Category Archives: business

A ‘seismic shift’ in legislative control over state government rules

With generally strong backing from the business lobby, Tennessee legislators made a theme this year of curbing the power of state departments and agencies while enhancing the General Assembly’s oversight of their rules and regulations.

The move with perhaps the greatest long-range consequences came with passage of HB2068 by Rep. Martin Daniel, R-Knoxville, and Sen. Mike Bell, R-Riceville.

The bill, signed into law by Gov. Bill Haslam despite concerns from several of the departments he oversees, makes it more difficult to promulgate rules and regulations. And it makes clear that the Legislature, acting through the Government Operations Committees of the House and Senate, has absolute authority to reject any rule that a majority want to overturn.

As Daniel put it: “The primary effect of this bill will be to eliminate the liberal construction of the Administrative Procedures Act.” Currently, the Uniform Administrative Procedures Act (UAPA) contains provisions that say, more or less, that if there’s a doubt about the authority of an administrative agency, the dispute will be resolved in favor of the agency having the authority to act.

The bill effectively flips that. The presumption now is that the agency does not have authority and must establish that the rule is necessary through “convincing” evidence. During debate, Democrats said the move is an unprecedented revision to the UAPA, a model law that has been adopted to govern administrative operations in all states, though each state can make modifications.
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Regulators close Memphis bank

NEW YORK (AP) — Regulators are closing a small Tennessee bank, marking the second failure of a federally insured bank this year.

The Federal Deposit Insurance Corp. said that Trust Co. Bank of Memphis, Tennessee, was closed Friday,

As of Dec. 31, Trust Co. Bank had about $20.7 million in total assets and $20.3 million in total deposits. It operated four branches.

The Bank of Fayette County of Piperton, Tennessee, agreed to buy about $3.9 million of the failed bank’s assets and assume all of its deposits.

The failure is expected to cost the FDIC $7.2 million.

Note: News release from the Tennessee Department of Financial Institutions is below. Continue reading

Judge backs requiring deposition of Jimmy Haslam

MOBILE, Ala. (AP) — Cleveland Browns owner Jimmy Haslam is a step closer to having to answer questions about fraud at the truck stop chain where he is president and CEO.

Haslam has denied any knowledge of the scheme that has cost Pilot Flying J $177 million in settlements with customers and the government since it came to light after federal agents raided the company’s Knoxville, Tennessee, headquarters in April 2013.

Pilot’s former president and seven others, including two former top executives, have been indicted and face trial next year on charges they conspired to cheat customers out of promised discounts and rebates. Another 10 former employees have pleaded guilty in the fraud. But Haslam has not been charged criminally and for three years has fought legal efforts by trucking companies to depose him.

While about 5,500 firms were part of a class-action lawsuit against Pilot that settled quickly, Mobile-based Wright Transportation is one of several that opted pursue their own lawsuits in state court. Haslam has been ordered to sit for a deposition in that case.

On Friday, Mobile Circuit Court Judge Sarah Stewart declined Haslam’s request to reconsider her order, according to But that does not end his attorneys’ efforts to stop the deposition. They have also filed a motion for a protective order, claiming the case should not move forward until jurisdictional issues are resolved. On May 13, the court will hear arguments on that motion.

Pilot is owned by Haslam and his brother, Tennessee Gov. Bill Haslam, who has said he is not involved with operating the company. It is the nation’s largest diesel retailer with $31.4 billion in revenue in 2014.

Haslam, Boyd headed for China, Korea and Japan

News release from Department of Economic and Community Development
NASHVILLE — Tennessee Gov. Bill Haslam and Economic and Community Development Commissioner Randy Boyd will travel to Asia on an economic development trip focused on increasing foreign direct investment opportunities specifically related to the automotive, high tech and advanced manufacturing sectors.

The 10-day business trip is scheduled from Monday, May 2 to Wednesday, May 11 and will include stops in Korea, China and Japan. Haslam and Boyd will meet with executives of existing Tennessee businesses as well as work to expand relationships between Tennessee and Asian business communities.
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Bredesen commissioners’ company gets $100M investment

Silicon Ranch, the solar energy venture led by ex-officials in former Gov. Phil Bredesen’s administration, has landed another nine-figure investment, according to the Nashville Business Journal.

The Nashville-based firm has secured a $100 million equity investment from Partners Group, a Swiss private equity firm that manages an investment portfolio of more than $50 billion, according to a news release Wednesday.

Founded in 2011 by Matt Kisber and Reagan Farr, Silicon Ranch owns, operates and develops solar energy plants in Tennessee, Georgia, Arkansas and Mississippi. The company recently completed its first project in Colorado and Wednesday broke ground on a $100 million facility in Mississippi.

In the release, Kisber and Farr said the investment from Partners Group will help fuel additional growth for the company across the U.S. during the next 18 months.

“[Partners Group] are absolutely the right partner to help us accelerate our business model of developing to own all of our projects for the long-term,” Kisber, Silicon Ranch’s president and CEO, said in the release.

Added Farr, the firm’s CFO: “The solar industry in the U.S. is in the midst of rapid, dynamic expansion, and Silicon Ranch is well-positioned to a play a meaningful role in its development. Adding Partners Group as a business partner further enhances our ability to offer full-service renewable energy solutions to our diverse customer base across the country.”

Note: Kisber, a former state representative, was state finance commissioner under Bredesen. Farr was state revenue commissioner. Bredesen was an early investor in the company.

NLRB lets stand VW union vote in Chattanooga

NASHVILLE, Tenn. (AP) — The National Labor Relations Board on Wednesday declined to take up Volkswagen’s challenge of a union vote at its lone U.S. assembly plant in Tennessee.

In a 2-1 decision, the panel refused to consider the German automaker’s appeal on the basis that it raised “no substantial issues warranting review.”

Volkswagen had unsuccessfully sought to block a union vote among a group of about 160 workers specializing in the repair and maintenance of machinery and robots, arguing that labor decisions should be made by all 1,400 blue-collar workers at the plant. The company also questioned the timing of the vote amid its struggles to cope with the fallout of its diesel emissions cheating scandal.
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Haslam hearing from bathroom bill critics; not so much from supporters

Gov. Bill Haslam said Wednesday he’s getting telephone calls and emails from corporate executives concerned about the transgender bathroom bill, but he hasn’t heard from parents and school administrators telling him that there’s a problem that demands such a legislative action.

Further from the Commercial Appeal:

(Haslam) said he’s also concerned about the loss of federal funding if the bill passes — a threat cited by the state attorney general given the U.S. Department of Education’s view that such actions are discriminatory against transgender students.

“Personally, I am not hearing about problems out in the districts. I’m hearing that our school boards have figured out how to adjust to each situation that arises, and to date I’m not hearing parents say we have problem in our schools today,” the governor told reporters after announcing South Korean tire manufacturer Hankook is relocating its North American headquarters to Nashville.

(Note: Press release on 60 businesses writing a letter to oppose the bill is HERE.)

…Haslam said he’s already heard from some of the executives (writing the letter) and will take their views into account as he considers whether to sign the bills into law, veto them or allow them to become law without his signature.

“Obviously you have to look at both principle and economics and that’s my role as governor. … My job as governor is different from the legislators. They represent their districts. I have to represent all 6.6 million Tennesseans and come to the best decisions I can.”

(Note: Press release on 60 businesses writing a letter to oppose the bill is posted HERE.)

Multiple Pilot stations seeking WIGS licenses

In Knoxville, 22 of the 52 local businesses applying to sell wine under a state law taking effect July 1 are Pilot Flying J stations, according to the News-Sentinel.

“The general way people call it is ‘wine in grocery stores,’ but it’s actually somewhat of a misnomer,” said Rob Frost, attorney for Knoxville City Council, which approves all of certificates of compliance. “If you sell above a certain percent of food, you don’t truly have to truly be a grocery store.”

In fact, only 20 percent of a business’s sales must come from retail food, according to the law passed in 2014. The law goes into effect on July 1.

Of the 52 compliance certificates issued so far, Food City has received 10, Kroger nine and Walmart four.

Alyson Dyer, an attorney with the city law office, said she expects more applications to be submitted.

The permits to sell wine are issued by the Tennessee Alcoholic Beverage Commission, but the agency requires a compliance certificate from the local government along with a business’s application.

To receive a compliance certificate, a business must fill out an application with the city, have a background check completed by the Tennessee Bureau of Investigations and receive confirmation from the Metropolitan Planning Commission that the store is correctly zoned for selling alcohol.

Note: A bill recently approved by the legislature prohibits anyone from owning more than two liquor store, but that applies only to sellers of distilled liquors, not those selling only wine.

State questions merger of Northeast TN hospital chains

The state Department of Health is questioning plans for the merger of Mountain States Health Alliance and Wellmont Health System in Northeast Tennessee, reports the Johnson City Press.

The department is asking the systems for more information about such issues as finances, public impact, competition and workforce consequences. In a letter dated March 28 and posted Thursday on the department’s website, Commissioner John J. Dreyzehner cited several deficiencies in the joint COPA (certificate of public advantage) application, including the lack of a separation plan in the event of failure.

“The department’s requirement for a plan of separation is to specifically ensure that if a COPA is issued and the New Health System (as defined in the application) fails to live up to the promised commitments and understanding reached by the department and the parties, the department may terminate the COPA and require a clear plan of action to return the parties to a pre-consolidation state,” Dreyzehner wrote. “The minimal framework presented in the application does not provide the level of detail necessary to meet the department’s requirement to outline a clear, actionable plan to separate a merged entity.”

On Feb. 16, the leaders of the nonprofit health organizations submitted thousands of pages of documents to state regulators asking for a COPA from Tennessee and a letter authorizing a cooperative agreement from Virginia. The applications kicked off a review process in both states — at least 120 days in Tennessee and 150 in Virginia — giving the health officials time to ponder the proposals before making final determinations, which the systems hope will be made in their favor this fall.

Asked for comment regarding the COPA letter, Mountain States and Wellmont issued a joint statement saying ongoing dialogue with both Virginia and Tennessee is an expected and welcome part of the application review process.

…Should regulatory approval be granted, the merged system would operate 19 hospitals, dominating the inpatient care system locally, and is expected to to reach $2 billion in annual revenues in two years, according to a budget included in the applications.

Deal cut on revising CON process, but not not repealing it

A negotiated deal has been reached on changing the Tennessee’s “certificate of need” (CON) program, which requires health care facilities to get a state agency’s approval before major expansions, reports the Commercial Appeal. This comes with a growing movement to completely repeal the CON program and abolish the oversight agency, the Health Services and Development Agency.

The deal is laid out in an amendment to Senate Bill 1842/House Bill 1730, a “caption bill” sponsored by Sen. Todd Gardenhire, R-Chattanooga, and Rep. Cameron Sexton, R-Crossville, with a goal, they say, of modernizing the process to give providers more flexibility and to make the system more “free-market oriented.”

The script calls for approval in health committees of both the House and Senate on Wednesday.

Its major provisions include:

Retaining the CON program and the HSDA but reducing the kinds of services, facilities and expansions that are subject to its provisions. CON approval would continue to be required, for example, for entirely new hospitals and for outpatient diagnostic centers statewide.

Allowing hospitals to add up to 10 percent of the beds they are currently licensed for, by specific categories, every three years without CONs.

Repealing the current requirement for a CON for any hospital modification or expansion project costing at least $5 million. Abolishing the $5 million threshold would let hospitals modify or expand non-health care areas regardless of the cost without HSDA approval.

Repealing the current requirement for a CON for the acquisition of major medical equipment exceeding $2 million, so most high-priced major equipment purchases would no longer require state approval.