2000 Summary of Legislation BUSINESS, BANKING AND INSURANCE Published by the Iowa General Assembly -- Legislative Service Bureau

BUSINESS, BANKING AND INSURANCE LEGISLATION

SENATE FILE 324 - Franchise Agreements (full text of act)

   BY COMMITTEE ON COMMERCE. This Act amends new Code Section 537A.10 relating to franchise agreements. Code Chapter 537A pertains to contracts.

   The Act provides that new Code Section 537A.10 applies to a new or existing franchise that is operated in this state and is subject to an agreement entered into on or after July 1, 2000. It does not apply to any existing or future contracts between Iowa franchisors and franchisees who operate franchises located out of state. A corresponding provision is added to Code Chapter 523H stating that Code Chapter 523H only applies to franchise agreements entered into prior to July 1, 2000.

   The Act provides for the jurisdiction and venue of disputes and prohibits as unenforceable a provision in the franchise agreement that attempts to restrict jurisdiction to a forum outside of this state. It provides that a provision requiring a franchisee to waive compliance with, or relieving a person of, a duty or liability imposed by or a right provided by this section is void. It also establishes certain rights and restrictions related to the transfer of a franchise.

   The Act defines "encroachment" and establishes a mechanism for the calculation of monetary damages associated with the encroachment. The Act provides that a franchisee has a cause of action under the encroachment provision unless any of the following apply: (1) the franchisor has first offered the new outlet or location to the existing franchisee on the same basic terms and conditions available to other potential franchisees, (2) the adverse impact on the existing franchisee's annual gross sales is determined to have been less than 6 percent during the first 12 months of operation of the new outlet or location, (3) the existing franchisee is not in compliance with the franchisor's then current reasonable criteria for eligibility for a new franchise, or (4) the existing franchisee has been granted reasonable territorial rights and the new outlet or location does not violate those territorial rights. The Act provides that the franchisor, with respect to encroachment claims, must establish a formal procedure for hearing and acting upon claims by an existing franchisee with regard to a decision by the franchisor to develop a new outlet or location prior to such development, and a reasonable formal procedure for mediating a dispute resulting in an award of compensation or other form of consideration to offset all or a portion of the franchisee's lost profits caused by the encroachment.

   The Act prohibits the termination of a franchise by a franchisor prior to the expiration of its term except for good cause. Prior to termination for good cause, the franchisor must provide the franchisee with written notice stating the basis for the proposed termination. After written notice, the franchisee has not less than 30 or more than 90 days to cure the default resulting in the notice. The Act sets forth certain instances where the franchisor may terminate the franchise upon written notice and without an opportunity to cure.

   The Act prohibits the franchisor from refusing to renew a franchise unless the franchisee has been notified of the franchisor's intent not to renew at least six months prior to the expiration date or any extension of the franchise agreement, along with the existence of one of several circumstances set forth in the Act.

   The Act prohibits a franchisor from requiring that a franchisee purchase goods, supplies, inventories, or services exclusively from the franchisor or from a source or sources of supply specifically designated by the franchisor where such goods, supplies, inventories, or services of comparable quality are available from sources other than those designated by the franchisor. The Act exempts principal goods, supplies, inventories, or services manufactured by the franchisor, or such goods, supplies, inventories, or services entitled to protection as a trade secret from the application of this provision.

   The Act prohibits a franchisor from restricting a franchisee from associating with other franchisees.

   The Act imposes a duty of good faith on the parties in the performance and enforcement of the franchise agreement. As used in the Act, "good faith" means honesty in fact and the observance of reasonable commercial standards of fair dealing in trade.

   The Act establishes a private civil cause of action. A person who violates a provision of the Act is liable for damages caused by the violation including, but not limited to, costs and reasonable attorney and expert witness fees, as well as other appropriate relief, including injunctive and other equitable relief.

   The Act provides that a condition, stipulation or provision requiring the application of the law of another state in lieu of the provisions of the Act is void.

   The Act does not limit any liability that may exist under another statute or at common law. The Act provides that the provisions in the Act are to be liberally construed to effectuate its purpose.

   The Act provides that if any provision or clause of the section is held invalid, the invalidity shall not affect other provisions that can be given effect without the invalid provision.

SENATE FILE 2126 - Health Insurance Coverage of Prescription Contraceptives (full text of act)

   BY JOHNSON, BOETTGER, REHBERG, SZYMONIAK, MCKIBBEN, LUNDBY, SOUKUP, HARPER, MCCOY, BOLKCOM, TINSMAN, SHEARER, DVORSKY, HAMMOND, DEARDEN, GRONSTAL, AND MADDOX. This Act provides that a person who provides an individual or group policy or contract providing for third-party payment or prepayment of health or medical expenses is prohibited from excluding or restricting benefits for prescription contraceptive drugs or prescription contraceptive devices that prevent conception and are approved by the U. S. Food and Drug Administration (FDA), or generic equivalents approved as substitutable by the FDA, if such policy or contract provides benefits for other outpatient prescription drugs or devices. The Act also prohibits the person from providing an individual or group policy or contract that excludes or restricts benefits for outpatient contraceptive services provided for the purpose of preventing conception if such policy or contract provides benefits for other outpatient services provided by a health care professional.

   The Act provides that a person who provides an individual or group policy or contract providing for third-party payment or prepayment of health or medical expenses which is subject to the Act is prohibited from denying eligibility, or continued eligibility, to an individual enrolling in or renewing coverage under the terms of such policy or contract because of the individual's use or potential use of such prescription contraceptive drugs or devices, or use or potential use of outpatient contraceptive services. The Act prohibits the person from offering a monetary payment or rebate to encourage an individual to accept less than the minimum benefits provided for under the policy or contract, or penalize or otherwise reduce or limit the reimbursement of a health care professional because such professional prescribes contraceptive drugs or devices or provides contraceptive services; or from providing incentives, monetary or otherwise, to a health care professional to induce such professional to withhold from a covered individual contraceptive drugs or devices or contraceptive services. The Act provides that the policy or contract shall permit an individual policyholder to reject the coverage provision at the option of the policyholder. The Act does not affect a third-party payer from requiring deductibles, coinsurance or copayments. The Act also does not apply to exclusions or restrictions for experimental contraceptive services.

   The provisions of the Act apply to third-party payment provider contracts or policies and public employer plans delivered, issued for delivery, continued, or renewed in this state on or after July 1, 2000.

SENATE FILE 2158 - Limitation on Deposits of Depository Institutions or Holding Companies (full text of act)

   BY COMMITTEE ON COMMERCE. This Act amends Code Section 524.1802, which establishes a limitation on deposits in Iowa which may be held by a bank or savings association, or a bank or savings and loan holding company, together with all of its affiliates, by establishing the manner for the Superintendent of Banking to determine compliance with the limitation in the event of a proposed acquisition of a depository institution or the deposits of any branch, office, or other facility of a depository institution. The Act increases the limitation on deposits in Iowa that may be held by a depository institution or holding company, together with all of its affiliates, from 10 percent to 15 percent of the total deposits in Iowa.

   The Act provides that if the superintendent determines that an acquisition may involve a question of compliance with the deposit limitation, each depository institution and holding company involved in the acquisition must submit to the superintendent a statement, certified by its president, chief executive officer, or chief financial officer, that no transfer, assignment or other disposition of deposits has been made for the purpose of achieving compliance with the deposit limitation. Certain transfers of deposits are not deemed to be made for the purpose of achieving compliance with the deposit limitation. The Act provides that the statement must also include deposit information sufficient to permit the superintendent to determine compliance with the deposit limitation, including all of the deposits in Iowa held by the acquiring entity, together with all of the deposits in Iowa held by all of its affiliates, as stated in the two most recent, available annual deposit reports filed with each institution's regulator, and all of the deposits directly or indirectly acquired by the acquiring entity, together with all of the deposits directly or indirectly acquired by all of its affiliates, in an acquisition or series of acquisitions occurring after the date of the most recent report or occurring between the dates of the two most recent reports.

   The Act takes effect April 14, 2000, and is retroactively applicable to January 1, 2000.

SENATE FILE 2200 - Domestic Insurers -- Protected Cells (full text of act)

   BY COMMITTEE ON COMMERCE. This Act creates new Code Chapter 521G, which permits a domestic insurer authorized to transact the business of insurance under Code Chapter 515 to establish protected cells as a means of accessing alternative sources of capital. The Act defines a "protected cell" as an identified pool of assets and liabilities of a company segregated from other company assets and liabilities.

   The Act provides that a protected cell company may establish one or more protected cells with the prior written approval of the Commissioner of Insurance. The company must submit to the commissioner a plan of operation with respect to each protected cell related to an insurance securitization. The Act provides that the plan must include, but is not limited to, the specific business objectives and investment guidelines of the protected cell company. The Act provides for the rights of creditors and other claimants with respect to the assets of a protected cell company, and provides that protected cell assets are only available to a creditor of that protected cell. The Act provides that the creditor shall have recourse to the protected cell assets attributable to that protected cell, to the exclusion of other creditors of the protected cell company that are not creditors with respect to that protected cell. The Act also provides that a protected cell company insurance securitization is not an insurance or reinsurance contract, and that a person participating in such protected cell company insurance securitization, solely as a result of such participation, is not deemed to be transacting an insurance business in this state.

SENATE FILE 2203 - Assignment of Benefits -- VETOED BY THE GOVERNOR (full text of act)

   BY MADDOX, LUNDBY, REDFERN, GRONSTAL, AND JOHNSON. Under this bill, a person insured under a group or individual policy, contract, or health benefit plan must be allowed the option by the carrier (an insurance company offering sickness or accident plans, a health maintenance organization, a nonprofit health service corporation, or any other entity providing a plan of health insurance, health benefits, or health services) or organized delivery system to assign, in writing, benefits from the policy, contract, or health benefit plan, to the health care provider, thereby allowing payment of benefits directly to the licensed health care provider.

SENATE FILE 2372 - Regulation of Physical Exercise Clubs and Social Referral Services (full text of act)

   BY COMMITTEE ON JUDICIARY. This Act amends provisions relating to the protection of consumers who enter into certain contractual agreements and to the registration responsibilities of certain persons offering such contractual agreements to consumers.

   The Act eliminates the requirement that physical exercise clubs register with the Office of Attorney General's Consumer Protection Division.

   The Act also includes the sale of social referral services or ancillary services under Code Chapter 555A, relating to door-to-door sales. The Act provides that "social referral service" means a service for a fee providing matching or introduction of individuals for the purpose of dating, matrimony, or general social contact not otherwise prohibited by law, and that "ancillary service" means goods or services directly or indirectly related to or to be provided in connection with a social referral service. A person who violates Code Chapter 555A, as it relates to the sale of social referral services or ancillary services, is guilty of a simple misdemeanor and is also subject to the remedies provided under Code Section 714.16, relating to consumer frauds.

SENATE FILE 2409 - Insurance Regulation -- Miscellaneous Provisions (full text of act)

   BY COMMITTEE ON COMMERCE. This Act amends provisions relating to the regulation of insurance entities in this state.

   Code Section 87.4 exempts cities, counties, and community colleges that establish a program of self-insurance for workers' compensation insurance from regulation by the Insurance Division of the Department of Commerce. The Act extends that exemption to apply to other political subdivisions. The Act amends Code Chapter 100A, which relates to arson investigations and provides for the release of information by an insurance company to an authorized agency upon a written request for such information. Code Section 100A.1 is amended to add the Fraud Bureau of the Insurance Division to the list of authorized agencies. An authorized agency may require an insurance company to release information relating to a fire loss.

   Code Section 505.8 is amended by striking the requirement that the Insurance Commissioner annually prepare a report identifying the premium volume of nonqualified insurance annuities issued by domestic insurance companies doing a volume of at least $5 million per annum. The section is also amended to require the commissioner to adopt rules protecting the privacy of information held by an insurer or an agent consistent with federal legislation.

   The Act creates new Code Section 505.23, which provides that if an evidentiary hearing is conducted in certain insurance-related proceedings, the proceeding is a contested case subject to Code Chapter 17A.

   Code Section 508.4 is amended to require that a life insurance company incorporated under Iowa law must file its bylaws and any amendments to such bylaws with the Commissioner of Insurance within 30 days of the adoption of such bylaws and amendments.

   The Act amends Code Chapter 508B, which provides for the conversion of a mutual life insurance company to a stock life insurance company. The Act rewrites a provision requiring that such plan of conversion be fair and equitable to policyholders and that the commissioner review the plan and make a finding that the plan is fair and equitable to the mutual company and its policyholders. The Act provides that a new certificate of authority to a reorganized company is effective on the effective date of the conversion as provided in the plan of conversion. Currently, such certificate is effective on the date specified in the plan of conversion. The Act also reduces the time within which a person may commence an action challenging a conversion under Code Chapter 508B from 180 days to 30 days, unless an application for rehearing is filed. The Act provides that if an application for rehearing is filed, the action challenging the conversion must be filed within 30 days after that application is denied or deemed denied or, if the application is granted, within 30 days after the issuance of the commissioner's final decision on rehearing.

   The Act amends Code Chapter 508C, which regulates Iowa life guaranty associations. Code Section 508C.3 is amended to provide that the chapter does not apply to an obligation that does not arise under the express written terms of a covered policy, a contractual agreement that establishes a member insurer's obligations to provide a book value accounting guaranty for defined contribution benefit plan participants by reference to a portfolio of assets that is owned by the benefit plan or its trustee, and a portion of a covered policy to the extent it provides for interest or other change in value to be determined by the use of an index or other external reference stated in the covered policy.

   Code Section 508C.9 is amended to provide that if two or more assessments are authorized in one calendar year with respect to insurers that become impaired or insolvent in different calendar years, the average annual premiums for purposes of the aggregate assessment percentage limitation are equal, and limited, to the higher of the three-year average annual premiums for the applicable account as calculated under the Code section.

   Code Section 511.8, which relates to investment of funds by an insurance company, is amended. The Code section provides for the qualifications of certain corporate obligations in which an insurance company may invest, including, at the date of acquisition, that the obligations are adequately secure and have investment qualities and characteristics, and that speculative elements are not predominant. The Code section is amended to include a limited liability company in the definition of "corporation" and to include financial instruments used in hedging transactions as a permissible investment option. The Act establishes certain criteria such financial instruments must meet. The Code section is also amended by striking a subsection that relates to the rules of valuation of certain assets.

   New Code Section 512A.10 is created and requires a benevolent association to file its articles of incorporation and any amendments to the articles with the commissioner for approval. The new Code section also requires a benevolent association to file its bylaws and amendments to the bylaws with the commissioner within 30 days of adoption.

   Code Section 513B.2 is amended by striking, for purposes of determining premium rates for a class of business, the use of similar case characteristics when comparing small employers.

   The Act amends Code Section 513C.10, which provides rates for basic and standard health care coverages. The Act provides that the rates must be determined as a product of a basic and standard factor and the lowest rate available for issuance by an insurance carrier or organized delivery system. The section is also amended to provide for the manner in which basic and standard factors are to be determined.

   Code Section 514.3 is amended and provides that a nonprofit health service corporation must file its bylaws and any amendments to such bylaws within 30 days of the adoption of such bylaws and amendments.

   Code Section 514.4 is amended to strike a provision prohibiting a corporation from reimbursing or compensating a director of a nonprofit health service corporation that is a provider or a subscriber, more than per diem plus necessary and actual expenses for attendance at a meeting of the board of directors.

   The Act creates new Code Section 514B.3A, which provides that the articles of incorporation of a health maintenance organization must be approved by both the Commissioner of Insurance and the Attorney General. The new Code section also requires a health maintenance organization to file its bylaws and any amendments to such bylaws within 30 days of the adoption of such bylaws and amendments.

   Code Section 514B.24 is amended to increase from three to five years the interval between examinations of health maintenance organizations by the Commissioner of Insurance.

   The Act creates new Code Section 514B.25A, which establishes an assessment mechanism in the event that a health maintenance organization or an organized delivery system is found to be insolvent.

   Code Section 515.2 is amended to provide that an insurance company, other than a life insurance company, must file its bylaws and any amendments to the bylaws within 22 days of the adoption of such bylaws and amendments.

   Code Section 515.46 is amended to provide that a dividend made contrary to the rules adopted by the commissioner subjects the company making it to forfeiture of its certificate of authority.

   Code Section 515C.3 is amended to provide that unearned premium reserves, with respect to mortgage guaranty insurance, are to be computed pursuant to rules adopted by the commissioner.

   The Act amends Code Sections 515G.7 and 515G.14, which relate to the conversion of a mutual property and casualty insurance company to a stock property and casualty insurance company. The Act rewrites a provision that requires the commissioner to review a plan of conversion to provide that the commissioner must make a finding that the plan is fair and equitable to the mutual insurer and its policyholders, rather than make a finding that the plan is not unfair or inequitable. The Act also provides that if an application for rehearing is filed after the commissioner approves the conversion, an action challenging the conversion must be filed within 30 days after that application is denied or deemed denied or, if the application is granted, within 12 days after the issuance of the commissioner's final decision on rehearing.

   Code Section 518.7 is amended to require that a director of a county mutual insurance association also be a member of such association.

   Code Section 518.8 is amended to provide that a county mutual insurance association must file its bylaws and any amendments to such bylaws within 30 days of the adoption of the bylaws and amendments.

   The Act creates new Code Section 518.13A, which prohibits a county mutual insurance association from levying an assessment on members of the association.

   Code Section 518.17 is amended to provide that reinsurance obtained by a county mutual insurance association will cover losses incurred only from coverages written under the Code chapter.

   The Act amends Code Section 518.23 to provide for a number of procedures governing cancellation or nonrenewal of a policy issued by a county mutual insurance association.

   Code Section 518A.6 is amended to require that a director of a state mutual insurance association must also be a member of such association.

   The Act creates new Code Section 518A.6A, which authorizes the directors of a state mutual insurance association to adopt bylaws and regulations necessary for the regulation and conduct of business, and requires that the bylaws and amendments to the bylaws be filed with the commissioner within 30 days of adoption.

   Code Sections 515B.2, 515F.3, 518A.7, 518A.12, 518A.35, 518A.52, 518A.53, 518A.54, 518A.55, 519.10, and 521E.1 are amended to conform to the change in the name of the association from mutual casualty assessment insurance association to state mutual insurance association.

   The Act rewrites Code Section 518A.9 by eliminating the authority of a state mutual insurance association to assess members of the association and authorizes the association to establish premium charges for the purpose of payment of losses and expenses and the establishment or maintenance of a reserve fund. The rewritten Code section also provides for the suspension of a policy for nonpayment of premium.

   The Act creates new Code Section 518A.9A, which prohibits a state mutual insurance association from levying an assessment on members of the association.

   The Act amends Code Section 518A.18, which provides that a state mutual association must annually prepare a statement of the condition of the association for the preceding calendar year. The Act provides that the statement must conform to the statement blank prescribed by the commissioner.

   The Act rewrites Code Section 518A.29, which provides the manner for cancellation and nonrenewal of a policy issued by a state mutual insurance association. The Act provides a number of procedures governing cancellation or nonrenewal.

   Code Section 518A.44 is amended to provide that reinsurance obtained by a state mutual insurance association will cover losses incurred only from coverages written under Code Chapter 518A.

   Code Section 522.3 is amended by striking a provision requiring that a first-time applicant for a license as an insurance agent pay to the commissioner an application fee of $10 for each line of insurance to be sold by the applicant.

   Code Section 573.3 is amended to provide that a public corporation, with respect to a public improvement which is or has been competitively bid or negotiated, shall not require a contractor to procure a bond from a particular insurance or surety company, agent or broker.

   The Act repeals sections relating to required reserve funds, unearned premium reserves, the state mutual insurance association concerning the borrowing of money, liability of members, reserves for unearned premium, cancellation of policies by insureds, unearned assessments, and pro rata assessments of association members; and makes conforming changes in various Code sections.

   Portions of the Act are effect upon enactment, July 1, 2000, and January 1, 2001.

HOUSE FILE 754 - Insurance Coverage of Anesthesia and Hospital Charges for Dental Care (full text of act)

   BY COMMITTEE ON HUMAN RESOURCES. This Act requires that an individual or group policy or contract providing for third-party payment or prepayment of health or medical expenses must provide coverage for the administration of general anesthesia and hospital or ambulatory surgical center charges related to the provision of dental care services to either of the following:

1. A child under five years of age, upon a determination by a licensed dentist and the child's treating physician that the child requires necessary dental treatment in a hospital or ambulatory surgical center due to a dental condition or a developmental disability for which patient management in the dental office has proved to be ineffective.
2. An individual determined to have one or more medical conditions that would create significant or undue medical risk for the individual in the course of delivery of any necessary dental treatment or surgery if not rendered in a hospital or ambulatory surgical center.

   The Act is applicable to third-party payment provider policies and contracts delivered, issued for delivery, continued, or renewed in this state on or after July 1, 2000.

HOUSE FILE 2106 - Licensure, Ownership, Operation, or Control of Motor Vehicle Dealers -- Manufacturers, Distributors, Wholesalers, and Importers (full text of act)

   BY COMMITTEE ON TRANSPORTATION. This Act adds a new provision to Code Section 322.3, prohibiting a motor vehicle manufacturer, distributor, wholesaler, or importer from directly or indirectly being licensed as, owning an interest in, operating, or controlling a motor vehicle dealer. The Act also provides several exceptions to the prohibition.

   The Act provides that, notwithstanding the new prohibition, a manufacturer or importer may be licensed as a motor vehicle dealer or own an interest in, operate or control a motor vehicle dealership for up to one year to facilitate transfer of the dealership to a new owner if the prior owner transferred the dealership to the manufacturer or importer and the dealership is continuously offered for sale upon reasonable terms and conditions.

   The new prohibition does not prohibit a manufacturer or importer from temporarily owning an interest in a motor vehicle dealership in order to enhance opportunities for persons who cannot financially purchase the motor vehicle dealership without assistance.

   The Act provides that a manufacturer or importer may own an interest in, operate or control a person whose primary business is renting motor vehicles and who is licensed as a used motor vehicle dealer. A manufacturer of motor homes or school buses may own an interest in, operate or control a motor vehicle dealer of the motor homes or school buses manufactured by that manufacturer and may be licensed as a motor vehicle dealer only of the motor homes or school buses manufactured by that manufacturer.

   Additionally, a manufacturer may own a minority interest in an entity that owns and operates motor vehicle dealers of the line-make manufactured by the manufacturer if all of the dealers owned and operated by the entity in Iowa are dealers of only the line-make manufactured by the manufacturer and if, on January 1, 2000, there was not less than one and not more than three dealers of that line-make licensed under Code Chapter 322.

   Violations of the new prohibition are simple misdemeanors punishable by a fine of not less than $250 or more than $1,500 or by imprisonment not to exceed 30 days.

HOUSE FILE 2148 - Business Telephone Listings (full text of act)

   BY EDDIE. This Act provides that it is an unlawful practice for a person to misrepresent the geographic location of a supplier or a service or product by listing a fictitious business name or an assumed business name in a local telephone directory or directory assistance database if the name purportedly represents the geographic location of the supplier; the listing does not identify the address, including the city and state, of the supplier; and calls made to a local telephone number are routinely forwarded to or otherwise transferred to a business location that is outside the local calling area covered by the local telephone directory or directory assistance database. Such unlawful practice is a consumer fraud and a violator is subject to the enforcement and penalty provisions provided under Code Section 714.16, "Consumer Frauds."

HOUSE FILE 2197 - Dissenting Shareholder Interests in Banks or Bank Holding Companies -- Fair Value (full text of act)

   BY WISE AND HOFFMAN. This Act provides for the determination of the value of the shares of a dissenting shareholder of a bank holding company. The procedure for determining such fair value is similar to the procedure for the determination of the value of the shares of a dissenting shareholder of a bank organized under Code Chapter 524.

   The Act provides that any payment made to dissenting shareholders under Code Section 490.1325 shall be in an amount not less than the stockholders' equity in the bank disclosed in its last statement of condition filed under Code Section 524.220, or the total equity capital of the bank holding company disclosed in the most recent report filed by the bank holding company with the Board of Governors of the Federal Reserve System, divided by the number of shares outstanding. The Act provides that in determining the fair value of the shares of a bank holding company under Code Chapter 490, the factors identified under Code Section 524.1406, "Rights of Dissenting Shareholders," must be considered. The Act also provides that a corporation that is a bank holding company may elect to have the fair value of the bank holding company's shares determined under Code Section 524.1406, notwithstanding the provisions of Code Chapter 490, relating to corporations.

HOUSE FILE 2205 - Electronic Commerce (full text of act)

   BY JACOBS. This Act creates a new Code Chapter 554D relating to electronic transactions, which replaces Code Chapter 554C, enacted during the 1999 Session. The Act sets forth the scope of the chapter and provides that the new Code chapter applies to electronic records and electronic signatures relating to a transaction, except for certain specific transactions. The Act provides that the new Code chapter applies to an electronic record or electronic signature created, generated, sent, communicated, received, or stored on or after the effective date of the Act, July 1, 2000. The Act provides that the Code chapter applies only to transactions between parties, each of which has agreed to conduct transactions by electronic means. The Act also provides that except as otherwise provided in the new Code chapter, the effect of any of its provisions may be varied by agreement of the parties.

   The Act provides that the new Code chapter is to be construed and applied to facilitate electronic transactions consistent with other applicable law, to be consistent with reasonable practices concerning electronic transactions and with the continued expansion of those practices, and to effectuate its general purpose to make uniform the law with respect to the subject of this chapter among states enacting the uniform law.

   The Act provides for the legal recognition of electronic records, electronic signatures, and electronic contracts, including electronic records affecting interests in real property.

   The Act provides that if parties have agreed to conduct a transaction by electronic means and a law requires a person to provide, send or deliver information in writing to another person, the requirement is satisfied if the information is provided, sent or delivered in an electronic record capable of retention by the recipient at the time of receipt. The Act sets forth additional requirements if a law other than new Code Chapter 554D establishes certain requirements for a record.

   The Act provides that an electronic record or electronic signature is attributable to a person if it was the act of the person. The effect of such attribution is to be determined from the context and surrounding circumstances at the time of its creation, execution or adoption, including the agreement of the parties. In a consumer transaction, the attribution and effect are also determined by the substantive law governing the transaction.

   The Act establishes the rules to be followed with respect to a change or error in an electronic record that occurs in a transmission between parties to a transaction. If the parties have agreed to use a security procedure to detect changes or errors, and one party has conformed to the procedure but the other party has not, and the nonconforming party would have detected the change or error had that party also conformed, then the conforming party may avoid the effect of the changed or erroneous electronic record. In an automated transaction involving an individual, the individual may avoid the effect of an electronic record that resulted from an error made by the individual in dealing with the electronic agent of another person if the electronic agent did not provide an opportunity for the prevention or correction of the error and, at the time the individual learns of the error, certain specified conditions have been met. The Act provides that if the established rules do not apply, then the change or error has the effect provided by other law, including the law of mistake, and the parties' contract, if any. The Act provides that in a consumer transaction, any substantive law limiting a consumer's liability shall apply to an electronic transaction.

   The Act provides that if a law requires a signature or record to be notarized, acknowledged, verified, or made under oath, the requirement is satisfied if the electronic signature of the person authorized to perform those acts, together with all other information required to be included by other applicable law, is attached to or logically associated with the signature or record.

   The Act sets forth the requirements regarding retention of electronic records and provides that if a law requires a record to be retained, the requirement is satisfied by retaining an electronic record of the information that remains accessible for later reference.

   The Act provides that in a legal proceeding, evidence of a record or signature shall not be excluded solely because it is in electronic form. The Act sets forth the rules to be followed with respect to automated transactions, and the manner in which a contract may be formed. The Act sets forth the manner for determining the time and place of sending and receipt of an electronic record.

   The Act establishes a definition for a "transferable record," and addresses the manner in which a transferable record must be treated. The Act provides that a person has control of a transferable record if a system employed for evidencing the transfer of interests in the transferable record reliably establishes that person as the person to whom the transferable record was issued or transferred.

   The Act provides that a governmental agency of this state shall determine whether, and the extent to which, it will create and retain electronic records and convert written records to electronic records. The Act also provides for the acceptance and distribution of electronic records by state governmental agencies and provides that a state agency shall determine whether, and the extent to which, it will send and accept electronic records and electronic signatures to and from other persons and otherwise create, generate, communicate, store, process, use, and rely upon electronic records and electronic signatures.

   The Act provides that the standards adopted under this new Code chapter should encourage and promote consistency and interoperability with similar requirements adopted by other governmental agencies and nongovernmental persons interacting with governmental agencies of this state.

   The Act prohibits a person from knowingly creating, publishing, altering, or otherwise using an electronic record or an electronic signature for a fraudulent or other unlawful purpose. The Act also prohibits a person from knowingly misrepresenting the person's identity or authorization to obtain a private key for use in a digital signature or in requesting suspension or revocation of a private key for use in a digital signature. A person convicted of a violation of the Act is guilty of a serious misdemeanor for a first offense and a class "D" felony upon conviction of a second or subsequent offense.

   The Act creates new Code Section 75.14, which provides that a public body authorized to issue bonds, notes or other obligations may elect to receive bids to purchase such bonds, notes or other obligations by means of electronic, Internet or wireless communication; by a proprietary bidding procedure or system; or by facsimile transmission to a location deemed appropriate by the governing body, in each instance as may be approved by the governing body and provided for in the notice of sale.

   The Act establishes an advisory committee to study issues associated with the electronic filing, recording and indexing of instruments affecting real property and the electronic use of real property disclosures. The advisory committee is to consist of representatives from private organizations and is to provide an initial written report, including any recommendations, to the General Assembly no later than January 20, 2001.

   The Act also provides for the abatement of unpaid state sales and use taxes and local sales and services taxes owed by a retailer in the event that the retailer failed to collect tax from the purchaser as a result of erroneous written advice issued by the Department of Revenue and Finance (DORF) that was specially directed to the retailer by the department and the retailer is unable to collect the tax, interest or penalties from the purchaser. The Act also abates taxes not collected as a result of certain erroneous written advice issued by DORF to a retailer prior to July 1, 1999, relating to sales and use taxes on charges for access to on-line computer services. The Act also expands the computer access exemption from sales and use taxes. The present exemption only applies to access to the Internet, while the Act expands the exemption to include other information made available through any computer server. These provisions also appeared in H. F. 2548 (see Taxation), a bill that was vetoed by the Governor.

   The Act provides that it is the intent of the General Assembly that the General Assembly consider the proposed Uniform Computer Information Transactions Act, as adopted by the National Conference of Commissioners on Uniform State Laws, during the 2001 Legislative Session.

   The provisions of the Act relating to the abatement of unpaid state sales and use taxes and local sales and services taxes owed by a retailer take effect May 15, 2000.

HOUSE FILE 2218 - County and State Mutual Insurance Guaranty Association (full text of act)

   BY COMMITTEE ON COMMERCE AND REGULATION. This Act creates new Code Chapter 518C, which establishes the Iowa County and State Mutual Insurance Guaranty Association. The purpose of the association is to pay covered claims resulting from the insolvency of a member insurer. The Act provides that the chapter applies to direct insurance authorized to be written by county mutual insurance associations under Code Chapter 518 and state mutual casualty assessment insurance associations under Code Chapter 518A.

   The Act provides that the association is established as a nonprofit unincorporated legal entity. Persons licensed to transact insurance business in this state under Code Chapter 518 or 518A are required to be members of the association. The Act provides that the board of directors of the association consists of the officers and directors of the Mutual Insurance Association of Iowa or its successor association.

   The Act provides that the association is obligated to pay covered claims existing prior to the final order of liquidation and arising within 30 days after the final order of liquidation; existing before the policy expiration date if the expiration date is less than 30 days after the final order of liquidation; and existing before the insured replaces the policy or causes its cancellation, if the insured replaces or cancels the policy within 30 days of the final order of liquidation. The association is also obligated to pay covered claims subject to a limitation as established by the rights, duties and obligations under the policy of the insolvent insurer. The Act directs the association to assess member insurers amounts necessary to pay the obligations of the association, the cost of examinations, and other expenses authorized under the Code chapter. The assessment of each member is in the proportion that the net direct written premiums of a member insurer for the preceding calendar year bears to the net direct written premiums of all member insurers for the preceding calendar year. The Act also directs the association to investigate and process claims filed with the association, and to adjust, compromise, settle, defend, and pay covered claims to the extent of the association's obligation and deny all other claims.

   The Act provides that the association's board of directors may, in its discretion, refund excess amounts to member insurers that are not needed for current or projected liabilities of a particular insolvency.

   The Act requires the association to submit a plan of operation to the Insurance Commissioner for the administration of the association. The plan must provide for procedures for the performance of the duties and execution of the powers of the association; procedures for managing the assets of the association; procedures by which claims may be filed with the association and acceptable forms of proof of covered claims; the place and time for meetings of the board of directors, as necessary; procedures for keeping records of all financial transactions of the association, its agents, and the board of directors; any member insurer aggrieved by a final action or decision of the association to appeal the action or decision to the Insurance Commissioner within 30 days after the action or decision; and for any additional provisions necessary or proper for the performance of the duties and execution of the powers of the association.

   The Act establishes the duties of the Insurance Commissioner with respect to the association and its operations, and authorizes the commissioner to levy certain penalties.

   The Act provides that a person who makes a recovery from the association is deemed to have assigned that person's rights under the policy issued by the insolvent insurer to the association to the extent of the person's recovery from the association. The Act provides that a person having a claim under another policy which arises out of the same facts which give rise to a covered claim is first required to exhaust the person's rights under the other policy, and that an amount recovered or recoverable by the person under the other insurance policy is to be credited against the liability of the association.

   The Act exempts from liability a member insurer, the association, its agents or employees, the board of directors, the commissioner, or the commissioner's representatives for any reasonable action taken in the performance of duties and execution of powers as provided under the new Code chapter.

   The Act also prohibits a person, in connection with the sale of an insurance policy, from advertising or publishing that claims under the insurance policy are subject to the new Code chapter or that such claims will be paid by the association.

HOUSE FILE 2239 - Limited Partnerships -- Transition to Limited Liability Limited Partnership Status (full text of act)

   BY COMMITTEE ON JUDICIARY. This Act provides that a limited partnership may become a limited liability limited partnership. The Act provides that the terms and conditions on which a limited partnership becomes a limited liability limited partnership must be approved by the vote necessary to amend the limited partnership agreement, except that in the case of a limited partnership agreement that expressly considers obligations to contribute to the limited partnership, such approval must be by the vote necessary to amend those contribution provisions. Upon receiving such approval, a limited partnership may become a limited liability limited partnership by filing a statement of qualification. The Act sets forth the information to be included in the statement of qualification, and provides that the filing of a statement of qualification establishes that a limited partnership has satisfied all conditions precedent to the qualification of the limited partnership as a limited liability limited partnership. The Act also provides that a limited liability limited partnership continues to be the same entity that existed before the filing of the statement of qualification, and also establishes fees to be collected by the Secretary of State for documents filed by limited partnerships.

   The Act also replaces a reference to Code Chapter 486, in Code Section 487.1103, with a reference to Code Chapter 486A. Code Chapter 486 is repealed effective January 1, 2001, and Code Chapter 486A will govern all partnerships after that date. This provision takes effect January 1, 2001.

HOUSE FILE 2316 - Health Organizations -- Risk-Based Capital Requirements (full text of act)

   BY COMMITTEE ON COMMERCE AND REGULATION. This Act creates new Code Chapter 521F, which establishes measures of risk-based capital for purposes of regulating health organizations in this state.

   The Act requires a domestic health organization to file annually with the Insurance Commissioner a report of the health organization's risk-based capital levels as of the end of the calendar year. Additionally, the report is to be filed with the Insurance Commissioner in each state in which the insurance company is authorized to do business. The Act establishes and defines a company-action-level event, a regulatory-action-level event, an authorized-control-level event, and a mandatory-control-level event. The Act establishes the steps a health organization must take as a result of each event, as well as the duties of the commissioner. The Act provides that all risk-based capital reports are confidential and provides that such reports are not to be used or introduced as evidence with regard to any rate proceeding.

   The Act provides that the commissioner may exempt from filing a risk-based capital report a domestic health organization that writes direct business only in this state, writes direct annual premiums of $100,000 or less, and does not assume reinsurance in excess of 5 percent of direct annual premiums written; is authorized to do business pursuant to Code Chapter 514 ("Nonprofit Health Service Corporations") and writes direct annual premiums of $100,000 or less; or is a limited health service organization that covers fewer than 500 lives. The Act provides that the commissioner, the Insurance Division, and employees and agents of the division do not incur liability as the result of any action taken in the exercise of powers or performance of duties under the new Code chapter.

HOUSE FILE 2317 - Entities and Subjects Regulated by Division of Insurance (full text of act)

   BY COMMITTEE ON COMMERCE AND REGULATION. This Act amends a number of provisions relating to the entities and subject matter under the regulatory authority of the Insurance Division of the Department of Commerce, including motor vehicle service contracts under Code Chapter 321I, securities (the Iowa "Blue Sky Law") under Code Chapter 502, business opportunities and promotions under Code Chapter 523B, residential service contracts under Code Chapter 523C, retirement facilities under Code Chapter 523D, and securities transfer on death probate provisions under Code Chapter 633, and creates a new Code Chapter 508E relating to the regulation of viatical settlement contracts. A number of provisions contain similar language.

MOTOR VEHICLE SERVICE CONTRACTS. The Act amends the definition of "commissioner" in Code Section 321I.1, to include the Commissioner of Insurance's deputy administrator for purposes of administering the Code chapter, but repeals Code Section 321I.9, which provided administrative authority to the deputy. The Act replaces references in the chapter from "insurance division" to "commissioner" for purposes of consistency. The Act adds a definition of "record" to mean information stored or preserved in any medium, and, to provide consistency, strikes references to "accounts" and "books."

   The Act amends Code Section 321I.3 to provide that a motor vehicle service contract provider must file certain provider information with the commissioner. The Act provides that a fee is not required as part of the filing.

   The Act amends Code Section 321I.11 to prohibit a provider from repairing a motor vehicle covered by a contract with used parts, unless the vehicle owner is notified prior to the repair. The Act also provides that any rebuilt parts used in repair of vehicles covered by service contracts must be rebuilt by a manufacturer according to nationally recognized standards.

   The Act amends Code Section 321I.14, which provides for investigations and administrative actions taken by the commissioner against providers. The Act sets out procedural requirements by persons who contest an order issued by the commissioner. The Act provides for the assessment of civil penalties for violations of an order issued pursuant to the section.

   The Act amends Code Section 321I.16 to state that a provider who fails to file documents as required in the Act is subject to a civil penalty equal to $400 plus $2 for each contract that the provider executes prior to satisfying the filing requirement. The Act directs the Iowa Code Editor to transfer the Code chapter to a place closer to other chapters under the jurisdiction of the Insurance Division.

UNIFORM SECURITIES ACT. The Act amends provisions in Iowa's "Blue Sky Law" administered by the commissioner or the commissioner's deputy. The Act provides that the commissioner may deny, suspend or revoke a registration or discipline a branch manager, assistant branch manager, or supervisor in the same manner that the commissioner may take action against an applicant or registrant.

   The Act also amends Code Section 502.604, which authorizes the commissioner to investigate and take disciplinary action against persons regulated under the chapter. The Act makes the same changes as it did in Code Section 321I.14 regulating motor vehicle service contracts. The Act provides procedural requirements for persons who contest an order issued by the administrator. The Act provides for the assessment of civil penalties for violations of an order issued pursuant to the section.

   Code Section 502.605, which provides that a person violating the Code chapter is guilty of a class "D" felony, is amended to provide that a person committing fraudulent conduct involving investor losses in excess of $10,000 is guilty of a class "C" felony, which is similar to the criminal penalty for theft pursuant to Code Section 714.2, and fraudulent practice in the first degree pursuant to Code Section 714.9.

   The Act amends Code Section 502.609, which requires that an issuer must file an irrevocable consent appointing the commissioner as the issuer's attorney to receive service in civil actions. The Act exempts certain persons from this requirement if the exemption is validated by rule or order of the administrator, including persons who issue exempt securities.

BUSINESS OPPORTUNITY PROMOTIONS. The Act amends Code Chapter 523B, which regulates sellers of business opportunity promotions by the commissioner or deputy. A business opportunity is the offer for the sale of products and equipment.

   The Act amends Code Section 523B.1 to define the term "record" in the same way in which the Act defines the term under Code Section 321I.1 regulating motor vehicle service contracts. Similarly, the Act strikes references to "books, papers, correspondence, memoranda, agreements, or other documents or records" in the chapter.

   The Act amends Code Section 523B.2 to eliminate language that refers to a specific date that the regulation was adopted and states that the commissioner must adopt rules providing for enforcement under the most recent federal regulation.

   The Act further amends Code Section 523B.2 to require disclosure of documents to the commissioner as part of a registration process. The Act provides that a seller must disclose sales or offers made in this state prior to registration. The Code section provides that a registration automatically becomes effective upon the expiration of the fifteenth business day after the filing has been received by the commissioner. The Act increases that period to the thirtieth business day. The Code section provides that a contract offered under the section must include a number of items. The Act adds to those required items, by stating that the contract must include the rights and responsibilities of the parties regarding the marketing of a business opportunity.

   The Act amends Code Section 523B.8, which provides for investigating or taking disciplinary action against persons regulated under the chapter. The Act makes the same changes as it did in Code Section 321I.14 regulating motor vehicle service contracts and Code Section 502.604 regulating securities. The Act provides procedural requirements by persons who contest an order issued by the administrator. The Act provides for the assessment of civil penalties for violations of an order issued pursuant to the section.

RESIDENTIAL SERVICE CONTRACTS. The Act amends provisions in Code Chapter 523C, which regulates residential service contracts executed between a residential owner and a company for the repair, maintenance or replacement of parts of the residence.

   The Act amends Code Section 523C.1 to define the term "record" in the same way in which the Act defines the term under Code Section 321I.1 regulating motor vehicle service contracts and Code Section 523B.1 regulating business opportunity promotions.

   The Act amends Code Section 523C.7, which provides that the administrator may institute a residential service contract form approval or form review fee. The Act provides that the fee cannot exceed $50,000.

   The Act amends Code Section 523C.19, which provides for investigating or taking disciplinary action against persons regulated under the chapter, by making the same changes as it did in Code Section 321I.14, regulating motor vehicle service contracts; Code Section 502.604, regulating securities; and Code Section 523B.8, regulating business opportunity promotions. The Act provides procedural requirements by persons who contest an order issued by the commissioner. The Act provides for the assessment of civil penalties for violations of an order issued pursuant to the section. The Act creates a new provision, designated as Code Section 523C.23, which provides for investigations and subpoenas. It authorizes the commissioner to conduct public or private investigations and issue subpoenas. The section is based on similar provisions in Code Section 502.603. Information obtained in the course of the investigation is confidential.

RETIREMENT FACILITIES. The Act amends Code Chapter 523D, which provides for the regulation of contracts to provide care to persons in a retirement facility, by making the same changes as it did in Code Section 321I.14, regulating motor vehicle service contracts; Code Section 502.604, regulating securities; and Code Section 523B.8, regulating business opportunity promotions. The Act also provides procedural requirements for persons who contest an order issued by the commissioner. The Act provides for the assessment of civil penalties for violations of an order issued pursuant to the section.

IOWA PROBATE CODE. The Act amends Code Chapter 633, which is the "Iowa Probate Code." Specifically it amends provisions enacted by the General Assembly in 1997 referred to as the "Uniform Transfer on Death Security Registration Act." The Act amends the term "security" to include a certificated security, an uncertificated security and a security account.

VIATICAL SETTLEMENT CONTRACTS. The Act creates new Code Chapter 508E and directs the commissioner to regulate, but not prohibit, the sale of viatical settlement contracts. A viatical settlement involves the sale to a viatical settlement provider of the death benefit under a life insurance policy or certificate by a person who owns or is insured under such a policy or certificate, or by a person who owns or is covered under a group life insurance policy.

   The Act amends Code Section 502.202 to provide that a transfer, sale, devise, or bequest of the death benefit or ownership of a life insurance policy or contract made by the policyholder to a viatical settlement provider is exempt from securities regulation if such transaction complies with the requirements established in new Code Chapter 508E.

   The Act provides generally that a viatical settlement contract shall not be entered into until after the contestable period of the policy has expired. However, if a viatical settlement contract is entered into during the contestable period of the life insurance policy or certificate, the Act provides that a rebuttable presumption arises that it was the intent of the person entering into such contract with a viatical settlement provider to enter into such contract at the time the life insurance policy or certificate was originally purchased and if the person fails to rebut the presumption, the viatical settlement contract is void. The Act provides that a viatical settlement contract shall only be entered into with an individual who owns a life insurance policy or certificate that covers the life of an individual who is either terminally ill or chronically ill.

   The commissioner is directed to adopt rules necessary to administer new Code Chapter 508E, including rules relating to advertising standards, disclosure, examinations, insurance company practices, license requirements, prohibited practices, refund provisions, reporting, standards for reasonableness of payment, unfair trade practices, and viatical settlement contracts.

HOUSE FILE 2425 - Limited Liability Company Management -- Limitations -- Effect (full text of act)

   BY COMMITTEE ON JUDICIARY. This Act strikes a subsection of Code Section 490A.702, relating to the management of limited liability companies, that provides that a person dealing with a limited liability company is deemed to have knowledge of a provision in the articles of organization that limits the agency authority of a manager or class of managers.

HOUSE FILE 2513 - Uniform Commercial Code -- Secured Transactions (full text of act)

   BY COMMITTEE ON JUDICIARY. This Act adopts revisions to Article 9 of the Uniform Commercial Code (Code Chapter 554), as proposed by the American Law Institute and the National Conference of Commissioners on Uniform State Laws, and conforming amendments to a number of articles within that chapter as well as other chapters providing for security interests and liens.

   With limited exceptions, Article 9 governs the creation, priority and enforcement of creditors' consensual liens, which are defined as security interests in personal property and fixtures. The article provides generally for the effectiveness of security agreements and the rights and duties of creditors (i.e., secured parties), including parties having possession and control of collateral. The article governs the attachment and enforceability of security interests or proceeds from the sale of collateral. Much of the article provides for "perfecting" a security interest, usually accomplished by filing a financing statement. The article provides for the contents of financing statements and the location where such financing statements must be filed (e.g., with the Secretary of State). In perfecting a security interest, a debtor is generally assured rights in the collateral superior to a security interest perfected later in time. The article provides special rules of perfection for specific collateral such as farm products. It provides that perfection may be accomplished without filing (e.g., by possession). It also provides special rules for collateral purchased by consumers. However, a fundamental purpose of perfection is to provide notice of rights in the collateral by the person perfecting the interest. The article also provides for who has priority in controlling the collateral or proceeds from the sale of the collateral, usually based on who first perfected a security interest. Finally, the article provides for enforcement of security interests in case of a default, which includes the right of a secured party to dispose of collateral following notification and the application of proceeds resulting from the disposition.

   This Act revises Article 9 for the first time since 1972, by expanding the scope of property and transactions covered by Article 9 and changing the manner in which security interests are created, perfected, provided priority, and enforced. For example, the Act provides for electronic authentication of documents. It expands its scope to cover more property, including "accounts" and "proceeds." The revised article includes rights arising out of the license of property and the distributions on stock. The Act amends provisions governing perfection other than by filing effective financing statements. For example, it provides that possession or control may be used as a method to perfect deposit accounts, letter of credit rights, and electronic chattel paper. It also provides for the automatic perfection of a security interest. Revised Article 9 changes methods of filing financing statements, including by electronic filing. The revised article provides a number of changes in which a security interest is enforced in case of default. It provides that a low price obtained at a foreclosure sale does not alone make the sale commercially unreasonable as formerly required in the article. It provides that guarantors of an obligation are entitled to the same notice and protections as the debtor. The revised article allows a secured party to retain collateral in satisfaction of a debt, regardless of whether the secured party is in possession of the collateral.

   The Act amends a number of other Code provisions which refer to Article 9. Many Code chapters provide special liens, including liens for landlords (Code Chapter 570), agricultural supply dealers (Code Chapter 570A), artisans (Code Chapter 577), custom cattle feedlots (Code Chapter 579A), contract producers of commodities (Code Chapter 579B), threshers and cornshellers (Code Chapter 571), and veterinarians (Code Chapter 581). Generally, each chapter provides that persons filing liens created under the chapter enjoy superpriority. The Act provides special rules for agricultural liens that become effective under statute when a lienholder files a financing statement.

   The Act takes effect July 1, 2001.

HOUSE FILE 2579 - Tobacco Settlement Authority Act (full text of act)

   BY RANTS. This Act establishes a new Code Chapter 12E, the "Tobacco Settlement Authority Act."

   The Act creates the Tobacco Settlement Authority, and provides the purposes, powers and restrictions of the authority. The powers of the authority include investing available funds and issuing bonds or entering into other funding options to establish a state source of revenue to be used for the purposes of the "Tobacco Settlement Endowment Fund."

   The Act establishes the governing board of the authority, which consists of the Treasurer of State, the Auditor of State, and the Director of the Department of Management. The Act provides for limitation of personal liability for members of the board and persons acting in the authority's behalf and in the scope or their employment or agency. The Act specifies the general powers of the authority, including the power to issue its bonds and to enter into other funding options.

   The Act authorizes the sale of the state's share of the master settlement agreement, entered into by the state with the tobacco companies, to the authority, pursuant to a program plan. Prior to any such sale, the program plan is to be developed, authorized by a constitutional majority of each house of the General Assembly, and approved by the Governor. If the plan is authorized and approved, the sale may take place. The terms and conditions of any sale are to be included in the program plan.

   The Act provides criteria for the program plan. The program plan is a means by which alternatives relating to investment of the state's share are reviewed and recommended for further action. The program plan is to include the structure of any sales agreement between the state and the authority; the terms of payment of amounts due the state by the authority; the investment criteria of funds of the authority; an analysis of funding options with or without the use of the authority and the issuance of bonds; recommendations for changes in the law relating to the chapter; a date certain for the sale of the state's share to the authority; the period during which the state should be paid, and the date by which the bonds or alternative funding options should be concluded; and any other terms or provisions necessary to implement the Code chapter.

   The Act establishes a Tobacco Settlement Trust Fund, separate and apart from all other public moneys or funds of the state, under the control of the authority. The fund is to consist of moneys paid to the authority and not pledged to the payment of bonds or otherwise obligated. The Act provides duties of the treasurer of the authority relating to the trust fund; provides that the authority is to execute the disposition and investment of moneys in the trust fund in accordance with the investment policy and goal statement established by the board, and provides the standard to be used in developing the policy and goal statement; provides limitation of personal liability of the authority, its staff, members of the board, and the treasurer of the authority relating to the trust fund; provides for payment of expenses relating to the trust fund; and provides the purposes for which moneys in the trust fund may be expended.

   The Act establishes provisions relating to the moneys of the authority, including providing for examination of the accounts and books of the authority.

   The Act provides that the authority is not subject to competitive bid laws and hearings, except as provided in Code Section 12.30, which establishes provisions relating specifically to authorities established by law.

   The Act requires the submission of an annual report to the Governor, the General Assembly, and the Attorney General relating to the Code chapter.

   The Act also provides limitations on the authority in filing for bankruptcy, provides for dissolution of the authority no later than two years from the date of final payment of all outstanding bonds and the satisfaction of all outstanding obligations of the authority, with exceptions, and provides for the liberal interpretation of the chapter to effect its purpose.

   The remainder of the Act makes conforming Code changes, including changes to the existing Tobacco Settlement Fund, by changing the name of that fund to the Tobacco Settlement Endowment Fund and providing for use of the moneys in that fund.

   The Act provides that the new Code Chapter is repealed March 1, 2001.

   The Act takes effect May 19, 2000.

RELATED LEGISLATION

SENATE FILE 441 -- Self-Insured Dental Insurance -- School Corporations (Complete summary under EDUCATION.)

   This Act provides an exemption from certain plan requirements relating to self-insured dental insurance plans maintained by one or more school corporations.

SENATE FILE 2092 -- Substantive Code Corrections (Complete summary under STATE GOVERNMENT.)

   This Act contains statutory corrections that adjust language to reflect current practices, insert earlier omissions, delete redundancies and inaccuracies, delete temporary language, resolve inconsistencies and conflicts, update ongoing provisions, or remove ambiguities. The word "bank" is substituted for the words "financial institution" and an internal reference to the section relating to payment of losses in a bank is added in provisions that relate to banks and to credit unions. A provision relating to the methods of causing a mechanic's lien which has been satisfied to be cancelled or forfeited is amended to provide that it is the demand and required attachments which are to be filed with the clerk of the district court and subsequently mailed by the clerk to both parties affected by a mechanic's lien.

SENATE FILE 2147 -- Motor Vehicle Regulation -- Miscellaneous Provisions (Complete summary under TRANSPORTATION.)

   This Act makes several Code changes relating to motor carrier authority and to motor vehicle manufacturers, distributors, dealers, and other persons involved with the use and sale of vehicles.

SENATE FILE 2254 -- Child Support -- Medical Support -- Data Matching (Complete summary under HUMAN SERVICES.)

   This Act provides changes in child support law relating to medical support, to payment of financial institutions for the costs of quarterly data matches and automation program development, and to liability of financial institutions relating to data matches.

SENATE FILE 2307 -- Public and Workplace Safety and Wage Payment Collection (Complete summary under LABOR & EMPLOYMENT.)

   This Act specifically provides for the applicability of the Iowa Wage Payment Collection Law to former employees.

SENATE FILE 2315 -- Motor Vehicle Lemon Law (Complete summary under TRANSPORTATION.)

   This Act makes various changes in and relating to the Motor Vehicle Lemon Law in Code Chapter 322G. The Act amends Code Section 322G.12, relating to the resale of vehicles returned to a manufacturer pursuant to a settlement, determination, or decision under the Motor Vehicle Lemon Law, to require a manufacturer who accepts such a return to obtain a new certificate of title for the vehicle in the manufacturer's name.

SENATE FILE 2349 -- Contract Care and Feeding of Swine -- Processors (Complete summary under AGRICULTURE.)

   This Act amends Code Chapter 9H, which provides prohibitions against corporations holding agricultural land or engaging in farming activities.

SENATE FILE 2366 -- Purchase, Possession, and Sale of Cigarettes and Tobacco Products (Complete summary under HEALTH & SAFETY.)

   This Act relates to cigarette and tobacco product provisions. The Act provides that possession of cigarettes or tobacco products by an individual under the age of 18 as part of the individual's employment does not constitute a violation of the prohibition against a minor possessing cigarettes or tobacco products. The Act provides penalties for a retailer or an employee of a retailer who violates the laws relating to the supplying of tobacco products or cigarettes to minors. The Act provides that if a retail permit is suspended or revoked, the suspension or revocation only applies to the place of business at which the violation occurred and not to any other place of business to which the permit applies but at which the violation did not occur.

SENATE FILE 2388 -- Corporate Reporting to Secretary of State (Complete summary under STATE GOVERNMENT.)

   This Act amends a number of provisions that provide for filing reports with the Secretary of State. In part, the Act amends provisions consistent with existing law to require that corporate entities file reports with the Secretary of State on a biennial rather than annual basis.

SENATE FILE 2435 -- Appropriations -- Human Services (Complete summary under APPROPRIATIONS.)

   This Act provides appropriations to the Department of Human Services for FY 2000-2001 and includes provisions related to human services and health care. The Act's health coverage provisions include continuation of the previously established AIDS/HIV Health Insurance Premium Payment Program and maintenance of the State Children's Health Insurance Program.

SENATE FILE 2452 -- Miscellaneous Appropriations and Other Provisions (Complete summary under APPROPRIATIONS.)

   Division VI of this Act does the following:

• Provides for the refund of assessments levied on financial institutions to cover the cost of the loss of public funds due to the failure of an Iowa financial institution if the public funds are recovered. This provision applies retroactively to January 1, 2000, for assessments made on or after that date.
• Provides that failure of a car dealership to meet an index or standard established by the franchiser does not in and of itself constitute good cause to terminate or discontinue a franchise.

   Division IX of this Act allows financial institutions to establish, control, maintain, or operate any number of automated teller machines in Iowa. This provision takes effect May 23, 2000.

HOUSE FILE 2179 -- Certified School to Career Program (Complete summary under ECONOMIC DEVELOPMENT.)

   This Act modifies the definition of "Certified School to Career Program" and makes a number of changes to the program. The Act requires that the program participant and employer agree in writing to the beginning date and duration of the employment. The Act also provides that if a participant is unable to complete the employment obligation because the employer does not afford the participant an employment opportunity, the participant is not required to repay the employer's portion of the participant's postsecondary education expenses.

HOUSE FILE 2329 -- Linked Investment Programs -- Qualification Period (Complete summary under AGRICULTURE.)

   This Act amends several provisions providing for linked investment programs administered by the Treasurer of State.

HOUSE FILE 2351 -- Limited Sales and Use Tax Exemption for Clothing and Footwear (Complete summary under TAXATION.)

   This Act provides for a sales and use tax exemption for clothing and footwear purchased on the first Friday and Saturday of August in each year. The exemption would also apply to local sales and services taxes. The Act takes effect May 26, 2000.

HOUSE FILE 2391 -- Theft Detection and Detection Shielding Devices (Complete summary under CRIMINAL LAW, PROCEDURE & CORRECTIONS.)

   This Act creates new criminal offenses related to theft detection shielding and theft detection devices.

HOUSE FILE 2512 -- Rented Motor Vehicles -- Stopping, Standing, or Parking Violations (Complete summary under TRANSPORTATION.)

   This Act amends a provision in Code Section 321.484, relating to the liability of owners of vehicles for certain stopping, standing or parking violations committed by a person other than the owner, to exempt the owner if the owner establishes that the vehicle was in the custody of a person other than the owner at the time of the violation pursuant to a rental agreement.

HOUSE FILE 2540 -- Economic Development Programs -- Tax Credits -- Incentives (Complete summary under ECONOMIC DEVELOPMENT.)

   This Act expands the tax credit presently allowed individual and corporate income taxpayers who are eligible housing businesses that build or rehabilitate housing in a designated enterprise zone, to include financial institutions and nonprofit organizations that are subject to the franchise tax.

HOUSE FILE 2548 -- Tax Administration and Related Matters -- VETOED BY THE GOVERNOR (Complete summary under TAXATION.)

   This bill would have amended various provisions of the state and local tax laws to do the following:

• Extend the time for filing a sales and use tax refund for construction projects under the New Jobs and Income Act.
• Expand the sales tax exemption on access to the Internet to include other information available through any computer server.
• Allow a sales tax permit holder to keep the same permit when a business is relocated if the ownership remains the same.
• Exempt from the use tax the transfer between businesses by limited liability companies of vehicles subject to registration for purposes of continuing the business. The bill would have exempted transfer of vehicles subject to registration from the use tax if done as part of the liquidation of the business if shareholders will subsequently retransfer to another business.
• Reduce the period for assessing the environmental protection charge and for keeping records for depositors of underground petroleum.
• Change the method of taxing moist snuff from a percent of wholesale price to a fixed amount per ounce.

HOUSE FILE 2560 -- Income and Property Taxes -- Credits, Deductions, and Exemptions (Complete summary under TAXATION.)

   This Act provides various income tax credits, including a research activities credit for businesses under the New Jobs and Income Program, the Quality Jobs Enterprise Zone Program, the incentives for building in enterprise zones, the individual income tax, and corporate income tax; a property rehabilitation credit equal to 25 percent of the costs of rehabilitating eligible properties, which are properties eligible to be listed on the National Register of Historic Places, historic properties in areas eligible to be designated local historic districts, local landmarks, or a barn constructed prior to 1937; and an assistive device credit equal to 50 percent of the first $5,000 paid for the purchase, rental or modification of an assistive device or for the renovation of the workplace for an individual with a disability.

© 1998 Cornell College and League of Women Voters of Iowa

Comments about this site or page? webmaster@legis.iowa.gov.
Please remember that the person listed above does not vote on bills. Direct all comments concerning legislation to State Legislators.

Last update: WED June 28 2000
sw/sam