Commerce Committee – Week 9, 2021


SF 564 – Electronic consent by corporate boards of directors

SF 564 (SSB 1216) allows corporate boards of directors to accept electronic signatures in transactions relating to the conduct of business, commercial or governmental affairs specified under the chapter. This is “back-up” legislation requested by the insurance industry. The language is included as part of the Model Business Corporations Act (SF 266/HF 681 by Judiciary), but they support moving this bill forward if the broader legislation in not enacted. The companion is HF 759.
[3/4: short form (Excused: Whiting)]

SF 565Unpaid beverage container refund value accounting

SF 565 (SSB 1087) adds high-alcoholic content beer and canned cocktails to the definition of “beverage” under Iowa’s Bottle Bill and requires distributors to show how much unclaimed deposits they have. Each distributer must open a special interest-bearing account at an Iowa financial institution, and deposit in the account an amount equal to the refund value for each beverage container sold by the distributor on or after July 1, 2021. The reimbursement of refund value paid by the distributor to a dealer, dealer agent or redemption center must be paid from the account. Beginning October 31, each distributor must submit a quarterly report to the Iowa Department of Natural Resources that includes the balance in the account at the beginning and close of the quarter, and a list of all deposits credited to and all withdrawals from the account. The State Treasurer, independently or upon request of the DNR director, may examine the accounts and records of any distributor. The Attorney General, independently or upon request of the DNR director, may take any appropriate action or proceeding to enforce any provision of the bill or any rule adopted.
[3/4: 11-5 (No: Bisignano, Lykam, Mathis, Petersen, Wahls; Excused: Whiting)]

SF 566 – Division of Banking Omnibus

SF 566 (SSB 1236) is a recommendation by the Division of Banking to modernize the Iowa Banking Act [Ch. 524], which has not been comprehensively reviewed since 1995. Portions of the Act are outdated, and fail to reflect current conditions and practices in the banking industry at both the state and national levels. Subjects requiring updates or more extensive statutory treatment include interstate banking, online banking, financial technology and innovation.

In developing the proposal, the Division thoroughly reviewed the Act with input from stakeholders to streamline provisions, eliminate outdated and unnecessary regulatory requirements (e.g., multiple filings, newspaper publications) and accommodate ongoing developments in the banking and financial services industries.

Specific changes include:

The bill allows the Superintendent to impose an initial civil penalty of up to $500,000 on a state bank (or its director or officer) that closes a transaction without receiving the approval of the Superintendent in violation of certain listed statutory provisions (voluntary dissolution, conversion to corporation, merger). For those violations the Superintendent may also impose a civil penalty of up to $10,000 per day on which the state bank operates after closing such a transaction without prior approval. Noting the extraordinarily high amounts, Sen. Quirmbach offered an amendment (.1071) to strike the provisions for civil penalties for unauthorized deals. The amendment failed on a 6-10, party-line vote. SF 566 was referred to Appropriations.
[3/4: 10-6, party-line (No: Democrats; Excused: Whiting)]

SF 567 Loans originated by mortgage bankers

SF 567 (SSB 1135) adds Iowa-licensed or Iowa-registered mortgage bankers to CH. 535B provisions to allow non-depository lenders (a.k.a. non-banks) that originate mortgage loans to charge the same points and fees as other financial institutions. This includes lenders such as Rocket Mortgage/Quicken Loans. The Association of Business and Industry and the Iowa Mortgage Association support the proposal. No declarations in opposition.
[3/4: short form (Excused: Whiting)]

SF 571 – Ban on social media blocking by private corporations

SF 571 (SF 402) prohibits the State or political subdivisions from entering into contracts with, or providing tax incentives or other benefits to, certain companies that censor online content.

The original bill was amended as follows:

  • Strikes the “Legislative Findings and Legislative Intent” language that was a perspective on freedom-of-speech and first-amendment rights. 
  • Defines “monopolistic entity” to include companies that own or operate a social media networking website, own or operate a search engine, or a person who owns or operates any similar Internet site that displays content to its users.
  • Requires the Iowa Attorney General to file a lawsuit alleging a violation of state or federal antitrust or price-fixing laws on such monopolistic entities.
  • Adds additional exceptions (i.e., allowed censorship) to cover situations where constitutionally-protected speech should be allowed to be removed or limited on a platform: Intellectual Property (trademark and copyrighted material); content generated by bots; and pornography.   
  • Allows a pre-installed application store to remove the ability to download a social media website (app) from its store if the app poses a national security threat that is confirmed by the U.S. Department of Homeland Security within 60 days after the removal.

To address concerns from various governmental entities (e.g., school boards, Regents institutions), the amendment also bifurcates tax incentive and non-tax incentive agreements. Agreements entered into by government entities and “Big Tech” companies require termination if they relate to tax incentives. Government entities may at their discretion terminate all other agreements within 90 days.

  • Tax incentive agreements must be terminated by government entities upon a court finding of a violation of 554E by a company.  
    • If the agreement relates to tax incentives, the tech company breaches the agreement once a court finds a violation of 554E.3 (censored constitutionally protected content), and the government entity is required to terminate the contract and recapture any tax incentives not earned through performance under the contract
    • This requirement to terminate will apply to existing contracts and future contracts
    • Government entities must include a provision stating the requirement to terminate a tax incentive in any agreement entered into on or after the effective date of this bill (prospective application)
    • This provision will essentially be written into an existing contract (retroactive application)
  • Non-tax incentive agreements are not required to be terminated by government entities, but they have the discretion to terminate these contracts within 90 days of the court’s finding of a violation of 554E by a company.  
    • If the agreement does not relate to tax incentives, the tech company breaches the agreement once a court finds a violation of 554E.3 (censored constitutionally protected content), and the government entity will have the option to terminate the contract within 90 days of the courts finding of a 554E.3 violation but may choose to continue the contract.
    • Option to terminate within 90 days must be included as a provision in any contract a between a government entity and a tech company entered into on or after the effective date.
    • Option to terminate the contract within 90 days will only apply to contracts entered into on or after the effective date of the bill.

The Attorney General must create a transitional reporting system within 30 days following the effective date of the bill that will operate until 59 days following that date. The transitional reporting system must include at a minimum a mechanism to submit electronic reports of potential violations of chapter 554E including evidence.

The bill takes effect upon enactment and applies to agreements in effect or entered into on or after the effective date. SF 571 was referred to Ways and Means.
[3/4: 10-6, party-line (No: Democrats; Excused: Whiting)]