Senate
File
444
-
Introduced
SENATE
FILE
444
BY
COMMITTEE
ON
EDUCATION
(SUCCESSOR
TO
SSB
1106)
A
BILL
FOR
An
Act
relating
to
oversight
functions
performed
by
the
college
1
student
aid
commission
regarding
certain
restrictions
and
2
requirements
for
schools
offering
postsecondary
educational
3
programs,
providing
for
fees,
and
making
penalties
4
applicable.
5
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
6
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Section
1.
Section
714.17,
Code
2011,
is
amended
to
read
as
1
follows:
2
714.17
Unlawful
advertising
and
selling
of
educational
3
courses
of
instruction
.
4
It
shall
be
unlawful
for
any
person,
firm,
association,
5
or
corporation
maintaining,
advertising,
or
conducting
in
6
Iowa
any
educational
course
of
instruction
for
profit,
or
7
for
tuition
charge,
whether
by
classroom
instructions
,
or
by
8
correspondence,
or
by
other
delivery
method
to:
9
1.
Falsely
advertise
or
represent
to
any
person
any
matter
10
material
to
such
an
educational
course
of
instruction
.
All
11
advertising
of
such
courses
of
instruction
shall
adhere
to
and
12
comply
with
the
rules
and
regulations
of
the
federal
trade
13
commission
as
of
July
4,
1965
July
1,
2010
.
14
2.
Collect
tuition
or
other
charges
in
excess
of
one
hundred
15
fifty
dollars
in
the
case
of
educational
courses
offered
by
16
correspondence
courses
of
study
,
in
advance
of
the
receipt
and
17
approval
by
the
pupil
of
the
first
assignment
or
lesson
of
such
18
course.
Any
contract
providing
for
advance
payment
of
more
19
than
one
hundred
fifty
dollars
shall
be
voidable
on
the
part
of
20
the
pupil
or
any
person
liable
for
the
tuition
provided
for
in
21
the
contract.
22
3.
Promise
or
guarantee
employment
utilizing
information,
23
training,
or
skill
purported
to
be
provided
or
otherwise
24
enhanced
by
a
an
educational
course,
unless
the
promisor
or
25
guarantor
offers
the
student
or
prospective
student
a
bona
26
fide
contract
of
employment
agreeing
to
employ
said
student
27
or
prospective
student
for
a
period
of
not
less
than
one
28
hundred
twenty
days
in
a
business
or
other
enterprise
regularly
29
conducted
by
the
promisor
or
guarantor
and
in
which
such
30
information,
training,
or
skill
is
a
normal
condition
of
31
employment.
32
Sec.
2.
Section
714.18,
subsection
1,
Code
2011,
is
amended
33
to
read
as
follows:
34
1.
Except
as
otherwise
provided
in
subsection
2
,
every
35
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person,
firm,
association,
or
corporation
maintaining
or
1
conducting
in
Iowa
any
such
educational
course
of
instruction
2
by
classroom
instruction
or
by
correspondence
or
by
other
3
distance
delivery
method,
or
soliciting
in
Iowa
the
sale
of
4
such
course,
shall
file
with
the
college
student
aid
commission
5
all
of
the
following:
6
a.
A
continuous
corporate
surety
bond
to
the
state
of
7
Iowa
in
the
sum
of
fifty
thousand
dollars
conditioned
for
8
on
the
faithful
performance
of
all
contracts
and
agreements
9
with
students
made
by
such
person,
firm,
association,
or
10
corporation,
or
their
salespersons;
but
the
aggregate
liability
11
of
the
surety
for
all
breaches
of
the
conditions
of
the
bond
12
shall
not
exceed
the
sum
of
the
bond.
The
surety
on
the
bond
13
may
cancel
the
bond
upon
giving
thirty
days’
written
notice
14
to
the
college
student
aid
commission
and
thereafter
shall
be
15
relieved
of
liability
for
any
breach
of
condition
occurring
16
after
the
effective
date
of
the
cancellation.
17
b.
A
statement
designating
a
resident
agent
for
the
purpose
18
of
receiving
service
in
civil
actions.
In
the
absence
of
such
19
designation,
service
may
be
had
upon
the
secretary
of
state
if
20
service
cannot
otherwise
be
made
in
this
state.
21
c.
A
copy
of
any
catalog,
prospectus,
brochure,
or
other
22
advertising
material
intended
for
distribution
in
Iowa.
23
Such
material
shall
state
the
cost
of
the
educational
course
24
offered,
the
schedule
of
tuition
refunds
for
portions
of
the
25
educational
course
not
completed,
and
if
no
refunds
are
to
26
be
paid,
the
material
shall
so
state.
Any
contract
induced
27
by
advertising
materials
not
previously
filed
as
provided
in
28
this
chapter
shall
be
voidable
on
the
part
of
the
pupil
or
any
29
person
liable
for
the
tuition
provided
for
in
the
contract.
30
Sec.
3.
Section
714.18,
subsection
2,
paragraph
a,
31
subparagraphs
(1)
and
(4),
Code
2011,
are
amended
to
read
as
32
follows:
33
(1)
A
continuous
corporate
surety
bond
to
the
state
of
34
Iowa
in
the
sum
of
fifty
thousand
dollars
or
ten
percent
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of
the
total
annual
tuition
collected,
whichever
is
less,
1
conditioned
for
on
the
faithful
performance
of
all
contracts
2
and
agreements
with
students
made
by
such
school.
A
school
3
desiring
to
file
a
surety
bond
based
on
a
percentage
of
annual
4
tuition
shall
provide
to
the
college
student
aid
commission,
in
5
the
form
prescribed
by
the
commission,
a
notarized
statement
6
attesting
to
the
total
amount
of
tuition
collected
in
the
7
preceding
twelve-month
period.
The
commission
shall
determine
8
the
sufficiency
of
the
statement
and
the
amount
of
the
bond.
9
Tuition
information
submitted
pursuant
to
this
subparagraph
10
shall
be
kept
confidential.
11
(4)
The
college
student
aid
commission
may
accept
a
letter
12
of
credit
from
issued
by
a
bank
in
lieu
of
and
for
the
amount
13
of
the
corporate
surety
bond
required
by
this
paragraph
“a”
14
subparagraphs
(1)
through
(3),
as
applicable
.
15
Sec.
4.
Section
714.19,
subsections
6
through
8,
Code
2011,
16
are
amended
to
read
as
follows:
17
6.
Schools
and
educational
programs
conducted
by
firms,
18
corporations,
or
persons
for
the
training
of
their
own
19
employees,
for
which
no
fee
is
charged.
20
7.
Seminars,
refresher
courses
,
and
schools
of
instruction
21
sponsored
conducted
by
professional,
business,
or
farming
22
organizations
or
associations
for
the
members
and
employees
of
23
members
of
such
organizations
or
associations.
A
person
who
24
provides
instruction
under
this
subsection
who
is
not
a
member
25
or
an
employee
of
a
member
of
the
organization
or
association
26
shall
not
be
eligible
for
this
exemption.
27
8.
Private
business
schools
accredited
by
the
accrediting
28
commission
for
business
schools
or
an
acknowledged
accrediting
29
agency
recognized
by
the
United
States
department
of
education
30
or
the
council
for
higher
education
accreditation
.
31
Sec.
5.
Section
714.19,
Code
2011,
is
amended
by
adding
the
32
following
new
subsection:
33
NEW
SUBSECTION
.
10.
Private,
nonprofit
schools
that
are
34
eligible
for
state
student
financial
aid
programs
authorized
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under
chapter
261.
1
Sec.
6.
Section
714.22,
Code
2011,
is
amended
to
read
as
2
follows:
3
714.22
Trade
and
vocational
schools
——
exemption
——
4
conditions.
5
1.
For
the
purposes
of
this
section,
a
“trade
or
vocational
6
school”
means
one
which
provides
a
postsecondary
educational
7
course
that
prepares
a
student
for
employment
in
a
recognized
8
occupation.
9
2.
a.
The
provisions
of
sections
714.17
714.18
through
10
714.21
shall
not
apply
to
trade
or
vocational
schools
if
they
11
meet
either
of
the
following
conditions:
12
1.
(1)
File
a
bond
or
a
bond
is
filed
on
their
behalf
by
13
a
parent
corporation
with
the
college
student
aid
commission
14
as
required
by
section
714.18
.
15
2.
(2)
File
an
annual
sworn
statement,
or
such
statement
is
16
filed
on
their
behalf
by
a
parent
corporation,
certified
by
a
17
certified
public
accountant,
showing
all
assets
and
liabilities
18
of
the
trade
or
vocational
school
and
the
assets
of
any
parent
19
corporation.
The
statement
shall
show
the
trade
or
vocational
20
school’s
net
worth,
or
the
net
worth
of
the
school’s
parent
21
corporation,
to
be
is
not
less
than
five
times
the
amount
of
22
the
bond
required
by
section
714.18
.
The
trade
or
vocational
23
school
shall
file
with
the
college
student
aid
commission
an
24
annual
sworn
statement,
or
such
statement
shall
be
filed
on
25
the
school’s
behalf
by
a
parent
corporation,
certified
by
a
26
certified
public
accountant,
showing
all
assets
and
liabilities
27
of
the
trade
or
vocational
school
and
the
assets
of
any
parent
28
corporation.
If
a
parent
corporation
files
the
statement
or
29
its
net
worth
is
included
in
the
statement
to
comply
with
this
30
subsection
,
the
parent
corporation
shall
appoint
a
registered
31
agent
and
otherwise
is
subject
to
section
714.18,
subsection
32
1
,
paragraph
“b”
,
and
is
liable
for
the
breach
of
any
contract
33
or
agreement
with
students
as
well
as
liable
for
any
fraud
in
34
connection
with
the
contract
or
agreement
or
for
any
violation
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of
section
714.16
by
the
trade
or
vocational
school
or
any
of
1
its
agents
or
salespersons.
2
b.
For
the
purposes
of
this
subsection,
the
net
worth
of
a
3
trade
or
vocational
school
or
the
school’s
parent
corporation,
4
as
applicable,
shall
be
determined
by
the
amount
the
school’s
5
or
parent
corporation’s
assets
exceed
its
liabilities
as
shown
6
in
the
sworn
statement
required
to
be
filed
pursuant
to
this
7
subsection.
8
Sec.
7.
Section
714.23,
Code
2011,
is
amended
by
adding
the
9
following
new
subsection:
10
NEW
SUBSECTION
.
0A.
a.
For
the
purposes
of
this
section
11
and
section
714.25,
“postsecondary
educational
program”
means
12
a
series
of
postsecondary
educational
courses
that
lead
to
13
a
recognized
educational
credential
such
as
an
academic
or
14
professional
degree,
diploma,
or
license.
15
b.
For
the
purposes
of
this
section,
“school
period”
means
16
the
course,
term,
payment
period,
postsecondary
educational
17
program,
or
other
period
for
which
the
school
assessed
tuition
18
charges
to
the
student.
A
school
that
assesses
tuition
charges
19
to
the
student
at
the
beginning
of
each
course,
term,
payment
20
period,
or
other
period
that
is
shorter
than
the
postsecondary
21
educational
program’s
length
shall
base
its
tuition
refund
on
22
the
amount
of
tuition
costs
the
school
charged
for
the
course,
23
term,
or
other
period
in
which
the
student
terminated.
A
24
school
shall
not
base
its
tuition
refund
calculation
on
any
25
portion
of
a
postsecondary
educational
program
that
remains
26
after
a
student
terminates
unless
the
student
was
charged
for
27
that
remaining
portion
of
the
postsecondary
educational
program
28
before
the
student’s
termination.
29
Sec.
8.
Section
714.23,
subsections
1
through
5,
Code
2011,
30
are
amended
to
read
as
follows:
31
1.
A
person
offering
a
course
of
instruction
at
the
32
postsecondary
level
postsecondary
educational
program
,
for
33
profit,
that
is
more
than
four
months
in
length
and
leads
34
to
a
degree,
diploma,
or
license
recognized
educational
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credential
,
shall
make
a
pro
rata
refund
of
no
less
than
1
ninety
percent
of
the
tuition
for
charges
to
a
terminating
2
student
to
the
appropriate
agency
based
upon
in
an
amount
3
that
is
not
less
than
ninety
percent
of
the
amount
of
tuition
4
charged
to
the
student
multiplied
by
the
ratio
of
completed
5
number
of
scheduled
school
days
to
the
number
of
calendar
days
6
remaining
in
the
school
period
until
the
date
equivalent
to
the
7
completion
of
sixty
percent
of
the
scheduled
school
calendar
8
days
of
in
the
school
term
or
course
period
.
9
2.
Notwithstanding
the
provisions
of
subsection
1
,
the
10
following
tuition
refund
policy
shall
apply:
11
a.
If
a
terminating
student
has
completed
sixty
percent
or
12
more
of
a
school
term
or
course
that
is
more
than
four
months
in
13
length
period
,
the
person
offering
the
course
of
instruction
a
14
postsecondary
educational
program
that
is
more
than
four
months
15
in
length
is
not
required
to
refund
tuition
for
charges
to
the
16
student.
However,
if,
at
any
time,
a
student
terminates
a
17
school
term
or
course
postsecondary
educational
program
that
is
18
more
than
four
months
in
length
due
to
the
student’s
physical
19
incapacity
or
due
to
the
transfer
of
the
student’s
spouse’s
20
employment
to
another
city,
the
terminating
student
shall
21
receive
a
refund
of
tuition
charges
in
an
amount
which
that
22
equals
the
amount
of
tuition
charged
to
the
student
multiplied
23
by
the
ratio
of
the
remaining
number
of
school
calendar
days
in
24
the
school
period
to
the
total
school
number
of
calendar
days
25
of
in
the
school
term
or
course
period
.
26
b.
A
refund
of
ninety
percent
of
the
tuition
for
a
27
terminating
student
shall
be
paid
to
the
appropriate
agency
28
based
upon
the
ratio
of
completed
number
of
school
days
to
the
29
total
school
days
of
the
school
term
or
course.
A
school
shall
30
provide
to
a
terminating
student
a
refund
of
tuition
charges
31
in
an
amount
that
is
not
less
than
ninety
percent
of
the
amount
32
of
tuition
charged
to
the
student
multiplied
by
the
ratio
of
33
the
remaining
number
of
calendar
days
in
the
school
period
34
to
the
total
number
of
calendar
days
in
the
school
period.
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This
paragraph
“b”
applies
to
those
persons
offering
courses
1
of
instruction
at
the
postsecondary
level
a
postsecondary
2
educational
program
of
more
than
four
months
in
length
,
for
3
profit,
whose
cohort
default
rate
for
students
under
the
4
Stafford
loan
program
as
defined
reported
by
the
United
States
5
department
of
education
for
the
most
recent
federal
fiscal
year
6
is
more
than
one
hundred
ten
percent
of
the
national
average
7
cohort
default
rate
for
that
program
for
that
period
the
same
8
federal
fiscal
year
or
six
percent,
whichever
is
higher.
9
3.
If
the
financial
obligations
of
a
student
are
for
three
10
or
fewer
months
duration,
this
section
does
not
apply.
In
the
11
case
of
a
program
in
which
student
progress
is
measured
only
in
12
clock
hours,
all
occurrences
of
calendar
days
in
subsections
1
13
and
2
shall
be
replaced
with
scheduled
clock
hours.
14
4.
Refunds
A
refund
of
tuition
charges
shall
be
paid
15
provided
to
the
appropriate
agency
student
within
thirty
days
16
following
the
student’s
termination
from
a
postsecondary
17
educational
program
.
18
5.
A
student
who
terminates
a
course
of
instruction
or
19
term
postsecondary
educational
program
shall
not
be
charged
20
any
fee
or
other
monetary
penalty
for
terminating
a
course
of
21
instruction
or
term
the
postsecondary
educational
program,
22
other
than
a
reduction
in
tuition
refund
as
specified
in
this
23
section
.
24
Sec.
9.
NEW
SECTION
.
714.24
Additional
requirements.
25
1.
A
required
filing
of
evidence
of
financial
26
responsibility
pursuant
to
section
714.18
or
714.22
must
be
27
completed
at
least
once
every
two
years.
28
2.
A
filing
of
a
claim
for
an
exemption
pursuant
to
section
29
714.19
must
be
completed
at
least
once
every
two
years.
30
3.
An
entity
that
claims
an
exemption
under
section
714.19
31
must
file
evidence
of
financial
responsibility
pursuant
to
32
section
714.18
or
714.22
within
two
business
days
following
33
the
date
upon
which
conditions
that
qualify
the
entity
for
an
34
exemption
under
section
714.19
no
longer
exist.
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4.
An
entity
that
is
required
to
file
evidence
of
financial
1
responsibility
under
section
714.18
or
714.22,
or
an
entity
2
that
files
a
claim
of
exemption
under
section
714.19,
shall
3
utilize
required
forms
approved
and
supplied
by
the
commission.
4
5.
a.
The
commission
shall
set
by
rule
and
collect
5
a
nonrefundable
fee
from
each
entity
that
files
with
the
6
commission
under
section
714.18,
714.19,
or
714.22.
7
b.
Fees
collected
under
paragraph
“a”
shall
be
deposited
8
into
the
general
fund
and
are
appropriated
to
the
commission
9
for
purposes
of
administering
sections
714.18
through
714.25.
10
6.
The
commission
and
the
attorney
general
may,
11
individually
or
jointly,
adopt
rules
pursuant
to
chapter
17A
12
for
the
implementation
of
sections
714.18
through
714.25.
13
Sec.
10.
Section
714.25,
Code
2011,
is
amended
to
read
as
14
follows:
15
714.25
Disclosure.
16
1.
For
purposes
of
this
chapter
section
,
unless
the
17
context
otherwise
requires,
“proprietary
school”
means
a
person
18
offering
a
course
of
instruction
at
the
postsecondary
level
19
postsecondary
educational
program
,
for
profit,
that
is
more
20
than
four
months
in
length
and
leads
to
a
degree,
diploma,
or
21
license
recognized
educational
credential,
such
as
an
academic
22
or
professional
degree,
diploma,
or
license
.
23
2.
A
proprietary
school
shall,
prior
to
the
time
a
student
24
is
obligated
for
payment
of
any
moneys,
inform
the
student,
the
25
college
student
aid
commission,
and
in
the
case
of
a
school
26
licensed
under
section
157.8
,
the
board
of
cosmetology
arts
27
and
sciences
or
in
the
case
of
a
school
licensed
under
section
28
158.7
,
the
board
of
barbering,
of
all
of
the
following:
29
a.
The
total
cost
of
the
course
of
instruction
postsecondary
30
educational
program
as
charged
by
the
proprietary
school.
31
b.
An
estimate
of
any
fees
which
may
be
charged
the
32
student
by
others
which
would
be
required
if
the
student
is
33
to
successfully
complete
the
course
postsecondary
educational
34
program
and
,
if
applicable,
obtain
a
degree,
diploma,
or
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license
recognized
educational
credential
.
1
c.
The
percentage
of
students
who
successfully
complete
2
the
course
postsecondary
educational
program
,
the
percentage
3
who
terminate
prior
to
completing
the
course
postsecondary
4
educational
program
,
and
the
period
of
time
upon
which
the
5
proprietary
school
has
based
these
percentages.
The
reporting
6
period
shall
not
be
less
than
one
year
in
length
and
shall
not
7
extend
more
than
five
years
into
the
past.
8
d.
If
claims
are
made
by
the
proprietary
school
as
to
9
successful
placement
of
students
in
jobs
upon
completion
of
the
10
course
of
study
proprietary
school’s
postsecondary
educational
11
programs
,
the
proprietary
school
shall
provide
the
student
with
12
all
of
the
following:
13
(1)
The
percentage
of
graduating
students
who
were
placed
14
in
jobs
in
fields
related
to
the
course
of
instruction
15
postsecondary
educational
programs
.
16
(2)
The
percentage
of
graduating
students
who
went
on
to
17
further
education
immediately
upon
graduation.
18
(3)
The
percentage
of
students
who,
ninety
days
after
19
graduation,
were
without
a
job
and
had
not
gone
on
to
further
20
education.
21
(4)
The
period
of
time
upon
which
the
reports
required
by
22
paragraphs
“a”
through
“c”
were
based.
The
reporting
period
23
shall
not
be
less
than
one
year
in
length
and
shall
not
extend
24
more
than
five
years
into
the
past.
25
e.
If
claims
are
made
by
the
proprietary
school
as
to
income
26
levels
of
students
who
have
graduated
and
are
working
in
fields
27
related
to
the
proprietary
school’s
course
of
instruction
28
postsecondary
educational
programs
,
the
proprietary
school
29
shall
inform
the
student
of
the
method
used
to
derive
such
30
information.
31
Sec.
11.
Section
714.25,
Code
2011,
is
amended
by
adding
the
32
following
new
subsection:
33
NEW
SUBSECTION
.
3.
The
requirements
of
subsection
2
shall
34
not
apply
to
a
proprietary
school
that
is
eligible
for
federal
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student
financial
aid
under
Tit.
IV
of
the
federal
Higher
1
Education
Act
of
1965,
as
amended.
2
EXPLANATION
3
This
bill
makes
various
changes
relating
to
the
college
4
student
aid
commission’s
oversight
functions
over
the
5
advertising,
financial
responsibility,
tuition
refund,
and
6
disclosure
requirements
and
restrictions
governing
certain
7
educational
programs
and
courses,
and
provides
for
fees.
8
The
bill
amends
Code
section
714.19,
relating
to
the
9
nonapplicability
of
Code
sections
714.17
to
714.22,
governing
10
business
and
financial
practices
of
sellers
of
educational
11
courses,
to
provide
that
instructors
for
courses
conducted
12
by
professional,
business,
or
farming
organizations
or
13
associations
for
the
members
and
employees
of
members
of
such
14
entities
who
are
not
members
or
employees
of
members
themselves
15
are
ineligible
for
exemption
from
Code
sections
714.17
to
16
714.22.
The
bill
specifies
accreditation
standards
for
private
17
business
schools
exempt
from
Code
sections
714.17
to
714.22.
18
The
bill
creates
a
new
exemption
from
Code
sections
714.17
19
to
714.22
for
private,
nonprofit
schools
eligible
for
state
20
student
financial
aid
programs
authorized
under
Code
chapter
21
261.
22
The
bill
amends
Code
section
714.23
to
remove
the
exemption
23
for
students
with
financial
obligations
of
three
or
fewer
24
months’
duration
from
standards
regarding
tuition
refund
25
policies.
The
bill
provides
for
the
inclusion
of
educational
26
programs
in
which
student
progress
is
measured
only
in
clock
27
hours
under
standards
regarding
tuition
refund
policies.
The
28
bill
also
provides
that
certain
tuition
refunds
must
be
paid
29
directly
to
students.
A
violation
of
Code
section
714.23
is
a
30
simple
misdemeanor,
which
is
punishable
by
confinement
for
not
31
more
than
30
days
or
a
fine
of
at
least
$65
but
not
more
than
32
$625
or
by
both.
33
The
bill
provides
that
the
commission
may
collect
34
nonrefundable
fees
for
the
filing
of
evidence
of
financial
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responsibility
and
claims
for
exemption
relating
to
the
1
commission’s
oversight
functions
under
Code
chapter
714.
2
The
bill
specifies
that
such
fees
must
be
deposited
into
3
the
general
fund
and
are
appropriated
to
the
commission
for
4
purposes
of
administering
the
commission’s
oversight
functions
5
under
Code
chapter
714.
6
The
bill
amends
Code
section
714.25
to
exempt
from
certain
7
disclosure
requirements
proprietary
schools,
as
defined
in
the
8
bill,
that
are
eligible
for
federal
student
financial
aid
under
9
Tit.
IV
of
the
Higher
Education
Act
of
1965.
10
The
bill
provides
that
the
commission
and
the
attorney
11
general
may,
individually
or
jointly,
adopt
rules
pursuant
12
to
Code
chapter
17A
to
carry
out
the
commission’s
oversight
13
functions
under
Code
chapter
714.
14
Finally,
the
bill
makes
changes
to
terminology,
15
demonstration
of
compliance,
and
exemptions
relating
to
the
16
commission’s
oversight
functions
under
Code
chapter
714.
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