing in this section shall preclude disclosure, upon proper inquiry, of information concerning medical condition to the members of the family of a patient or to his clergyman a patient’s clergy, his physician, his or attorney, or an interested party. MONDAY, MAY 8, 2000 63 (c) Any person violating this section shall be fined not more than $500.00 or imprisoned for not more than one year, or both. (d) Nothing in 12 V.S.A. § 1612(a) shall affect the provisions of this section. Sec. 7. 26 V.S.A. § 1354 is amended to read: § 1354. UNPROFESSIONAL CONDUCT The term "unprofessional conduct" as used in this chapter shall mean the following items or any one or combination thereof; whether or not the conduct at issue means one or more of the following, whether the conduct was committed within or without the state: * * * (10) failure to furnish a patient's medical record to make available health care records to the patient or succeeding physicians or hospital upon proper request health care providers or health care facilities pursuant to section 9462 of Title 18; Sec. 8. STUDY OF HEALTH INSURANCE ACCOUNTABILITY The commissioner of banking, insurance, securities, and health care administration shall report to the General Assembly on or before December 1, 2000 with a comprehensive survey of and recommendations concerning the options for legislative, administrative and other nonjudicial mechanisms to enhance the accountability of health insurance plans for decisions on coverage of medically-necessary care to beneficiaries. The report’s survey of and recommendations concerning accountability mechanisms shall include the patient protection measures agreed to by Aetna U.S. Health Care in its April 2000 Consent Decree with the State of Texas which are not provided for under Vermont laws and regulations. In preparing the report, the commissioner shall consult with Vermont’s health insurers, the Vermont Medical Society, the Vermont Trial Lawyers’ Association, and the Vermont Health Care Ombudsman. Sec. 9. SUNSET OF LOSS AND EXPENSE RATIO FILING REQUIREMENT 8 V.S.A. § 4089b(f)(2) (health insurance plan revenue loss and expense ratios relating to mental health conditions) is repealed on July 1, 2003. Sec. 10. EFFECTIVE DATE This section and Secs. 1, 2, 8, and 9 of this act, shall take effect on July 1, 2000. Secs. 3, 4, 5, 6, and 7 of this act shall take effect on January 1, 2001.

64 JOURNAL OF THE SENATE And that the bill ought to pass in concurrence with such proposals of amendment. Recess At 10:30 A.M., on motion of Senator Shumlin the Senate recessed until 11:00 A.M. At 11:30 A.M. the Senate was called to order by the President. Consideration Resumed; Proposals of Amendment; Third Reading Ordered Consideration was resumed on House bill entitled: H. 628. An act relating to health insurance coverage of mental health and substance abuse services. Thereupon, Senator Riehle requested and was granted leave to withdraw the second proposal of amendment of the Committee on Health and Welfare. Thereupon, Senator Riehle requested and was granted leave to withdraw all of the remaining proposals of amendment of the Committee on Health and Welfare. Thereupon, the proposals of amendment as recommended by the Committee on Finance were approved and third reading was ordered. Committees of Conference Appointed The President laid before the Senate, Senate bill entitled: S. 76. An act relating to the crime of hazing. And, pursuant to the request of the Senate, announced the appointment of Senator Ankeney Senator Crowley Senator Cummings as members of the Committee of Conference on the part of the Senate to consider the disagreeing votes of the two Houses. The President laid before the Senate, Senate bill entitled: S. 203. An act relating to public school choice in grades 9 - 12. And, pursuant to the request of the Senate, announced the appointment of Senator Chard Senator Maynard Senator Kittell MONDAY, MAY 8, 2000 65 as members of the Committee of Conference on the part of the Senate to consider the disagreeing votes of the two Houses. The President laid before the Senate, Senate bill entitled: S. 300. An act relating to fair pricing of prescription drugs. And, pursuant to the request of the Senate, announced the appointment of Senator Shumlin Senator Riehle Senator Rivers as members of the Committee of Conference on the part of the Senate to consider the disagreeing votes of the two Houses. The President laid before the Senate, House bill entitled: H. 343. An act relating to nonpayment of rent and termination of residential tenancies. And, pursuant to the request of the Senate, announced the appointment of Senator Bartlett Senator Greenwood Senator Kittell as members of the Committee of Conference on the part of the Senate to consider the disagreeing votes of the two Houses. The President laid before the Senate, House bill entitled: H. 841. An act relating to administrative rule-making procedure. And, pursuant to the request of the Senate, announced the appointment of Senator Doyle Senator Kittell Senator Brownell as members of the Committee of Conference on the part of the Senate to consider the disagreeing votes of the two Houses. Rules Suspended; Bills Messaged On motion of Senator Shumlin, the action on the following bills was ordered messaged to the House forthwith: H. 343, H. 841.

66 JOURNAL OF THE SENATE Rules Suspended; Bills Delivered On motion of Senator Shumlin, the rules were suspended and the following bills were ordered delivered to the Governor forthwith: S. 214, S. 303. Rules Suspended; Bills Messaged On motion of Senator Shumlin, the rules were suspended and the following bills were ordered messaged to the House forthwith: S. 76, S. 203, S. 300, H. 629. Rules Suspended; Bill Made Special Order Appearing on the Calendar for action on motion of Senator Shumlin, the rules were suspended and House bill entitled: H. 843. An act relating to assisting families to attain self-sufficiency. Was taken up. Thereupon, on motion of Senator Shumlin, the bill was made a special order for Tuesday, May 9, 2000, at one o’clock in the afternoon. Message from the House A message was received from the House of Representatives by Mr. Palmisano, its First Assistant Clerk, as follows: Mr. President: I am directed to inform the Senate the House has considered Senate proposal of amendment to House bill of the following title: H. 837. An act relating to assuring a livable wage for all working Vermonters. And has concurred therein with an amendment in the adoption of which the concurrence of the Senate is requested. The House has considered Senate proposal of amendment to House bill of the following title: H. 738. An act relating to professional regulation. And has concurred therein. The House has adopted Joint Resolutions of the following titles: J.R.H. 267. Joint resolution congratulating the Town of Halifax on the occasion of its 250th anniversary. MONDAY, MAY 8, 2000 67 J.R.H. 268. Joint resolution congratulating Mark Rodgers on being named as the recipient of the 1999 National Distinguished Young Holstein Breeder Award. J.R.H. 269. Joint resolution honoring the first USA-National Karate Federation (NKF) New England Junior Olympics. In the adoption of which the concurrence of the Senate is requested. Adjournment On motion of Senator Shumlin, the Senate adjourned. Afternoon The Senate was called to order by the President. Joint Resolutions Placed on Calendar Joint resolution originating in the House of the following title was read the first time and is as follows: J.R.H. 267. Joint resolution congratulating the Town of Halifax on the occasion of its 250th Anniversary. Whereas, in the spring of 1750, a group of distinguished individuals, led by Oliver Partridge, sought to establish a new plantation, or town, in territory then under the control of the province of New Hampshire, and Whereas, these individuals approached the governor of the province of New Hampshire Benning Wentworth, who with the advice of the New Hampshire Council, on May 11, 1750, granted to the applicants, and to their heirs and successors, 64 equal shares, in a grant of land comprising 23,040 acres or six miles square “beginning at a marked tree standing half a mile west of Green River in the boundary line between the government of the Massachusetts Bay and New Hampshire and from thence due west on said boundary line six miles and at the end of said six miles to turn off at a right angle and run due north six miles and at the end of said six miles to turn off at a right angle and run due east six miles to turn a right angle and run due south six miles to the tree first mentioned,” and Whereas, the six-square-mile land area contained within these boundaries was designated as the new town of Halifax, and Whereas, Halifax was the second town chartered in the future state of Vermont, and Whereas, on March 3, 1778, Halifax conducted its first recorded town meeting and voted to accept the Vermont Constitution, and

68 JOURNAL OF THE SENATE Whereas, the first representatives to the General Assembly from the town of Halifax were Hubbel Wells and Edward Harris, and Whereas, the little municipality of Halifax once boasted 14 schools that have since been consolidated into one, and Whereas, although the number of farms has sadly declined, the residents of Halifax are proud of their agricultural history, and Whereas, Halifax has been a beacon of tolerance and acceptance for all types of persons, and it proudly embodies the tradition of Vermont’s small towns which cares for and assists all of its citizens, and Whereas, the 250th anniversary of Halifax is a special opportunity for the town of Halifax to reflect on its long history that predates the establishment of the state of Vermont, now therefore be it RESOLVED BY THE SENATE AND HOUSE OF REPRESENTATIVES: That the General Assembly congratulates the town of Halifax on the 250th anniversary of its chartering, and be it further RESOLVED: That the Secretary of State be directed to send a copy of this resolution to the Halifax Town Clerk. Thereupon, in the discretion of the President, under Rule 51, the joint resolution was placed on the Calendar for action tomorrow. Joint resolution originating in the House of the following title was read the first time and is as follows: J.R.H. 268. Joint resolution congratulating Mark Rodgers on being named as the recipient of the 1999 National Distinguished Young Holstein Breeder Award. Whereas, Mark Rodgers stands as a stellar role model for dairy farmers in Vermont and nationwide, and Whereas, his family roots are solidly planted in Orleans County and the state of Vermont, and Whereas, starting as a youth, Mark Rodgers was being recognized for his outstanding farming skills when, in 1980, he was the recipient of the Orleans County Young Farmer Award, and Whereas, after graduation from the University of Vermont, where he was president of the dairy club and a member of Alpha Zeta, the national agricultural honor society, he assumed a series of positions, starting at the American Jersey Cattle Association, that enabled him to learn the fundamentals of the dairy industry, and MONDAY, MAY 8, 2000 69 Whereas, since 1993, Mark Rodgers has been a partner in the Andersonville Farm where he has proven to be an outstanding breeder of Holstein cows, and Whereas, he is currently chair of the Vermont Holstein Association’s breed promotion committee, a member of the board of trustees of the Eastern States Exposition, and a representative to the National Milk Producers Federation on behalf of the Agri-Mark Cooperative, and Whereas, he is a leader in the Vermont Farm Bureau of which he is presently a vice president, and Whereas, in 1999, he was named the Vermont and New England Outstanding Young Holstein Breeder of the Year and the National Dairy Shrine Progressive Producer of the Year, and Whereas, each of these honors was a mere prelude to his designation by the Holstein Association U.S.A. as the National Distinguished Young Holstein Breeder of 1999, and Whereas, Mark Rodgers has demonstrated that this very special award was truly deserved, as he has shown through his dedication and creativity, the success that can occur on a farm that breeds Holstein cows, and Whereas, aside from his extensive commitments to the preservation and future prosperity of Vermont’s dairy industry, he is committed to improving the state’s system of public education and has chaired both the Glover and Orleans Central Supervisory School Boards, now therefore be it RESOLVED BY THE SENATE AND HOUSE OF REPRESENTATIVES: That the General Assembly congratulates Mark Rodgers on his receipt of the 1999 National Distinguished Young Holstein Breeder Award, and be it further RESOLVED: That the Secretary of State be directed to send a copy of this resolution to Mark Rodgers in West Glover. Thereupon, in the discretion of the President, under Rule 51, the joint resolution was placed on the Calendar for action tomorrow. Joint resolution originating in the House of the following title was read the first time and is as follows: J.R.H. 269. Joint resolution honoring the first USA-National Karate Federation (NKF) New England Junior Olympics. Whereas, karate is an increasingly popular sport among young New Englanders, and

70 JOURNAL OF THE SENATE Whereas, many of these fine young athletes wish to qualify for the USA- NKF National Junior Olympics, and Whereas, until now, those youngsters desiring to enter one of the 444 separate karate events at the national competition were required to travel outside New England to participate in a regional USA-NKF Junior Olympics, and Whereas, New Englanders interested in the development of karate as a viable competitive athletic opportunity for the region’s young persons have succeeded in establishing a USA-NKF New England Junior Olympics to be held for the first time on September 14-17, 2000, in Windsor, Vermont, and Whereas, the USA-NKF Junior Olympics are the only Junior Olympics karate event sanctioned by a member of the United States Olympics Committee, and Whereas, it is hoped that the chief referee of the United States Olympic Committee Referee Council will referee this inaugural New England USA- NKF Junior Olympics, and Whereas, the establishment of a USA-NKF New England Junior Olympics is an exciting opportunity for karate’s growth in the region, now therefore be it RESOLVED BY THE SENATE AND HOUSE OF REPRESENTATIVES: That the General Assembly welcomes the establishment of the USA-NKF New England Junior Olympics, and is pleased that its inaugural meet will be held in Windsor, and be it further RESOLVED: That the Secretary of State be directed to send a copy of this resolution to Mark S. Bielecki, co-chair of USA-NKF New England in White River. Thereupon, in the discretion of the President, under Rule 51, the joint resolution was placed on the Calendar for action tomorrow. Proposal of Amendment; Point of Order; Bill Passed in Concurrence with Proposals of Amendment House bill entitled: H. 854. An act relating to fees. Was taken up. Thereupon, pending third reading of the bill, Senator Riehle moved that the Senate propose to the House to further amend the bill by inserting four new sections to be numbered Secs. 13K, 13L, 13M and 13N to read as follows: Sec. 13K. 32 V.S.A. § 3102(e) is amended to read: MONDAY, MAY 8, 2000 71 (e) The commissioner may, in his or her discretion and subject to such conditions and requirements as he or she may provide, including any confidentiality requirements of the Internal Revenue Service, disclose a return or return information: * * * (10) to any person, provided that the disclosure is reasonably necessary to investigate the truthfulness of a statement made pursuant to section 3113 of this title that a contractor, licensee, or person authorized by the state to conduct a trade or business is in good standing with respect to or in full compliance with a plan to pay any and all taxes due as of the date such statement is made, or to discipline or prosecute any person making a false statement; (11) to the liquor control department or board for the purpose of verifying return information provided to the liquor control department or board by a cabaret license applicant, cabaret licensee or suspended cabaret licensee. Sec. 13L. 32 V.S.A. §9709 is amended to read: § 9709. RECORDS TO BE KEPT (a) Every person required to collect any tax imposed by this chapter shall keep records of every sale or amusement charge and of all amounts paid, charged or due thereon and of the tax payable thereon, in such form as the commissioner may by regulation require. These records shall include a true copy of each sales slip, invoice, receipt, statement or memorandum upon which section 9778 of this title requires that the tax be stated separately. The records shall be available for inspection and examination at any time upon demand by the commissioner or his duly authorized agent or employee and shall be preserved for a period of three years, except that the commissioner may consent to their destruction within that period or may require that they be kept longer. (b) Every person that holds both a restaurant or hotel license and a cabaret license under Title 7 shall keep separate records for receipts under the restaurant or hotel license and for receipts under the cabaret license. Sec. 13M. 7 V.S.A. §242 is added to read: §242 PRODUCTION OF TAX INFORMATION (a) Any applicant for a cabaret license, or any cabaret licensee or suspended cabaret licensee, shall produce upon request by the liquor control department or board all records required to be maintained under sections 9203 and 9709 of Title 32, and any meals and rooms and sales and use tax returns filed within the last three years by the applicant or the cabaret licensee or suspended licensee.

72 JOURNAL OF THE SENATE (b) Failure to produce the records and returns as requested under this section shall constitute a violation of this title sufficient for license revocation under section 236 of this title. Sec. 13N. 7 V.S.A. §2 (5) is amended to read: (5) "Cabaret license": for the purposes of this title shall mean a first class license or first and third class licenses where the business is devoted primarily to providing entertainment, dancing and the sale of alcoholic beverages to the public and not the service of food. The holder of a "cabaret license" shall dispense food to the public and shall have adequate and sanitary space and equipment for preparing and serving food. However, the receipts from the sale of food shall be less in amount or volume than the combined receipts from the sales of alcoholic beverages and the receipts from , entertainment and dancing in the prior reporting year. All laws and regulations pertaining to a first class license or first and third class licenses shall apply to a first class or first and third class cabaret license. Thereupon, pending the question, Shall the Senate propose to the House to amend the bill as recommended by Senator Riehle? Senator Sears raised a point of order, on the grounds that the proposal of amendment was not germane, in that the bill’s purpose was related to the subject of fees and that the proposal of amendment did not so pertain. Thereupon, the President sustained the point of order and ruled that the amendment could not be considered. Thereupon, the bill was read the third time by title only and passed in concurrence with proposals of amendment. Proposals of Amendment; Bill Passed in Concurrence with Proposals of Amendment House bill entitled: H. 688. An act relating to state employees’ and teachers’ retirement systems. Was taken up. Thereupon, pending third reading of the bill, Senator Illuzzi moved that the Senate propose to the House to further amend the bill by adding a new section to be numbered Sec. 26 to read as follows: Sec. 26. PORTABILITY OF EMPLOYMENT CREDITS ACCRUED (a) Notwithstanding any provision of law to the contrary, a member of the Vermont state police who transfers to or is reemployed or rehired into a MONDAY, MAY 8, 2000 73 position in another state agency within two years after his or her separation from the department of public safety shall be credited with time served as a member of the state police for purposes of calculating rate of pay, seniority status, leave accrual and transfer of leave balances in his or her new position, regardless of the manner in which the officer was separated from the state. (b) Upon receipt of notice from an eligible employee, the department of personnel shall make the adjustments in pay and benefits authorized by this act. These adjustments shall be effective at the beginning of the next full pay period immediately following receipt of notice under this subsection. (c) The provisions of this act shall only apply to transfers, reemployment or rehires occurring during the period January 1, 1990, through January 1, 2000, and only to the extent that the notice required under subsection (b) of this section is received by the department of personnel on or before August 1, 2000. Which was agreed to on a roll call, Yeas 20, Nays 9. Senator Illuzzi having demanded the yeas and nays, they were taken and are as follows: Roll Call Those Senators who voted in the affirmative were: Backus, Bahre, Bartlett, Bloomer, Canns, Chard, Costes, Crowley, Cummings, Greenwood, Ide, Illuzzi, Leddy, MacDonald, Mazza, McCormack, Ready, Rivers, Sears, Shumlin. Those Senators who voted in the negative were: Ankeney, Brownell, Doyle, Kittell, Maynard, Morrissey, Munt, Riehle, Spaulding. The Senator absent and not voting was: Ptashnik. Thereupon, pending third reading of the bill, Senators Crowley and Maynard moved that the Senate propose to the House to further amend the bill, by adding a new section to be numbered Sec. 27 to read as follows: Sec. 27. STATE TREASURER; REPORT The State Treasurer shall report to the General Assembly by January 15, 2001, on the impact on the funds of the Vermont Employees Retirement System if firefighters currently employed by the state of Vermont have the option of being included in Group C of the system. The State Treasurer shall consult with and have the cooperation of the retirement board. Which was agreed to.

74 JOURNAL OF THE SENATE Thereupon, pending third reading of the bill, Senator MacDonald moved that the Senate propose to the House to further amend the bill by adding a new section to be numbered Sec. 29 to read as follows: Sec. 29. 16 V.S.A. § 1953 is added to read: § 1953. CREDIT FOR PRIOR SERVICE Notwithstanding any other provision of law to the contrary, any member who leaves service prior to completing five years of creditable service, and subsequently returns to service, shall receive credit for prior years of service rendered. If the member received a return of accumulated contributions upon leaving service and would like to receive service credit upon return to service, the member shall deposit in the annuity savings fund by a single contribution an amount equal to the return of accumulated contributions. Which was disagreed to on a division of the Senate, Yeas 7, Nays 17. Thereupon, pending third reading of the bill, Senator Brownell moved that the Senate propose to the House to further amend the bill by adding a new section to be numbered Sec. 26 to read as follows: Sec. 26. STATE TREASURER; REPORT ON EMPLOYEES OF DEPARTMENT OF SOCIAL AND REHABILITATIVE SERVICES AND STATE HOSPITAL On or before January 15, 2001, the State Treasurer shall submit a report to the General Assembly which assesses the financial impact on the Vermont Employees Retirement System if employees of the Department of Social and Rehabilitation Service who provide supervision and treatment services to juveniles in the community and employees of the Vermont State Hospital are provided retirement benefits and options equal to those received by employees of the Department of Corrections. In the report and in consultation with the Commissioner of Personnel, the Treasurer shall advance a basis for establishing parity among the retirement benefits and options available to employees of the Department of Corrections, Department of Social and Rehabilitation Services, and Vermont State Hospital. Which was agreed to. Thereupon, the bill was read the third time and passed in concurrence with proposals of amendment. Rules Suspended; Bills Messaged On motion of Senator Shumlin, the rules were suspended and the following bills were ordered messaged to the House forthwith: MONDAY, MAY 8, 2000 75 H. 688, H. 854. Proposals of Amendment; Third Reading Ordered Senator Ready, for the Committee on Natural Resources and Energy, to which was referred House bill entitled: H. 316. An act relating to preventing watercourses from flooding. Reported recommending that the Senate propose to the House to amend the bill by striking out all after the enacting clause and inserting in lieu thereof the following: Sec. 1. 10 V.S.A. § 1023(c) is added to read: (c) If the local legislative body and planning commission determine in writing by majority vote of each that gravel in a watercourse is threatening life or property, due to increased potential for flooding, and that the removal of gravel is necessary to prevent the threat to life or property, and if a complete permit application has been submitted to the secretary, requesting authority to remove gravel in the minimum amount necessary to remove threats to life or property, the local legislative body and the planning commission may request an expedited review of the complete permit application by notifying the secretary and providing copies of their respective decisions. If the secretary fails to approve or deny the application within 45 calendar days of receipt of notice of the decisions, the application shall be deemed approved and a permit shall be deemed to have been granted. Gravel removed shall be used only for public purposes, and cannot be sold, traded or bartered. The fact that an application for a permit has been filed under this subsection shall not limit the ability to take emergency measures under section 1021 (b) of this title. For the purposes of section 1024 of this title, if a permit has been deemed to have been granted under this subsection, that permit shall constitute a decision of the secretary. Sec. 2. 10 V.S.A. § 1253(d) is amended to read: (d) The board shall determine what degree of water quality and classification should be obtained and maintained for those waters not classified by it before 1981 following the procedures in sections 1254 and 1258 of this title. Those waters shall be classified in the public interest. The secretary shall revise all 17 basin plans by January 1, 2000 2006, and update them every five years thereafter. At least one basin plan shall be completed per year beginning in 1992. On or before January 1 of each year, the secretary shall report to the house committees on agriculture and natural resources and energy and to the senate committees on agriculture and natural resources and energy regarding the progress made and difficulties encountered in revising basin plans. By

76 JOURNAL OF THE SENATE January 1, 1993, the secretary shall prepare an overall management plan to ensure that the water quality standards are met in all state waters. Sec. 3. 10 V.S.A. § 1264 is amended to read: § 1264. STORMWATER MANAGEMENT (a) The runoff of stormwater that is collected and discharged to the waters of the state and which may be deleterious to the surrounding waters shall be subject to the provisions of this chapter. The general assembly finds that the management of stormwater runoff is necessary to reduce stream channel instability, pollution, siltation, sedimentation and local flooding, all of which have adverse impacts on the water and land resources of the state. The general assembly intends, by enactment of this section, to reduce the adverse effects of stormwater runoff. The general assembly determines that this intent may best be attained by a process that: assures broad participation; focuses upon the prevention of pollution; relies on structural treatment only when necessary; establishes and maintains accountability; tailors strategies to the region and the locale; assures an adequate funding source; builds broad - based programs; provides for the evaluation and appropriate evolution of programs; is consistent with the federal Clean Water Act and the state water quality standards; and accords appropriate recognition to the importance of community benefits that accompany an effective stormwater runoff management program. However, the The term "stormwater runoff," as used in this section, is limited to collected discharges from large scale developments to sensitive water quality areas, means precipitation that does not infiltrate into the soil, including material dissolved or suspended in it, but does not include discharges from undisturbed natural terrain or wastes from combined sewer overflows, and does not include ditching, tiling or the creation of grass waterways within agricultural lands. (b) The secretary shall prepare a plan for the management of collected stormwater runoff found by the department to be deleterious to receiving waters. The plan shall recognize that the runoff of stormwater is different from the discharge of sanitary and industrial wastes because of the influence of natural events of stormwater runoff, the variations in characteristics of those runoffs, and the increased stream flows and natural degradation of the receiving water quality at the time of discharge. The plan shall be cost effective and designed to minimize any adverse impact of stormwater runoff to waters of the state. By no later than April 1, 2001, the secretary shall prepare an enhanced stormwater management program and report to the general assembly on the content of that program. In developing the program, the secretary shall consult with the water resources board, affected municipalities, regional entities, other state and federal agencies, and members of the public. MONDAY, MAY 8, 2000 77 The secretary shall be responsible for implementation of the program. The secretary’s stormwater management program shall include, at a minimum, provisions that: (1) Indicate that the primary goals of the state program will be to assure compliance with the Vermont water quality standards and to maintain after development, as nearly as possible, the predevelopment runoff characteristics. (2) Allow for differences in hydrologic characteristics in different parts of the state. (3) Incorporate stormwater management into the basin planning process conducted under section 1253 of this title. (4) Assure consistency with applicable requirements of the federal Clean Water Act. (5) Address stormwater management in new development and redevelopment. (6) Control stormwater runoff from construction sites and other land disturbing activities. (7) Indicate that water quality mitigation practices may be required for any redevelopment of previously developed sites, even when pre - redevelopment runoff characteristics are proposed to be maintained. (8) Specify minimum requirements for inspection and maintenance of stormwater management practices. (9) Promote detection and elimination of improper or illegal connections and discharges. (10) Promote implementation of pollution prevention during the conduct of municipal operations. (11) Provide for a design manual that includes technical guidance for the management of stormwater runoff. (12) Encourage municipal governments to utilize existing regulatory and planning authority to implement improved stormwater management by providing technical assistance, training, research and coordination with respect to stormwater management technology, and by preparing and distributing a model local stormwater management ordinance. (13) Promote public education and participation among citizens and municipalities about cost-effective and innovative measures to reduce stormwater discharges to the waters of the state.

78 JOURNAL OF THE SENATE (c) The secretary shall submit the plan program report to the house committees on agriculture and natural resources and energy and to the senate committees on agriculture and energy and natural resources and energy. (d) The board shall consider the plan, and may amend it. It shall adopt the plan as a rule under the Administrative Procedure Act. No later than July 1, 2001, the secretary shall file with the secretary of state a proposed rule which contains the regulatory elements of the program. (e) After the plan program takes effect as a rule, the secretary shall issue require a discharge permit for discharge of collected stormwater runoff which achieves the goals of the plan consistent with, at a minimum, the December 15, 1997, agency of natural resources stormwater management procedures. The secretary may issue, condition, modify, revoke or deny discharge permits for collected stormwater runoff, as necessary to assure achievement of the goals of the program and compliance with state law and the federal Clean Water Act. The permit shall require as a condition of approval, proper operation and maintenance of any stormwater management facility and submittal by the permittee of a semiannual inspection report on the operation, maintenance and condition of the stormwater management system. The permit shall contain additional conditions, requirements and restrictions as the secretary deems necessary to achieve and maintain compliance with the water quality standards, including but not limited to requirements concerning recording, reporting and monitoring the effects on receiving waters due to operation and maintenance of stormwater management facilities. The secretary may issue general permits for classes of stormwater runoff permittees and may specify the period of time for which the permit is valid other than that specified in section 1263(d)(4) of this title when such is consistent with the goals provisions of this section. General permits shall be adopted and administered in accordance with the provisions of section 1263(b) of this title. No permit is required under this section for stormwater runoff from fields used for normal agricultural activities farms subject to accepted agricultural practices adopted by the commissioner of agriculture, food and markets or for stormwater runoff from silvicultural activities subject to accepted management practices adopted by the commissioner of forests, parks and recreation. (f) Where the secretary determines the water quality standards are not met in receiving waters due, in whole or in part, to collected stormwater runoff, the secretary may issue a general permit specific to the watershed or a permit for an individual project, but not a statewide general permit for such receiving waters. Any permit issued pursuant to this subsection shall include a compliance schedule of no longer than five years reasonably designed to assure attainment of the water quality standards in the receiving waters. This MONDAY, MAY 8, 2000 79 compliance schedule shall not require a permittee to take actions regarding discharge of collected stormwater runoff that are not subject to the control of the permittee. Sec. 4. 24 V.S.A. § 4407(20) is added to read: (20) Stormwater management and control. Any municipality may adopt zoning and subdivision regulations as necessary to implement stormwater management and control consistent with the program developed by the secretary of natural resources pursuant to 10 V.S.A. § 1264. Sec. 5. TRANSITION (a) Until the secretary has adopted rules implementing the enhanced program for management of stormwater runoff, the secretary’s existing program shall remain in effect, and may be amended by the secretary, under the authority of this section prior to the amendments included in this act. (b) The secretary shall conduct a study of stormwater management responsibilities suitable for implementation by municipalities and shall present to the legislature recommendations for promoting increased and cost effective municipal involvement in stormwater management. The study shall be conducted in cooperation with representatives of: municipal governments, conservation groups, fishing groups, the construction industry, agricultural interests, and the earth moving and shaping industry. Sec. 6. EFFECTIVE DATE This act shall take effect upon passage. And that the bill ought to pass in concurrence with such proposal of amendment. Thereupon, the bill was read the second time by title only pursuant to Rule 43, the proposal of amendment was agreed to, and third reading of the bill was ordered on a roll call, Yeas 26, Nays 0. Senator Sears having demanded the yeas and nays, they were taken and are as follows: Roll Call Those Senators who voted in the affirmative were: Ankeney, Backus, Bahre, Bartlett, Bloomer, Canns, Chard, Costes, Crowley, Cummings, Greenwood, Ide, Illuzzi, Kittell, Leddy, MacDonald, Maynard, Mazza, McCormack, Morrissey, Munt, Ready, Riehle, Rivers, Sears, Shumlin. Those Senators who voted in the negative were: None.

80 JOURNAL OF THE SENATE Those Senators absent and not voting were: Brownell, Doyle, Ptashnik, Spaulding. Proposals of Amendment; Third Reading Ordered Senator Ready, for the Committee on Natural Resources and Energy, to which was referred House bill entitled: H. 408. An act relating to historic downtown development. Reported recommending that the Senate propose to the House to amend the bill by striking out all after the enacting clause and inserting in lieu thereof the following: Sec. 1. 24 V.S.A. § 2791 is amended to read: § 2791. DEFINITIONS As used in this chapter: * * * (5) "Downtown development nonprofit corporation" means a nonprofit corporation that is designated to implement the community reinvestment agreement under subdivision 2793(b)(2) of this title. A nonprofit corporation established by the Vermont economic development authority shall be considered qualified for purposes of this chapter. “Local downtown organization” means either a nonprofit corporation, including a nonprofit corporation established by the Vermont economic development authority, or a board, council, or commission created by the legislative body of the municipality, whose primary purpose is to administer and implement the community reinvestment agreement and other matters regarding the revitalization of the downtown district under section 2793(b)(2) of this title. * * * (10) "Local board" means a board, council, commission or organization selected or appointed by the legislative body of a municipality which is empowered by law with the primary administration, oversight, regulation or adjudication of matters of a district listed in subdivision 2793(b)(1) of Title 32. “Expressway interchange area” means the part of a muni cipality that is located within 2,000 feet of the intersection of any entrance or exit ramp that provides access to any divided arterial highway for through traffic that has full control of access, and grade separation at major intersections. Sec. 2. 24 V.S.A. § 2793 is amended to read: § 2793. DESIGNATION OF DOWNTOWN DEVELOPMENT DISTRICTS MONDAY, MAY 8, 2000 81 (a) A municipality, by its legislative body, may apply to the state board for designation of a downtown area within that municipality as a downtown development district. An application by a municipality shall contain a map delineating the district, evidence that the regional planning commission and the regional development corporation have been notified of the municipality's intent to apply and information showing that the district meets the standards for designation established in subsection (b) of this section. (b) Within 45 days of receipt of a completed application, the state board shall designate a downtown development district if the state board finds, with respect to that district, that the municipality has: (1) a planning process confirmed under section 4350 of this title and has otherwise demonstrated a planning commitment through the adoption of a design control district, an historic district, an urban renewal district, or through the creation of a development review board authorized to undertake local Act 250 reviews pursuant to section 4449 of this title; and (2) provided a community reinvestment agreement that has been executed by the authorized representatives of the municipal government, business and property owners within the district, and community groups with an articulated purpose of supporting downtown interests, and that contains the following provisions: (A) a delineation of the area that meets the requirements set forth in subdivision 2791(3) of this title and that is part of or contains a district that is listed or eligible for listing on the National Register of Historic Places pursuant to 16 U.S.C. § 470a; (B) a capital improvement plan to improve or preserve public infrastructure within the district, including facilities for public transit, parking, pedestrian amenities, lighting and public space; (C) a source of funding and resources necessary to fulfill the community reinvestment agreement, demonstrated by a commitment by the legislative body of the municipality to implement at least one of the following: (i) a special assessment district created to provide funding to the downtown district; (ii) authority to enter into a tax stabilization agreement for the purposes of economic development in a downtown district; (iii) a commitment to implement a tax incremental financing district pursuant to subchapter 5 of chapter 53 of this title; or (iv) other multiple-year financial commitments among the parties subject to the approval of the state board;

82 JOURNAL OF THE SENATE (D) an organizational structure necessary to sustain a comprehensive long-term downtown revitalization effort, including a local board or designation of the entity that will qualify as the downtown development nonprofit corporation downtown organization as defined under subdivision 2791(5) of this title; (E) evidence that any private or municipal sewage system and private or public water supply serving the proposed downtown district is in compliance with the requirements of chapters 47 and 56 of Title 10, and that the municipality has dedicated a portion of any unallocated reserve capacity of the sewage and public water supply for growth within the proposed downtown district. Any municipality proposing a municipal sewage system and public water supply to serve the proposed downtown district shall provide evidence to the state board of a commitment to construct or maintain such a system and supply in compliance with requirements of chapters 47 and 56 of Title 10, or a commitment to construct, as applicable, a permittable potable water supply, wastewater system, indirect discharge or public water supply within no more than ten years. A commitment to construct does not relieve the property owners in the district from meeting the applicable regulations of the agency of natural resources regarding wastewater systems, potable water supplies, public water supplies, indirect discharges, and the subdivision of land. In the event that a municipality fails in its commitment to construct a municipal sewage system and public water supply, the state board shall revoke designation and the incentives that accrue pursuant to 24 V.S.A. § 2794 from that date forward, unless the municipality demonstrates to the state board that all good faith efforts were made and continue to be made to obtain the required approvals and permits from the agency of natural resources, and failure to construct was due to unavailability of state or federal matching loan funds. (c) A municipality with a designated downtown shall be eligible for additional incentives listed under subsection 2794(c) of this title, if the municipality demonstrates and the board determines both of the following: (1) That the municipality is making substantial progress in implementing measures to attain each of the goals established in subsection 4302(c) of this title. Implementation measures shall be designed to achieve the state goals that encourage the development of downtown areas and foster compact settlements separated by rural countryside, continue the use of farm and forest land for farming and managed forestry, and protect important features of the area, including open spaces and views, and important environmental and historic features. Implementation measures shall discourage scattered, low-density growth patterns and inefficient use of land and public services. The implementation measures shall be designed to guide public investment in MONDAY, MAY 8, 2000 83 support of these goals. Implementation measures shall be commensurate with the resources of the municipality, the status of the municipality when it commenced planning, and the length of time that the municipality has been planning, and shall include the adoption of bylaws and ordinances, where applicable. These measures may include easements, land trust actions, a town fund for the protection of land, trail networks and their management, agri- tourism development plans, farm stands, affordable housing for rural farm and forestry workers, sites for sawmills or other forestry infrastructure, other land protection strategies, public education activities, and local land use controls. (2) That the municipality has adopted under chapter 117 of this title a statement of objectives, a plan, and bylaws consistent with the plan, for present and prospective development of expressway interchange areas. The plan and bylaws shall include provisions for the protection of public investment in the interstate interchanges, the preservation of scenic qualities adjacent to the interchange, the achievement of the state goals of compact settlements separated by rural countryside, and the management of access to properties. (d) The state board shall review a community's designation every three years. If a municipality fails to demonstrate substantial progress in implementing the municipal plan, the board shall remove the district’s designation, with removal not affecting any of the district’s previously awarded benefits. If the state board determines that the downtown development district no longer meets the standards for designation established in subsection (b) of this section, it may take any of the following actions: (1) require corrective action; (2) provide technical assistance through the Vermont downtown program; or (3) remove the district's designation, with such removal not affecting any of the district's previously awarded benefits. Sec. 3. 24 V.S.A. § 2794(c) and (d) are added to read: (c) A municipality with a designated downtown that has been determined eligible for additional incentives under subsection 2793(c) of this title shall be eligible for the following: (1) notwithstanding the provisions of sections 4755 and 4758 of this title, placement on the secretary’s annual project priority list for loans from the Vermont pollution control revolving fund or the Vermont water supply revolving fund under chapter 120 of this title, provided the municipality otherwise meets the eligibility criteria for these loans. A loan granted to a municipality under this subdivision shall be a zero interest loan;

84 JOURNAL OF THE SENATE (2) eligibility for prioritized planning funds from the municipal and regional planning fund, established under section 4306 of this title; (3) eligibility on a priority basis, beginning in fiscal year 2002, for aid from state general fund and transportation fund allocations for designated downtowns, or from the state infrastructure bank, created under 10 V.S.A. chapter 12, to finance any or all of the following, in addition to other eligible infrastructure: (A) lighting, benches, trees, signs, and other components of streetscape projects; (B) humps, roundabouts, and other traffic-calming projects; (C) sidewalk construction or other special pedestrian construction projects, such as alternative paving and pedestrian signs; (4) exemption from act 250 fees. Applications involving property located entirely within the downtown district shall be exempt from act 250 fees established under 10 V.S.A. § 6083a; (5) whenever the commissioner of the department of buildings and general services or other state officials in charge of selecting a site are planning to lease or construct buildings suitable to being located in a downtown, the option of utilizing existing space in a downtown development district shall be given thorough investigation and priority. (d) If a designated downtown development district is severely damaged by fire, flood, or other disaster, the board shall give the district special priority in the allocation of benefits. Sec. 4. 24 V.S.A. § 4407 is amended to read: § 4407. PERMITTED TYPES OF REGULATIONS Any municipality may adopt zoning regulations that may include, but shall not be limited to, any of the following provisions: * * * (20) Ridgeline and hilltop protection. Pursuant to the authority of this chapter, any municipality may adopt zoning and subdivision regulations that provide for development restrictions on ridgelines or hilltops, or both, as defined in the regulations. In adopting regulations for the protection of ridgelines or hilltops, a municipality shall not be subject to the extraordinary majority voting provisions established in subsection 4404(e) of this title. Sec. 5. 24 V.S.A. § 4753(a)(1), (2), and (3) are amended to read: (a) There is hereby established a series of special funds to be known as: MONDAY, MAY 8, 2000 85 (1) The Vermont environmental protection agency (EPA) pollution control revolving fund which shall be used to provide loans to municipalities for planning sewage systems and sewage disposal plants as defined in sections 3501(6) and 3601 of this title, for constructing publicly-owned sewage systems and sewage disposal plants as defined in sections 3501(6) and 3601 of this title, and for implementing related management programs. The fund also may be used to provide municipally sponsored loans for: decentralized wastewater systems in rural and suburban areas to correct existing water pollution problems, including new system installation of single and clustered systems; replacement, upgrade, or modification of inadequate or failing systems; prevention of water pollution in compact village centers; costs associated with the establishment of a centralized management entity; and capital costs associated with centralized management systems. “Decentralized” wastewater systems include onsite disposal systems such as septic systems and alternative systems such as mounds and cluster systems. (2) The Vermont pollution control revolving fund which shall be used to provide loans to municipalities for planning pollution control facilities and for constructing publicly-owned pollution control facilities. The fund also may be used to provide municipally sponsored loans for decentralized wastewater systems in rural and suburban areas to correct existing water pollution problems. (3) The Vermont environmental protection agency (EPA) drinking water state revolving fund which shall be used: (A) to provide loans to municipalities and certain privately-owned water systems for: (A)(i) planning, designing, constructing, repairing or improving a public water system in order to comply with state and federal standards and protect public health; and (B)(ii) implementing related management programs; (B) to provide municipally sponsored loans for decentralized drinking water systems in rural and suburban areas to correct drinking water problems. Sec. 6. 24 V.S.A. § 4758 is amended to read: § 4758. LOAN PRIORITIES Periodically, and at least annually, the secretary shall prepare and certify to the bond bank a project priority list of those municipalities whose publicly- owned projects are eligible for financing or assistance under this chapter. In

86 JOURNAL OF THE SENATE determining financing priority under this chapter, the secretary of the agency having jurisdiction shall apply the following criteria: (1) the probable public benefit to be gained or preserved by the project to be financed; (2) the long-term costs and the resulting benefits to be derived from the project. In determining benefits, induced growth from a project that is not consistent with a town, city, or village plan, duly adopted under 24 V.S.A. chapter 117, will not be considered; (3) the cost of comparable credit or financing alternatives available to the municipality; (4) the existence of immediate public health, safety and welfare factors, and compliance therewith; (5) the existence of an emergency constituting a threat to public health, safety and welfare; and (6) the current area and population to be served by the proposed project; (7) whether all or a substantial portion of the project is located in a downtown designated under section 2793 of this title. For purposes of this section, a “substantial portion” of a project shall be deemed to be located in a designated downtown if 50 percent or more of the project construction costs are associated with the designated downtown. The secretary shall give projects meeting this criterion preference over other projects with equivalent priority points but which are not located in a designated downtown; and (8) whether and the extent to which the project and foreseeable induced growth is consistent with community character including community size, land use composition, road network, and scale of development and with protection of important natural resources including forestry and agricultural soils, water quality, habitat, open space, and views. (b) Before including on the priority list a project that serves an area located outside a downtown designated under section 2793 of this title, the secretary, in consultation with the municipality, shall determine that the project will not promote scattered, low-density growth patterns and inefficient use of land and public services, except the secretary may include projects as necessary to allow reasonable growth capacity in limited areas that are contiguous to established growth centers or that are in-fill areas in existing growth areas, or to abate documented threats to public health. (c) In preparing the project priority list, the secretary shall give due consideration to funding decentralized wastewater and potable water systems MONDAY, MAY 8, 2000 87 as an alternative to publicly-owned, centralized sewage treatment and drinking water systems. The secretary may fund a decentralized system whenever the secretary determines that the decentralized system is appropriate technology and a cost effective option for the particular conditions of the area. Sec. 7. 30 V.S.A. § 218(d) is added to read: (d) In any rate investigation in which the issue is whether to disallow the expenditures of a company for activities intended to improve aesthetic factors on surrounding areas, the board shall include aesthetic factors among the economic and environmental costs and benefits that it considers. Sec. 8. 32 V.S.A. § 5930n is amended to read: § 5930n. TAX CREDIT FOR SUBSTANTIAL REHABILITATION OF HISTORIC BUILDINGS ALSO CLAIMING FEDERAL REHABILITATION TAX CREDIT * * * (b) State board credit allocation. (1) Prior to the commencement of any rehabilitation work, a An owner or long-term lessee of a building in a downtown development district designated under the provisions of chapter 76A of Title 24 may apply to the state board for an historic building tax credit allocation under this section. The board shall grant approval for an historic building tax credit allocation, and issue a letter of approval, if it finds that the applicant meets the provisions of subdivision (2) of this subsection. The burden of proof shall be on the applicant. * * * (f)(1) In any calendar fiscal year after 1998, the state board shall not may award a total amount of tax credits to all applicants under this subchapter and, subchapter 11G of this chapter that exceeds $300,000.00, and section 9819 of this title concerning the reallocation of sales tax revenues, not to exceed $2,300,000.00 nor more than 40 percent of the same amount for any single municipality. * * * (4) If within five years after the building is placed in service upon completion of the certified rehabilitation project any of the following events occur, the taxpayer shall be liable for a recapture penalty: (A) the owner of the building for which a tax credit has been awarded under this subchapter disposes of the building; or

88 JOURNAL OF THE SENATE (B) the division finds that the taxpayer performed any work on the building not contained in the application for certified rehabilitation as defined in subdivision (a)(3) of this section or not otherwise certified by the National Park Service, or the National Park Service has revoked certification for unapproved alterations or for work not done as described in the historic preservation certification application, or the taxpayer has knowingly failed to supply information, or knowingly failed to supply true information required by the division or the state board for certification under this section; or (C) the taxpayer failed to satisfy any requirement of certification imposed by the state board in the tax credit allocation; or (D) the taxpayer performed any subsequent work during the five-year period that resulted in loss of status as a certified rehabilitation. * * * Sec. 9. 32 V.S.A. § 5930a(l) is added to read: (l) Approval shall be granted under this section for any application only if the development cabinet, in consultation with the municipality to which the application pertains, finds that the enterprise will not promote scattered, low density growth patterns and inefficient use of land and public services. Decisions of the development cabinet under this subsection shall be similar to decisions of the economic progress council under subsection (g) of this section, in that they shall not be subject to contested case hearing requirements and shall be final and not subject to judicial review. Sec. 10. 32 V.S.A. § 5930p is amended to read: § 5930p. REHABILITATION TAX CREDIT FOR OLDER OR HISTORIC BUILDINGS * * * (b)(1) Prior to the commencement of any rehabilitation work, a property owner or lessee may apply to the state board for a rehabilitation tax credit allocation under this section. The state board, within 45 days of receipt of a completed application, shall decide, based on the availability of credit, whether or not to grant a rehabilitation tax credit allocation. In granting such tax credits, the board shall issue a letter of approval after receiving certification by the local board of the district in which the project is located that the project meets the requirements of subdivisions (2) and (3) of this subsection. In all instances the burden of proof shall be upon the applicant. * * * (3) The local board shall also find all of the following: MONDAY, MAY 8, 2000 89 (A) the qualified expenditures for a 24-month period selected by the taxpayer and ending within the taxable year exceed $5,000.00; and (B) the total qualified rehabilitation expenditures of the project do not exceed the adjusted basis of the structure if the structure is listed or, individually eligible for listing in the National Register of Historic Places as determined by the local board in consultation with the division, or the application is solely for the expenses of an exterior elevator access in addition to a structure otherwise undergoing a rehabilitation that applies for the state tax credit under subchapter 11F of this chapter and for which the costs of such an addition is not a qualified rehabilitation expenditure; and (f)(1) In any calendar fiscal year after 1998 the state board shall not may award a total amount of tax credits to all applicants under this subchapter and , subchapter 11F of this chapter that exceeds $300,000.00, and section 9819 of this title concerning the reallocation of sales tax revenues, not to exceed $2,300,000.00 nor more than 40 percent of the same amount for any single municipality. (2) The owner or long-term lessee of a building that is listed in the National Register of Historic Places, or is determined to be individually eligible by the division as part of the local board's review of the application for the tax credit allocation, whose proposed qualified rehabilitation expenses expenditures equal or exceed the adjusted basis of the building, shall be eligible for a tax credit under subchapter 11F of this chapter, but shall not be eligible for a tax credit under this subchapter. * * * (6) If within five years after the building is placed in service upon completion of the qualified rehabilitation project any of the following events occur, the taxpayer shall be liable for a recapture penalty: (A) the owner of a building for which a tax credit has been awarded under this subchapter disposes of the building; or (B) the local board finds that the taxpayer performed any remedial work on the building not contained in the application, knowingly failed to supply any information or true information required by the local board for certification under this section, or failed to satisfy any requirement of certification imposed by the local board; or * * * Sec. 11. 32 V.S.A. § 9819 is amended to read: § 9819. REALLOCATION OF RECEIPTS

90 JOURNAL OF THE SENATE (a) Receipts from the tax imposed by this chapter on sales of construction materials used in qualified projects under chapter 76A of Title 24 shall be allocated by the commissioner of taxes and paid to the municipality in which the project is located in the following amounts pursuant to the following requirements: (1) In a municipality in which the population is 7,500 residents or less, all receipts from sales in excess of $100,000.00 of construction materials used in each separate qualified project located in that municipality, provided that a total of no more than $600,000.00 may be allocated under this section to all municipalities of 7,500 residents or less. (2) In a municipality in which the population is greater than 7,500 residents but less than 30,000 residents, all receipts from sales in excess of $200,000.00 of construction materials used in each separate qualified project located in that municipality, provided that a total of no more than $600,000.00 may be allocated under this section to all municipalities of more than 7,500 but less than 30,000 residents. (3) In a municipality in which the population is more than 30,000 residents, all receipts from sales in excess of $1,000,000.00 of construction materials used in each separate qualified project located in that municipality, provided that no more than $800,000.00 may be allocated under this section to all municipalities of more than 30,000 residents. (b) In any fiscal year after 1998, the Vermont downtown development board established under 24 V.S.A. § 2792 may certify for allocation to municipalities sales tax revenues under this section, in combination with the total amount of rehabilitation tax credits awarded to all applicants under subchapters 11F and 11G of chapter 151 of this title, not to exceed $2,300,000.00 nor more than 40 percent of the same amount for any single municipality. (c) For the purposes of this section: (1) "Construction materials" means all materials purchased by the owner or owner's representative, project manager, construction manager, general contractor, or subcontractor to be incorporated into a qualified project. (2) "Qualified project" means expansion or rehabilitation of contiguous real property that is or will be used at the completion of the expansion or rehabilitation as a structure in a downtown development district designated under chapter 76A of Title 24, but only to the extent that the expansion or rehabilitation becomes an integral component of the real property and the project does not seek qualification for either tax credit authorized under subchapter 11F or subchapter 11G of chapter 151 of Title 32. "Qualified MONDAY, MAY 8, 2000 91 project" also means new construction of contiguous real property that will be used at the completion of the construction as a structure in a downtown development district designated under chapter 76A of Title 24 but only to the extent that the new construction is compatible with the buildings that contribute to the integrity of the district in terms of materials, features, size, scale and proportion, and massing of buildings. (c)(d) The owner or owner's representative of a qualified project shall report all sales taxes paid on purchases of qualified construction materials to the treasurer of the municipality in which the project is located. The treasurer of the municipality shall submit requests for allocation of revenues under this section to the Vermont downtown development board established under section 2792 of Title 24 and the board shall certify the qualified projects and sales taxes paid thereon to the commissioner of taxes, who shall allocate the appropriate amounts of sales tax revenues due under this section to the municipalities. Revenues allocated to a municipality under this section shall be used by the municipality only for expenditures related to the support of the qualified project located in that municipality which generated those revenues. Sec. 12. STUDY ON LAND USE ISSUES RELATED TO INTERCHANGES AND BYPASSES (a) There is established a study committee on land use issues related to interchanges and bypasses. The committee shall consist of four members of the senate, appointed by the committee on committees, including at least one member each from the committees on natural resources and energy, transportation, and general affairs and housing; and four members appointed by the speaker of the house, including at least one member each from the committees on natural resources and energy; transportation; and general, housing, and military affairs. The committee shall conduct a study which shall determine and make recommendations regarding: (1) How to protect state public investment , and implement access management and land use planning policies when developing expressway interchange areas. (2) How Vermont can, based on approaches taken in other states, establish enforceable transportation and land use planning agreements between the state of Vermont and municipalities prior to the construction of new interchanges or for the future development of existing expressway interchange areas. (3) Land use effects and the economic impacts on existing downtowns of proposed bypasses in Vermont, using the Chittenden County circumferential highway project for analysis.

92 JOURNAL OF THE SENATE (4) The impacts of transportation investment alternatives to these bypasses on land use patterns and downtown economic activity. (5) State and federal tax policies, budget expenditures and fees that could be modified or established to enhance downtown viability, encourage smart growth, and reduce sprawl. (b) The committee shall be entitled to staff support from the legislative council and the joint fiscal office, and shall receive assistance, on request, from state agencies. The committee may meet up to 10 times, and committee members shall be entitled to compensation and expenses, as provided in 2 V.S.A. § 406. The committee’s report shall consist of draft legislation, along with supporting documentation that it deems necessary to implement any recommendation by the committee and shall be submitted to the legislature by January 15, 2001. Sec. 13. APPROPRIATIONS For fiscal year 2001, $96,000.00 shall be available from the municipal allocation from the municipal and regional planning fund on a competitive basis to designated downtowns for implementation of their plans, as provided under 24 V.S.A. § 2793(c)(1). And that the bill ought to pass in concurrence with such proposals of amendment. Senator Rivers, for the Committee on Finance, to which the bill was referred, reported recommending that the bill be amended as recommended by the Committee on Natural Resources and Energy with the following amendments thereto: First: In Sec. 3, in §2794(c), by striking out subdivision (2) in its entirety. Second: In Sec. 3, in §2794(c), by striking out subdivision (4) in its entirety and by renumbering the remaining subdivisions in subsection (c) to be numerically correct. Third: In Sec. 6, in §4758, by striking out subsection (b) in its entirety, and by relettering subsection (c) to be subsection (b). Fourth: In Sec. 7, in §218(d), before the word “activities”, by inserting the word “utility”. Fifth: In Sec. 9, in §5930a(l), in the first sentence, by striking out the words “development cabinet” and by inserting in lieu thereof the words “economic progress council”, and by deleting the second sentence. Sixth: By striking out Sec. 12, and by inserting a new Sec. 12 to read: MONDAY, MAY 8, 2000 93 (a) The Secretary of Transportation, in collaboration with the Secretary of Commerce and Community Development, the Secretary of Natural Resources, a representative of the Vermont League of Cities and Towns, a representative of the Vermont Association of Planning and Development Agencies, a representative of the Vermont Planners Association, a representative of a regional transportation advisory committee appointed by the Secretary of Transportation, a representative of the business community appointed by the Secretary of Transportation, and a representative of the Vermont Forum on Sprawl shall conduct a study which shall make recommendations regarding: (1) How to protect state public investment and implement access management and land use policies when developing expressway interchange areas: (2) How Vermont can establish enforceable transportation and land use planning agreements between the state and municipalities prior to construction of new interchanges or for the future development of expressway interchange areas; (3) State and federal tax policies, budget expenditures and fees that could be modified or established to enhance downtown viability, encourage smart growth, and reduce sprawl; (b) The Secretary of Transportation shall report to the General Assembly by January 15, 2001, on the results of this study and on any recommended courses of action. Seventh: By striking out Sec. 13 in its entirety. And that the bill ought to pass in concurrence with such proposals of amendment. Senator Ready, for the Committee on Appropriations, to which the bill was referred, reported that the bill ought to pass in concurrence. Thereupon, the bill was read the second time by title only pursuant to Rule 43, and pending the question, Shall the Senate propose to the House to amend the bill as recommended by the Committee on Natural Resources and Energy? Senator Ready requested and was granted leave to substitute a proposal of amendment for the report of the Committee on Natural Resources and Energy which is as follows: By striking out all after the enacting clause and inserting in lieu thereof the following: Sec. 1. 24 V.S.A. § 2791 is amended to read: § 2791. DEFINITIONS

94 JOURNAL OF THE SENATE As used in this chapter: * * * (5) "Downtown development nonprofit corporation" means a nonprofit corporation that is designated to implement the community reinvestment agreement under subdivision 2793(b)(2) of this title. A nonprofit corporation established by the Vermont economic development authority shall be considered qualified for purposes of this chapter. “Local downtown organization” means either a nonprofit corporation, including a nonprofit corporation established by the Vermont economic development authority, or a board, council, or commission created by the legislative body of the municipality, whose primary purpose is to administer and implement the community reinvestment agreement and other matters regarding the revitalization of the downtown district under section 2793(b)(2) of this title. * * * (10) "Local board" means a board, council, commission or organization selected or appointed by the legislative body of a municipality which is empowered by law with the primary administration, oversight, regulation or adjudication of matters of a district listed in subdivision 2793(b)(1) of Title 32. “Expressway interchange area” means the part of a muni cipality that is located within 2,000 feet of the intersection of any entrance or exit ramp that provides access to any divided arterial highway for through traffic that has full control of access, and grade separation at major intersections. Sec. 2. 24 V.S.A. § 2793 is amended to read: § 2793. DESIGNATION OF DOWNTOWN DEVELOPMENT DISTRICTS (a) A municipality, by its legislative body, may apply to the state board for designation of a downtown area within that municipality as a downtown development district. An application by a municipality shall contain a map delineating the district, evidence that the regional planning commission and the regional development corporation have been notified of the municipality's intent to apply and information showing that the district meets the standards for designation established in subsection (b) of this section. (b) Within 45 days of receipt of a completed application, the state board shall designate a downtown development district if the state board finds, with respect to that district, that the municipality has: (1) a planning process confirmed under section 4350 of this title and has otherwise demonstrated a planning commitment through the adoption of a design control district, an historic district, an urban renewal district, or through MONDAY, MAY 8, 2000 95 the creation of a development review board authorized to undertake local Act 250 reviews pursuant to section 4449 of this title; and (2) provided a community reinvestment agreement that has been executed by the authorized representatives of the municipal government, business and property owners within the district, and community groups with an articulated purpose of supporting downtown interests, and that contains the following provisions: (A) a delineation of the area that meets the requirements set forth in subdivision 2791(3) of this title and that is part of or contains a district that is listed or eligible for listing on the National Register of Historic Places pursuant to 16 U.S.C. § 470a; (B) a capital improvement plan to improve or preserve public infrastructure within the district, including facilities for public transit, parking, pedestrian amenities, lighting and public space; (C) a source of funding and resources necessary to fulfill the community reinvestment agreement, demonstrated by a commitment by the legislative body of the municipality to implement at least one of the following: (i) a special assessment district created to provide funding to the downtown district; (ii) authority to enter into a tax stabilization agreement for the purposes of economic development in a downtown district; (iii) a commitment to implement a tax incremental financing district pursuant to subchapter 5 of chapter 53 of this title; or (iv) other multiple-year financial commitments among the parties subject to the approval of the state board; (D) an organizational structure necessary to sustain a comprehensive long-term downtown revitalization effort, including a local board or designation of the entity that will qualify as the downtown development nonprofit corporation downtown organization as defined under subdivision 2791(5) of this title; (E) evidence that any private or municipal sewage system and private or public water supply serving the proposed downtown district is in compliance with the requirements of chapters 47 and 56 of Title 10, and that the municipality has dedicated a portion of any unallocated reserve capacity of the sewage and public water supply for growth within the proposed downtown district. Any municipality proposing a municipal sewage system and public water supply to serve the proposed downtown district shall provide evidence to the state board of a commitment to construct or maintain such a system and

96 JOURNAL OF THE SENATE supply in compliance with requirements of chapters 47 and 56 of Title 10, or a commitment to construct, as applicable, a permittable potable water supply, wastewater system, indirect discharge or public water supply within no more than ten years. A commitment to construct does not relieve the property owners in the district from meeting the applicable regulations of the agency of natural resources regarding wastewater systems, potable water supplies, public water supplies, indirect discharges, and the subdivision of land. In the event that a municipality fails in its commitment to construct a municipal sewage system and public water supply, the state board shall revoke designation and the incentives that accrue pursuant to 24 V.S.A. § 2794 from that date forward, unless the municipality demonstrates to the state board that all good faith efforts were made and continue to be made to obtain the required approvals and permits from the agency of natural resources, and failure to construct was due to unavailability of state or federal matching loan funds. (c) A municipality with a designated downtown shall be eligible for additional incentives listed under subsection 2794(c) of this title, if the municipality demonstrates and the board determines both of the following: (1) That the municipality is making substantial progress in implementing measures to attain each of the goals established in subsection 4302(c) of this title. Implementation measures shall be designed to achieve the state goals that encourage the development of downtown areas and foster compact settlements separated by rural countryside, continue the use of farm and forest land for farming and managed forestry, and protect important features of the area, including open spaces and views, and important environmental and historic features. Implementation measures shall discourage scattered, low-density growth patterns and inefficient use of land and public services. The implementation measures shall be designed to guide public investment in support of these goals. Implementation measures shall be commensurate with the resources of the municipality, the status of the municipality when it commenced planning, and the length of time that the municipality has been planning, and shall include the adoption of bylaws and ordinances, where applicable. These measures may include easements, land trust actions, a town fund for the protection of land, trail networks and their management, agri-tourism development plans, farm stands, affordable housing for rural farm and forestry workers, sites for sawmills or other forestry infrastructure, other land protection strategies, public education activities, and local land use controls. (2) That the municipality has adopted under chapter 117 of this title a statement of objectives, a plan, and bylaws consistent with the plan, for present and prospective development of expressway interchange areas. The plan and MONDAY, MAY 8, 2000 97 bylaws shall include provisions for the protection of public investment in the interstate interchanges, the preservation of scenic qualities adjacent to the interchange, the achievement of the state goals of compact settlements separated by rural countryside, and the management of access to properties. (d) The state board shall review a community's designation every three years. If a municipality fails to demonstrate substantial progress in implementing the municipal plan, the board shall remove the district’s designation, with removal not affecting any of the district’s previously awarded benefits. If the state board determines that the downtown development district no longer meets the standards for designation established in subsection (b) of this section, it may take any of the following actions: (1) require corrective action; (2) provide technical assistance through the Vermont downtown program; or (3) remove the district's designation, with such removal not affecting any of the district's previously awarded benefits. Sec. 3. 24 V.S.A. § 2794(c) and (d) are added to read: (c) A municipality with a designated downtown that has been determined eligible for additional incentives under subsection 2793(c) of this title shall be eligible for the following: (1) notwithstanding the provisions of sections 4755 and 4758 of this title, placement on the secretary’s annual project priority list for loans from the Vermont pollution control revolving fund or the Vermont water supply revolving fund under chapter 120 of this title, provided the municipality otherwise meets the eligibility criteria for these loans. A loan granted to a municipality under this subdivision shall be a zero interest loan; (2) eligibility on a priority basis, beginning in fiscal year 2002, for aid from state general fund and transportation fund allocations for designated downtowns, or from the state infrastructure bank, created under 10 V.S.A. chapter 12, to finance any or all of the following, in addition to other eligible infrastructure: (A) lighting, benches, trees, signs, and other components of streetscape projects; (B) humps, roundabouts, and other traffic-calming projects; (C) sidewalk construction or other special pedestrian construction projects, such as alternative paving and pedestrian signs;

98 JOURNAL OF THE SENATE (3) exemption from act 250 fees. Applications involving property located entirely within the downtown district shall be exempt from act 250 fees established under 10 V.S.A. § 6083a; (4) whenever the commissioner of the department of buildings and general services or other state officials in charge of selecting a site are planning to lease or construct buildings suitable to being located in a downtown, the option of utilizing existing space in a downtown development district shall be given thorough investigation and priority. (d) If a designated downtown development district is severely damaged by fire, flood, or other disaster, the board shall give the district special priority in the allocation of benefits. Sec. 4. 24 V.S.A. § 4407 is amended to read: § 4407. PERMITTED TYPES OF REGULATIONS Any municipality may adopt zoning regulations that may include, but shall not be limited to, any of the following provisions: * * * (20) Ridgeline and hilltop protection. Pursuant to the authority of this chapter, any municipality may adopt zoning and subdivision regulations that provide for development restrictions on ridgelines or hilltops, or both, as defined in the regulations. In adopting regulations for the protection of ridgelines or hilltops, a municipality shall not be subject to the extraordinary majority voting provisions established in subsection 4404(e) of this title. Sec. 5. 24 V.S.A. § 4753(a)(1), (2), and (3) are amended to read: (a) There is hereby established a series of special funds to be known as: (1) The Vermont environmental protection agency (EPA) pollution control revolving fund which shall be used to provide loans to municipalities for planning sewage systems and sewage disposal plants as defined in sections 3501(6) and 3601 of this title, for constructing publicly-owned sewage systems and sewage disposal plants as defined in sections 3501(6) and 3601 of this title, and for implementing related management programs. The fund also may be used to provide municipally sponsored loans for: decentralized wastewater systems in rural and suburban areas to correct existing water pollution problems, including new system installation of single and clustered systems; replacement, upgrade, or modification of inadequate or failing systems; prevention of water pollution in compact village centers; costs associated with the establishment of a centralized management entity; and capital costs associated with centralized management systems. “Decentralized” wastewater MONDAY, MAY 8, 2000 99 systems include onsite disposal systems such as septic systems and alternative systems such as mounds and cluster systems. (2) The Vermont pollution control revolving fund which shall be used to provide loans to municipalities for planning pollution control facilities and for constructing publicly-owned pollution control facilities. The fund also may be used to provide municipally sponsored loans for decentralized wastewater systems in rural and suburban areas to correct existing water pollution problems. (3) The Vermont environmental protection agency (EPA) drinking water state revolving fund which shall be used: (A) to provide loans to municipalities and certain privately-owned water systems for: (A)(i) planning, designing, constructing, repairing or improving a public water system in order to comply with state and federal standards and protect public health; and (B)(ii) implementing related management programs; (B) to provide municipally sponsored loans for decentralized drinking water systems in rural and suburban areas to correct drinking water problems. Sec. 6. 24 V.S.A. § 4758 is amended to read: § 4758. LOAN PRIORITIES (a) Periodically, and at least annually, the secretary shall prepare and certify to the bond bank a project priority list of those municipalities whose publicly- owned projects are eligible for financing or assistance under this chapter. In determining financing priority under this chapter, the secretary of the agency having jurisdiction shall apply the following criteria: (1) the probable public benefit to be gained or preserved by the project to be financed; (2) the long-term costs and the resulting benefits to be derived from the project. In determining benefits, induced growth from a project that is not consistent with a town, city, or village plan, duly adopted under 24 V.S.A. chapter 117, will not be considered; (3) the cost of comparable credit or financing alternatives available to the municipality; (4) the existence of immediate public health, safety and welfare factors, and compliance therewith;

100 JOURNAL OF THE SENATE (5) the existence of an emergency constituting a threat to public health, safety and welfare; and (6) the current area and population to be served by the proposed project; (7) whether all or a substantial portion of the project is located in a downtown designated under section 2793 of this title. For purposes of this section, a “substantial portion” of a project shall be deemed to be located in a designated downtown if 50 percent or more of the project construction costs are associated with the designated downtown. The secretary shall give projects meeting this criterion preference over other projects with equivalent priority points but which are not located in a designated downtown; and (8) whether and the extent to which the project and foreseeable induced growth is consistent with community character including community size, land use composition, road network, and scale of development and with protection of important natural resources including forestry and agricultural soils, water quality, habitat, open space, and views. (b) Before including on the priority list a project that serves an area located outside a downtown designated under section 2793 of this title, the secretary, in consultation with the municipality, shall determine that the project will not promote scattered, low-density growth patterns and inefficient use of land and public services, except the secretary may include projects as necessary to allow reasonable growth capacity in limited areas that are contiguous to established growth centers or that are in-fill areas in existing growth areas, or to abate documented threats to public health, or to serve the expansion of existing industrial sites or the buildout of existing industrial parks. (c) In preparing the project priority list, the secretary shall give due consideration to funding decentralized wastewater and potable water systems as an alternative to publicly-owned, centralized sewage treatment and drinking water systems. The secretary may fund a decentralized system whenever the secretary determines that the decentralized system is appropriate technology and a cost effective option for the particular conditions of the area. (d) In considering the inclusion of projects that will serve the expansion of existing industrial sites that are not contiguous with established growth centers or the buildout of existing industrial parks that are not contiguous with established growth centers, the secretary shall give due consideration to decentralized wastewater and potable water systems. In cases where decentralized systems are not feasible, the secretary shall consider, when awarding priority points, how the application will influence Vermont’s traditional settlement patterns, in both the community and the region. MONDAY, MAY 8, 2000 101 Sec. 7. 30 V.S.A. § 218(d) is added to read: (d) In any rate investigation in which the issue is whether to disallow the expenditures of a company for utility activities intended to improve aesthetic factors on surrounding areas, the board shall include aesthetic factors among the economic and environmental costs and benefits that it considers. Sec. 8. 32 V.S.A. § 5930n is amended to read: § 5930n. TAX CREDIT FOR SUBSTANTIAL REHABILITATION OF HISTORIC BUILDINGS ALSO CLAIMING FEDERAL REHABILITATION TAX CREDIT * * * (b) State board credit allocation. (1) Prior to the commencement of any rehabilitation work, a An owner or long-term lessee of a building in a downtown development district designated under the provisions of chapter 76A of Title 24 may apply to the state board for an historic building tax credit allocation under this section. The board shall grant approval for an historic building tax credit allocation, and issue a letter of approval, if it finds that the applicant meets the provisions of subdivision (2) of this subsection. The burden of proof shall be on the applicant. * * * (f)(1) In any calendar fiscal year after 1998, the state board shall not may award a total amount of tax credits to all applicants under this subchapter and, subchapter 11G of this chapter that exceeds $300,000.00, and section 9819 of this title concerning the reallocation of sales tax revenues, not to exceed $2,300,000.00 nor more than 40 percent of the same amount for any single municipality. * * * (4) If within five years after the building is placed in service upon completion of the certified rehabilitation project any of the following events occur, the taxpayer shall be liable for a recapture penalty: (A) the owner of the building for which a tax credit has been awarded under this subchapter disposes of the building; or (B) the division finds that the taxpayer performed any work on the building not contained in the application for certified rehabilitation as defined in subdivision (a)(3) of this section or not otherwise certified by the National Park Service, or the National Park Service has revoked certification for unapproved alterations or for work not done as described in the historic

102 JOURNAL OF THE SENATE preservation certification application, or the taxpayer has knowingly failed to supply information, or knowingly failed to supply true information required by the division or the state board for certification under this section; or (C) the taxpayer failed to satisfy any requirement of certification imposed by the state board in the tax credit allocation; or (D) the taxpayer performed any subsequent work during the five-year period that resulted in loss of status as a certified rehabilitation. * * * Sec. 9. 32 V.S.A. § 5930a(c) is amended to read: (c) The council shall review each application under subsection (b) of this section by evaluating its overall consistency with the following guidelines: (1) The degree to which the enterprise creates new full-time jobs that are filled by Vermont residents, not including those jobs or employees transferred from an existing business in the state or replacements for vacated or terminated positions with the applicant business, and provides opportunities that increase income, reduce unemployment, and reduce vacancy rates. New jobs include those which exceed the average annual employment level in Vermont for the applicant business in the preceding two fiscal years; (2) The degree to which the new jobs pay more than the prevailing regional wage, provide employee benefits, and offer opportunities for advancement and professional growth; (3) The creation of positive fiscal impacts on the state, the host municipality and region as projected by the cost-benefit model applied by the council under subsection (d) of this section; (4) The degree to which the enterprise uses Vermont's resources; (5) The degree to which the enterprise is welcomed by the host municipality, including conformance with appropriate duly adopted town and regional plans, and conformance with all permit and approval requirements; (6) The degree to which the enterprise strengthens the quality of life in the host municipality and fosters cooperation within the host municipality's region; (7) The degree to which the enterprise uses existing infrastructure or is a downtown redevelopment project; (8) The degree to which the enterprise protects or improves Vermont's natural, historical, and cultural resources, and enhances Vermont's historic settlement patterns.; MONDAY, MAY 8, 2000 103 (9) The degree to which the enterprise encourages locally designated growth areas and historic settlement patterns of compact village and urban centers separated by rural countryside, and prevents scattered, low density growth patterns and inefficient use of land and public services. Sec. 10. 32 V.S.A. § 5930p is amended to read: § 5930p. REHABILITATION TAX CREDIT FOR OLDER OR HISTORIC BUILDINGS * * * (b)(1) Prior to the commencement of any rehabilitation work, a property owner or lessee may apply to the state board for a rehabilitation tax credit allocation under this section. The state board, within 45 days of receipt of a completed application, shall decide, based on the availability of credit, whether or not to grant a rehabilitation tax credit allocation. In granting such tax credits, the board shall issue a letter of approval after receiving certification by the local board of the district in which the project is located that the project meets the requirements of subdivisions (2) and (3) of this subsection. In all instances the burden of proof shall be upon the applicant. * * * (3) The local board shall also find all of the following: (A) the qualified expenditures for a 24-month period selected by the taxpayer and ending within the taxable year exceed $5,000.00; and (B) the total qualified rehabilitation expenditures of the project do not exceed the adjusted basis of the structure if the structure is listed or, individually eligible for listing in the National Register of Historic Places as determined by the local board in consultation with the division, or the application is solely for the expenses of an exterior elevator access in addition to a structure otherwise undergoing a rehabilitation that applies for the state tax credit under subchapter 11F of this chapter and for which the costs of such an addition is not a qualified rehabilitation expenditure; and (f)(1) In any calendar fiscal year after 1998 the state board shall not may award a total amount of tax credits to all applicants under this subchapter and , subchapter 11F of this chapter that exceeds $300,000.00, and section 9819 of this title concerning the reallocation of sales tax revenues, not to exceed $2,300,000.00 nor more than 40 percent of the same amount for any single municipality. (2) The owner or long-term lessee of a building that is listed in the National Register of Historic Places, or is determined to be individually eligible by the division as part of the local board's review of the application for

104 JOURNAL OF THE SENATE the tax credit allocation, whose proposed qualified rehabilitation expenses expenditures equal or exceed the adjusted basis of the building, shall be eligible for a tax credit under subchapter 11F of this chapter, but shall not be eligible for a tax credit under this subchapter. * * * (6) If within five years after the building is placed in service upon completion of the qualified rehabilitation project any of the following events occur, the taxpayer shall be liable for a recapture penalty: (A) the owner of a building for which a tax credit has been awarded under this subchapter disposes of the building; or (B) the local board finds that the taxpayer performed any remedial work on the building not contained in the application, knowingly failed to supply any information or true information required by the local board for certification under this section, or failed to satisfy any requirement of certification imposed by the local board; or * * * Sec. 11. 32 V.S.A. § 9819 is amended to read: § 9819. REALLOCATION OF RECEIPTS (a) Receipts from the tax imposed by this chapter on sales of construction materials used in qualified projects under chapter 76A of Title 24 shall be allocated by the commissioner of taxes and paid to the municipality in which the project is located in the following amounts pursuant to the following requirements: (1) In a municipality in which the population is 7,500 residents or less, all receipts from sales in excess of $100,000.00 of construction materials used in each separate qualified project located in that municipality, provided that a total of no more than $600,000.00 may be allocated under this section to all municipalities of 7,500 residents or less. (2) In a municipality in which the population is greater than 7,500 residents but less than 30,000 residents, all receipts from sales in excess of $200,000.00 of construction materials used in each separate qualified project located in that municipality, provided that a total of no more than $600,000.00 may be allocated under this section to all municipalities of more than 7,500 but less than 30,000 residents. (3) In a municipality in which the population is more than 30,000 residents, all receipts from sales in excess of $1,000,000.00 of construction materials used in each separate qualified project located in that municipality, MONDAY, MAY 8, 2000 105 provided that no more than $800,000.00 may be allocated under this section to all municipalities of more than 30,000 residents. (b) In any fiscal year after 1998, the Vermont downtown development board established under 24 V.S.A. § 2792 may certify for allocation to municipalities sales tax revenues under this section, in combination with the total amount of rehabilitation tax credits awarded to all applicants under subchapters 11F and 11G of chapter 151 of this title, not to exceed $2,300,000.00 nor more than 40 percent of the same amount for any single municipality. (c) For the purposes of this section: (1) "Construction materials" means all materials purchased by the owner or owner's representative, project manager, construction manager, general contractor, or subcontractor to be incorporated into a qualified project. (2) "Qualified project" means expansion or rehabilitation of contiguous real property that is or will be used at the completion of the expansion or rehabilitation as a structure in a downtown development district designated under chapter 76A of Title 24, but only to the extent that the expansion or rehabilitation becomes an integral component of the real property and the project does not seek qualification for either tax credit authorized under subchapter 11F or subchapter 11G of chapter 151 of Title 32. "Qualified project" also means new construction of contiguous real property that will be used at the completion of the construction as a structure in a downtown development district designated under chapter 76A of Title 24 but only to the extent that the new construction is compatible with the buildings that contribute to the integrity of the district in terms of materials, features, size, scale and proportion, and massing of buildings. (c)(d) The owner or owner's representative of a qualified project shall report all sales taxes paid on purchases of qualified construction materials to the treasurer of the municipality in which the project is located. The treasurer of the municipality shall submit requests for allocation of revenues under this section to the Vermont downtown development board established under section 2792 of Title 24 and the board shall certify the qualified projects and sales taxes paid thereon to the commissioner of taxes, who shall allocate the appropriate amounts of sales tax revenues due under this section to the municipalities. Revenues allocated to a municipality under this section shall be used by the municipality only for expenditures related to the support of the qualified project located in that municipality which generated those revenues. Sec. 12. STUDY ON LAND USE ISSUES RELATED TO INTERCHANGES AND BYPASSES

106 JOURNAL OF THE SENATE (a) The Secretary of Transportation, in collaboration with the Secretary of Commerce and Community Development, the Secretary of Natural Resources, a representative of the Vermont League of Cities and Towns, a representative of the Vermont Association of Planning and Development Agencies, a representative of the Vermont Planners Association, a representative of a regional transportation advisory committee appointed by the Secretary of Transportation, a representative of the business community appointed by the Secretary of Transportation, and a representative of the Vermont Forum on Sprawl shall conduct a study which shall make recommendations regarding: (1) How to protect state public investment and implement access management and land use policies when developing expressway interchange areas: (2) How Vermont can establish enforceable transportation and land use planning agreements between the state and municipalities prior to construction of new interchanges or for the future development of expressway interchange areas; (3) State and federal tax policies, budget expenditures and fees that could be modified or established to enhance downtown viability, encourage smart growth, and reduce sprawl; (b) The Secretary of Transportation shall report to the General Assembly by January 15, 2001 on the results of this study and on any recommended courses of action. Sec. 13. STUDY OF THE MUNICIPAL AND REGIONAL PLANNING AND DEVELOPMENT ACT The governor shall appoint a “chapter 117 study commission” for the purpose of reviewing the language of subchapters six through nine of 24 V.S.A. chapter 117, the municipal and regional planning and development act. The commission shall consist of a balanced representation of individuals, including: a representative of the regional planning commissions, two representatives of the development and real estate community, a designee from the office of the secretary of state, two legal experts with extensive municipal law backgrounds, two municipal zoning administrators, one planner, one representative of the environmental community, and a designee of the commissioner of the department of housing and community affairs. The committee shall take public comment on proposed changes to the language in chapter 117, and shall develop a report containing recommendations to the general assembly for proposed revisions of chapter 117. Thereupon, the pending question, Shall the Senate propose to the House to amend the bill as recommended by the Committee on Natural Resources and MONDAY, MAY 8, 2000 107 Energy? Senator Rivers, on behalf of the Committee on Finance, requested and was granted leave to withdraw the proposals of amendment of the Committee on Finance and further moved that the substituted proposals of amendment of the Committee on Natural Resources and Energy be amended as follows: First: In Sec. 3, 24 V.S.A. § 2794(c), by striking out subdivision (3) in its entirety and by renumbering the remaining subdivision to be numerically correct. Second: In Sec. 6, 24 V.S.A. § 4758, by striking out subsection (b) in its entirety and by relettering the remaining subsections to be alphabetically correct. Thereupon, the pending question, Shall the proposals of amendment of the Committee on Natural Resources and Energy be amended as recommended by Senator Rivers? at the request of Senator Ready, the question was divided. Thereupon, the first amendment as recommended by Senator Rivers on behalf of the Committee on Finance was disagreed to on a roll call, Yeas 12, Nays 16. Senator Ready having demanded the yeas and nays, they were taken and are as follows: Roll Call Those Senators who voted in the affirmative were: Bahre, Bartlett, Bloomer, Ide, Illuzzi, MacDonald, Mazza, McCormack, Morrissey, Rivers, Sears, Shumlin. Those Senators who voted in the negative were: Ankeney, Backus, Brownell, Canns, Chard, Costes, Crowley, Cummings, Greenwood, Kittell, Leddy, Maynard, Munt, Ready, Riehle, Spaulding. Those Senators absent and not voting were: Doyle, Ptashnik. Thereupon, the second amendment recommended by Senator Rivers on behalf of the Committee on Finance was disagreed to on a roll call, Yeas 12, Nays 16. Senator Ready having demanded the yeas and nays, they were taken and are as follows: Roll Call Those Senators who voted in the affirmative were: Bahre, Bloomer, Canns, Crowley, Cummings, Greenwood, Illuzzi, Maynard, Morrissey, Rivers, Sears, Shumlin.

108 JOURNAL OF THE SENATE Those Senators who voted in the negative were: Ankeney, Backus, Bartlett, Brownell, Chard, Costes, Ide, Kittell, Leddy, MacDonald, Mazza, McCormack, Munt, Ready, Riehle, Spaulding. Those Senators absent and not voting were: Doyle, Ptashnik. Thereupon, the proposals of amendment of the Committee on Natural Resources and Energy were agreed to on a roll call, Yeas 17, Nays 11. Senator Sears having demanded the yeas and nays, they were taken and are as follows: Roll Call Those Senators who voted in the affirmative were: Ankeney, Backus, Bartlett, Brownell, Chard, Costes, Cummings, Ide, Illuzzi, Kittell, Leddy, MacDonald, Mazza, McCormack, Munt, Ready, Riehle. Those Senators who voted in the negative were: Bahre, Bloomer, Canns, Crowley, Greenwood, Maynard, Morrissey, Rivers, Sears, Shumlin, Spaulding. Those Senators absent and not voting were: Doyle, Ptashnik. Thereupon, pending the question, Shall the bill be read the third time? Senators Backus, Brownell, Ide, Leddy, Mazza, Shumlin, Ankeney and Munt proposed that the Senate recommend to the House that the bill be further amended in Sec. 12 by adding a new subdivision (c) to read as follows: (c) Nothing in this section shall be construed to affect the timing of construction of the Chittenden County circumferential highway. Thereupon, pending the question, Shall the Senate propose to the House to amend the bill as recommended by Senators Backus, Brownell, Ide, Leddy, Mazza, Shumlin, Ankeney and Munt? Senators Sears and Morrissey moved to amend the proposal of amendment in Sec. 12, at the end of subdivision (c), by adding the following: “, or the Bennington bypass highway” Which was agreed to. Thereupon, the pending question, Shall the Senate propose to the House to amend the bill as recommended by Senators Backus, Brownell, Ide, Leddy, Mazza, Shumlin, Ankeney and Munt, as amended? was decided in the affirmative. Thereupon, third reading of the bill was ordered on a roll call, Yeas 20, Nays 8. Senator Sears having demanded the yeas and nays, they were taken and are as follows: MONDAY, MAY 8, 2000 109 Roll Call Those Senators who voted in the affirmative were: Ankeney, Backus, Bartlett, Brownell, Chard, Costes, Cummings, Ide, Illuzzi, Kittell, Leddy, MacDonald, Mazza, McCormack, Munt, Ready, Riehle, Rivers, Shumlin, Spaulding. Those Senators who voted in the negative were: Bahre, Bloomer, Canns, Crowley, Greenwood, Maynard, Morrissey, Sears. Those Senators absent and not voting were: Doyle, Ptashnik. Adjournment On motion of Senator Shumlin, the Senate adjourned until ten o’clock and thirty minutes in the morning.