Secretary of State: current business filings won’t identify renewable-energy firms, limiting H.125 data goals

Vermont Secretary of State Sarah Copeland Hanzas told the House Committee on Energy and Digital Infrastructure on Feb. 18 that the state’s existing business registration system cannot reliably identify businesses operating in the renewable energy sector, complicating the committee’s efforts tied to H.125.

The statement came during testimony from Copeland Hanzas and David Hall, director of business services for the Office of the Secretary of State, about what the office’s business database currently captures and what it does not. “We don't currently have categories in business filings that would enable us to specifically identify businesses that are operating in the renewable energy realm,” Copeland Hanzas said.

That limitation matters because the bill before the committee seeks to assemble data about the renewable-energy market in Vermont. Copeland Hanzas and Hall told members that the filings the office receives are largely self‑reported, that the statutory filing requirements are minimal, and that the office generally does not verify or expand business-provided information.

“I'm going to have David actually give you the nitty gritty details,” Copeland Hanzas said, introducing Hall. Hall explained that, except for sole proprietors, businesses form as separate legal entities by filing an initial document with the secretary of state's office. “For everything except for a sole proprietor, which is you doing business under your name, you come to the secretary of state's office because that's the place that they have designated to essentially form the business to breathe life into a separate legal existence,” Hall said.

Hall said the initial filing statute requires only a small set of data — “five or six data points” — such as an organizer and an address; ownership information is not required for the most common entity type (limited liability company). The office’s online form allows businesses to optionally select a NAICS (North American Industry Classification System) code and multiple activity descriptions, but Hall said that using a NAICS code is voluntary. “A NAICS code itself is not required by law,” Hall said, adding that many businesses simply select “any lawful purpose” when forming an entity.

Because the classification fields are optional and self-identified, Copeland Hanzas told the committee the secretary of state's database would not produce a reliable count of renewable-energy firms unless the Legislature required more detailed or mandatory disclosures in formation or follow-up filings.

Committee members also asked about business closure data. Hall said the office receives filings that close or wind up entities, but the “take rate” for closure filings is lower than for initial filings. Entities can be listed as active, inactive, pending, administratively dissolved, or terminated depending on filings or failures to meet statutory obligations, Hall said, and the office does not automatically mark every operationally closed business as terminated.

As alternatives to changing business-formation law, Hall suggested the committee consider other state and federal data sources and “reverse-engineer” market information. He noted the Department of Labor’s Labor Market Information Division and federal resources such as the U.S. Small Business Administration as possible sources of sector or employment data. Hall also recommended looking at related licensing or permitting records — for example, trades such as electricians and plumbers who work on renewable installations often appear in Division of Fire Safety licensing or other agency records.

No formal vote or directive was recorded at the hearing. Copeland Hanzas and Hall said the office could be a useful repository for voluntarily submitted data and that the committee could return later to discuss IT transitions that may change data collection capabilities. “For the most part, that's always going to be voluntary self-identified data,” Hall said.

The committee did not adopt statutory changes at that meeting; members indicated they would explore alternative data sources and follow up with the secretary of state's office about the state's filing system and upcoming IT transitions.

The testimony clarifies that, under current law and practice, Vermont would need either new statutory reporting requirements or a composite approach using multiple agency datasets to produce a reliable inventory of businesses active in renewable energy.