Scheuermann: Outdoor recreation threatened by consumer justice bill

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Scheuermann: Outdoor recreation threatened by consumer justice bill

Tue, 05/08/2018 - 3:39pm -- tim

by Representative Heidi E Scheuermann (R-Stowe) Late last week, the Vermont House of Representatives passed S.105, a bill with which many have significant concerns (Page 1514 of House Journal). Indeed, the breadth of the bill is exceptionally broad, and will have a significant impact on a number of industries and their ability to do business in Vermont. These include the technology industry, utilities, telecommunications, and many more. That said, the impact about which I am most concern is on our incredibly important, statewide, outdoor recreation industry.

As background, as passed, S.105 mandates a "rebuttable presumption" of anti-consumer intent in all instances in which there is any limitation of a claim in a contract; essentially, that the 5 items listed in the bill would be considered "substantively unconscionable" when included in a contract.

This may sound like gobbledygook to many, and has been dismissed by some in Montpelier as a change that really should be of no concern to our recreation industry.

But, it is important gobbledygook to understand, and the concerns of our recreation industry are very real.

What this change does is open up the door to a much wider array of legal claims - specifically very costly lawsuits, consumer fraud claims, and fines, in addition to the potential of costly increases in a business' liability insurance.

In the cases of the many recreational activities offered in this state by the thousands of non-profit and for-profit providers - biking, skiing, riding a horse, fishing, boating, golf, etc. - this means that those who offer those activities may not be able to include in their contracts some of the important waiver conditions that have historically been in their contracts.

The importance of these kinds of waivers in the outdoor recreation industry cannot be overstated, and the Vermont Outdoor Recreation Economic Collaborative outlined well this importance in testimony presented to the committee of jurisdiction:

"Waivers are an integral aspect of Vermont's recreational landscape. Ski resorts, guide services, trail-based organizations, recreation event providers, environmental and educational programs, college outing groups, land owners, and summer camps all use waivers for protection under the law when a participant in an activity has agreed to assume the associated risks. These entities depend on strong legislation to help them enforce waivers.

States like New York, Connecticut and Illinois, have proposed model consumer bills similar to S.105, which have not passed. New Hampshire and Colorado, states like Vermont that are highly dependent on recreation, have passed language to enforce waiver forms and strengthen inherent risk laws.

Meanwhile, Vermont has failed to provide legislative protections for recreation providers. Further, this bill makes it easier for participants to sue and harder for recreation providers to secure liability insurance."

To be clear, the recreation industry is one of the primary reasons why 13 million people visit Vermont each year, and spend $2.6 billion here.  The industry is, in fact, what makes Vermont, Vermont.

Indeed, when individuals participate in any of these activities, they are taking on a risk. And, indeed, limitation of liability language is included in most recreational activity contracts throughout the state.

But, through the years, when there are claims, the Vermont Judiciary has done a good, competent job of evaluating these claims on a case-by-case basis - specifically in determining whether or not a provision in the contract is "unconscionable."

The bottom line is the system has been working. So, why would we put at risk the success of this critically important industry to every region of this state at this time?

In an effort to ensure we didn't, I proposed an amendment to the bill that would have exempted the industry from the requirements of this bill.  I am sorry to report that the amendment did not pass.  Unfortunately, the Democratic majority chose to vote against the interests of our outdoor recreation industry.

Further Notes of Interest from Testimony Received

Run Vermont - Vermont City Marathon

"To enact such hardline legislation would jeopardize RunVermont's ability to grow its events and align with critical corporate sponsors."

Vermont Ski Areas Association

"This bill would have an extremely detrimental impact on the ski industry as well as all other recreational businesses in Vermont. It would likely drive recreational activities out of Vermont, prevent others from coming into the state and make it more difficult for businesses offering recreational activities and competitive and other recreational events to secure liability insurance, as well as increase insurance premiums significantly."

Vermont Outdoor Recreation Economic Collaborative:

"This bill would hamper the ability of Vermont's outdoor recreation businesses and non-profits to exist, much less grow, and jeopardize the significant tax revenues and direct spending hat tourism and outdoor recreation generate to the State."

Franchise Reform Bill

I am pleased to report that both the Vermont House and the Vermont Senate have advanced through final passage House Bill 710, a bill I co-sponsored and led through the House that reforms Vermont's beer franchise laws as they apply to small brewers.

As Vermonters know well, Vermont is host to a thriving craft brewing industry, with over 55 small craft breweries.  We also know that this industry is dramatically different than it was in the 1970's when Vermont adopted its so-called "franchise laws" - laws giving beer distributors special legal protections.

While franchise law protections are still useful to protect distributors from very large brewers, H. 710 simply recognizes that distributors don't need these protections and advantages over small craft brewers.

This bill, that I expect to become law, puts the following changes into place, among others:

  1. Creates an exemption from current franchise law for small brewers, and defines such as as a brewer that makes or distributes 50,000 barrels or less of beer per year and is 3% or less of the distributor's portfolio.
  2. Ensures that, starting in July 2022, small brewers and distributors are able to negotiate contracts with termination provisions that are fair and enforceable.
  3. Until that time, provides an option that is fair to both sides, that allows a small brewer currently in a franchise agreement, the ability to terminate their relationship with their distributor if they so choose.

To be clear, the definition of small brewer is such so that the departure of a small brewer from a distributor will not have an unreasonable impact on a distributor.

The bottom line is that H. 710 recognizes that craft brewing is a thriving sector of the Vermont economy; that craft brewers are the quintessential small business and a significant source of jobs.  And, the relief this law will provide from some of the burdens of Vermont's franchise laws will allow craft brewers greater opportunity to get their product to market.

Minimum Wage and Paid Family Leave Update

As the General Assembly moves toward adjournment (quickly I hope), two of the highest priorities of the democratic majority continue to face significant obstacles.

On the same day last week, both the proposal to increase the minimum wage to $15.00 per hour, and the creation of a brand new, statewide, government-run, paid family leave program were advanced to the House and Senate floors without recommendation of either of the final two committees of jurisdiction.

Specifically, the minimum wage bill (S. 40) was advanced to the House floor by the House Appropriations Committee.  But, in a very rare occurrence, it was done so without a positive recommendation from the Committee.

Likewise, the Paid Family Leave bill  was advanced to the Senate Floor by the Senate Appropriations Committee without a positive recommendation from that Committee.

To be clear, this is a very rare occurrence, and signals significant opposition to the proposals on the part of some in the democratic majority.

That said, will that opposition stick when the bills come to the floors for action or will it be politics as usual?

I suspect the answer to that will be known in just a few days.

Additional Items of Note

Rooms and Meals Tax

As I mentioned last week, the House approved a a $4.5 million increase in the rooms and meals tax that would be specifically earmarked for our state's clean water efforts.

Indeed, I believe strongly that we need to put into place smart, strategic policies to clean up our state's waters.  And, I believe that the bill under consideration will help do just that.

But, to be clear, no funding is actually required for this bill to move forward and the work in the bill to begin.  Absolutely no new funding for our clean water efforts is needed until 2021.

As importantly, though, I also believe strongly that when we do institute a funding source for the work, that that funding source must have a nexus to water. Putting the vast majority of the burden to clean up our state's waterways on our hospitality industry is both unfair and misguided.

Education Spending and Property Tax Relief

It seems as though the issue of statewide education spending and property taxes might be a sticking point holding up final adjournment for the second year in a row.

At this time it is too early to tell where negotiations might go and what proposals might emerge from such negotiations.

Rest assured, however, as one who has fought for 12 years for meaningful education funding reform and property tax relief, I will be keeping a close eye on developments.