Commerce Committee Report – Week 9, 2019

SF 534 relates to the use of gasification and pyrolysis facilities for the conversion of certain recoverable waste materials. It excludes the facilities from the definition of “sanitary disposal project,” excludes certain post-use polymers and recoverable feedstocks from the definition of “solid waste,” and excludes certain gasification and pyrolysis facilities from the definition of “waste conversion technologies.” The proposal incorporates recommendations by the Iowa Department of Natural Resource’s Waste Management Bureau to include financial assurance provisions for proper disposal of any materials that remain at a facility due to the owner’s or operator’s failure to properly close the site within 60 days of termination of operations.
[3/13: 45-3 (No: Celsi, Hogg, R. Taylor; Absent: T. Taylor; Vacant: Danielson)]

HF 426 – IID background checks, fraud investigators

HF 426 (SF 331) is based on a non-controversial proposal recommended by the Iowa Insurance Division (IID). The Senate version included additional language by Sen. Chapman that requires the Division to dedicate at least two of its insurance fraud bureau investigators to investigate workers compensation cases. The Division is concerned that this stipulation is detrimental to its current fraud bureau staff, which consists of a director, three investigators and a criminal intelligence analyst. The IID requests that if the language is adopted, legislators consider providing for two additional investigators dedicated to workers compensation, and funding for those two new full-time employees. [Fiscal note estimate: $220,000 to fund two FTEs.] In 2018, 83 of the 1,046 investigation referrals were related to workers compensation issues (about 9 percent), consistent with the past three years of data.

The original IID recommendation, now HF 426, clarifies the IID’s authority to review possible fraud cases in all areas regulated by the Insurance Commissioner. It also adds authorization of criminal history background checks for insurance producers and updates licensing requirements to meet the new standards. Almost all states require a criminal history background check (which includes fingerprints) for insurance producers. The IID worked with the Department of Public Safety’s Division of Criminal Investigation to ensure that the language would be acceptable to the FBI, which conducts the federal background checks. This will be applicable to new and out-of-state insurance producers, public adjusters and viatical settlement providers.

The House passed HF 426 March 11 on a vote of 94-0. The Senate amended the bill to include the additional language limiting two of the three investigators to reviewing only workers compensation issues. Sen. Boulton offered an amendment to give the Commissioner discretion in balancing the workload due to the low percentage of worker compensation cases compared to the overall fraud investigations conducted by the bureau. The amendment (S-3032) lost on a vote of 18-31 (Democrats, Sen. Carlin voting in favor).
[3/13: 32-17 party-line (Vacant: Danielson)]

HF 668 – Business interests of alcoholic beverage manufacturers, wholesalers, retailers

HF 668 (SF 533) relates to limitations on business interests of certain manufacturers, wholesalers and retailers of alcoholic beverages. In 2017, the Legislature passed SF 516, which required the Iowa Alcoholic Beverages Division to extensively review Iowa’s “tied house” laws (limitations on business interests of manufacturers, wholesalers and retailers of alcoholic beverages) to assist legislators in determining if current laws adequately meet the needs of the modern marketplace and protect public health, safety and welfare. The Alcoholic Beverage Control Study was submitted to the Legislature on July 1, 2018. The legislation was proposed by the Commerce Committee chairs as study bills and amended in committee. The proposal allows employees to engage in cross-tier employment as long as they are not in a position to influence; provides an exception to allow alcoholic beverage retail sales at the principal office of a retailer; allows beer manufacturers to sell, at wholesale, no more than 30,000 barrels of beer annually for off-premise consumption; and defines “institutional investor” to clarify that a person who has investments in businesses that manufacture, bottle, wholesale or sell at retail alcoholic beverages may maintain a diversified portfolio of investments (such as deferred compensation, stocks, retirement plans ) that includes alcoholic beverages if the majority of investments are in other businesses.

The bill makes changes related to tied house and the three-tier system:

Allows an alcoholic beverages manufacturer or wholesaler to have an interest in an alcoholic beverages retailer, provided the retailer does not sell the manufacturer’s or wholesaler’s product.
Creates an exception to the limitation above, allowing a person engaged in the business of manufacturing wine that is not native wine to sell that person’s wine products at their principal office by obtaining a special class “C” liquor control license and a class “B” wine permit. Another retail licensee or permittee operating at the principal office of a person engaged in the business of manufacturing wine that is not native wine would also be able to sell that person’s wine.
Allows cross-tier ownership through investments, provided the majority of investments in a person’s portfolio are not in businesses that manufacture, bottle, wholesale or sell at retail alcoholic beverages.
Allows for cross-tier employment, provided the employee is not an officer, owner, director, or in a position to exercise any control or influence over the types of sales or the purchasing of alcoholic beverages in either position of employment.
Limits the ability for a native brewery to sell at wholesale no more than 30,000 barrels of beer on an annual basis to retailers authorized to sell beer in Iowa.
[3/13: 38-11 (No: Bolkcom, Celsi, Hogg, Jochum, Kinney, Mathis, Petersen, Quirmbach, Ragan, J. Smith, R. Taylor; Vacant: Danielson)]

COMMITTEE ACTION:

SF 556 – Life and Health Insurance Guaranty Association membership

SF 556 (SSB 1222) updates Iowa Code relating to the membership of the Life and Health Insurance Guaranty Association (LHIGA) and assessments to member insurers for insurance written by impaired or insolvent member insurers. It more closely conforms Chapter 508C to the National Association of Insurance Commissioners’ (NAIC) model act, including those recently adopted by NAIC. The bill provides that assessments to member insurers of the LHIGA for long-term care insurance written by an impaired or insolvent insurer must be allocated by the methodology included in the association’s plan of operation and must provide for 50 percent of the assessment to be allocated to accident and health member insurers and 50 percent to be allocated to life and annuity member insurers. Current law does not provide for life and annuity members to be included in the assessment for long-term care insurance written by an impaired or insolvent insurer.
[3/7: short form]

SF 557 – Insurance demolition reserves in cities

SF 557 (SF 216) provides that an insurer that has issued a fire and casualty insurance policy for the payment of damages to real property located in a city must reserve an amount equal to $20,000 or 20 percent of the payment for damages, whichever is greater, as a demolition cost reserve. The current required amount is $10,000 or 10 percent of the payment, whichever is greater. The bill also requests that the Legislative Council establish an interim study committee to review the demolition reserve statute to consider whether it adequately meets the needs of cities of various sizes and geographic locations within Iowa. The House companion is HF 225.
[3/7: short form (No: Quirmbach)]

SF 558 – Domestic surplus lines insurance

SF 558 (SSB 1207) allows insurers of surplus lines to be based in Iowa. The bill establishes requirements and defines “domestic surplus lines insurer” as an insurer that is domiciled in this state and authorized by the Insurance Commissioner to do business as such. Currently, a company with its main office in Iowa can write surplus lines insurance in every state except Iowa. The bill also specifies requirements that a non-admitted insurer domiciled in Iowa must meet to be considered a domestic surplus lines insurer. Surplus lines insurance (a.k.a. excess lines insurance) helps provide coverage of an unconventional nature (e.g., Ninja Gyms, underground storage tanks, long-haul trucking of high-value, hazardous or perishable cargo) when what needs to be insured makes it difficult to get insurance through regular lines because the insurance companies are unable or unwilling to accept the risk. The proposal, based on recommendations by the Iowa Insurance Institute working with the Iowa Insurance Division and other stakeholders, should enhance Iowa’s reputation as an insurance industry leader and could bring more jobs to the state. Similar legislation has been enacted in 18 other states. The House approved companion is HF 651.
[3/7: short form]

SF 559 — Portable electronic insurance notifications

SF 559 (SSB 1206) allows insurance carriers to electronically send notifications to portable electronic device policyholders. The companion is HF 605.
[3/7: short form]

SF 560 – Installation of wireless communications infrastructure

SF 560 (SSB 1195), the Iowa Cell Siting Act, provides uniform rules and limitations and requires authorities to approve an application for a tower in compliance with the Nationwide Public Safety Broadband Network in counties with populations of less than 15,000 people. An authority or governing body authorized to make decisions relative to a cell siting cannot reject an application for the installation of a tower or transmission equipment in the unincorporated area of a county with a population of less than 15,000 (except on property zoned as single-family residential or property of historical significance). It requires written confirmation from the Statewide Interoperable Communications System Board that the tower or equipment is intended to be installed and used as part of the state plan approved under specified federal law for the deployment of the Nationwide Public Safety Broadband Network or radio access network. The bill takes effect upon enactment and sunsets in two years. The House’s companion bill, HF 487, passed the House on March 11 on a vote of 74-20.
[3/7: short form (No: Quirmbach)]

SF 561 – Unemployment benefits disqualification for misconduct

SF 561 (SSB 1088) relates to the disqualification from eligibility for unemployment benefits due to discharge for misconduct. Currently, Iowa Code does not define “misconduct. That definition is laid out in the administrative rules and in case law. The bill defines misconduct in the Code using similar (but not exact) language in administrative rules. In addition, the bill numerates a list (“including to but not limited to” list) of what is considered “misconduct.”
[3/7: 11-6, party line]

SF 562 – Removal of municipal utility trustees

SF 562 (SSB 1095), as amended, allows removal of a member of a city utility board for cause by order of the mayor with approval of the city council. The original version of the bill allowed removal for cause and only by filing an action in district court. The bill takes effect upon enactment. Companion is HF 261 is on the House calendar with a conforming amendment.
[3/7: short form (No: Bisignano, Lykam, Mathis, Petersen)]

SF 583 – Electric utility rates for private generation

SF 583 (SSB 1201) allows investor-owned utilities to set minimum infrastructure charges for private net-metered customer generation. Rate-regulated utilities’ tariff rates for customer-owned generation. The bill:

States the Legislature’s desire to ensure that all customers are paying their fair share of the costs of electric utility infrastructure, thereby eliminating “cross-subsidization.”
Expresses the Legislature’s intent to provide rate options to customers with their own generation.
Defines customer owned generation as “private generation” and it defines “avoided cost” in terms of the rate paid to private generators in compliance with PURPA (Public Utilities Regulatory Policies Act).
Allows rate-regulated electric utilities to file tariffs applicable to private generation facilities that are installed on or after the date such tariffs are approved.
Requires that all such tariffs must recover the full cost of providing service to private generation customers.
Requires that all such tariffs require a private generation customer to choose from four different rate structures.
“Grandfathers in” existing private generation facilities so that the new tariffs do not alter the existing power purchase agreements and other financing.
One rate structure creates a minimum infrastructure charge but also allows full retail credit rate on the bill as well as annual cash out with an energy credit carry forward to future billing periods.
One rate structure is a multi-part rate that includes at a minimum, a fixed basic service charge, an energy charge to recover variable costs, and a monthly demand charge that ensures the private generation customers pays the full cost of infrastructure. The rate allows an annual excess credit cash out at the utility’s avoided cost.
One rate structure is a “buy all and sell all” rate under which the generation is separately metered and the customer buys all power at retail and sells all power at avoided cost.
The fourth rate structure allows future structures to be filed and approved at the board without having to amend the statute in order to file future, as yet undefined tariffs.

An amendment was adopted that exempts certain large renewable energy producers from the bill’s requirements regarding the utility infrastructure charges:

A cogeneration facility, including without limitation combined heat and power facilities.
A facility that produces renewable fuel registered with the U.S. Environmental Protection Agency as a manufacturer.
A facility that uses a de minimus amount of biomass in its operations (less than 10 percent of all fuel used in the generation processes).
A private generation facility with a nameplate generating capacity greater than one megawatt.
[3/7: short form (No: Bisignano, Bolkcom, Petersen, Quirmbach)]

SF 595 – Regulation of service contract providers

SF 595 (SSB 1223) combines two Code Chapters (516E Motor Vehicle Service Contracts and 523C Residential Service Contracts). The proposal is based on recommendations by the Service Contract Industry Council (SCIC), a national trade association that works with lawmakers across the country to develop fair and uniform regulation. SCIC member companies collectively offer approximately 80 percent of all appliance, consumer electronics, home and vehicle service contracts sold in the U.S.

The Iowa Insurance Division has worked on the proposal to incorporate recommendations based on the Model Act by the National Association of Insurance Commissioners. The Attorney General’s Consumer Protection Division has offered additional recommendations, such as cancellation notice provisions and a stipulation that if unlicensed service companies sell in Iowa, it is a violation of the Iowa Consumer Fraud Act and the customer’s contract is void. The bill takes effect upon enactment. The House companion, HF 665, was referred to House Ways and Means.
[3/7: short form]

FLOOR ACTION:

SF 534 – Gasification, pyrolysis facilities