Commerce Committee – All-Bill Summary 2019

SF 228 is a recommendation by the Iowa Economic Development Authority. It cleans up Code language relating to definitions in the Targeted Small Business Program. It also replaces the Iowa Innovation Corporation, which was created in 2011, with the Iowa Bioscience Development Corporation (IBDC). This new corporation’s structure as a non-profit and purpose are similar to the current Iowa Innovation Corporation. The Bioscience Development Corporation will be tasked with enhancing bioscience-based economic development. The corporation will focus on vaccines and immunotherapeutics; bio-based chemicals; precision and digital agriculture; and medical devices and medical diagnostics.

The proposal changes the number of members and type of members on the Innovation Council (which is different than Innovation Corporation): representatives from targeted industry businesses increase by seven; those who serve on the Technology Commercialization Committee and then serve on the Iowa Innovation Corporation is reduced by seven members. It does NOT change programs and funds, such as the Innovation and Commercialization Development Fund or the Strategic Infrastructure Fund. The Governor recommends a new general fund appropriation of $2 million for a joint effort by Iowa State University and the University of Iowa for a Biosciences Innovation Ecosystem, but no appropriation is in this policy bill.
[4/25: 49-0 (Absent: Chapman)]

SF 230 – Manufacturers of native distilled spirits, beer, wine

SF 230 relates to the authority of manufacturers of beer and native distilled spirits (Iowa Code Chapter 123). It amends the section concerning native distilleries by allowing a manufacturer of native distilled spirits to be issued a class “C” native distilled spirits liquor-control license, regardless of whether the manufacturer is also a manufacturer of beer; amends the section concerning limitations on business interests to provide that a manufacturer of beer may be granted one class “B” beer permit to sell beer at retail for consumption on or off the premises of the manufacturing facility regardless of whether the manufacturer also makes native distilled spirits; and amends the section concerning keeping liquor where beer is sold to allow liquor for beverage purposes to be used or kept at a premises for which both a class “B” beer permit and class “A” native distilled spirits license have been issued. The proposal was initiated by Toppling Goliath Brewing Company in Decorah. The Iowa Alcoholic Beverage Division has no objections to the legislation, noting that it offers parity for breweries and does not change the state’s three-tier system. Native wine manufacturers may hold similar multiple licenses/permits. Native wineries could sell beer for on-premises consumption or for carry-out sales, and wine and beer could be stored on premises where a native winery has a permit to sell beer.
[4/15: Concur, 49-1 (No: Costello)]

SF 337 – Child labor exceptions for volunteers

SF 337 is an Iowa Economic Development proposal supported by the Iowa Commission on Volunteers Service, United Ways of Iowa and the YMCA State Alliance. It modifies current provisions of Code Chapter 92, which are Iowa child labor regulations regarding hours, permits, prohibited occupations and permitted occupations for those under 18. The proposal establishes three new exceptions to the law: a child who willfully volunteers, as defined by federal regulation, for a charitable or public purpose; a child 12 or older who is employed by a charitable organization or unit of state or local government as a referee for a sports program sponsored by that charitable organization or unit of government; a child under 16 who serves in the Iowa Summer Youth Corps Program in Section 15H.5 or a child over 14 who serves in any other recognized program of Iowa National Service Corps Program, in accordance with Section 15H.9. These three new subsections must comply with prohibited hazardous occupations listed in Code section 92.8.
[3/26: 49-0 (Absent: Breitbach)]

SF 402 – Credit Union Division “good faith” requirement

SF 402 is a proposal by the Credit Union Division to add a new section to Code Ch. 533 – Credit Unions. It stipulates that any information, record, application or document provided to the division must be provided in good faith. A director, officer, agent or employee of a state credit union, a credit union service organization, or any other person must not intentionally publish, report, submit or file any information, record, application or document that is false or misleading by statement or omission. Any such information provided in the absence of good faith or in violation of the bill may be subject to revocation of prior approval or denial.
[4/8: 50-0]

SF 403 – Credit Union Superintendent subpoena power

SF 403 is a recommendation by the Credit Union Division of the Department of Commerce. Currently, the superintendent of credit unions can subpoena witnesses and compel the production of any relevant record only during the period of an examination of a state credit union. This bill expands the timeframe to include the examination period and time related to any report or filing made by or provided to the division. If a person subpoenaed by the superintendent fails to produce a record as required by the terms of the subpoena, the superintendent may apply to Polk County district court to issue an order compelling compliance. The refusal of any person to obey such an order without reasonable cause constitutes contempt of court.
[4/8: 50-0]

SF 412 – Insurance assignment of rights to contractors

SF 412 relates to post-loss assignment of rights to residential contractors for repair or services performed on residential real estate covered by property and casualty insurance. The Attorney General strongly opposed the original proposals but worked with legislators and stakeholders to craft legislation that included the recommended consumer protections.

The legislation allows the insured to cancel the contract at the later date of either the execution date or the date on which the insured receives the assignment; adds one additional notice provision that must be included in the contract/assignment (notice of the right to cancel and the process to do so); and makes a violation an unlawful practice under 714.16 – Consumer Frauds. The contract between the insured and the contractors is void if a contractor violates any requirement related to the post-loss assignment of rights or benefits by the insured to the contractor.

The post-loss assignment must include an itemized description of, and the materials, labor and fees for, the work to be performed, including a total itemized amount. It also requires that the post-loss assignment include a statement and a notice, in 14-point type, that the contractor has not represented that the claimed loss will be fully covered by insurance. After the post-loss assignment is executed, a copy must be provided to the insurer of the real estate within five business days. The insured has the right to cancel the assignment for any reason within those five business days. If the insured cancels, the contractor must return any payments made by the insured, the landowner or the possessor of the real estate.

Any written contract, estimate or work order prepared by the contractor must include a notice advising the insured that the insured is responsible for payment to the contractor for any goods or services provided by the contractor, even if the insured does not receive payment from the insurance policy. The notice also advises the insured that if the contractor advertises or promises to rebate the insured’s deductible, or represents or negotiates, or offers to represent or negotiate with the insured’s property and casualty insurer on behalf of the insured, the insured is not responsible for payment to the contractor under the contract, estimate or work order. A copy of the document, signed by the insured, must be sent to the insured’s insurance company prior to the contractor being paid from the proceeds of the insurance.
[3/18: 48-0: (Absent: Dawson; Vacant: Danielson)]

SF 505 – Professional landscape architects licensure

SF 505 is a recommendation by the Banking Division’s Professional Licensure Bureau that updates provisions relating to the licensure of professional landscape architects by the Landscape Architectural Examining Board. It includes a change to the board membership requirements. The seven-member board includes two public members and five professional members who must be actively engaged in the practice or teaching of landscape architecture for at least five years preceding appointment. The bill allows one of those five members to be actively engaged in the practice or teaching of landscape architecture for at least one year preceding appointment. It also allows the board to adopt a national standardized test, and give reciprocity to individuals who have passed the same standardized test in other states.
[3/21: 46-0 (Absent: Bisignano, Celsi, R. Taylor; Vacant: Danielson)]

SF 506 – Notification requirements for credit union mergers

SF 506 is a recommendation by the Credit Union Division. Currently, a merging credit union must provide notice of balloting for voting members at least 20 days prior to the scheduled vote. It requires that at least 15 days before that notice is sent to members, a merging credit union must submit to the Superintendent of Credit Unions all materials that will be included in the notice. The Superintendent must review and approve those materials at least 10 days before the notice is sent to the members, and may direct other materials to be included in the notice.
[3/19: 49-0 (Vacant: Danielson)]

SF 507 – Workers’ compensation for idiopathic falls

SF 507 changes the definition of personal injuries arising out of and in the course of employment for purposes of workers’ compensation. It creates a blanket rule that personal injuries due to idiopathic or unexplained falls from a level surface onto the same level surface would not be compensable under workers’ compensation, rather than looking at such falls on a case-by-case basis and requiring the claimant to show proof that the condition of a floor, just like any other workplace condition, poses an increased risk of injury and should be compensated.
[3/19: 32-17, party line (Vacant: Danielson)]

SF 528 – Self-service storage facilities

SF 528 creates a new Code chapter on self-service storage facility liens and repeals the current chapter (578A). It includes updated definitions (e.g., “leased space” is individual storage space at a self-service storage facility rented to an occupant by a rental agreement; “occupant” is a person entitled to use that space under a rental agreement, or the person’s successors or assignees; “operator” means the owner, operator, lessor or sub-lessor of a self-service storage facility or an agent or other person authorized to manage the facility.)

It allows the operator and occupant to agree to use email to satisfy all notice requirements. If they do so, the rental agreement must contain a section outlining the rights and duties of both parties regarding use of email for all notices. There must be a brief, general description of the personal property subject to the lien. The description must be reasonably adequate to permit the occupant to identify the property. If any container includes a trunk, valise or box that is locked, fastened, sealed or tied in a manner that deters immediate access to its contents, it must be described as such, with no description of the contents. The operator must notify all they know of who claim a security interest in the personal property.

At least seven days before the sale, the operator must also advertise the time, place and terms of the sale in a commercially reasonable manner (i.e., likely to attract at least three independent bidders to attend or view the sale in person or online at the time and place advertised). The operator may buy the occupant’s personal property at this public sale.

The rental agreement must disclose if the facility is located in a flood zone (FEMA-defined “special flood hazard area”), and provisions the operator will follow if such a catastrophic event makes the storage space unusable for the occupant.
[3/28: 35-12 (No: Bolkcom, Boulton, Celsi, Dotzler, Giddens, Hogg, Jochum, Mathis, Petersen, J. Smith, T. Taylor, Wahls; Absent: Breitbach, Nunn, Sweeney)]

SF 534 – Gasification, pyrolysis facilities

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)]

SF 556 – Life and Health Insurance Guaranty Association membership

SF 556 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 provisions recently adopted by NAIC. Regardless of the state in which an insurance company is located, there are policyholders across the country. 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 accident and health member insurers and 50 percent 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. The 50/50 split offers parity in those long-term care policies that may be categorized as a type of “life insurance” and/or “health insurance.” The bill takes effect upon enactment.
[3/20: 49-0 (Vacant: Danielson)]

SF 558 – Domestic surplus lines insurance

SF 558 allows insurers of surplus lines to be based in Iowa. It 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.
[3/19: 49-0 (Vacant: Danielson)]

SF 559 – Portable electronic insurance notifications

SF 559 allows insurance carriers to electronically send notifications and documents to customers who purchased portable electronics insurance policies in a retail transaction. Prior to or at the point of sale, the consumer must provide an e-mail address and must be advised in a conspicuous disclosure that by providing the e-mail address, the consumer is giving affirmative consent for insurance notices and correspondence to be delivered by electronic means. The consumer must also be provided a conspicuous disclosure advising them of their right to have the notice or document in paper form, and of the right to cancel consent.
[3/20: 49-0 (Vacant: Danielson)]

SF 619 – Regulation of service contract providers

SF 619 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% of all appliance, consumer electronics, home and vehicle service contracts 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.

With advice from the service contract providers, the Insurance Division and the Consumer Protection Division, the bill ensures that existing consumer protections in the two chapters are contained in the new merged chapter.
[4/22: 49-0 (Absent: Segebart)]

HF 260 – Permissible interest rates

HF 260 allows the Iowa Superintendent of Banking to set interest rates on a tiered basis and finance charges for certain loans of $30,000 or less. It applies to non-depository lenders who acquire financing on the open market (banks and credit unions are depository lenders). These lenders offer installment loans to consumers, typically small loans for appliances or vehicles. Customers may prefer this local financing option to apply for a loan rather than another financial institution, delayed deposit companies (payday loans), or out-of-state online lenders that charge higher rates and fees. Currently, the Superintendent can establish the maximum rate of interest or charges for regulated loans (Code Ch. 536, Regulated Loans) with unpaid principal balances of $10,000 or less. This increases that amount to $30,000. The maximum interest rate is capped at 36 percent. For loans with unpaid principal balances in excess of $30,000, the maximum interest rate or charges remains the greater of the rate permitted in Code Ch. 535 or the rate authorized for supervised financial organizations in Code Ch. 537. The bill authorizes a creditor to contract for and receive, for an interest-bearing consumer credit transaction, a service charge (a.k.a. loan origination fee) in an amount not to exceed 10 percent of the amount financed or $30, whichever is less. If the creditor has received such a service charge, the creditor cannot collect or retain a minimum charge upon prepayment as authorized under Code section 537.2510; rebate upon prepayment does not apply to service charges collected pursuant to the bill.

Stakeholders worked with the Banking Division and Attorney General’s office to proper ensure regulation and consumer protection. The companies will continue to be regulated and licensed by the Superintendent of Banking and be under the jurisdiction of the Attorney General via the Uniform Consumer Credit Code.
[4/8: 40-10 (No: Bolkcom, Celsi, Dotzler, Giddens, Hogg, Jochum, Lykam, J. Smith, T. Taylor, Wahls)]

HF 263 – Consumer loan exemption from fee if applicant denied

HF 263 is designed to clarifying the Iowa Consumer Credit Code. Code section 537.2501 lists permissible fees that banks and credit unions may charge on consumer loans, and those fees are excluded from the finance charge, which is capped at 21 percent. Current law allows a financial institution to charge an application fee on loans for less than $3,000 with terms less than a year. The fee is limited to 10 percent of the amount loaned or $30, whichever is less.

A southeast Iowa credit union is starting a “payday loan alternative” program for these small-dollar loans and does not want to charge the application fee if applicants are denied. The legislation gives financial institutions flexibility to waive the fee if clearly stated in the application, and the waiver is applied to all who are denied a loan. The Attorney General’s office has provided guidance to clarify that credit unions and banks can charge this fee only to those approved for the loan and still have it excluded from the finance charge.
[4/24: 50-0]

HF 264 – Domestic stock insurers

HF 264 allows Iowa domestic stock companies to divide into two or more insurers, and provides a process for regulatory approval for such actions. The insurer must file its plan with the Iowa Insurance Division and meet various requirements. The Division will determine whether to approve the plan. The proposal is modeled after Connecticut law and does not apply to mutual insurance companies.
[3/25: 50-0]

HF 305 – Enhance Iowa Board

HF 305 is an Iowa Economic Development Authority (IEDA) proposal. It increases the term of voting members on the Enhance Iowa Board from two years to three years; and provides a transition from the current two-year, staggered terms to three-year, staggered terms. The bill directs the Board, rather than the IEDA, to adopt rules to administer the programs established in Code Chapter 15F. It also eliminates the requirement that the Board, at the beginning of each fiscal year, allocate $100,000 from the Community Attraction and Tourism fund to market projects receiving money from the fund.
[4/24: 50-0]

HF 327 – Franchisor-franchisee relationships

HF 327 specifies that a franchisor is not defined as an “employer” for certain purposes. It exempts franchisors from liabilities under Iowa Code chapters applicable to workers’ compensation, wages, unemployment compensation and civil rights.

Workers’ Compensation: A franchisor is not an employer for workers’ compensation purposes unless there is a written agreement or the workers’ compensation commissioner finds the franchisor exerts control over the franchisee that is not customary for the purpose of protecting the franchisor’s trademarks and brand.
Wage Payment: A franchisor is not an employer for the purposes of wages unless there is a written agreement or the commissioner finds the franchisor exerts control over the franchisee that is not customary.
Minimum Wage: A franchisor is not an employer for the purposes of wages unless there is a written agreement or the labor commissioner finds the franchisor exerts control over the franchisee that is not customary.
Unemployment Compensation: A franchisor is not an employer for the purposes of wages unless there is a written agreement or the department finds the franchisor exerts control over the franchisee that is not customary.
Civil Rights Commission: A franchisor is not an employer for the purposes of wages unless there is a written agreement or the commission finds the franchisor exerts control over the franchisee that is not customary.
[3/25: 32-18, party line]

HF 487 – Installation of wireless communications infrastructure

HF 487, 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 historic significance). It requires written confirmation from the Statewide Interoperable Communications System Board that the tower or equipment will be installed and used as part of the state plan approved under the federal law for the deployment of the public safety broadband and radio access networks. The State of Iowa opted in to “FirstNet,” and it is in the first year of a five-year build-out that will cover 99.5 percent of the Iowa population, including 99.2 percent of our rural areas. FirstNet’s public safety mission is to build and deploy a high-speed nationwide wireless broadband network dedicated to first responders to help them better communicate and collaborate across local, state, tribal and national jurisdictions. The bill, which is designed to address a controversial plan to construct a cell phone tower in Allamakee County, takes effect upon enactment and sunsets in two years.
[3/14: 38-10 (No: Bisignano, Bolkcom, Celsi, Dotzler, Hogg, Jochum, Quirmbach, J. Smith, R. Taylor, Wahls; Absent: Miller-Meeks; Vacant: Danielson)]

HF 537 – Public utility right-of-way fee

HF 537 relates to certain fees imposed on public utilities for the use of public rights-of-way [Ch. 480A]. Currently, local governments may impose fees on public utilities for operating facilities in public rights-of-way. A local government may only impose a fee for management costs that are caused by the utility’s activity in the right-of-way, and cannot require in-kind services in lieu of a fee. The bill modifies the definition of “management costs” and requires that such costs be direct and fully documented. It specifies that a local government may only recover a permit fee for management costs attributable to the utilities requested use of an available public right-of-way, instead of management costs caused by the utility’s activity in the right-of-way. It provides that Code section 480A.3, relating to permissible fees imposed on public utilities, not prohibit voluntary agreements between a public utility and local government to share services to reduce costs and preserve public rights-of-way for future public safety purposes, and allows in-kind services in lieu of a fee for such voluntary agreements. The Legislative Services Agency (LSA) fiscal note indicated that the legislation may decrease revenue to local governments by more than $100,000, but, at the time of bill passage, LSA had not received data to identify the total fees collected under Iowa Code chapter 480A, and so could not estimate the fiscal impact at that time.
[4/23: 32-18 (Yes: Republicans, Kinney, Ragan; No: Democrats, Rozenboom, Zaun)]

HF 668 – Business interests of alcoholic beverages entities

HF 668 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 bill 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 alcoholic beverages at retail 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)]

SF 228 – Bioscience Development Corporation