Part I
Business and Economic Issues
Bay Pilots and Docking Masters
Pilots safely guide cargo ships between the open seas and ports. The federal government regulates, through licensure by the U.S. Coast Guard, pilots on American flag vessels. Ships traveling among United States ports need to have only a federally licensed pilot on board, but state pilots are generally required to be on board each vessel engaged in foreign trade when it is underway in the navigable waters of that state. These state pilots can be held accountable for their actions through reprimand, license suspension, or license revocation, whereas federal licenses have no jurisdiction over vessels engaged in foreign trade.
Often, as in Maryland, having a federal license is a prerequisite to state licensure. A state pilot's license requires more education, additional testing, the approval of a state regulatory board, and usually completion of an apprenticeship training program. Currently, a state-licensed pilot must be employed to pilot each American vessel engaged in foreign trade and each foreign vessel when it is underway on the navigable waters of Maryland, including when the vessel is towing or being towed by another vessel. However, Maryland law provides an exception to this general rule, allowing docking masters to operate without state pilots on board when:
• maneuvering during berthing or unberthing operations; and/or
• shifting within a port with tug assistance and a docking master aboard the vessel.
Consequently, two types of ship pilots service the Port of Baltimore. Bay pilots (a.k.a. Maryland pilots or state pilots) are licensed by the Maryland State Board of Pilots and pilot ships from the time they enter State waters until they require tug boat assistance. At that time, a docking master (a.k.a. harbor pilot) assumes command. Docking masters are employed by tug boat companies and are responsible for berthing ships. All three Port of Baltimore towing companies require that docking masters hold a first-class federal pilot's license.
This two-pilot system is not unusual: all major ports on the East Coast -- from Portland, Maine to Jacksonville, Florida -- use both state pilots and docking masters. The two-pilot system worked well until the labor strikes occurred during the 1980s when gaps in accountability were exposed. Some towing companies replaced docking masters with individuals who were not familiar with the ports as well as those who did not hold federal licenses.
The federal government commissioned a three-year study by the National Research Council (NRC) to assess the accountability issues. In October 1994, the NRC recommended that all movements of ships in U.S. waters be directed by a state-licensed pilot, downgrading the status of a federal pilotage license to an entry-level requirement for obtaining a state or port-controlled license. In addition, the NRC urged the U.S. Coast Guard to close existing gaps in the system which allow a variety of pilots, including docking pilots on the East Coast, to operate on foreign-flag ships without a state pilot's license. It was suggested that these pilots could be consolidated into existing state pilotage associations or be granted local licenses and still remain independent of the state pilotage organizations in their area.
The U.S. Coast Guard has been working with the various port authorities to ensure accountability for pilotage because the only penalty it can generally levy related to foreign vessels is negligent operation of tug boats. Two means of ensuring accountability have been put forward: either require that state pilots remain on board vessels during all movements or also license, at the state level, docking masters.
Senate Bill 237 (passed) establishes the State Board of Docking Masters within the Department of Labor, Licensing, and Regulation and requires that docking masters be licensed by the State. Like other regulatory boards, the State Board of Docking Masters is subject to the Maryland Program Evaluation Act. The board is responsible for adopting regulations and pass orders to govern and regulate licensed docking masters and for safety in providing docking services.
In addition, Senate Bill 237 establishes a Joint Committee on the Port of Baltimore to assess the competitive position of the port and annually report to the Governor and the Legislative Policy Committee of the General Assembly. Legislation to address these accountability concerns was introduced in the 1998 and 1999 sessions but did not pass.
Under current law, the Public Service Commission establishes pilotage fees and charges for pilotage services to vessels. The commission imposes an assessment on the Association of Maryland Pilots for expenses incurred by the commission in determining the fees and charges. Under Senate Bill 237, the commission establishes fees and charges for a licensed docking master to provide docking services in the ports of Maryland. The commission imposes an assessment on the licensed docking masters for the expenses incurred by the commission.
Real Estate Appraisers
House Bill 96 (passed) establishes a real estate appraiser trainee license that will be issued by the State Commission of Real Estate Appraisers. This bill formalizes many current practices and provides a framework for regulating and monitoring real estate appraisers as they progress from trainee to full certification. The trainee license is valid for three years and may be renewed for one additional three-year period. A trainee may provide certain real estate appraisal services only under the supervision of a supervising appraiser.
Real Estate Brokers
Real estate brokers are required under current law to take 15 clock hours of continuing education courses every two years; however, brokers licensed for ten years or more only have to complete six clock hours. The 15-hour requirement includes one three-hour course that discusses changes in the law and a one and one-half hour course that discusses fair housing laws and regulations. Courses must be taken in-State from a professional association or institution approved by the State Real Estate Commission. House Bill 844 (passed) expands what qualifies as continuing education credit for real estate brokers. The commission will be able to accept continuing education credit from out-of-state courses. The commission is also required to have in place, by January 1, 2002, regulations for accepting continuing education credit through alternative instructional media such as Internet-based courses. Approved subject matter for continuing education courses will be expanded and could include course-work related to real estate brokerage services.
Plumbers and Natural Gas Fitters
Currently, there are three separate boards that have regulatory jurisdiction in Maryland over natural gas fitters. The State Board of Plumbing regulates 20 counties and Baltimore City, the Washington Suburban Sanitary Commission regulates Montgomery and Prince George's counties, and Baltimore County has its own board. These three regulatory bodies have developed different rules regarding gas fitters. Senate Bill 699 (passed) establishes three new professional designations under the State Board of Plumbing: master natural gas fitter, journeyman natural gas fitter, and apprentice natural gas fitter. The bill requires that anyone who provides natural gas services in the 20 counties and/or Baltimore City be licensed by the board as a plumber or a natural gas fitter.
Private Detectives
House Bill 1402 (passed) allows an individual who is not certified as a private detective to provide private detective services if: (1) the individual is employed or has applied for employment with a licensed private detective agency; (2) the detective agency has submitted the individual's application, fingerprint cards, and applicable fees to the State Police; (3) the individual passes a preliminary background check; and (4) the application has not been denied. House Bill 1402 does not change the requirements to be certified as a private detective, which include submitting a sworn application with two sets of fingerprints and paying the $50 application fee and the cost of the fingerprint card record checks. House Bill 1402 is similar to the codified language in Chapter 602 of 1996 which allows a licensed security guard agency to hire an uncertified individual if the agency has submitted an application with fingerprint cards and a records fee to the Secretary of the State Police and the Secretary has not disapproved the application. House Bill 1402 passed as an emergency bill and takes effect when it is signed by the Governor.
Security Systems Technicians
Under current law, the Secretary of the State Police may deny an application, or suspend or revoke the registration of a security system technician, if the applicant or registrant pleads guilty or nolo contendere to, or is convicted of, a felony, theft offense, or crime of moral turpitude. House Bill 1298 (passed) requires that, before a registration is denied, the Secretary must consider certain factors. The factors to be considered are: (1) the length of time since the applicant pleaded guilty or nolo contendere to, or was convicted of, the crime; (2) whether the applicant was a security system technician prior to the registration requirements; and (3) any evidence that the applicant has been a good citizen since the applicant pleaded guilty or nolo contendere to, or was convicted of, the crime.
New Home Builders
Currently, new home builders are not required to be licensed or registered with the State. The State may only bring an action against a home builder that has committed an unfair or deceptive trade practice under the Consumer Protection Act. In the last three years, the Division of Consumer Protection of the Office of the Attorney General received approximately 677 complaints about home builders. Approximately 75 percent of the complaints were for construction defects, while the remaining 25 percent were
based on financial practices and contract compliance of the builder. While approximately 40 percent were successfully mediated, in a majority of the cases the consumer either had to bring a private action in court or was without adequate means of redress.
In response to these problems, the General Assembly passed legislation to regulate new home builders. Senate Bill 380/House Bill 811 (both passed) create a home builders registration unit in the Office of the Attorney General, Division of Consumer Protection. The unit is required to develop a consumer pamphlet, in consultation with the home building industry, that describes the rights and remedies of consumers in the purchase of a new home. The division must provide each registered home builder with copies of the consumer information pamphlet, and the home builder must provide each contract purchaser with the pamphlet before entering into a contract for the initial sale of a new home.
The bills establish a Home Builder Registration Fund, into which all fees collected under the Maryland Home Builders Registration Act (MHBRA) are to be deposited. The money in this fund may be used for administration and enforcement of the MHBRA.
Under the bills, each person who acts as a home builder in the State must be registered as a home builder with the unit. Each home builder is required to maintain general liability insurance in the amount of at least $100,000. If the registration of a home builder has been revoked, the unit has discretion to approve a new registration for the home builder conditioned on the fulfillment of specified terms and conditions, including the posting of a bond. The bills exempt lenders who complete a home builder's unfinished project pursuant to a default in obligations of the first home builder to the lender from obtaining a builder registration number from the Consumer Protection Division; however, an exempt lender is subject to certain provisions of the registration law.
Home builders are required to post prominently the home builder registration number at each property where the home builder is doing any work covered by the MHBRA, and in the case of a home builder doing work on multiple new homes, to post the registration number at one central location in the project. Under the bills, counties and municipal corporations are prohibited from issuing a home building permit without a home builder registration number of the builder, except when issued for a property owner's own use.
Various grounds for denial, suspension, or revocation of a registration are established, including engaging in a pattern of poor workmanship as evidenced by repeated unresolved building code violations, repeated unsatisfied arbitration awards, or an unsatisfied final judgment that results in a consumer filing a complaint under the Consumer Protection Act. Under the bills, the home builders registration unit is required to encourage the owner or buyer to pursue resolution of any dispute pursuant to the existing contract. The unit is authorized to bring a cease and desist action against a home builder that is not registered. In addition, a home builder that is not registered is subject to criminal and civil penalties.
Senate Bill 380/House Bill 811 also require the contract for the initial sale of a new home to contain the following information printed in conspicuous type: (1) the home builder's registration number; (2) a provision stating that the new home must be constructed in accordance with all applicable building codes; (3) a provision referencing all performance standards or guidelines; and (4) the purchaser's right to receive a consumer pamphlet.
The bills require the Consumer Protection Division to study the feasibility of a new home builder guaranty fund and to report its findings and recommendations to the Senate Finance Committee and the House Economic Matters Committee by October 1, 2003. The division is also required to submit annual reports of its activities regarding home builders to the Governor and the General Assembly beginning November 1, 2001. The bills are effective January 1, 2001.
Home Improvement Contractors
Home Improvement Guaranty Fund
House Bill 548 (passed) increases from $50,000 to $100,000 the maximum amount of unreimbursed payments that the Maryland Home Improvement Commission may pay to homeowners from the Maryland Home Improvement Guaranty Fund before the commission may pay any approved claims proportionately. This provides uniformity with Chapter 137 of 1999, which increased to $100,000 the maximum amount that may be awarded from the fund to all claimants for the acts or omissions of one contractor unless, after the commission has paid out $100,000, the contractor reimburses $100,000 to the fund.
Senate Bill 362/House Bill 581 (both passed) increase from $10,000 to $15,000 the maximum amount that may be awarded from the fund to a single aggrieved homeowner for the acts or omissions of one contractor.
Sunset Laws
Senate Bill 362/House Bill 581 also continue the Maryland Home Improvement Commission until October 1, 2012. The commission was the subject of a sunset evaluation by the Department of Legislative Services during the 1999 interim. The department found that the commission is adequately run and that there are few complaints from the public or the industry regarding the commission's operations.
In addition, the bills require the Department of Labor, Licensing, and Regulation to submit to the Senate Economic and Environmental Affairs Committee and the House Economic Matters Committee by October 1, 2002, a report that evaluates:
State Athletic Commission
Sunset Laws
Senate Bill 363/House Bill 580 (both passed) extend the termination date of the State Athletic Commission to July 1, 2011. The commission was the subject of a sunset evaluation by the Department of Legislative Services during the 1999 interim. The department found that the commission is well-run and that there are few complaints from the public or the industry regarding the commission's operations.
In addition, the bills require the commission to submit to the Senate Economic and Environmental Affairs Committee and the House Economic Matters Committee on or before October 1, 2001, a report that evaluates: (1) the popularity of full contact martial arts in Maryland and whether it should be regulated; and (2) the commission's efforts to market boxing and wrestling in Maryland.
State Collection Agency Licensing Board
Sunset Laws
Senate Bill 575/House Bill 574 (both passed) extend the State Collection Agency Licensing Board to July 1, 2012. During the 1999 interim, the Department of Legislative Services conducted a preliminary evaluation of the board under the Maryland Program Evaluation Act. The department determined that the board is fulfilling its statutory obligations and as a result, the department's evaluation recommended that the board be waived from a full sunset evaluation and that the termination date of the board be extended ten years. The Legislative Policy Committee voted to waive the board from a full sunset evaluation.
Charitable Solicitations
Public Safety Solicitors
According to the Office of the Secretary of State, because solicitors for law enforcement or badge-related organizations are not currently required to register with the Charitable Organizations Division of the office, the division is unable to provide information to citizens on the fund-raising practices of these organizations or investigate complaints of overly aggressive or deceitful solicitors. There is growing concern among citizens, consumer groups, state charity regulators, and other national organizations that some solicitors raising funds on behalf of public safety organizations are not providing efficient and effective fund-raising services and are misleading the public about the uses of the funds raised. In addition, the division frequently receives complaints about questionable fund-raising tactics, such as solicitors implying that the public safety organization would not provide emergency services unless the individual being solicited agreed to make a donation.
With the passage of Senate Bill 71 (passed), Maryland joins 31 other states, including the adjoining states of Pennsylvania, Virginia, and West Virginia, that require public safety solicitors to register. This bill requires persons who solicit contributions on behalf of public safety organizations to register with the Secretary of State and submit a $25,000 surety bond or letter of credit.
Senate Bill 71 changes the name of the Maryland Charitable Solicitations Act to the Maryland Solicitations Act, expressly applies the act to a "public safety solicitor" employed by a volunteer organization of fire fighters or rescue or ambulance personnel, and gives the Secretary of State the same investigative and enforcement authority over public safety solicitors as the Secretary of State currently has over charitable organizations and charitable representatives. The bill also prohibits a public safety solicitor from making deceptive or misleading statements and using high-pressure tactics in soliciting the public.
Other Changes to the Maryland Charitable Solicitations Act
Senate Bill 75 (passed) makes several changes to the Maryland Charitable Solicitations Act. First, the bill clarifies that a charitable organization that qualifies for an exemption is only exempt from the registration and disclosure requirements of the Act; that is, the organization would still be subject to the remaining provisions of the Act, including the prohibited acts and penalty provisions. According to the Office of the Secretary of State, failing to subject all organizations soliciting charitable contributions in Maryland to the provisions of the Maryland Charitable Solicitations Act concerning fraudulent solicitation, misrepresentation, and other prohibited activities would violate the intent of the Act.
Second, Senate Bill 75 clarifies the categories of exempt organizations that are required to submit a fund-raising notice to the Secretary of State. Under the bill, organizations that either raise funds for a named individual or receive less than $25,000 in charitable contributions are required to submit the fund-raising notice. The bill further requires that the notice be submitted annually, rather than only before starting a public solicitation.
Third, the bill authorizes a late fee of $25 a month to be assessed (after a 60-day grace period) against a charitable organization that fails to file its annual report when due. An uncodified section of the bill requires that, beginning with the fiscal 2002 budget, at least one-half of the amount of the late fees collected in the preceding fiscal year be included in the budget for the Charitable Giving Information Program. The Secretary of State's Office indicates that enabling it to assess late fees will provide greater incentive for charitable organizations to report renewal information on a timely basis.
Finally, Senate Bill 75 prohibits fund-raising counsel from making an agreement with a charitable organization unless the charitable organization has applied to register with the Secretary of State or is otherwise exempt. Additionally, a charitable organization is prohibited under the bill from making an agreement with a professional solicitor or fund-raising counsel unless they have applied to register with the Secretary of State or are otherwise exempt. Currently, only professional solicitors are prohibited from entering into an agreement with a charitable organization unless the charity has applied to register. The bill extends this provision to apply to fund-raising counsel, as well as the organization itself.
Retail Service Station Dealers
Senate Bill 354/House Bill 998 (both passed) extend to October 1, 2004, the conditional prohibition on the State Comptroller issuing a certificate of registration to any service station dealer who sells motor fuel through retail stations, which have been structurally modified since July 1, 1977, without the service station dealer's consent.
When this conditional prohibition was first passed in 1977, there was concern over the petroleum industry's trend away from local full-service gas stations and towards the "quick-stop" or "gas-and-go" type facilities, often run by large corporations. The belief was that such a trend would be bad for communities since corporations would be far less community oriented and responsive than locally owned full-service stations. This law was originally passed to try to slow down this trend, which continues today in a slightly different form. The emerging trend is for multi-corporate facilities, combining food/merchandise facilities with fuel facilities. With the continuing prohibition, a service station can only be converted with the service station dealer's consent, otherwise the Comptroller will not register the station, which means no motor fuel can be sold by the establishment.
Senate Bill 354/House Bill 998 also continue to September 30, 2004, the suspension of the voluntary allowance uniformity provision, which affords equal treatment among motor fuel dealers who have the same fuel supplier. If a supplier offers temporary price reductions in the wholesale price of fuel to a retail service station dealer, allowing the dealer to compete with the lower prices offered by a competitor, this price reduction must be extended to all other retail service station dealers supplied by the wholesaler. The continued suspension of this uniformity provision allows motor fuel wholesalers to be selective when granting breaks in wholesale prices to service station dealers.
Miscellaneous Business Licenses
House Bill 93 (passed) increases from $100 to $300 the fine for failing to obtain or to display specified business licenses under Title 17 of the Business Regulation Article. The bill covers the following business licenses: console machine, pinball machine, Wicomico County pinball machine, Garrett County amusement device, billiard table, construction, nonresident construction, wholesale farm machinery dealer, garage, peddler, magazine seller, junk dealer, scrap metal processor, agent for a junk dealer or scrap metal processor, Calvert County junk dealer or scrap metal processor, cleaning and laundering, storage warehouse, juke box, Harford County juke box, promoter, plumber, restaurant, soda fountain, trader, chain store, vending machine, and trading stamp issuer.
In General
Public Service Commission Personnel
In the last several years, the Public Service Commission has lost many of its experienced employees. A recent salary survey revealed that the commission pays its senior employees less than every state and federal commission in the region. To address the commission's salary and funding needs, the General Assembly passed Senate Bill 171/House Bill 1012 in the 1999 legislative session. Both were vetoed, based in part on concerns over special funding and the effect of the legislation on equivalency of comparable state employment positions.
This session, the General Assembly passed more narrowly tailored legislation, dealing primarily with specialized positions not found elsewhere in State government. House Bill 887 (passed) authorizes the commission to set the salaries of its managerial staff and unique professional staff. These include the executive director and executive secretary, general counsel and associated attorneys, and the chief hearing examiner and license hearing officers. The positions also include all personnel in the management service, and those in professional and technical positions unique to the commission.
The bill gives similar authority to the People's Counsel. The People's Counsel may determine the salaries of the Deputy People's Counsel, management service and special appointment attorneys, and other management, professional, and technical positions that are unique to the Office of People's Counsel.
House Bill 887 requires the commission and the People's Counsel to report their respective proposed changes to pay schedules and salary ranges to the Secretary of Budget and Management for comment. They must also report to the Secretary and the General Assembly each year on the positions, classifications, and salaries of their respective units at the end of each calendar year.
Miss Utility - Liability for Damages
The "one-call" system known as "Miss Utility" protects underground facilities from inadvertent damage caused by demolition and excavation. The program requires owners of underground facilities, such as water and sewer mains, telephone, cable, and electric lines, and steam heating pipes, to register as members of the one-call system. The system provides contractors with a single point of contact, so that one notification suffices to mark the location of all known underground facilities in the vicinity of proposed demolition or excavation.
One problem has been the failure of owners to register with the one-call system, despite the clear mandate of existing law to do so. Senate Bill 480 (passed) penalizes unregistered owners of underground facilities by excusing contractors who comply with the law from liability to the unregistered owners, and by making those owners liable to other parties for restoration and repairs of property damaged by the excavation or demolition. In addition, a contractor who fails to comply with the law is usually deemed negligent; Senate Bill 480 removes this presumption in the case of damage to an underground facility of an unregistered owner.
Natural Gas Utilities
After shaping the restructuring of the electric utility industry during the 1999 legislative session (Chapters 3 and 4 of 1999), the General Assembly turned its attention to natural gas utilities. The Public Service Commission has been allowing customer choice in retail natural gas markets during recent years in the form of pilot projects, without specific enabling legislation. In light of the specific consumer protection mechanisms built into electric restructuring, and concerns over potential service disruptions, the General Assembly perceived a need for the commission to exercise additional authority over foreign natural gas suppliers, and to have clearer authority to protect the State's gas consumers.
Senate Bill 581/House Bill 1134 (both passed) require the commission to license gas suppliers that operate in the State. The commission has the same authority to license and regulate gas suppliers as it has over electricity suppliers under electric restructuring. The commission must adopt gas supplier licensing requirements and procedures that protect consumers and assure the collection of State and local taxes.
The bills require the commission to adopt consumer protection provisions by July 1, 2001, including protection against unfair or discriminatory practices, as well as enrollment and billing procedures, and other matters that the commission considers necessary to protect consumers. In general, the commission must adopt consumer protections and gas supplier requirements that are consistent with applicable provisions of the electric restructuring legislation.
Senate Bill 581/House Bill 1134 do not affect the authority of the Attorney General's Consumer Protection Division to enforce other consumer protection laws such as unfair or deceptive trade practice protections, or exempt gas companies or suppliers from other antitrust or consumer protection laws.
The People's Counsel has the same right to participate or intervene in licensing, complaint, and dispute resolution proceedings as under electric restructuring and the commission's general administrative laws.
Motor Carriers
One area of concern has been the safety of motor coaches that are owned and operated by not-for-profit organizations. Some of these organizations offer extended excursions using equipment comparable to coaches of regulated common carriers, but without regulation and required safety inspections by the Public Service Commission. Senate Bill 673/House Bill 971 (both passed) require an annual safety inspection for motor coaches that a not-for-profit entity owns and operates, and that have a gross vehicle weight rating of at least 32,000 pounds and a capacity of at least 30 passengers. These coaches are not subject to tariffs and rate making by the commission.
Steam Heating Companies
Although steam heating companies were deregulated during the 1999 legislative session (Chapter 605 of 1999), the services that they provide are still classified as public utilities, similar to electricity and natural gas. Senate Bill 414 (passed) treats property that is used to produce steam heat, and hot or chilled water used for building climate control, in the same manner as electricity generation equipment for purposes of the property tax.
For a more complete discussion of taxation of steam heat and hot and chilled water used for climate control, see Part B - Taxes, Subpart Property Tax, of The 90 Day Report.
Taxi and For-Hire Driving Services
For years, the Public Service Commission has regulated for-hire driving services, which consist of taxicabs in several jurisdictions, sedan services, and limousine services. However, the commission has not had adequate resources to enforce its for-hire driving laws. Senate Bill 552 (passed) establishes the For-Hire Driving Services Enforcement Fund. The fund provides resources for staffing and statewide enforcement activities of the commission with respect to for-hire driving services. The funding source is an annual assessment of up to $40 on each for-hire vehicle permit, except for limousines and employee-transport vans.
In order to enhance passenger safety, Senate Bill 552 authorizes the commission to require for-hire driver's license applicants to obtain a national criminal history records check from the Federal Bureau of Investigation, in addition to the currently required State records check through the Criminal Justice Information System.
The bill also requires all Baltimore City taxi drivers to complete a course approved by the commission that includes courtesy to passengers, as well as geography, map reading, and tourist information for the city.
Telephones and Telecommunications
Competitive Rates
Among the thornier issues facing the Public Service Commission are competition in local residential telephone service and the rate structure and area designations for local calling and in-state long distance calling. Although Maryland is relatively small geographically, it has four local access and transport areas (LATAs) and four area codes. As a result, local calling areas are relatively small, and long-distance charges apply to many calls that actually cover a small distance. House Bill 56 (failed) initially would have required the commission to adopt a new, alternative rate structure to allow local calling between areas that are now long-distance, either in-state or interstate within a single metropolitan area. As amended, however, it would have called on the commission to undertake efforts to increase competition in local residential telephone services and to petition the Federal Communications Commission to implement changes to increase competition in intrastate interLATA telephone services in Maryland.
Telephone Solicitation
Resistance to persistent telemarketing inspired Senate Bill 185 (failed). The bill, modeled on a Georgia statute, would have required the Public Service Commission to establish a database of residential telephone subscribers who do not wish to receive telephone solicitations. Telemarketers would have been required to obtain the database from the commission, and would have been prohibited from making telephone solicitations to listed subscribers. The bill is also discussed under Part I Financial Institutions, Commercial Law, and Corporations, Subpart Commercial Law of The 90 Day Report.
Internet Services
Several proposals were introduced involving the use and abuse of Internet services.
Open Access: The proliferation of high-speed broadband Internet access through cable modems and digital subscriber lines raises the question of who has access to cable customers. Unlike telephone access, in which the customer has an unlimited choice of Internet service providers and content, limited only by long-distance charges, cable access typically involves a dedicated Internet service provider that is bundled with the locally franchised cable service. House Bill 986 (failed) would have established a study commission to explore access issues involved in broadband Internet transport services, including customer access to various Internet service providers. Senate Bill 505/House Bill 571 (both failed) would have mandated "open access" for cable modem subscribers of locally franchised cable systems.
Spam and Spoofing: Unsolicited commercial electronic mail constitutes a nuisance for many people, as well as new opportunities for scams and confidence schemes. Senate Bill 177 (failed) would have prohibited the falsification of tracking information for electronic mail. Commonly known as "spoofing" this technique is used to obscure the true sender of unsolicited commercial electronic mail. The bill would also have prohibited the sale or possession of software that is primarily used to falsify tracking information.
Insurers - In General
Mutual Insurance Holding Company Act
In November 1999, Congress passed and President Clinton signed S. 900, the Gramm-Leach-Bliley Act. The legislation eliminates many federal and state barriers to affiliations among banks, securities firms, insurers, and other providers of financial services. The new federal law allows mutual insurers to redomicile if the state of current domicile has not established reasonable terms and conditions for allowing mutual insurance companies to reorganize into a stock insurer and to form a mutual insurance holding company. According to the National Association of Insurance Commissioners (NAIC), as of August 1998, 21 states and the District of Columbia had passed legislation allowing their domestic mutual insurance companies to reorganize by forming a holding company and converting the mutual insurer into a stock corporation.
After the 1999 session, a workgroup on mutual insurance holding companies was established and included representatives from both the House and Senate as well as the Maryland Insurance Administration. The workgroup produced draft legislation, which was introduced as Senate Bill 148/House Bill 119 (both passed).
Senate Bill 148/House Bill 119 authorize a mutual insurer to reorganize into a stock insurer and to establish a mutual insurance holding company. Under the bills, the mutual insurer is required to demutualize in accordance with a plan of reorganization approved by the Maryland Insurance Administration.
Regulation of Extraordinary Dividends and Distributions
In 1999 the Maryland Insurance Administration underwent a five year review by the National Association of Insurance Commissioners (NAIC). The NAIC gave the Insurance Administration a full five year accreditation, but indicated that Maryland law on extraordinary dividends should be amended to conform with NAIC standards.
House Bill 979 (passed) conforms Maryland law to the NAIC standards. This bill defines the circumstances under which a dividend or distribution of cash or other property by an insurer is considered extraordinary. According to the Insurance Administration, most major multi-state insurers are part of a holding company system. The bill clarifies that an insurer that is not a life insurer may pay extraordinary dividends only out of earned surplus. To ensure the solvency of insurers, an insurer may not issue an extraordinary dividend without approval from the commissioner. The bill applies to dividends or distributions declared and paid on or after January 1, 2001.
Insurance Rating Law - Exempt Commercial Policyholders
Current law requires each insurer to file policy forms and endorsements with the Maryland Insurance Administration. Prior approval law provides that these filings do not take effect until 30 working days after being filed, unless approved sooner by the commissioner. Rates and supplementary rate information filed by an insurer are based on the competitive rating law which allows rates to be used without prior approval from the commissioner.
Senate Bill 598/House Bill 818 (both passed) exempt policy forms and endorsements issued to sophisticated commercial policyholders from form filing requirements under the prior approval insurance rating law. The bills do not apply to the filing of workers' compensation insurance policy forms.
Under Senate Bill 598/House Bill 818, an "exempt commercial policyholder" includes a person that certifies that it pays annual aggregate property and casualty insurance premiums of $75,000 or more and meets any two of the following criteria:
The bills further provide that an exempt commercial policyholder must certify to the insurer issuing coverage and the Insurance Commissioner that it meets the criteria necessary for exemption from form filing requirements. This certification must include reference to the optional criteria that the insured has satisfied.
Senate Bill 598/House Bill 818 authorize the commissioner to adopt regulations that require insurers to provide the Insurance Administration with information on the number and types of policies written for exempt commercial policyholders. The bills also allow the commissioner to authorize an exempt commercial policyholder to procure insurance from a surplus lines insurer.
Life Insurers
Reserve Investments
In 1999 the General Assembly enacted Chapter 529 to authorize a life insurer to include as reserve investments an amount from loans secured by real estate investments in the United States or Canada that does not exceed 95 percent of the fair market value of the real estate.
Senate Bill 763/House Bill 978 (both passed) provide life insurers, under specified conditions, with additional avenues of investment for their reserves. The Maryland Insurance Administration has reviewed these proposed investments, which conform to model legislation drafted by the National Association of Insurance Commissioners.
These bills specifically define the various investments in which life insurers are authorized to invest their reserves. These investments are:
Property and Casualty Insurers
Required Notice for Cancellation of Policies
Senate Bill 173 (passed) requires homeowner's and motor vehicle liability insurers to provide written notice of cancellation by certificate of mailing at least ten days before the insurer proposes to cancel a policy as a result of the insured's failure to pay the required premium. Under current law, an insurer is not required to provide notification of a policy cancellation if the reason for the cancellation is nonpayment of premium.
Senate Bill 173 also requires homeowner's insurers to send to an insured, by certificate of mailing, written notice of intention to cancel or not to renew a policy for a reason other than nonpayment of premium at least 45 days before the date of the proposed cancellation or expiration of the policy.
Motor Vehicle Liability Insurance
Voluntary Cancellation of Motor Vehicle Insurance: The Motor Vehicle Administration (MVA) is prohibited from issuing a motor vehicle registration unless the owner furnishes evidence of the required security. The owner must maintain the required security for the vehicle during the registration period. The required security is: $20,000 for bodily injury or death arising from an accident for any one person ($40,000 for two or more); and $15,000 for property damage to others.
If the required insurance on any vehicle terminates or otherwise lapses, the registration on that vehicle is automatically suspended as of the date of termination or lapse and remains suspended until the owner: (1) submits evidence of replaced insurance to the MVA; and (2) pays any uninsured motorist penalty fee assessed by the MVA. Insurers are required to notify MVA immediately of a termination or final lapse, and the MVA must notify the vehicle owner that the registration on the vehicle has been suspended. The owner is required to provide proof of new insurance or surrender all evidences of the vehicle's registration to the MVA within 48 hours of being notified by the MVA. In addition to suspending registration, the MVA may also impose fines on an individual who allows a policy of motor vehicle liability insurance to lapse. The fines include $150 for the first 30 days and $7 per day beginning on day 31. The maximum penalty is $2,500 in a 12-month period.
Senate Bill 307 (passed) requires the MVA, in consultation with the Insurance Commissioner and representatives of the automobile insurance industry, to adopt regulations that provide timely notification to an insured of the penalties that may be imposed upon the cancellation of motor vehicle liability insurance without surrendering the evidences of registration.
Written Proof of Insurance: House Bill 1129 (passed) requires an automobile insurer, for automobile insurance policies sold by an independent agent, to provide written proof of insurance upon the renewal of the policy at the request of the insured or a person with an insurable interest in the property.
Referrals by the Maryland Automobile Insurance Fund: Senate Bill 80 (passed) changes the requirements under which the Maryland Automobile Insurance Fund (MAIF) refers the status of an insured's driver's license to the Motor Vehicle Administration (MVA) for a determination of whether a driver's license should be suspended or revoked. The bill requires MAIF to refer the status of an insured's driver's license to the MVA when the insured has had three or more chargeable accidents involving third party liability within the last 12 months.
Property and Casualty Insurers
Requests for Data: House Bill 1339 (passed) establishes guidelines under which the Maryland Insurance Administration (MIA) may request data from property and casualty insurers that relate to the policies written by these insurers. Requests must be made by bulletin. The bulletin must include the line of insurance and the period of time for which the data are requested. Each request expires after two years, unless MIA issues another bulletin to continue the request. MIA must notify an insurer if it receives a request to inspect company-specific data, and an insurer may show that the data are confidential commercial data or are otherwise protected from disclosure under the Public Information Act.
Agents and Brokers
Maintenance of Records
House Bill 344 (passed) requires the Maryland Insurance Administration to adopt regulations establishing the minimum length of time and the manner in which an independent agent or broker is required to maintain records of insurance transactions conducted by the agent or broker. Currently, there are no requirements for agents or brokers to maintain records of canceled or expired policies.
Horse Racing
The horse racing industry in Maryland employs more than 15,000 people and generates approximately $600 million annually in direct economic activity for the State. Like other states, Maryland=s racing industry has lost market share in recent years to other forms of commercial gambling. Some states, including two in this region, have sought to revive their industries by introducing slot machines at the tracks. Maryland has taken other approaches to restructuring its racing industry, including subsidizing purses, providing State tax relief, and expanding marketing efforts. Chapter 168 of 1999 mandated the distribution of $10 million of net fiscal 1999 lottery revenues in excess of $352,175,000 to increase purses at race tracks and to supplement existing bred funds. This was the third year that the State provided financial support to the industry. The release of the funds was contingent upon the submission of plans to the Governor and the General Assembly detailing proposed improvements in track facilities, management, and marketing. The plan created by the Maryland Jockey Club (owner of Laurel Park and Pimlico Race Course) calls for $60 million in improvements over the next five years. The plan identifies $42.5 million in capital improvements, of which $27.5 million would be financed through revenue bond proceeds. The sources of funds identified to support the debt service on those bonds include: surplus revenues from the horse racing special fund and a 1.5 percent increase in the takeout. Rosecroft Raceway=s financing plans are vague, but include $10 million through a AState partnership." Ocean Downs plans do not include any future year capital expenditures.
Financial Assistance for Track Redevelopment, Purses, and Bred Funds
Senate Bill 813 (passed) continues financial assistance to the horse racing industry in several ways. First, the bill establishes a Maryland Racing Facility Redevelopment Program to assist specified horse racing facilities with capital improvements. Eligible licensees will submit a racing facility master plan to the
Maryland Racing Commission for review and approval. Requests for assistance must be reviewed and approved by the Maryland Stadium Authority and must provide evidence that the applicant and its affiliates will spend specified amounts for improvements in accordance with the master plan. If approved, the Maryland Economic Development Corporation (MEDCO) will issue revenue bonds to finance the improvements. In order for the commission to approve a plan, an applicant must demonstrate that the improvements will be completed within five years from the time MEDCO issues bonds. Mile thoroughbred licensees must also demonstrate that they have spent or are contractually obligated to spend $9.5 million on improvements by the time bonds are issued. If a master plan is approved and proceeds from the sale of bonds sufficient to accomplish the plan are made available, the licensee must implement the plan and submit an audited report of expenditures to the commission, the Maryland Stadium Authority, and MEDCO.
To finance the debt service on the bonds issued by MEDCO, the bill increases the "takeout" (the commission that is deducted from betting pools) on thoroughbred races and requires additional takeout allocations from mile thoroughbred licensees to be paid into a new special fund, the Racing Facility Redevelopment Bond Fund. Further, the legislation requires specified harness licensees to allocate a portion of takeout to the redevelopment program. Beginning in fiscal 2002, the bill provides for the allocation of uncashed pari-mutuel tickets from the existing horse racing special fund to the bond fund. If revenues from the uncashed tickets are not needed, these funds will revert to the horse racing special fund. If these funds are used, specified excess lottery revenues will replenish the horse racing special fund. If lottery revenues are not sufficient to credit the horse racing special fund, the Governor may request a deficiency appropriation in the next fiscal year.
Allocations to the bond fund from the takeout would total approximately $4 million annually. Depending on the amount of funds needed to accomplish approved improvements, uncashed tickets of up to an estimated $2 million may also be used to support the debt service for capital improvements. The amount of bonds MEDCO will ultimately issue is unknown; it depends on the capital improvements approved, the future revenue stream to MEDCO, interest rates, and the terms of the bonds issued.
If MEDCO does not issue revenue bonds by a specified date, a licensee must notify MEDCO of its intent to use its share of funds in the bond fund. To do so, a licensee must submit a multiyear racing facility improvement plan to the Governor for approval.
In addition to establishing the redevelopment program, Senate Bill 813 requires a one-time distribution of $10 million of net fiscal 2000 lottery revenues in excess of $366,813,000 to a special fund to supplement existing bred funds and purses. The legislation also extends the current wagering tax of 0.32 percent (which is set to increase to 0.5 percent as of June 30, 2000) and continues the distribution of funds to purses and bred funds that would otherwise go into the general fund (estimated at approximately $1.2 million annually). The bill also recodifies the Maryland Million and Sire Stakes programs, modifies authorized racing times, specifies how a track in Allegany County may send racing signals, and requires the commission to report to the House Committee on Ways and Means and the Senate Finance Committee by August 15, 2000, on the status of regulations to administer telephone betting.
Sunset Law
Senate Bill 368 (passed) extends the sunset date for the Maryland Horse Racing Act from July 1, 2001 to July 1, 2011. The bill also requires the Maryland Racing Commission to inspect satellite simulcast facilities at least four times annually to determine if permit holders are complying with permit requirements. The inspections must include evaluations of the financial and physical conditions of each satellite simulcast facility.
Gaming
Tip Jars - Washington County
Presently, all terms of office for Washington County Gaming Commission members begin on July 1. A tip jar license holder is now entitled to retain the lesser of $45 or 50 percent of the gross profits from each tip jar game. Gross profits of a tip jar may not exceed $250 under current law. The current distribution formula for monies deposited in the Washington County Gaming Fund is: (1) 60 percent to bona fide charitable organizations in the county; and (2) 40 percent to the Washington County Volunteer Fire and Rescue Association. There is no limit on the amount of money the commission may distribute to an applicant who seeks a grant from the fund.
House Bill 1389 (passed) makes several changes in the terms of office of members of the commission and in the way money raised from tip jar gaming in Washington County is distributed to recipients of the funds. Under the bill, the starting dates of the terms of four members of the seven-member commission will be March 1, and the starting dates of the terms of the other three members will be October 1. Under current law, the terms of the commission members are for two years.
In addition, the bill alters the formula for distributing the proceeds in several ways: (1) a tip jar license holder may retain 50 percent of the gross profits from each tip jar game; (2) monies deposited in the Gaming Fund (i.e., 50 percent of the gross profits from each tip jar game) are to be distributed equally between
bona fide charitable organizations in the county and the Washington County Volunteer Fire and Rescue Association; and (3) the commission will be prohibited from distributing more than $50,000 in grants to each applicant per grant application. These provisions of the bill terminate in three years.
Finally, the commission is required to report to the Washington County Delegation on or before January 31, 2001, and every six months thereafter, on how recipients of funds from the Gaming Fund have been affected by the new formula for distributing those funds.
Video Lottery Terminals
The past several sessions of the General Assembly saw the introduction of bills to allow the use of video lottery terminals (VLTs) at the State's horse racing tracks. House Bill 1170 (failed) would have permitted up to 2,500 VLTs each at Laurel, Pimlico, and Rosecroft racetracks and at a licensed track in Allegany County. The bill would have established the Education Trust Fund (ETF) and other special funds, and detailed the programs that would have been funded from video lottery proceeds. In addition, the bill would have prohibited the General Assembly from adopting any laws authorizing any additional forms or expansion of commercial gaming.
Under this bill, it is estimated that general fund revenues would have increased by about $17.3 million and special fund revenues would have increased by $238.4 million beginning in fiscal 2002.
Economic and Community Development
Business and Economic Development
There were a number of initiatives considered during the 2000 session that alter or expand existing economic development programs as well as create new programs.
Financing Program Consolidation
The State offers a variety of tools to provide financial assistance to businesses in the State. In accordance with Chapters 299 and 301 of 1999, and the Joint Chairmen's Report of 1999, a study panel was convened during the 1999 interim to review the potential for consolidating the current financing programs under the Department of Business and Economic Development (DBED). The study panel's membership included legislative representatives, local economic development officials, and private sector representatives. Senate Bill 783/House Bill 972 (both passed) represent the final recommendations of the panel.
Senate Bill 783/House Bill 972 consolidate 20 financing assistance programs into ten primary programs. The legislation amends the Maryland Economic Development Assistance and Authority Fund (MEDAFF) and the Maryland Industrial Development Financing Authority (MIDFA) to incorporate the capabilities of the repealed programs and funds. Specifically, six programs are consolidated into the MEDAF to create a large direct loan, grant, and equity investment fund. The legislation repeals the Maryland Industrial Land Act (MILA), the Maryland Industrial and Commercial Revitalization Fund (MICRF), the Brownfields Revitalization Incentive Program (BRIP), the Animal Waste Technology Fund, the Seafood and Aquaculture Loan Fund, the Child Care Special Loan Fund, and the Day Care Facilities Direct Loan Fund. Funds that are on deposit in the repealed funds are to transfer to MEDAF on July 1, 2000. As such, MEDAF would have $29.2 million available in fiscal 2001.
The initiative further consolidates the Day Care Facilities Guarantee Fund, the Enterprise Deposit Incentive Fund, and the Maryland Energy Financing Administration (MEFA) into the MIDFA. Any obligations of the repealed funds, except MEFA, will be considered obligations of MIDFA after July 1, 2000. The repeal of MEFA takes effect January 1, 2002.
The legislation completely repeals two inactive funds: the Enterprise Zone Venture Capital Guarantee Fund and the Maryland Workforce Training Fund.
Neighborhood Business Development Program - Capital Access Program
While the Department of Housing and Community Development (DHCD) provides various types of financial assistance to specified small businesses, including loans, grants, and tax credits, House Bill 98 (passed) provides an innovative means of encouraging banks to make profitable, but individually risky loans to small businesses in State priority funding areas. This legislation creates the Capital Access Program (CAP) within the Neighborhood Business Development Program (NBDP) of DHCD to stimulate private sector lending to small businesses.
This legislation authorizes DHCD to enter into participation agreements with eligible private lenders, using funds from NBDP to make matching contributions to loan reserve accounts established by private lenders. To be eligible to participate in the CAP, House Bill 98 requires a lender to: (1) enroll loans made to eligible businesses in the CAP; (2) establish a loan reserve account with a federally insured financial institution as additional security to cover losses sustained by the lender on any loans enrolled by the lender; and (3) contribute funds to the loan reserve account for each loan enrolled in the CAP. If a loan goes into default and a lender has exhausted its normal methods to collect on the loan, the lender may withdraw funds from the reserve to cover its net losses. An eligible borrower is a small business that: (1) meets the eligibility requirements set out in the CAP participation agreement between the borrower's lender and DHCD; and (2) agrees with the lender to contribute funds to the loan reserve account established by the lender.
The fiscal 2001 budget includes $8 million in PAYGO general and special funds for the NBDP. Of this amount, up to $1 million may be used to implement the CAP.
Maryland Enterprise Zones
DBED is required, under House Bill 1208 (passed), to consider whether a project is located in an enterprise zone or a focus area when making financial assistance decisions. This legislation prohibits the Secretary of DBED from designating any area as an enterprise zone unless the area is designated as a priority funding area. Priority funding areas include municipal corporations, neighborhoods that qualify for the Neighborhood Business Development Program, enterprise zones, certified heritage areas, areas inside the Baltimore or Washington beltways, and areas designated by the governing body of a county. Currently, Prince George's County has the only designated focus area in the State.
This legislation establishes an 18-member Task Force to Study the Maryland Enterprise Zone Program (task force), to study further enhancements to the State's enterprise zone program, including: (1) allowing local legislative authority to grant real estate credits for converting vacant commercial property to residential use; (2) the feasibility of State agencies favoring enterprise zones in the delivery of services; and (3) examination of other states' enterprise zone incentives. The task force, which is effective July 1, 2000, must issue a final report of its findings and recommendations to the Governor and the General Assembly by December 1, 2000, before its termination on December 31, 2000.
Rural Development
Senate Bill 679/House Bill 932 (both passed) establish a four-year Maryland Agricultural Education and Rural Development Assistance Fund to be administered by the Board of Public Works and DBED. The stated purpose of the fund is to provide grants to rural regional planning and economic development organizations, rural community development programs, and advanced technology centers that serve agricultural and natural resources-based small businesses in rural areas. The fiscal 2001 budget includes $422,000 in general funds for the grant program.
Senate Bill 446/House Bill 933 (both passed) create a 17-member Task Force on Resource Based Industry in Maryland to examine the need for establishing a financing development authority to assist Maryland's farming, fishing, forestry, and mining extraction industries with loans, financing, training, and technical and business planning assistance services. The task force is required to develop and report its recommendations to the Governor and the General Assembly by December 1, 2000.
Arts Council and Tourism Funding
The fiscal 2001 budget includes $12.2 million for grants administered by the Maryland State Arts Council. This represents an increase of $1.7 million (16 percent) over the fiscal 2000 level. The General Assembly earmarked a total of $500,000 to specific arts organizations.
The arts council provides grants to arts organizations, community arts development, artists in education, and individual arts from this budget. The council has a goal of providing grants equivalent to 10 percent of an arts organization's operating expenses. The funds provided for fiscal 2001 will allow the council to continue to move in that direction.
Tourism funding also receives significant enhancement in fiscal 2001. Consistent with Chapter 471 of 1997, the Maryland Tourism Development Board receives an increase of $1 million in general funds, to a level of $6 million. The Office of Tourism Development's budget increases by $800,000 for advertising, promotions, and web-site development, and $525,000 is provided for multi-cultural, outdoor nature, and sports tourism marketing to develop and promote these specialty products.
Housing and Community Development
Hippodrome Performing Arts Center
Financing: The Hippodrome is seen as the cornerstone of the Baltimore west side revitalization effort. The Maryland Stadium Authority (MSA) is working in conjunction with the Baltimore Center for the Performing Arts (BCPA) in developing the Hippodrome Performing Arts Center. The new Hippodrome is planned to be a state-of-the-art theatrical facility larger than other theater facilities in the city that will attract larger Broadway touring shows. The facility will be capable of accommodating 420,000 theater patrons annually. The MSA estimates that the project costs for the Hippodrome will total approximately $56 million including costs for design, land acquisition, construction, furniture, fixtures, and equipment. Expected funding sources include State appropriations, Baltimore City, the performing arts center's operator, bond revenue, proceeds from historic preservation tax credits, and private contributions.
The General Assembly approved $1.7 million in fiscal 1999 and $1.8 million in PAYGO funds in fiscal 2000 for the design stage of the project. The fiscal 2001 budget includes $11.5 million in PAYGO general funds for the construction stage of the project. Construction on the theater and surrounding buildings is expected to begin in July 2000. The MSA anticipates that opening day will be in the fall of 2002.
House Bill 1301 (passed) authorizes the MSA to issue $12 million in bonds. The Hippodrome Performing Arts Center Financing Fund may accept proceeds from the sale of bonds. Monies in the fund are to be used to the extent deemed appropriate for the payment of debt service on MSA bonds for the Hippodrome for all reasonable charges and expenses related to the MSA's borrowing and the management of MSA's obligations.
The legislation further allows the MSA to establish and participate in "authority affiliates" with respect to the site acquisition, construction, and development of the Hippodrome facility. An authority affiliate is defined as any for-profit or nonprofit corporation, partnership, limited liability company, or other entity, if the MSA directly or indirectly owns any outstanding shares of capital stock, partnership interests, membership interests, or other equity interests. The MSA is authorized to permit the affiliate to transfer, to any individual or entity, the full amount of any State or local tax credit to which the MSA or the affiliate is entitled.
Plans are currently underway to have the Hippodrome and two surrounding buildings declared as national landmarks. This will entitle the owner of the properties to claim federal and State tax credits for historic preservation, equivalent to 25 percent of qualifying expenses to rehabilitate the properties. The sale of these tax credits to investors (and partners with the MSA in a limited liability company) is expected to raise $8 million toward project costs.
Property Tax Payments: House Bill 1302 (passed) provides that the Hippodrome Performing Arts Center Facility and site are subject to property taxes unless: (1) the property is used principally as a performing arts center; and (2) the owner negotiates a payment in lieu of property taxes with the Baltimore City Board of Estimates.
The Hippodrome theater is owned by the MSA and therefore is currently exempt from property taxes. The legislation requires that to be eligible for a payment in lieu of taxes, the theater must be used principally as a performing arts center. During the construction phase of the Hippodrome project, the theater will not meet this criteria. Accordingly, upon enactment of the legislation, the Hippodrome property will be subject to tax until the time that the site is functioning as a performing arts center. It is estimated that the MSA would thus be required to pay $8,596 in taxes for the Hippodrome property.
The remaining properties that encompass the Hippodrome site are currently privately held and are subject to taxation. The MSA is in the process of acquiring the properties. The MSA will continue to pay the applicable tax on the acquired properties until the theater is operational. The city currently collects $35,569 on the surrounding properties. The MSA would be liable for the taxes until the opening of the theater, scheduled in fiscal 2003. It is assumed that the total tax liability of $44,165 will be paid from the Hippodrome Performing Arts Center Financing Fund.
Following the opening of a functioning theater, the MSA, or its authority affiliate acting as the theater's owner, will negotiate a payment to Baltimore City in lieu of taxes. The property tax exemption would be restored and no tax payments would be made to Baltimore City or to the Annuity Bond Fund. Estimates on the negotiated payment amount are not readily available, however, it is assumed to be less than the tax that would be due on a completely renovated theater site. As renovated, the taxes on the Hippodrome site are estimated at $1.2 million.
Smart Codes
In May 1999, several architects, planners, local code officials, environmentalists, and others joined the Governor at the Maryland Smart Codes Conference. Participants discussed impediments to development caused by Maryland's existing construction codes and development regulations. Specifically, concern was raised over the lack of uniformity arising from overlapping and unclear requirements, the lack of predictability due to varying requirements and interpretations among jurisdictions, the lack of flexibility, and the lack of training for local code officials and private businesses.
As a result of the conference, DHCD and the Maryland Office of Planning, with participation of the State Fire Marshal and the Department of Labor, Licensing, and Regulation (DLLR), convened the Smart Codes Strategy Group. The Governor appointed a steering committee and charged the group with recommending innovative ways to strengthen Maryland's existing communities by altering the State's building codes and development regulations. First, the steering committee recommended that a statewide code be established to address the rehabilitation of existing buildings. The steering committee recommended that the code: (1) integrate the existing ten State codes into one document governing building rehabilitation; (2) distinguish rehabilitation requirements from those for new construction; and (3) establish five categories of work that gradually increase compliance requirements proportionally to the amount of work required. The steering committee recommended that the code be based on a model developed by the U.S. Department of Housing and Urban Development and the National Association of Home Builders, which itself was modeled on a code currently in place in New Jersey. The steering committee also recommended that the code permit local amendments, but that the State should offer incentives to local governments that administer the code without making any amendments.
Another recommendation made by the steering committee was to direct the Office of Planning to develop two smart growth model ordinances to promote infill and compact mixed-use development. The committee recommended that the ordinances be voluntary for local governments, but that the State provide incentives to local governments to adopt them. The committee recommended that the models create overlay zones to: (1) establish procedures and standards for infill development and comprehensively planned, mixed-use projects within priority funding areas; (2) allow for flexible lot sizes, building heights, and building setbacks; (3) promote the use of open space and landscape improvement; and (4) provide flexible requirements for parking and roadway design.
Maryland Building Rehabilitation Code: Senate Bill 207/House Bill 284 (both passed) address the steering committee's first recommendation by providing for the adoption of a statewide building rehabilitation code that will apply to all rehabilitation projects in the State for which a construction permit application is received. The Maryland Building Rehabilitation Code (MBRC) will be developed and adopted by DHCD in cooperation with a 27-member Maryland Building Rehabilitation Code Advisory Council, DLLR, and the State Fire Marshal.
The MBRC will: (1) maintain a level of safety consistent with existing codes, and provide for multiple categories of work with multiple compliance standards; (2) be enforceable by local officials using existing enforcement procedures; (3) apply to the repair, renovation, modification, reconstruction, change of occupancy, and addition to an existing building; (4) provide an expedited review process for proposed amendments to the MBRC submitted by a local government or an organization that represents local governments; and (5) contain provisions that provide an opportunity for a person proposing a complex rehabilitation project involving multiple codes, prior to submitting a construction permit application, to meet with specified local officials or designees, as applicable, and to anticipate and expedite the resolution of problems a complex rehabilitation project may have in complying with the applicable laws and regulations and the MBRC. A local jurisdiction may adopt local amendments to the MBRC; however, the bill provides incentives for local governments not to amend its local code.
The fiscal 2001 budget includes $551,703 in general funds, contingent upon the enactment of the bill, for DHCD to implement the new code.
Models and Guidelines - Infill Development and Smart Neighborhoods:
House Bill 285 (passed) addresses the steering committee's second recommendation by requiring the Office of Planning to develop model land-use codes for infill development and smart neighborhood development. "Infill development" is new development in a priority funding area on vacant, bypassed, and underutilized lands within existing developed areas. "Smart neighborhood development" is comprehensively planned, compact mixed-use development in a priority funding area that integrates residential, commercial, open space, and public uses.
The Office of Planning will also draft guidelines to provide local governments with information on innovative planning and implementation techniques to encourage and facilitate infill development and smart neighborhood development. The Office of Planning will circulate the models and guidelines to State agencies and departments and work with local governments, State agencies, and departments to develop incentives to encourage the voluntary adoption and implementation by local governments of models and guidelines implementing the intent of the models and guidelines developed by the Office of Planning.
Maryland Building Performance Standards
The three model building code groups in the United States have consolidated efforts to create the International Code Council, which will produce one single code, the International Building Code (IBC), to be used throughout the United States.
Senate Bill 64 (passed) requires the implementing body, the Department of Housing and Community Development, to change references in the Maryland Building Performance Standards (MBPS) from the National Building Code issued by the Building Officials and Code Administrators International, Inc. (BOCA) to the IBC, and the Department of Housing and Community Development is further required to incorporate subsequent versions of the IBC into the MBPS within 12 months from the issuance date.
Lead Paint Initiative
The State's fiscal 2001 budget includes $5 million in State funds as part of a total $16.8 million commitment between the State, Baltimore City, and the federal government to expand lead abatement, lead poisoning prevention, and lead enforcement efforts. The $5 million State commitment is divided in the following manner:
The annual budget bill requires all of the departments receiving funds from the lead paint initiative to jointly prepare a comprehensive report before the funds may be expended. Strategies for the implementation of certain programs, strategies for strengthening current lead laws, methods for improving the lead screening of children, and information by jurisdiction on the extent of the lead paint problems and the funds available to combat the problem, are required to be in the report. The report will be submitted to the budget committees for review and comment.
Technology and E-Commerce
In General
In January 2000, the Governor, the President, and the Speaker announced a technology agenda designed to "strengthen Maryland's position as a leader in the digital economy and the technological age." The bills compromising the technology agenda sought to address the needs of technology businesses, guarantee consumers' right to privacy, protect Marylanders from digital crime, and enhance Maryland's standing in the nation for delivering services over the Internet.
Within State government operations, initiatives include:
Further information on these initiatives can be found in Part C - State Government of The 90 Day Report.
Two significant pieces of commercial law related to electronic commerce, the Uniform Electronic Transactions Act (UETA) and the Uniform Computer Information Transactions Act (UCITA), were passed. More information can be found in Part I - Financial Institutions, Commercial Law, and Corporations.
Several bills addressing electronic crime, including piracy and computer intrusion crime, knowingly sending falsified or forged unsolicited electronic mail ("spamming"), and engaging in child pornography through electronic communications, were introduced and considered. For more information on these bills, are under subpart criminal law under Part E of The 90 Day Report.
Maryland Technology Development Corporation
House Bill 1209 (passed) changes the name of the Maryland Science, Engineering, and Technology Development Corporation (MSETDCo) to the Maryland Technology Development Corporation (TEDCO). This legislation authorizes TEDCO to make grants to provide equity investment financing for technology-based businesses; to fix, revise, and collect royalties; and to hire accountants, engineers, financial advisors, legal counsel (with the approval of the Attorney General), or other consultants when necessary. This legislation also authorizes a custodian to deny an inspection of information disclosing or relating to a trade secret, confidential commercial information, or confidential financial information owned in whole or in part by TEDCO. In addition, House Bill 1209 increases the number of members on the Board of Directors from 11 to 15 and requires the Governor to consider diversity when appointing board members. The fiscal 2001 budget includes a $2 million operating grant to TEDCO.
Injured Workers' Insurance Fund
The Injured Workers' Insurance Fund (IWIF) was created in 1914 as the State Accident Fund (the fund), a self-supporting trust fund under the Maryland Workers' Compensation Commission (the commission). The fund was created to provide workers' compensation insurance to any employer who was unable or who elected not to obtain insurance from a private carrier. Coverage was extended regardless of the employer's experience rating. In 1941, the fund was made an independent agency. In 1970, the Department of Personnel was given oversight of the fund's personnel.
In 1987, a gubernatorial task force found that the State budget, procurement, and personnel systems caused the fund to be "inherently 'market insensitive'." The task force made several recommendations, which the General Assembly enacted within a year, including:
Under current law, IWIF is exempt from three obligations imposed by State law on all other workers' compensation insurance carriers. First, IWIF is not subject to regulation, including rate regulation, by the Maryland Insurance Administration (MIA). Second, IWIF is not required to participate in the Property and Casualty Insurance Guaranty Corporation, which insures payments of claims on behalf of member companies that become insolvent. Finally, IWIF is not required to pay the insurance premium tax.
IWIF is directed by a seven-member board of directors, each of whom serves a five-year term and is appointed by the Governor with the advice and consent of the Senate.
In late 1998 and early 1999, the Baltimore Sun ran a series of articles calling into question IWIF's procurement and executive compensation practices. On June 2, 1999, largely as a result of this negative publicity, the Governor issued an executive order creating a 13-member task force to review the operations of IWIF. The task force made the following recommendations:
Senate Bill 881/House Bill 980 (both passed) implement some of the recommendations of the task force.
The bills require IWIF to become a member of the Property and Casualty Insurance Guaranty Corporation, but only after the Insurance Commissioner certifies the fund's solvency. Under the legislation, IWIF is exempt from the Open Meetings Law.
In addition, IWIF is subjected to regulation by the MIA under several provisions of the Insurance Article, including those related to risk-based capital standards, asset and reserve requirements, and impaired entities.
The bills further require the Commissioner to regularly examine the affairs, transactions, accounts, records, and assets of the fund. In the event that the adjusted capital of the fund is determined to be inadequate based on the level of risk assumed, the Commissioner is given specific authority to take any action necessary, except to increase rates, to bring the fund into compliance with statutory standards. The Commissioner is required to report the results of any examination of the fund to the board.
The Commissioner may examine or review IWIF for compliance with other provisions of the Insurance Article, including those related to policy form approval and unfair trade practices. The Commissioner may not enforce these provisions, but must report the results of the examination or review to the board.
The State Treasurer is no longer required under law to be the custodian of IWIF's funds. This provision codifies current practice to the extent that the State Treasurer has never exercised its statutory authority over the fund. Finally, the membership of the IWIF governing board is increased from seven to nine members and a two-term limit is imposed.
Benefits
Permanent Partial Disability
Under current workers' compensation law, scheduled payments for permanent partial disability caused by the loss of a thumb, finger, or great toe are based on the middle tier rate of compensation for permanent partial disability, rather than the lower tier rate of compensation.
The statutory provision that requires compensation at the higher rate was initially approved by the General Assembly in 1987 (Chapter 591 of 1987) with a termination date of January 1, 1990. The termination has since been extended several times and is now scheduled to take effect January 1, 2001. Senate Bill 117/House Bill 182 (both passed) repeal the January 1, 2001, termination date and ensure that permanent partial disability benefits will continue to be paid at the middle tier for the loss of a great toe, thumb, or finger. The legislation was recommended by the Workers' Compensation Benefit and Insurance Oversight Committee.
Permanent Total Disability - Cost of Living Adjustments
Senate Bill 500 (passed) requires the Subsequent Injury Fund to pay a cost of living adjustment (COLA) to an individual receiving workers' compensation payments for a permanent total disability if the individual was the victim of a violent crime that resulted in the compensable permanent total disability.
The bill is retroactive and applies to injuries that occurred after December 22, 1978, but before January 1, 1988. Current law requires a COLA on compensation for permanent total disability claims filed on or after January 1, 1988. The bill requires the Subsequent Injury Fund to pay an individual who qualifies under the bill a lump-sum payment equaling the total of all annual COLAs not previously paid to the individual between January 1, 1988, and June 30, 2000, as determined by the commission. The bill terminates on June 30, 2001.
Offsets of Temporary Total Disability Benefits
Under current law, the Workers' Compensation Commission may order reimbursement to an employer from an individual who knowingly obtained benefits to which the individual was not entitled. However, no provision of law expressly authorizes an offset or credit for temporary total disability benefits previously paid or vocational rehabilitation previously provided where there is no intent to defraud.
In Sealy Furniture of Maryland v. Miller, 356 Md. 462 (1999), the Court of Appeals held that the commission incorrectly awarded a credit to an employer for the overpayment of weekly vocational rehabilitation benefits against its award of permanent partial disability benefits. The court reasoned that because the statute governing workers' compensation does not specifically authorize the offset or credit of an overpayment of temporary total disability benefits against a subsequent award of permanent partial disability benefits, the General Assembly intended to prohibit this practice.
House Bill 183/Senate Bill 116 (both passed) are intended to respond to the Sealy ruling by expressly authorizing the commission to order an offset or credit against an award for permanent partial disability benefits for temporary total disability benefits previously paid, or for vocational rehabilitation benefits previously provided, to a covered employee.
According to the commission, following Sealy, employers and insurers resisted paying temporary total disability benefits that were not ordered by the commission for fear that they would not receive a credit or offset against a permanency award. House Bill 183/Senate Bill 116 allow the continued payment of temporary total disability benefits, pending a permanency award, so that the claimant may receive uninterrupted compensation and the employer/insurer may receive a credit or offset for an overpayment of benefits paid. The legislation was recommended by the Workers' Compensation Benefit and Insurance Oversight Committee.
Temporary Total Disability - Jurisdiction of the Commission
An employer, employee, or insurer who is aggrieved by a Workers' Compensation Commission decision may appeal to the circuit court within 30 days of the order. The circuit court conducts a de novo proceeding. During the appeal process, the commission retains jurisdiction only to consider a request for additional medical treatment and attention. An order is not stayed while it is on appeal.
Senate Bill 586/House Bill 612 (both passed) provide that the commission retains jurisdiction pending an appeal to consider a request for temporary total disability benefits if the order that is on appeal granted temporary total disability benefits which were subsequently terminated by the insurer pending resolution of the appeal.
Under the bills, if the commission finds that an employee was temporarily totally disabled at the time the benefits were terminated, the commission has the authority to pass a supplemental order requiring the employer to reinstate paying temporary total disability benefits.
The bills further provide that if the commission's decision to reinstate temporary total disability benefits is reversed or modified on appeal, the insurer or self-insurer is entitled to an offset or credit for overpayment of the temporary total disability benefits granted in the supplemental order.
Calculation of Occupational Hearing Loss
Senate Bill 179/House Bill 827 (both passed) alter the standards for determining whether an employee has suffered a compensable hearing loss under the workers' compensation statute. The new standards were developed by the American National Standards Institute (ANSI). The bills lower the threshold hearing for a compensable loss by increasing the specified frequencies over which hearing loss is measured. The percentage of hearing loss for compensation is calculated by averaging, in decibels, the hearing thresholds for the 500, 1,000, 2,000, and 3,000 hertz frequencies. The average is calculated by adding the lowest measured losses in each of the four frequencies and dividing by four. The loss is not compensable if the average is 25 decibels or less.
Both bone conduction and air conduction results must be used in determining whether noise-related hearing loss is compensable. For a conductive loss, the bone conduction thresholds for each ear must be used to calculate the claimant's average hearing loss. Finally, the bills increase from 40 to 50 the age at which a measurement must be adjusted to account for age-related hearing loss.
Hearing Locations
Under current law, a covered employee may elect to have a hearing held on a claim before the Workers' Compensation Commission in the county in which the injury or last exposure occurred, the county in which the covered employee resided at the time of the injury or last exposure, or in Baltimore City.
Approximately 40,000 cases are scheduled annually by the commission at 18 different hearing locations. More than 60 percent of the workers' compensation hearings docketed are heard outside of Baltimore City. To meet this demand, the commission has held hearings in conference rooms, recreation centers, boardrooms, and other inadequate locations throughout the State. These sites often lack the security necessary to ensure the safety of all participants to a hearing. The commission's lack of control over the availability of sites has often resulted in considerable delays in scheduling hearings for claimants.
Senate Bill 857/House Bill 1348 (both passed) provide that a covered employee may elect to have a hearing on a claim before the commission held at:
If the employer is a governmental agency and hearings are not conducted in the county in which the agency is located, a hearing may be held in the regional hearing location nearest that county's government offices.
It is anticipated that with the passage of this legislation, the commission will establish six regional hearing locations throughout Maryland in addition to Baltimore City. The Workers' Compensation Benefit and Insurance Oversight Committee requested last interim that the Department of General Services (DGS) assist the commission in securing hearing locations. DGS is in the process of reviewing the current sites and determining the appropriate criteria for selecting regional hearing sites.
Workers' Compensation Insurers - Office and Personnel
House Bill 1257 (passed) requires an insurer that provides workers' compensation insurance in the State or a self-insurer located in the State to establish a toll-free number to receive direct telephone inquiries during working hours. This is in addition to current requirements that the insurer or self-insurer have an office in the State run by a competent individual to handle all workers' compensation business.
The bill repeals the existing criminal penalty for violating the statute and imposes a $1,000 civil fine to be levied by the Workers' Compensation Commission. The bill transfers the authority to enforce these requirements from the MIA to the commission.
Unemployment Insurance Benefits
Eligibility for unemployment insurance benefits is determined by the circumstances of an individual's dismissal, employment history, and workforce participation. The amount of weekly benefits an individual is entitled to receive is calculated according to a formula based on the individual's earnings during the first four of the last five completed calendar quarters prior to filing a claim. Currently, the maximum weekly benefit amount that an individual may receive is $250. House Bill 402 (passed) increases the maximum weekly unemployment insurance benefit to $280. An increase to $280 would replace 44.5 percent of the State average weekly wage. The Office of Unemployment Insurance does not expect the new benefits schedule to trigger a surtax for calendar 2001. A surtax is added to each employer's basic rate when the ratio between the Unemployment Insurance Trust Fund balance and the total taxable wages for the four completed calendar quarters immediately preceding September 30 of each year is less than 4.7 percent. With taxable wages at $16.5 billion, the trust fund must be at least $752 million. As of September 30, 1999, it was $815 million. Accordingly, there was no surtax for calendar 2000.
In each of the past two years, bills identical to House Bill 402 were introduced. In the 1999 session, House Bill 1182 received an unfavorable report from the Senate Finance Committee, and in the 1998 session, House Bill 1357 received an unfavorable report from the House Economic Matters Committee. The maximum weekly benefit amount was last increased in 1995 from $223 to $250 (Chapter 1 of 1995).
Self-Employment Assistance Program
In response to a provision in the North American Free Trade Agreement (NAFTA) that authorizes states to amend their unemployment insurance laws to allow certain categories of claimants to work full-time toward starting their own businesses rather than actively seek full-time work, the Self-Employment Assistance Program allows individuals to receive an allowance from the Unemployment Insurance Trust Fund while participating in self-employment assistance activities such as entrepreneurial training, business counseling, and technical assistance. The program has been in effect in Maryland since 1995, and has assisted numerous entrepreneurs to establish new businesses ranging from telecommunications to pet day care. However, the program was due to expire on June 1, 2000. House Bill 97/Senate Bill 77 (both passed) change the termination date of the program to provide for its continuation until federal or other sources of funding are no longer available.
Employment Discrimination - Use of Genetic Testing and Genetic Information
The past decade has seen a quantum leap forward in the field of genetics. Both public and private efforts are underway to map the entire human genome -- the more than 3 billion pairs of chemicals that make up human DNA (deoxyribonucleic acid). Sequences of DNA create genes, which oversee every process in the body. These genetic sequences are responsible for an individual's physical characteristics, such as eye or hair color, as well as an individual's susceptibility or predisposition to certain diseases. In addition, some scientists believe that these sequences are also responsible for at least some intangible traits of an individual, such as personality and intelligence, although conclusive proof for this hypothesis has not been established.
It is estimated that a rough map of the human genome will be completed in the summer of 2000, with a complete map coming within two to three years after that. Many scientists believe that a finished map of the genome will allow for numerous breakthroughs in the identification and treatment of a wide array of diseases.
Coupled with this increased knowledge of the human genome is the issue of the privacy of an individual's genetic information. With advances in information technology, medical records have become increasingly automated and are available to authorized parties on-line. However, as with other information maintained on-line, unauthorized users can gain access to medical records -- intentionally or accidentally. Privacy advocates contend that, as more and more genetic information about an individual becomes available, insurance companies and employers could access and use this information to discriminate against individuals. Some health care professionals also worry that if this information is used for discriminatory purposes it will produce a chilling effect on individuals taking medical tests that might identify their predisposition for certain genetic diseases.
In the 1999 session, the General Assembly enacted legislation that prohibits the use of genetic testing by insurance companies for discriminatory purposes. The "Genetic Information Nondiscrimination in Health Insurance Act of 1999" (Chapters 50 and 51 of 1999) prohibits an insurer, a nonprofit health service plan, or a health maintenance organization from using a genetic test to affect the terms or conditions of a health insurance policy. The same entities may not use a genetic test for the purpose of determining whether or not to issue or renew health benefits coverage. This prohibition does not apply to life insurance policies, annuity contracts, long-term care insurance policies, or disability insurance policies.
In the 2000 session, the General Assembly considered two different bills that would prohibit private employers from using genetic information or genetic testing to discriminate against their employees. Under current State law, an employer cannot discriminate against an individual's hiring, retention, compensation, terms, conditions, or privileges of employment because of that individual's race, color, religion, sex, age, national origin, marital status, or disability. There is no provision concerning the use of genetic information or genetic testing.
Senate Bill 748 (failed) would have prohibited an employer, an employment agency, a labor organization, or a joint labor-management committee from: (1) discriminating against an employee or applicant for employment based on an employee's genetic information or genetic characteristics; (2) requesting or requiring a genetic test of an employee or applicant for employment; and (3) obtaining or using genetic information of an employee or applicant for employment, except as provided below.
The bill would have allowed an employer to seek, obtain, or use genetic information relating to an employee or applicant if: (1) the employee or applicant provided a written and informed consent; (2) the purpose was to determine the existence of a bona fide occupational qualification, investigate a workers' compensation claim, or determine an employee's susceptibility or level of exposure to potentially toxic chemicals or substances in the workplace; and (3) the employer did not terminate the employee or take any other adverse employment action as a result of the genetic information.
House Bill 793 (failed) would have prohibited an employer from discriminating against an employee or applicant for employment because of that individual's genetic information or refusal to submit to a genetic test or make available the results of a genetic test. The bill would have also prohibited an employer from requesting or requiring genetic tests or genetic information as a condition for hiring or determining employment benefits.
Occupational Safety and Health - Bloodborne Pathogen Standard
Bloodborne pathogens are pathogenic microorganisms present in human blood that can cause disease in humans and include, but are not limited to, the Hepatitis B virus (HBV), the Hepatitis C virus (HCV), and the Human Immunodeficiency virus (HIV). Hazards presented by the transmission of bloodborne pathogens can be very serious and include infections, illness, and death. Furthermore, a person who has a disease caused by a bloodborne pathogen can become a carrier and transmit the disease to others.
Since 1992 Maryland has followed the same standards on bloodborne pathogens as adopted by the federal Occupational Safety and Health Administration (OSHA). These regulations require employers to use engineering and work practice controls to eliminate or minimize employee exposure to bloodborne pathogens. In 1999 the General Assembly enacted a law (Chapter 408 of 1999) that required the Department of Health and Mental Hygiene (DHMH) to convene a Study Group on Health Care Worker Safety. Chapter 408 directed the study group to hold hearings and prepare a report on the establishment of a standard governing occupational exposure to bloodborne pathogens. The study was completed in December 1999.
The study group found that health care workers are at great risk for occupationally acquired illnesses as more than 800,000 needle stick injuries occur nationally every year. The group also found that the current bloodborne pathogen standard used by the Maryland Occupational Safety and Health Administration (MOSHA) has not been effective in protecting health workers from "sharps" injuries. Based on these findings, the study group recommended the increased use of "engineered" sharps protection technology. Engineered products reduce the risk of exposure to bloodborne pathogens by the use of mechanical barriers, blunting, encapsulation, withdrawal, retraction, destruction, or other means. The study group found that the number of health care facilities using engineered sharps protection is growing, but 24 percent of facilities that responded to a survey reported that they did not use engineered sharps protection devices. The study group found that testing and aftercare costs resulting from occupational exposures to sharps injuries approaches $35 million.
OSHA has compiled statistics from studies that show needle stick injuries can be decreased by 50 percent with the use of engineered products. A number of companies have developed "needleless needle" systems for injecting solutions into the bloodstream or removing bodily fluids without placing the health care provider at risk of a needle stick. In November 1999, while the Maryland study was still underway, OSHA issued a directive updating the 1992 bloodborne pathogen regulations to encourage the use of needleless technology. The directive requires employers, in devising the exposure control plan required under the OSHA regulations, to ensure that those plans reflect consideration and use of "commercially available safer medical devices," including retractable and needleless needles. The directive also requires that the engineering controls and work practices considered and used by employers include safer medical devices. The directive clarifies that employer reports of occupational exposures must include needle sticks.
Senate Bill 553 (passed) requires the Commissioner of Labor and Industry, in consultation with the Secretary of the Department of Health and Mental Hygiene, to adopt regulations that implement the new bloodborne pathogen standard established by OSHA. If the federal standard is subsequently modified, the commissioner must make recommendations to the General Assembly about modifying the State standard.
Statewide Bills
Hard Cider
Senate Bill 757/House Bill 1123 (both passed) treat hard cider as beer, rather than as wine, for alcoholic beverages regulation, licensing, and taxing purposes. Hard cider is defined as a beverage consisting primarily of apples or apple concentrate and water, with no other fruit product, that contains at least one-half of one percent but less than seven percent alcohol by volume. Although the State does not specifically track the sales of hard cider, it is estimated that close to 50,000 gallons of hard cider per year are sold in Maryland. The State tax on beer is nine cents per gallon, and the State tax on wine is 40 cents per gallon.
Pub-breweries and Micro-breweries
Class 6 pub-brewery and Class 7 micro-brewery licenses are issued for establishments that hold retail alcoholic beverages licenses and allow their holders to brew and sell a limited quantity of beer and other malt beverages. House Bill 967 (passed) allows the holder of a pub-brewery or micro-brewery license to have or hold a financial interest in one additional retail liquor license that is unrelated to the existing pub-brewery or micro-brewery license.
Winery Events
House Bill 414 (passed) establishes a winery special event permit that allows a Class 4 limited winery to provide free samples of wine or sell wine by the glass for consumption at the event. The winery may also sell bottles of wine for off-site consumption. Permits will be issued for events organized and conducted by a nonprofit organization or a government entity and at which the sale and promotion of alcoholic beverages is a subordinate activity. A Class 4 licensee may receive up to 12 special event permits per year though not more than one per year may be issued for use in the same political subdivision.
Advertising Signs
Beer brewers, dealers, and wholesalers often supply retail alcoholic beverages licensees with signs that advertise their products. Senate Bill 253/House Bill 513 (both passed) increase from $50 to $150 the value of an advertising sign that a brewer, a nonresident dealer, or a beer wholesaler may furnish. However, a $50 value limit is maintained for signs that are manufactured by beer wholesalers and are furnished to alcoholic beverages retailers.
Appeals from a Local Licensing Board
According to Edgewater Liquors v. Liston, 349 Md. 803 (1998), only the licensee or applicant for a license has standing to appeal a decision made by a local alcoholic beverages licensing board. Senate Bill 499/House Bill 504 (both passed) allow decisions to be appealed by any individual holding a license from the licensing board, by an applicant for the license that is the subject of the decision, or by a group of ten or more persons who are residents or real estate owners in the district in which the licensed place of business is located or proposed to be located. To appeal, an individual or group must be aggrieved by the decision and must be present at the board hearing either in person, by a representative, or by the submission of a written document introduced at the hearing. On appeal to the local circuit court, the individual or group appealing a local board's decision must pay all costs associated with the board's hearing.
Local Bills
Anne Arundel County
Additional Licenses: House Bill 62 (passed) is the product of a 1999 task force established to study multiple liquor licensing in Anne Arundel County. It allows a holder of a Class H (restaurant) alcoholic beverages license to acquire a second Class H license for a restaurant located in one of six designated areas of the county. A person who does not hold a retail alcoholic beverages license may apply for up to two Class H licenses so long as one of the licenses is for a restaurant located in one of the designated areas. In addition, independent owners and operators of restaurants that are part of a common franchise corporate entity may be issued one Class H (beer and wine) license if no retail licenses were held by the owner on January 1, 2000. If a Class H (beer and wine) license was held by an independent owner on January 1, 2000, one additional license may be issued. House Bill 62, however, sets a limit of 30 on the number of additional Class H licenses that may be issued. The Anne Arundel County Economic Development Corporation, with the aid of the county's Board of License Commissioners, will study the impact of multiple licensing in the county and report their findings to the county legislative delegation, the county executive, and the county council by January 1, 2006.
House Bill 62 also distinguishes between districts that are underserved and overserved by off-sale licensees and authorizes the Board of License Commissioners to use this distinction in making determinations about the issuance of additional off-sale licenses.
Special Class C Licenses: Special Class C temporary licenses are issued for up to seven consecutive days and allow their holders to serve alcoholic beverages in conjunction with entertainment sponsored by a club, society, or association. House Bill 242 (passed) prohibits, unless approval is granted by the Anne Arundel County Board of License Commissioners, the issuance of a special Class C license for a premises where a license has previously been denied, suspended, or revoked. The Act also increases the daily fee for the licenses. The daily fee for a beer license or a beer and wine license is increased from $10 to $25, and the daily fee of a beer, wine and liquor license is increased from $25 to $50.
Board of License Commissioners: House Bill 241 (passed) authorizes the Board of License Commissioners for Anne Arundel County to hire a second full-time administrator and four additional part-time inspectors. The board also employs a full-time secretary and an attorney.
Baltimore City
Increased License Fees: Several bills enacted by the General Assembly increase the alcoholic beverages license fees in Baltimore City. House Bill 1384 (passed) increases by ten percent the annual licensing fees for the majority of the licenses held in the city. Fees for beer and light wine licenses and beer, wine and liquor licenses are affected. Senate Bill 132 (passed) increases the annual license fee for an arena license from $5,000 to $10,000. Senate Bill 131 (passed) increases from $25 to $50 the fee that Class A (off-sale) licensees must pay to sell alcoholic beverages on Sundays. The bill prohibits stores from selling alcoholic beverages on the two Sundays preceding Thanksgiving Day. Assuming the number of licenses issued does not change significantly, Baltimore City revenues will increase by approximately $185,000.
Caterers: Senate Bill 828 (passed) creates a caterer's privilege to be held in conjunction with a beer and wine or beer, wine, and liquor license. A caterer's privilege allows licensees to contract to provide food and alcoholic beverages off the licensed premises during the days and hours that their existing licenses permit. The annual fee for the privilege is $500 in addition to the fee for the existing license.
Baltimore County
Class A Light Wine Licenses: Class A light wine licenses are issued to holders of Class 4 limited winery licenses and allow wineries to sell their wines for off-site consumption. House Bill 1112 (passed) increases from 14 percent to 21 percent the alcohol by volume that a Class A light wine licensee in Baltimore County may sell.
Caroline County
Fingerprinting and Criminal Records Checks for License Applicants: House Bill 874 (passed) requires the Board of License Commissioners of Caroline County, when considering an application for a new license or for the transfer of an existing license, to collect the applicant's fingerprints to be used for both a State criminal records check and a national criminal records check for the applicant. The board may also require an applicant for a license renewal to go through the same process. Applicants will be charged for fingerprinting and for the results of the criminal records checks.
Regulation of Consumption: Two bills concern regulating the consumption of alcoholic beverages in Caroline County. Senate Bill 465 (passed) prohibits the possession of an alcoholic beverage in an open container while in a parking lot or otherwise outside of a shopping center or any other retail establishment. Violators are guilty of a misdemeanor. Senate Bill 627 (passed) authorizes the County to adopt ordinances or resolutions to further regulate the consumption of alcoholic beverages on public property, on property used by the public, or on any highway.
Cecil County
Golf Courses: Senate Bill 102 (passed) creates a GC (golf course) alcoholic beverages license in Cecil County. The annual licensing fee is $2,000 and is only available to golf courses with at least 18 holes. The license authorizes on-course consumption of beer, wine and liquor and does not count against the total number of licenses the Cecil County Board of License Commissioners may issue.
Charles County
Regulation of Consumption: House Bill 566 (passed) adds Charles County to the list of subdivisions that may adopt ordinances or resolutions to regulate the consumption of alcoholic beverages on public property, on property used by the public, or on any highway.
Sales to Underage Persons: In a recent field test, Charles County found that the employees of many retail alcoholic beverages licensees were selling illegally to individuals under the age of 21. House Bill 1332 (passed) authorizes the Charles County Board of License Commissioners to impose fines of up to $50 on an employee of a retail licensee if the employee sells alcoholic beverages to a minor.
Frederick County
Cultural Arts Center: The Cultural Arts Center of Frederick County, a multipurpose arts space and arts incubator in downtown Frederick, is scheduled to open in March 2001. House Bill 427 (passed) creates a special alcoholic beverages license for the center that will allow beer and wine to be served in conjunction with performances at the center.
Class A Light Wine Licenses: Class A light wine licenses are issued to holders of Class 4 limited winery licenses and allow wineries to sell their wines for off-site consumption. House Bill 1112 (passed) increases from 14 percent to 21 percent the alcohol by volume that a Class A light wine licensee in Frederick County may sell.
Garrett County
New Licenses: House Bill 538 (passed) establishes a special Class B-resort beer, wine and liquor license for a complex with at least two separate facilities at which alcoholic beverages will be served. Senate Bill 549 (passed) creates a CAT (caterer's) license for stand-alone catering businesses. A CAT license allows its holder to keep for sale and sell alcoholic beverages at a catered event. Licensees may not, however, hold self-sponsored events.
Kent County
Sunday Openings: House Bill 664 (passed) changes from noon to 9 a.m. the time when Class B and Class C licensees operating in Kent County may begin serving alcoholic beverages on Sundays.
Montgomery County
Additional Restaurant Licenses: House Bill 802 (passed) creates a special B-K beer, wine and liquor license to be issued to restaurants in specified areas of the Town of Kensington. Before the bill can become law, it must win voter approval in referendum to be held this year for qualified voters in Kensington. If a majority of voters oppose the measure, the prohibition on permanent retail alcoholic beverages licenses in the Town of Kensington will continue.
House Bill 1058 (passed) adds the Germantown Town Center District to those specified areas of the county in which the holders of Class B beer, wine and liquor licenses may obtain additional alcoholic beverages licenses for restaurants. Depending on where the licensed restaurants are located, a licensee may now hold up to six Class B licenses in Montgomery County.
Prince George's County
Increased License Fees and Salaries: House Bill 1008 (passed) increases by ten percent the license fees for all alcoholic beverages licenses in Prince George's County with the exception of the special Class C (country club) beer, wine, and liquor license and the Class B (hotel) beer, wine and liquor license, which remain unchanged. House Bill 1008 also raises the annual salaries of part-time inspectors from $9,270 to $9,976.
Additional Restaurant Licenses: Three areas in Prince George's County -- the Suitland business district, the Port Towns business district, and the Largo area -- have been identified as being underserved by restaurants. House Bill 1026 (passed) allows a licensee to hold more than one Class B (restaurant) beer, wine and liquor license, so long as no more than one of the licenses is outside the targeted districts. Licensees may acquire a maximum of six Class B licenses, though they must wait a year after the fourth license is issued or transferred to acquire a fifth and another year after the fifth license is issued or transferred to acquire a sixth.
St. Mary's County
Special Temporary Licenses: House Bill 1128 (passed) authorizes the holders of temporary licenses in St. Mary's County to purchase alcoholic beverages from a retail licensee rather than from a wholesaler.
Wicomico County
Increased License Fees: House Bill 489 (passed) increases the Wicomico County license fees for Class B beer and wine licenses and special temporary Class C licenses. The annual fee for a Class B beer and wine license is increased from $275 to $400. The daily fees for special Class C licenses are increased by $10: beer licenses and beer and wine licenses are increased from $20 to $30, and beer, wine, and liquor licenses are increased from $35 to $45. Taken together, Senate Bill 477 (passed) and Senate Bill 478 (passed) make the identical fee increases.
Wine Tasting Licenses: Senate Bill 476/House Bill 492 (both passed) create WT (wine tasting) permits available to Class A (off-sale) beer and wine licensees in Wicomico County. The WT permit allows a licensee to hold as many as 15 one-day wine tasting events per year. At an event, store customers may sample small amounts of wine from a selection chosen by the permit holder.
Beer at County Liquor Dispensaries: House Bill 1286 (passed) authorizes the county dispensaries to sell chilled beer, nonchilled beer, ice, and bottled water in addition to wine and liquor.
Liquor Control Board: House Bill 1287 (passed) increases the compensation that members of the Liquor Control Board receive. The chairman of the board receives $3,500 per year, a $1,000 increase, and the two other members receive $2,750, an increase of $750 each. The compensation increases begin in July 2002.
House Bill 1288 (passed) increases the Liquor Control Board's borrowing limit from $25,000 to $500,000. The board seeks the authority to borrow additional funds in case it is needed to support higher rent, maintenance, and renovation costs at the board's new liquor dispensary.