ADMINISTRATIVE RULES REVIEW COMMITTEE Rules Digest --August 1998 Scheduled for committee review - August 11-12, 1998 - Room #118 For further information, please contact Joe Royce, Legal Counsel, Administrative Rules Review Committee

HIGHLIGHTS IN THIS ISSUE:

COLLEGE STUDENT AID COMMISSION Loans & scholarships

ECONOMIC DEVELOPMENT DEPARTMENT Enterprise zone revisions

IOWA EMPOWERMENT BOARD Organization & operation

ENVIRONMENTAL PROTECTION DIVISION Iowa land recycling

ENVIRONMENTAL PROTECTION DIVISION Beneficial use of waste tires

ENVIRONMENTAL PROTECTION DIVISION Coal ash landfill

ENVIRONMENTAL PROTECTION DIVISION Medical waste incinerators

HUMAN SERVICES DEPARTMENT Iowa plan for behavioral health

RACING & GAMING COMMISSION Credit at gaming facilities

RACING & GAMING COMMISSION Charitable contributions

Pursuant to 1998 legislation the Commission proposes rules for a forgivable loan program and a scholarship. House File 2533 created the Industrial Technology Forgivable Loan Program, which will provide a forgivable loan up to $3,000 for students who are will to teach industrial technology in Iowa for a period of five years. Twenty percent of the loan and accrued interest is reduced for each year of teaching. The Act also administers the privately funded Governor Terry E. Branstad Iowa State Fair Scholarship. This the interest from this privately funded program will provide up to four $1000 scholarships plus a $2000 scholarship to the state fair queen. A panel of state officials will choose the annual recipients.

1997 legislation {House File 724} authorized counties and cities of more than 24,000 to create "enterprise zones", lasting up to ten years. Benefits for businesses located within a zone include such things as new jobs credit from withholding; sales, services, and use tax refund; investment tax credit and research activities credit. The jurisdiction may exempt from all property taxation for a period of up to ten years all or a portion of the value added to the property upon which an eligible business locates or expands in an enterprise. Enterprise zones may be established either in a city or a county. Once the zone is established a business located in the zone are eligible for special incentives if the business:

• Is not a retail business.
• Pays at least eighty percent of the cost of a standard medical and dental insurance plan for all full-time employees.
• Pays an average wage that is not less that $7.50 per hour and is at or greater than ninety percent of the lesser of the average county wage or average regional wage, as determined by the department.
• Creates at least ten full-time positions and maintains them for at least ten years. In smaller jurisdictions, the level is five jobs for five years.
• Makes a capital investment of at least five hundred thousand dollars, half of which may be met by the value of the property occupied.

This program has now been amended by House Files 2164, 2395 and 2538. House File 2164 contained a number of minor amendments relating to health care, boundaries of the zone and make-up of the governing commission. The most significant change allows certain businesses outside the designated zone to obtain those same benefits. A business outside the zone is eligible to receive incentives and assistance if the business has not simply relocated an existing business into a location which qualifies the business and:

• Would otherwise meet the eligibility requirements set out above;
• Is or will be located in a city with a population between eight thousand and twenty-four thousand;
• Is or will be located in a city which is not more than thirty-five miles from an existing enterprise zone in Iowa or an equivalent zone in an adjacent state;
• Pays not less than $11 per hour (1993 base) or 130% of the average county wage;
• Is located in a "distressed area".

House Files 2395 and 2538 relate to qualified housing businesses and the approval process. An eligible housing business includes a housing developer or housing contractor that builds or rehabilitates a minimum of four single-family homes or one apartment building with three or more units with a value, after completion of the building or rehabilitation, not exceeding one hundred twenty thousand dollars for each home or apartment unit located in a designated enterprise zone. The single-family homes and apartments which are rehabilitated or constructed by the eligible housing business must be modest homes or units but shall include the necessary amenities. The single-family homes and apartment must meet the United States department of housing and urban development's housing quality standards and local safety standards. The eligible housing business shall complete its building or rehabilitation within two years from the time the business begins construction on the single-family homes and apartments.

An eligible housing business may receive up to a ten percent income of the new investment tax credit and may receive a sales and use tax refund for taxable materials and services utilized in the project.

Senate File 2406 a statewide system of community empowerment areas with the goal of improving the well-being of families with young children and reducing barriers to community efforts to improve the efficiency and effectiveness of local education, health, and human services programs. The Act hopes to meet these goals by:

1. Encouraging collaboration among state agencies which including the departments of human services, education, and public health and allow for the coordination of these agencies' funding and other resources.
2. Establishing community empowerment areas with broad community representation to provide services to families and children from birth through five years.

The Iowa Empowerment Board is made up of eleven members; eight from the general public and three from state agencies, meeting not less that quarterly. The main function of the board is the creation and oversight of the community empowerment areas. The rules set out eleven criteria for the creation of these areas. In essence the areas must contain at least 150 children, five years or under; the area must be at least an entire county or school district; and must have completed the necessary assessments and plans used by the state board to evaluate the request. Once these areas are established the board will establish "performance indicators" to measure the progress and results achieved by the local areas. These indicators will be based on the indicators set out in Senate File 2406, §8"a"; these include: including encouraging early intellectual stimulation of very young children, increasing the basic skill levels of students entering school, increasing the health status of children, reducing the incidence of child abuse and neglect, increasing the access of children to an adult mentor, increasing parental involvement with their children, and increasing the quality and accessibility of child day care.

Each community empowerment area is to be governed by a board made up of community citizens and officials, based on a laundry list of qualifications set out in section 6 of the Act. Each community board will be responsible for administering the grants available to the empowerment area. Like the state board itself, local boards must establish performance indicators to monitor the success of the grants they administer. The "Iowa Empowerment Grant Program" is funded through the Iowa empowerment fund to provide preschool programs, parent education and support programs, and enhanced child care to meet the needs of children and families, and children's health and safety. These grants can be used to provide:

• Voluntary preschool services provided to children deemed at risk of not succeeding in elementary school.
• Parent support and education programs promoted to parents of children from birth through five years of age. These programs must be affordable and offered at times convenient to the varying schedules of working parents.
• A comprehensive Iowa empowerment grant plan developed by a community board for providing various services for children from birth through five years of age.

The Empowerment Board shall distribute school ready children grant moneys to community boards with approved comprehensive school ready children grant plans based upon the degree of readiness of the community empowerment area to effectively utilize the moneys, with the grant moneys being adjusted for other federal and state grant moneys to be received by the area for services to children from birth through five years of age. Grants are to be awarded for three-year periods, paid in annual installments.

In 1997 the legislature enacted Iowa Code Supplement Chapter 455H to encourage the voluntary clean up of some contaminated property. Under this legislation incentives are established to encourage competent persons to voluntarily develop and implement cleanup plans. The reward for such efforts is a measure of limited liability and regulatory closure, thus restoring at least some measure of the property's value. Three types of property may not be enrolled in the program:

• Property for which corrective action is needed or has been taken for petroleum underground storage tanks;
• Property which has been placed or is proposed to be included on the national priorities list;
• An animal feeding operation structure.

Any person may enroll property in the land recycling program to reduce, minimize, eliminate, clean up, control, assess, or monitor a release in order to protect the public health and safety or the environment. This effort, called a "response action" must be documented in a proposal that sets out the site investigation data and a commentary on how the participant will meet the clean-up standards, including the technology that will be used or the controls or monitoring that will be employed. Department approval is not required prior to taking action, but without that approval the department will not be required to release the site.

Participants must enter into an agreement with the department to reimburse the department for actual costs in reviewing documents submitted as a part of the enrollment of the site. The fee cannot exceed seven thousand five hundred dollars per enrolled site. All agreements must allow the department access to the enrolled site and must require a demonstration of the participant's ability to carry out a response action reasonably associated with the enrolled site.

A site may obtain a no further action classification, when the department determines the participant has met all compliance standards applicable to the affected area and the hazardous substances actually identified and evaluated such that no further response action is required except that a no further action classification may be conditioned upon the continued maintenance and effectiveness of any applicable institutional or technological control). A no further action certificate is in a form recordable in the county real estate records as provided in Iowa law.

The Department proposes a new chapter setting out guidelines for the use of whole or processed waste tires for erosion control, drainage structures, civil engineering applications, and other uses where the intended purpose is to produce a beneficial product or an end use, but not posing a threat to the environment, or to public health, welfare, and safety. The purpose of the rules is to identify those safe alternatives. These provisions implement 1996 legislation--House File 2433. The Act provided for the creation of an advisory committee to advise on this rulemaking. The Act called for the use of tires in erosion control structures, various drainage systems, road bases, culverts, field crossings, or intakes, or agricultural or construction uses. The rules enumerate a series of accepted uses for whole tires, shredded tires, bailed tires and cut tires.

The commission completes action a new regulation dealing exclusively with coal residue landfills. Coal waste, mainly fly ash, presents a reduced risk to the environment and for that reason enjoys its own simplified regulatory category. Coal waste permits are issued for a ten year period and are renewable. Coal waste cannot be located on a wetland and must be five feet above the groundwater table. The waste cannot be located with 300 feet of an inhabited residence. Note that for most landfills this requirement is 500 feet. Surface water must be diverted and the site must be fenced. Dust control measure must be in place, but daily covering of the waste is not required. At least one monitoring well must be established with annual sampling.

Upon closure the site must be covered with two feet of compacted soil and one foot on uncompacted soil with a common grass covering; slope musts be at least 3% but not more than 25% The original condition of this covering must be maintained for not less than ten years.

It should be noted that Iowa Code §455B.304(8) call for: "financial assurance standards and requirements and which establish minimum levels of financial responsibility for sanitary disposal projects." No standards have been proposed for any of the landfills established under chapter 103.

The division proposes highly technical regulations dealing, in part, with existing hospital, medical, and infectious waste incinerators; these rules are based on federal provisions issued in September, 1997 {40 C.F.R Part 60}. Compliance is required within 36 months of the approval of the state plan.

"Medical/infectious waste" means any waste generated in the diagnosis, treatment, or immunization of human beings or animals; including research or in the production or testing of biological materials. The term does not include hazardous waste; household waste, ash from incineration of medical/infectious waste; bodies that are intended for burial; and domestic sewage materials. "Hospital waste" includes any items discarded by a hospital.

This proposal sets outs new source performance standards and emission guidelines to reduce air emissions from hospital/medical/infectious waste incinerators (called: HMIWI). The federal provisions which are the basis of these rules were adopted in 1997 and implement sections 111 and 129 of the Clean Air Act as amended in 1990. Regulated facilities are required to achieve emission levels set by the EPA, as detailed in two charts published with the rules. The proposals establish emission limits for particulate matter, opacity, and various other emissions. Some of the pollutants being regulated are considered to be carcinogens and at sufficient concentrations can cause toxic effects.

The rules also establish requirements for HMIWI operator training and qualification, mandating at least 24 hours of training in several mandated areas; waste management plans to minimize the volume of waste, and testing/monitoring of pollutants and operating parameters to ensure the effective operation of the equipment. Additionally, the rules for existing HMIWI contain equipment inspection requirements requiring a 17 point inspection on an annual basis.

These final rules create the Iowa Plan for Behavioral Health {Iowa Plan}, which is a managed care plan for the delivery of mental health and substance abuse services. The Iowa Plan replaces the Mental Health Access Plan and the Iowa Managed Substance Abuse Care Plan effective January 1, 1999. These two programs have been in place since 1995.

Under the plan the department contracts with one or several entities to provide mental health services. Contractors will be paid a capitated rate based on the number of enrollees. Contractors must provide services at least as accessible as those provided under the old plan. Clients may choose their particular care provider from among those participating in the program. They must provide a broad range of services, which in part include:

• Ambulance services for psychiatric conditions.
• Emergency room services for psychiatric conditions available 24 hours per day, 365 days per year.
• Inpatient hospital care for psychiatric conditions.
• Outpatient hospital care for psychiatric conditions including intensive outpatient services.
• Day treatment.
• Psychiatric physician services including consultations requested for enrollees receiving treatment for other medical conditions.
• Services of a licensed psychologist for testing, evaluation and treatment of mental illness.

The contractor must establish written procedures by which clients providers may request a clinical decision review. The clinical decision review, when requested, shall be conducted by staff other than the those making the original clinical care decision. All policies related to clinical decision review shall be approved by the department prior to implementation.

Clients may appeal clinical care decisions in accordance with the appeal process available to all persons receiving Medicaid-funded services as set forth in 441--Chapter 7 if the enrollee or member is not satisfied with the final decision rendered by the contractor through the contractor's clinical decision review process.

The Racing and Gaming Commission has adopted in final form a freeze on new licenses and a ban on satellite terminals which extend immediate credit to the facility customer through the use of a credit card. The initial notice of intended action, published as ARC 8071A was far more wide-reaching and was in essence language extracted from Senate File 2320, legislation that was passed by the House and Senate, but vetoed by the Governor. The Administrative Rules Review Committee concluded this filing, taken as a whole, violated the long-standing precept that failed legislation cannot be reenacted as an administrative rule.

The Commission now offers a compromise in the form of a much scaled down version, based on recommendations and issues raised by the Assistant Attorney General. This filing is significantly narrower than the initial notice of intended action, both in scope and substance; but the issue still remains whether portions of this filing improperly attempt to recast failed legislation in rule form. On several occasions the General Assembly has considered legislation to ban satellite terminals which extend immediate credit; that language has never been enacted into law. Conversely, this provision does have some measure of statutory support. Iowa Code §§99F.7 and 99F.9 prohibit a facility from extending credit or accepting a credit card.

In a completely unrelated rulemaking the commission proposes two changes:

Item 1 requires recipients of nonprofit distributions to explain how their receipt of this money would benefit residents of Iowa.

Item 2 requires the qualified sponsoring organization, before funding a request, to consider how it would benefit residents of Iowa. It also does not allow the qualified sponsoring organization to distribute to an organization that has an employee, officer or director who is a member of the Commission.

Existing subrule 20.11(6), along with these proposed amendments add detail to the statutory requirements for charitable distributions; Iowa Code §99F.6(4)"a" states in part:

"_A qualified sponsoring organization licensed to operate gambling games under this chapter shall distribute the receipts of all gambling games, less reasonable expenses, charges, taxes, fees, and deductions allowed under this chapter, as winnings to players or participants or shall distribute the receipts for educational, civic, public, charitable, patriotic, or religious uses as defined in section 99B.7, subsection 3, paragraph "b"_."

Iowa Code §99B.7(3)"a" provides a detailed definition of the phrase "educational, civic, public, charitable, patriotic, or religious uses." Note that the definition itself does not restrict the distribution of receipts to Iowa alone. §99B.7(3)"a" does contain such a restriction, but it is not contained in the definition itself and appears by its own terms to apply only to games conducted under §99B.7.

The intent of Iowa Code §99F.6(4) was to lift the definition alone from §99B.7(3). The restriction of "Iowa-only" distributions is unique to Chapter 99B, which regulates raffles, bingo and similar games commonly conducted by local churches and other charitable institutions. In that context the legislature clearly thought it desirable to keep locally raised funds in Iowa--in part to help ensure that these funds were not "skimmed" to some dubious charity. Such a restriction is less appropriate for the much larger operations regulated under Iowa Code chapter 99F, many of which operate in border areas and draw patrons from several states. The proposed rule does not force or coerce organizations to donate to Iowa-only recipients but does "nudge" the qualified organizations to carefully consider Iowa donations---they are not required to act on that consideration, but the proposal ensures that Iowa's needs will be considered. At the same time recipients must report how the gift benefits Iowa residents. Again, the rule does not require that Iowan's benefit from the donation, but the rule will generate data to measure the extent that gambling proceeds are used to benefit Iowa.

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