Senator Daniel Hemmert proposes the following substitute bill:


1     
UTAH SCIENCE TECHNOLOGY AND RESEARCH

2     
INITIATIVE AMENDMENTS

3     
2018 GENERAL SESSION

4     
STATE OF UTAH

5     
Chief Sponsor: Daniel Hemmert

6     
House Sponsor: R. Curt Webb

7     

8     LONG TITLE
9     General Description:
10          This bill modifies provisions of the Utah Science Technology and Research Governing
11     Authority (USTAR) Act and other related provisions.
12     Highlighted Provisions:
13          This bill:
14          ▸     defines terms;
15          ▸     modifies provisions that require USTAR to provide ongoing funding for certain
16     researchers at the University of Utah and Utah State University;
17          ▸     modifies reporting requirements related to researchers that receive state funding;
18          ▸     requires USTAR to transfer ownership of:
19               •     a certain research building located on the campus of the University of Utah to
20     the university; and
21               •     a certain research building located on the campus of Utah State University to the
22     university;
23          ▸     creates a new restricted account;
24          ▸     amends provisions related to the Governor's Office of Economic Development's
25     Technology Commercialization and Innovation Program; and

26          ▸     makes technical changes.
27     Money Appropriated in this Bill:
28           This bill appropriates in fiscal year 2019:
29          ▸     to the Utah Science Technology and Research Governing Authority -- Research
30     Capacity Building -- various programs described in this bill:
31               •     from the General Fund as an ongoing appropriation, ($6,519,000); and
32               •     from Beginning Nonlapsing Balances as a one-time appropriation, ($250,000);
33          ▸     to the General Fund:
34               •     from nonlapsing balances -- Utah Science Technology and Research Governing
35     Authority as a one-time appropriation, $250,000;
36          ▸     to the University of Utah -- Education and General:
37               •     from the General Fund as an ongoing appropriation, $2,000,000; and
38               •     from the General Fund as a one-time appropriation, ($307,300);
39          ▸     to Utah State University -- Education and General:
40               •     from the General Fund as an ongoing appropriation, $1,000,000; and
41               •     from the General Fund as a one-time appropriation, $1,000,000;
42          ▸     To USTAR -- Grant Programs -- various programs described in this bill:
43               •     from the General Fund as an ongoing appropriation, ($9,220,000); and
44               •     from the General Fund as a one-time appropriation, $9,220,000;
45          ▸     To Governor's Office of Economic Development -- Business Development --
46     Outreach and International Trade:
47               •     from the General Fund as an ongoing appropriation, ($2,448,900); and
48               •     from the General Fund as a one-time appropriation, $2,448,900; and
49          ▸     To Workforce Development Restricted Account:
50               •     from the General Fund as an ongoing appropriation, $12,187,900; and
51               •     from the General Fund as a one-time appropriation, ($9,111,600).
52     Other Special Clauses:
53          None
54     Utah Code Sections Affected:
55     AMENDS:
56          63I-1-253, as last amended by Laws of Utah 2017, Chapters 166 and 181

57          63M-2-502, as enacted by Laws of Utah 2016, Chapter 240
58          63M-2-602, as enacted by Laws of Utah 2016, Chapter 240
59          63M-2-802, as last amended by Laws of Utah 2017, Chapter 18
60          63N-3-204, as renumbered and amended by Laws of Utah 2015, Chapter 283
61     ENACTS:
62          13-1-14, Utah Code Annotated 1953
63          53B-17-1101, Utah Code Annotated 1953
64          53B-17-1102, Utah Code Annotated 1953
65          53B-18-1501, Utah Code Annotated 1953
66          53B-18-1502, Utah Code Annotated 1953
67     REPEALS:
68          63M-2-702, as enacted by Laws of Utah 2016, Chapter 240
69          63M-2-704, as enacted by Laws of Utah 2016, Chapter 240
70          63M-2-705, as enacted by Laws of Utah 2016, Chapter 240
71     

72     Be it enacted by the Legislature of the state of Utah:
73          Section 1. Section 13-1-14 is enacted to read:
74          13-1-14. Workforce Development Restricted Account.
75          (1) There is created a restricted account within the General Fund known as the
76     Workforce Development Restricted Account.
77          (2) The restricted account shall be administered to provide funding for collaborative
78     projects that support:
79          (a) economic development in the state;
80          (b) workforce development in the state;
81          (c) the support of scientific and technical innovation and entrepreneurship in the state;
82     and
83          (d) the programs and duties of the governing authority in accordance with this chapter.
84          (3) The state treasurer shall invest the money in the restricted account according to the
85     procedures and requirements of Title 51, Chapter 7, State Money Management Act, except that
86     interest and other earnings derived from the restricted account shall be deposited into the
87     restricted account.

88          (4) The restricted account shall be funded by appropriations made to the account by the
89     Legislature.
90          (5) Subject to appropriation and direction from the Legislature, account money may be
91     used in accordance with this part.
92          Section 2. Section 53B-17-1101 is enacted to read:
93     
Part 11. USTAR Researchers

94          53B-17-1101. Definitions.
95          As used in this part:
96          (1) "Researcher" means an individual who:
97          (a) on May 8, 2018, is employed, alone or as part of a research team, by the university;
98          (b) before May 8, 2018, received funding from USTAR for some or all of the
99     researcher's startup costs or salary;
100          (c) was recruited to become a member of the university's faculty; and
101          (d) after May 8, 2018, receives some or all of the researcher's start up costs or salary
102     from a legislative appropriation to the university for that purpose.
103          (2) "University" means the University of Utah.
104          (3) "USTAR" means the Utah Science Technology and Research Initiative created in
105     Section 63M-2-301.
106          Section 3. Section 53B-17-1102 is enacted to read:
107          53B-17-1102. Researcher reporting requirements.
108          (1) On or before September 1 each year, the university shall submit a written report to
109     the governor, the Legislature, and the Business, Economic Development, and Labor
110     Appropriations Subcommittee.
111          (2) A report under Subsection (1) shall contain:
112          (a) the amount and sources of funding expended on a researcher's research program,
113     including:
114          (i) university funds and other state funds;
115          (ii) legislative appropriations;
116          (iii) federal funds;
117          (iv) philanthropic or nonprofit funds; and
118          (v) industry funds;

119          (b) a copy of each:
120          (i) technology disclosure that a researcher files with the university;
121          (ii) license agreement that the university enters into with respect to a technology
122     developed by a researcher, including any current, expired, or breached license; and
123          (iii) patent filed by the university based on technology developed by a researcher;
124          (c) publications in which a researcher participated, including a citation for each peer
125     reviewed publication;
126          (d) the number of jobs maintained by a researcher's research program and average
127     wages paid to those holding those jobs;
128          (e) expenses paid by legislative appropriations for each researcher, including:
129          (i) salary and benefits for a researcher or staff;
130          (ii) operational expenses;
131          (iii) capital equipment expenses; and
132          (iv) travel; and
133          (f) compensation, including salary and benefits, that a researcher received from a
134     publicly funded source other than legislative appropriations under this part.
135          Section 4. Section 53B-18-1501 is enacted to read:
136     
Part 15. USTAR Researchers

137          53B-18-1501. Definitions.
138          As used in this part:
139          (1) "Researcher" means an individual who:
140          (a) on May 8, 2018, is employed, alone or as part of a research team, by the university;
141          (b) before May 8, 2018, received funding from USTAR for some or all of the
142     researcher's startup costs or salary;
143          (c) was recruited to become a member of the university's faculty; and
144          (d) after May 8, 2018, receives some or all of the researcher's start up costs or salary
145     from a legislative appropriation to the university for that purpose.
146          (2) "University" means Utah State University.
147          (3) "USTAR" means the Utah Science Technology and Research Initiative created in
148     Section 63M-2-301.
149          Section 5. Section 53B-18-1502 is enacted to read:

150          53B-18-1502. Researcher reporting requirements.
151          (1) On or before September 1 each year, the university shall submit a written report to
152     the governor, the Legislature, and the Business, Economic Development, and Labor
153     Appropriations Subcommittee.
154          (2) A report under Subsection (1) shall contain:
155          (a) the amount and sources of funding expended on a researcher's research program,
156     including:
157          (i) university funds and other state funds;
158          (ii) legislative appropriations;
159          (iii) federal funds;
160          (iv) philanthropic or nonprofit funds; and
161          (v) industry funds.
162          (b) a copy of each:
163          (i) technology disclosure that a researcher files with the university;
164          (ii) license agreement that the university enters into with respect to a technology
165     developed by a researcher, including any current, expired, or breached license; and
166          (iii) patent filed by the university based on technology developed by a researcher;
167          (c) publications in which a researcher participated, including a citation for each peer
168     reviewed publication;
169          (d) the number of jobs maintained by a researcher's research program and average
170     wages paid to those holding those jobs;
171          (e) expenses paid by legislative appropriations for each researcher, including:
172          (i) salary and benefits for a researcher or staff;
173          (ii) operational expenses;
174          (iii) capital equipment expenses; and
175          (iv) travel; and
176          (f) compensation, including salary and benefits, that a researcher received from a
177     publicly funded source other than legislative appropriations under this part.
178          Section 6. Section 63I-1-253 is amended to read:
179          63I-1-253. Repeal dates, Titles 53, 53A, and 53B.
180          The following provisions are repealed on the following dates:

181          (1) Subsection 53-10-202(18) is repealed July 1, 2018.
182          (2) Section 53-10-202.1 is repealed July 1, 2018.
183          (3) Title 53A, Chapter 1a, Part 6, Public Education Job Enhancement Program, is
184     repealed July 1, 2020.
185          (4) Section 53A-13-106.5 is repealed July 1, 2019.
186          (5) Section 53A-15-106 is repealed July 1, 2019.
187          (6) Sections 53A-15-206 and 53A-15-207 are repealed January 1, 2023.
188          (7) Title 53A, Chapter 31, Part 4, American Indian and Alaskan Native Education State
189     Plan Pilot Program, is repealed July 1, 2022.
190          (8) Title 53B, Chapter 17, Part 11, USTAR Researchers, is repealed July 1, 2028.
191          (9) Title 53B, Chapter 18, Part 15, USTAR Researchers, is repealed July 1, 2028.
192          [(8)] (10) Section 53B-24-402, Rural residency training program, is repealed July 1,
193     2020.
194          [(9)] (11) Subsection 53C-3-203(4)(b)(vii), which provides for the distribution of
195     money from the Land Exchange Distribution Account to the Geological Survey for test wells,
196     other hydrologic studies, and air quality monitoring in the West Desert, is repealed July 1,
197     2020.
198          Section 7. Section 63M-2-502 is amended to read:
199          63M-2-502. Principal researchers -- Agreement requirements -- Discontinuing
200     funding.
201          (1) Subject to Subsection (6) and legislative appropriation, the governing authority
202     shall:
203          (a) provide funding to help a research university honor its commitments to principal
204     researchers employed by the research university; and
205          (b) give priority to funding provided under Subsection (1)(a).
206          (2) The governing authority shall enter into a written agreement with a higher
207     education institution that employs a principal researcher:
208          (a) establishing performance standards and expectations for a principal researcher; and
209          (b) requiring the higher education institution to require a principal researcher to comply
210     with reporting requirements set forth in Section 63M-2-702.
211          (3) (a) A principal researcher may not be hired on or after May 10, 2016 without the

212     approval of the governing authority and the higher education institution.
213          (b) A higher education institution that enters into or renews an agreement with a
214     principal researcher on or after May 10, 2016 shall include in the agreement:
215          (i) a specific time period for the commitment of USTAR funding;
216          (ii) the amount of USTAR funding committed to the higher education institution for
217     the principal researcher, specifying the purpose of the funding;
218          (iii) an acknowledgment that the principal researcher understands and agrees to the
219     reporting requirements and performance standards under this chapter; and
220          (iv) the governing authority's written approval of the terms of the new or renewed
221     agreement.
222          (4) The governing authority may not allocate money to a higher education institution
223     for a principal researcher unless the higher education institution provides the reporting required
224     under Section 63M-2-702.
225          (5) The governing authority may discontinue allocating money to a higher education
226     institution for a principal researcher if the governing authority and the president of the higher
227     education institution employing the principal researcher agree in writing that:
228          (a) the principal researcher:
229          (i) fails to meet the performance standards and expectations established under
230     Subsection (2)(a);
231          (ii) receives a reasonable opportunity to remedy the failure to meet performance
232     standards and expectations; and
233          (iii) fails to remedy the failure to meet performance standards and expectations; and
234          (b) under the circumstances, discontinuing USTAR funding to the higher education
235     institution for the principal researcher is appropriate and justified.
236          (6) Beginning on July 1, 2018, USTAR may not provide funding to help a research
237     university honor its commitments to principal researchers employed by the research university.
238          Section 8. Section 63M-2-602 is amended to read:
239          63M-2-602. Lease agreement for a research building -- Requirements for lease
240     agreement.
241          (1) [The] Subject to Subsection (3), the governing authority shall enter into a written
242     lease agreement with a research university to lease to the research university a research

243     building constructed on the research university's campus.
244          (2) A lease agreement under Subsection (1) shall:
245          (a) require the research university to pay the ongoing operation and maintenance
246     expenses associated with the research building, including for any infrastructure in the research
247     building; and
248          (b) subject to the reporting requirements described in Section 63M-2-705, permit the
249     research university to use or rent space within the research building for research other than
250     research receiving USTAR support, including research by a private entity.
251          (3) (a) On or before October 1, 2018, the governing authority shall transfer ownership
252     and title of the:
253          (i) research building known as the James L. Sorenson Molecular Biotechnology
254     Building, USTAR Building, located at 36 South Wasatch Drive, Salt Lake City, to the
255     University of Utah; and
256          (ii) research building known as the USTAR BioInnovations Center located at 650 East
257     1600 North, North Logan, to Utah State University.
258          (b) The provisions of Subsections (1) and (2) are no longer in effect after the transfer of
259     ownership described in this Subsection (3) occurs.
260          Section 9. Section 63M-2-802 is amended to read:
261          63M-2-802. USTAR annual report.
262          (1) (a) On or before October 1 of each year, the governing authority shall submit, in
263     accordance with Section 68-3-14, an annual written report for the preceding fiscal year to:
264          (i) the Business, Economic Development, and Labor Appropriations Subcommittee;
265          (ii) the Economic Development and Workforce Services Interim Committee;
266          (iii) the Business and Labor Interim Committee; and
267          (iv) the governor.
268          (b) An annual report under Subsection (1)(a) is subject to modification as provided in
269     Subsection (5) after an audit described in Section 63M-2-803 is released.
270          (2) An annual report described in Subsection (1) shall include:
271          (a) information reported to the governing authority[:(i) by an institution of higher
272     education under Section 63M-2-702;     (ii)] through the survey described in Section 63M-2-703;
273     [and]

274          [(iii) by a research university, under Section 63M-2-705;]
275          (b) a clear description of the methodology used to arrive at any information in the
276     report that is based on an estimate;
277          (c) starting with fiscal year 2017 data as a baseline, data from previous years for
278     comparison with the annual data reported under this Subsection (2);
279          (d) relevant federal and state statutory references and requirements;
280          (e) contact information for the executive director;
281          (f) other information determined by the governing authority that promotes
282     accountability and transparency; and
283          (g) the written economic development objectives required under Subsection
284     63M-2-302(1)(e) and a description of progress or challenges in meeting the objectives.
285          (3) The governing authority shall design the annual report to provide clear, accurate,
286     and accessible information to the public, the governor, and the Legislature.
287          (4) The governing authority shall:
288          (a) submit the annual report in accordance with Section 68-3-14; and
289          (b) place a link to the annual report and previous annual reports on USTAR's website.
290          (5) Following the completion of an annual audit described in Section 63M-2-803, the
291     governing authority shall:
292          (a) publicly issue a revised annual report that:
293          (i) addresses the audit;
294          (ii) responds to audit findings; and
295          (iii) incorporates any revisions to the annual report based on audit findings;
296          (b) publish the revised annual report on USTAR's website, with a link to the audit; and
297          (c) submit, in accordance with Section 68-3-14, written notification of any revisions of
298     the annual report to:
299          (i) the Business, Economic Development, and Labor Appropriations Subcommittee;
300          (ii) the Economic Development and Workforce Services Interim Committee;
301          (iii) the Business and Labor Interim Committee; and
302          (iv) the governor.
303          (6) In addition to the annual written report described in this section, the governing
304     authority shall:

305          (a) provide information and progress reports to a legislative committee upon request;
306     and
307          (b) on or before [October 1, 2019] August 1, 2018, and every five years after [October
308     1, 2019, include with the annual report described in this section] August 1, 2018, provide to the
309     same entities that receive the annual report described in Subsection (1)(a) a written analysis and
310     recommendations concerning the usefulness of the information required in the annual report
311     and USTAR's ongoing effectiveness, including whether:
312          (i) the reporting requirements are effective at measuring USTAR's performance;
313          (ii) the reporting requirements should be modified; [and]
314          (iii) USTAR is beneficial to the state and should continue[.]; and
315          (iv) whether programs in other agencies could provide similar benefits to the state
316     more effectively or at a lower cost.
317          Section 10. Section 63N-3-204 is amended to read:
318          63N-3-204. Administration -- Grants and loans.
319          (1) The office shall administer this part.
320          (2) (a) (i) The office may award Technology Commercialization and Innovation
321     Program grants or issue loans under this part to an applicant that is:
322          (A) an institution of higher education;
323          (B) a licensee; or
324          (C) a small business.
325          (ii) If loans are issued under Subsection (2)(a)(i), the Division of Finance may set up a
326     fund or account as necessary for the proper accounting of the loans.
327          (b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
328     office shall make rules for a process to determine whether an institution of higher education
329     that receives a grant under this part must return the grant proceeds or a portion of the grant
330     proceeds if the technology that is developed with the grant proceeds is licensed to a licensee
331     that:
332          (i) does not maintain a manufacturing or service location in the state from which the
333     licensee or a sublicensee exploits the technology; or
334          (ii) initially maintains a manufacturing or service location in the state from which the
335     licensee or a sublicensee exploits the technology, but within five years after issuance of the

336     license the licensee or sublicensee transfers the manufacturing or service location for the
337     technology to a location out of the state.
338          (c) A repayment by an institution of higher education of grant proceeds or a portion of
339     the grant proceeds may only come from the proceeds of the license established between the
340     licensee and the institution of higher education.
341          (d) (i) An applicant that is a licensee or small business that receives a grant under this
342     part shall return the grant proceeds or a portion of the grant proceeds to the office if the
343     applicant:
344          (A) does not maintain a manufacturing or service location in the state from which the
345     applicant exploits the technology; or
346          (B) initially maintains a manufacturing or service location in the state from which the
347     applicant exploits the technology, but within five years after issuance of the grant, the applicant
348     transfers the manufacturing or service location for the technology to an out-of-state location.
349          (ii) A repayment by an applicant shall be prorated based on the number of full years the
350     applicant operated in the state from the date of the awarded grant.
351          (iii) A repayment by a licensee that receives a grant may only come from the proceeds
352     of the license to that licensee.
353          (3) (a) Funding allocations shall be made by the office with the advice of the board.
354          (b) Each proposal shall receive the best available outside review.
355          (4) (a) In considering each proposal, the office shall weigh technical merit, the level of
356     matching funds from private and federal sources, and the potential for job creation and
357     economic development.
358          (b) Proposals or consortia that combine and coordinate related research at two or more
359     institutions of higher education shall be encouraged.
360          (5) The office shall review the activities and progress of grant recipients on a regular
361     basis and, as part of the office's annual written report described in Section 63N-1-301, report
362     on the accomplishments and direction of the Technology Commercialization and Innovation
363     Program.
364          (6) (a) On or before August 1, 2018, the office shall provide a written analysis and
365     recommendations concerning the usefulness of the Technology Commercialization and
366     Innovation Program described in this part, including whether:

367          (i) the program is beneficial to the state and should continue; and
368          (ii) other office programs or programs in other agencies could provide similar benefits
369     to the state more effectively or at a lower cost.
370          (b) The written analysis and recommendations described in this Subsection (6) shall be
371     provided to:
372          (i) the Business, Economic Development, and Labor Appropriations Subcommittee;
373          (ii) the Economic Development and Workforce Services Interim Committee;
374          (iii) the Business and Labor Interim Committee; and
375          (iv) the governor.
376          Section 11. Repealer.
377          This bill repeals:
378          Section 63M-2-702, Reporting requirements for higher education institutions.
379          Section 63M-2-704, Reporting on licensed or acquired intellectual property.
380          Section 63M-2-705, Reporting on use of research buildings.
381          Section 12. Appropriation.
382           The following sums of money are appropriated for the fiscal year beginning July 1,
383     2018, and ending June 30, 2019. These are additions to amounts previously appropriated for
384     fiscal year 2019. Under the terms and conditions of Title 63J, Chapter 1, Budgetary Procedures
385     Act, the Legislature appropriates the following sums of money from the funds or accounts
386     indicated for the use and support of the government of the state of Utah.
387     ITEM 1
388          To Utah Science Technology and Research Governing Authority --
389           Research Capacity Building
390               From General Fund
($6,519,000)

391               From Beginning Nonlapsing Balances, One-time
($250,000)

392               Schedule of Programs:
393                    U of U Legacy Salary                    ($4,200,000)
394                    U of U Legacy Support               ($120,000)
395                    U of U Start Up, Carry Over,
396                     Commercialization                    ($1,369,000)
397                    USU Legacy Salary                    ($775,000)

398                    USU Legacy Support                    ($305,000)
399     ITEM 2
400          To General Fund
401               From Nonlapsing Balances - Utah Science Technology and Research
402               Governing Authority, One-time
$250,000

403               Schedule of Programs:
404                    General Fund, One-time               $250,000
405     ITEM 3
406          To University of Utah - Education and General
407               From General Fund
$2,000,000

408               From General Fund, One-time
($307,300)

409               Schedule of Programs:
410                    Education and General               $1,692,700
411     ITEM 4
412          To Utah State University - Education and General
413               From General Fund
$1,000,000

414               From General Fund, One-time
$1,000,000

415               Schedule of Programs:
416                    Education and General               $2,000,000
417     ITEM 5
418          To USTAR - Grant Programs
419               From General Fund
($9,220,000)

420               From General Fund, One-time
$9,220,000

421               Schedule of Programs:
422                    Energy Research Triangle               $0
423                    Industry Partnership Program          $0
424                    Science and Technology Initiation Grant     $0
425                    Technology Acceleration Program          $0
426                    University Technology Acceleration Grant     $0
427     ITEM 6
428          To Governor's Office of Economic Development - Business Development

429               From General Fund
($2,448,900)

430               From General Fund, One-time
$2,448,900

431               Schedule of Programs:
432                    Outreach and International Trade          $0
433     ITEM 7
434          To Utah Science Technology and Research Governing Authority --
435           Workforce Development Restricted Account
436               From General Fund
$12,187,900

437               From General Fund, One-time
($9,111,600)

438               Schedule of Programs:
439                    Workforce Development Restricted
440                     Account                         $3,076,300