House committee advances fee overhaul that would raise some business filing fees; farmers and registered agents push back

Representative Harris asked the House Administration Committee to give favorable consideration to House Bill 400, saying the measure would modernize fees administered by the Secretary of State and strengthen Delaware’s fiscal position.

Harris, who presented the bill, said many fees ‘‘have not been updated since the 1990s and some since the 1970s’’ and cited a fiscal estimate that the changes would yield an estimated $142,000,000 annually — roughly $140,000,000 from alternative-entity adjustments and $1,750,000 from fee modernization changes.

Secretary of State Charani Patibanda Sanchez told the committee the bill is organized in three ‘‘buckets’’: alternative-entity fee increases, miscellaneous fee updates and a revision of expedited-fee authority. Sanchez said the division provides an extraordinary level of service and defended Delaware’s franchise while acknowledging concerns about how expedited fees are capped.

"We really appreciate your leadership," she said, adding that Delaware’s Division of Corporations processed more than 1,000,000 service requests last year and that she did not ‘‘think that either change would . . . damage the franchise.’'

Public commenters urged caution. Sydney Grossnickle of the Delaware Farm Bureau testified in-person that many Delaware farms operate as LLCs or partnerships and are ‘‘working family farms operating on extremely tight margins.’' The Farm Bureau ‘‘respectfully oppose[d] House Bill 400 as written,’' urging amendments to protect small agribusinesses from permanent annual cost increases.

Virtual commenter Greg Lavelle, speaking as a registered-agent industry representative, focused on expedited fees and said, "The expedited fees are doubling and tripling," citing an example of a two-hour expedited fee moving from $500 to $1,500 in the draft. Lavelle warned that uncertainty about regular turnaround times can force filers into costly expedited services.

Sanchez responded that the bill raises the statutory cap on expedited fees (the ‘‘up to’’ number) but that ‘‘the fees themselves are not doubling or tripling’’ automatically; she said proposed caps permit flexibility but do not mandate chargeable rates at the higher amounts.

Committee members pressed on projected attrition and revenue assumptions. Harris and Sanchez discussed differing attrition estimates (references in the record to 15% and 20%) and whether a $100 increase to alternative-entity fees would prompt out-of-state filers to relocate. Representative Dukes voiced concern that a 33% increase in one annual fee could make the state vulnerable to competition.

After discussion and public comment, the committee moved and seconded a motion to release HB400. A roll-call vote recorded the motion as carried with Chair Harris, Vice Chair Ozinski and Speaker Minor Brown voting yes and Representative Dukes recorded as voting no.

The bill now moves to the next step in the legislative process for further consideration and potential amendments; fiscal estimates and specific fee schedules remain subject to refinement as the bill advances.