Bill Text: IA SF2402 | 2023-2024 | 90th General Assembly | Introduced

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Bill Title: A bill for an act relating to the regulation of vapor products, and providing penalties.(Formerly SSB 3101.)

Spectrum: Committee Bill

Status: (Introduced - Dead) 2024-04-19 - Withdrawn. S.J. 939. [SF2402 Detail]

Download: Iowa-2023-SF2402-Introduced.html

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Senate File 2402 - Introduced
SENATE FILE 2402
BY COMMITTEE ON WAYS AND MEANS
(SUCCESSOR TO SSB 3101)
A BILL FOR
An Act relating to the regulation of vapor products, and
providing penalties.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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Section 1. Section 453A.19, Code 2024, is amended by adding
the following new subsection:
NEW SUBSECTION . 5. For the purpose of enabling the
department to determine compliance with subchapter III, the
department shall have the right to inspect any premises of the
holder of an Iowa permit located within the state of Iowa where
vapor products are stored, transported, sold, or offered for
sale or exchanged, to examine all stocks of vapor products of
the permit holder, and to examine all of the records required
to be kept or any other records that may be kept incident to
the conduct of the vapor products business of the permit holder
or any other person dealing in vapor products. It shall be
unlawful for any such permit holder to fail to produce upon
demand of the department any records required to be kept, or to
hinder or prevent in any manner the inspection of the records
or the examination of the premises or stock as specified in
this subsection.
Sec. 2. Section 453A.35, subsection 1, paragraph b, Code
2024, is amended to read as follows:
b. The revenues generated from the tax on cigarettes
pursuant to section 453A.6, subsection 1 , and from the tax on
tobacco products as specified in section 453A.43, subsections
1, 2, 3, and 4 , and from the fees and penalties specified in
subchapter III shall be credited to the health care trust fund
created in section 453A.35A .
Sec. 3. Section 453A.35A, Code 2024, is amended to read as
follows:
453A.35A Health care trust fund.
1. A health care trust fund is created in the office of
the treasurer of state. The fund consists of the revenues
generated from the tax on cigarettes pursuant to section
453A.6, subsection 1 , and from the tax on tobacco products
as specified in section 453A.43, subsections 1, 2, 3, and 4 ,
and from the fees and penalties specified in subchapter III,
that are credited to the health care trust fund, annually,
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pursuant to section 453A.35 . Moneys in the fund shall be
separate from the general fund of the state and shall not be
considered part of the general fund of the state. However, the
fund shall be considered a special account for the purposes
of section 8.53 relating to generally accepted accounting
principles. Moneys in the fund shall be used only as specified
in this section and shall be appropriated only for the uses
specified. Moneys in the fund are not subject to section 8.33
and shall not be transferred, used, obligated, appropriated,
or otherwise encumbered, except as provided in this section .
Notwithstanding section 12C.7, subsection 2 , interest or
earnings on moneys deposited in the fund shall be credited to
the fund.
2. Moneys in the fund shall be used only for purposes
related to health care, substance use disorder treatment and
prevention, and tobacco use prevention, cessation, and control ,
including but not limited to the administration and enforcement
of subchapter III .
Sec. 4. NEW SECTION . 453A.52 Vapor products directory ——
established —— requirements.
1. By August 1, annually, following the date the director
first makes the vapor products directory available as specified
in section 453A.52A, every vapor products manufacturer where
vapor products are sold in the state, whether directly or
through a distributor, wholesaler, retailer, or similar
intermediary or intermediaries, shall certify under penalty of
perjury on a form and in the manner prescribed by the director,
that the vapor products manufacturer agrees to comply with this
subchapter and to one of the following:
a. That the vapor products manufacturer has received a
marketing authorization or similar order for the vapor product
from the United States food and drug administration pursuant
to 21 U.S.C. §387j.
b. That the vapor product was marketed in the United
States as of August 8, 2016, the vapor products manufacturer
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submitted a premarket tobacco product application for the vapor
product to the United States food and drug administration
pursuant to 21 U.S.C. §387j on or before September 9, 2020,
and the application either remains under review by the United
States food and drug administration or a final decision on the
application has not otherwise taken effect.
2. A vapor products manufacturer shall submit a
certification form that separately lists each of the vapor
products manufacturer’s vapor products sold in this state.
3. Each initial and annual certification form required to
be submitted under this section shall be accompanied by both
of the following:
a. A copy of the marketing authorization or other order
for each vapor product issued by the United States food and
drug administration pursuant to 21 U.S.C. §387j, or evidence
that the premarket tobacco product application for each vapor
product was submitted to the United States food and drug
administration and a final authorization or order has not yet
taken effect.
b. A payment of one hundred dollars for each vapor product
listed in the certification.
4. A vapor products manufacturer required to submit a
certification form under this section shall notify the director
within thirty business days of any material change to the
certification form, including the issuance or denial of a
marketing authorization or other order by the United States
food and drug administration pursuant to 21 U.S.C. §387j, or
any other order or action by the United States food and drug
administration that affects the authorization of the vapor
product to be introduced or delivered into interstate commerce
for commercial distribution in the United States.
5. a. The director shall maintain and make publicly
available a vapor products directory that lists all
vapor products manufacturers and vapor products for which
certification forms have been submitted.
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b. The director shall make the directory available on the
department’s internet site.
c. The director shall update the directory as necessary in
order to correct mistakes, ensure accuracy, and add or remove
vapor products on at least a monthly basis.
6. a. The director shall provide a vapor products
manufacturer with notice and an opportunity to cure
deficiencies before removing the vapor products manufacturer or
a vapor product from the directory.
b. The director shall not remove a vapor products
manufacturer or the vapor products manufacturer’s vapor product
from the directory until at least fifteen business days after
the vapor products manufacturer has been given notice of an
intended action. Notice shall be sufficient and be deemed
immediately received by a vapor products manufacturer if the
notice is sent either electronically or by facsimile to an
electronic mail address or facsimile number, as applicable,
provided by the vapor products manufacturer in the vapor
products manufacturer’s most recent certification filed under
this section.
c. The vapor products manufacturer shall have fifteen
business days from the date of service of the notice of
intended action to establish that the vapor products
manufacturer or the vapor product should be included in the
directory.
d. A determination by the director to not include or to
remove a vapor products manufacturer or a vapor product from
the directory shall be subject to review by the filing of a
civil action for prospective declaratory or injunctive relief.
7. If a vapor product is removed from the directory, each
retailer, distributor, and wholesaler shall have twenty-one
business days from the day such vapor product is removed from
the directory to remove the vapor product from its inventory
and return the vapor product to the vapor products manufacturer
for disposal. After twenty-one business days following removal
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from the directory, the vapor products of a vapor products
manufacturer identified in the notice of removal are contraband
and are subject to seizure, forfeiture, and destruction, and
shall not be purchased or sold in the state. The cost of such
seizure, forfeiture, and destruction shall be borne by the
person from whom the vapor products are confiscated.
Sec. 5. NEW SECTION . 453A.52A Vapor products ——
requirements.
Beginning October 1, 2024, or on the date the director
first makes the vapor products directory available for public
inspection on the department’s internet site, whichever is
later, all of the following shall apply to vapor products in
this state:
1. A person shall not sell or offer for sale a vapor product
in this state that is not included in the vapor products
directory, and a vapor products manufacturer shall not sell,
either directly or through a distributor, wholesaler, retailer,
or similar intermediary or intermediaries, a vapor product
in this state that is not included in the vapor products
directory.
2. A retailer shall purchase vapor products for resale to
consumers only from a distributor or subjobber with a valid
license issued pursuant to this chapter.
Sec. 6. NEW SECTION . 453A.52B Penalties.
1. A retailer, distributor, or wholesaler who sells or
offers for sale a vapor product in this state that is not
included in the vapor products directory established in
this subchapter shall be subject to all of the following, as
applicable:
a. A civil penalty of three hundred dollars per day for each
vapor product offered for sale in violation of this subsection
until the offending vapor product is removed from the market
or until the offending vapor product is properly listed on the
directory.
b. For a second violation within a period of two years, a
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retailer shall be assessed a civil penalty of one thousand five
hundred dollars or the retailer’s permit shall be suspended for
a period of thirty days.
c. For a third violation within a period of three years, a
retailer shall be assessed a civil penalty of one thousand five
hundred dollars and the retailer’s permit shall be suspended
for a period of thirty days.
d. For a fourth violation within a period of three years, a
retailer shall be assessed a civil penalty of one thousand five
hundred dollars and the retailer’s permit shall be suspended
for a period of sixty days.
e. For a fifth violation within a period of four years, the
retailer’s permit shall be revoked.
2. A vapor products manufacturer whose vapor products are
not listed in the vapor products directory and are sold in this
state, whether directly or through a distributor, wholesaler,
retailer, or similar intermediary or intermediaries, is subject
to a civil penalty of one thousand dollars per day for each
vapor product offered for sale in violation of this subsection
until the offending vapor product is removed from the market
or until the offending vapor product is properly listed on the
directory.
3. Any vapor products manufacturer that knowingly makes a
false representation in any of the information required by this
subchapter is guilty of a serious misdemeanor for each false
representation.
4. Knowingly shipping or receiving vapor products in
violation of this subchapter is an unfair practice and a
violation of section 714.16.
5. In any action brought by the state to enforce this
subchapter, the state shall be entitled to recover the costs
of investigation and prosecution, expert witness fees, court
costs, and reasonable attorney fees.
Sec. 7. NEW SECTION . 453A.52C Compliance checks.
1. Each distributor or retailer that distributes or sells
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vapor products in this state shall be subject to unannounced
compliance checks conducted by the department or peace officers
as defined in section 801.4 for purposes of enforcing this
subchapter. Peace officers who conduct compliance checks
pursuant to this section shall forward the results of any
compliance check to the department in a manner prescribed by
the department within thirty business days after the compliance
check is conducted.
2. Any unannounced follow-up compliance checks of a
noncompliant retailer or distributor shall be conducted within
thirty business days after any violation of this subchapter.
3. The director shall publish the results of all compliance
checks performed under this section at least annually and shall
make the results available to the public upon request.
Sec. 8. NEW SECTION . 453A.52D Agent for service of process.
1. A nonresident vapor products manufacturer that has not
registered to do business in the state as a foreign corporation
or business entity shall, as a condition precedent to being
included or retained in the vapor products directory, appoint
and continually engage without interruption the services of
an agent in this state to act as agent for service of process
on whom all process, and any action or proceeding against the
vapor products manufacturer concerning or arising out of the
enforcement of this subchapter, may be served in any manner
authorized by law. Such service shall constitute legal and
valid service of process on the vapor products manufacturer.
The vapor products manufacturer shall provide the name,
address, telephone number, and proof of the appointment and
availability of such agent to the director.
2. The vapor products manufacturer shall provide notice
to the director thirty calendar days prior to termination of
the authority of an agent and shall further provide proof to
the satisfaction of the director of the appointment of a new
agent no less than five calendar days prior to the termination
of an existing agent appointment. In the event an agent
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terminates an agency appointment, the manufacturer shall notify
the director of the termination within five calendar days and
shall include proof to the satisfaction of the director of the
appointment of a new agent.
3. A vapor products manufacturer whose vapor products
are sold in this state, who has not appointed and engaged
the services of an agent as required by this section, shall
be deemed to have appointed the secretary of state as its
agent for service of process. However, the appointment of the
secretary of state as agent shall not satisfy the condition
precedent for the vapor products manufacturer to be included or
retained in the vapor products directory.
Sec. 9. NEW SECTION . 453A.52E Proceeds paid to health care
trust fund.
The revenues generated from the payment of fees and
penalties provided for under this subchapter shall be credited
to the health care trust fund created in section 453A.35A and
used for the administration and enforcement of this subchapter.
Sec. 10. NEW SECTION . 453A.52F Annual reports.
By January 15, annually, following the date the director
first makes the vapor products directory available as specified
in section 453A.52A, the director shall submit a report to the
general assembly regarding the status of the vapor products
directory, vapor products manufacturers, the vapor products
included in the directory, revenue and expenditures related to
administration of this subchapter, and enforcement activities
undertaken pursuant to this subchapter.
Sec. 11. NEW SECTION . 453A.52G Adoption of rules.
The director shall adopt rules pursuant to chapter 17A to
administer this subchapter.
Sec. 12. CODE EDITOR DIRECTIVES.
1. The Code editor is directed to create a new subchapter IV
in chapter 453A as follows: Subchapter IV shall be entitled
“Uniform Application of Chapter”.
2. The Code editor shall transfer section 453A.56 to the new
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subchapter IV.
3. The Code editor is directed to create a new subchapter
III in chapter 453A as follows: Subchapter III shall be
entitled “Vapor Products Directory and Regulation” and include
sections 453A.52A through 453A.52G.
4. The Code editor may modify subchapter titles if necessary
and is directed to correct internal references in the Code as
necessary due to enactment of this section.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
This bill relates to the regulation of vapor products in
the state. The bill directs the Code editor to create a
new subchapter in Code chapter 453A (cigarette and tobacco
taxes and regulation of alternative nicotine products and
vapor products) to be entitled “Vapor Products Directory and
Regulation”.
The bill requires that by August 1, annually, following the
date the director first makes the vapor products directory
publicly available, every vapor products manufacturer whose
vapor products are sold in the state, whether directly or
through an intermediary, shall certify under penalty of
perjury on a form and in the manner prescribed by the director
(director) of the department of revenue (DOR), that the vapor
products manufacturer agrees to comply with the new Code
subchapter and has either received a marketing authorization
or similar order for the vapor product from the federal food
and drug administration (FDA); or that the vapor product was
marketed in the United States as of August 8, 2016, the vapor
products manufacturer submitted a premarket tobacco product
application for the vapor product to the FDA on or before
September 9, 2020, and the application either remains under
review by the FDA or a final decision on the application has
not otherwise taken effect.
The certification must separately list each of the vapor
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products manufacturer’s vapor products sold in the state.
Each initial and annual certification form required to
be submitted shall be accompanied by a copy of either the
FDA marketing authorization or other order for each vapor
product; or evidence that the premarket tobacco product
application for each vapor product was submitted to the FDA
and a final authorization or order has not yet taken effect.
The certification must also be accompanied by a payment of
$100 for each vapor product listed in the certification. A
vapor products manufacturer required to submit a certification
form shall notify the director within 30 business days of
any material change to the certification form, including any
change in the federal authorization for the vapor product. The
director shall maintain and make publicly available a vapor
products directory that lists all vapor products manufacturers
and vapor products for which certification forms have been
submitted. The directory shall be available on DOR’s internet
site, and the director shall update the directory on at least a
monthly basis.
The director shall provide a vapor products manufacturer
with notice and an opportunity to cure deficiencies before
removing the vapor products manufacturer or a vapor product
from the directory. The bill provides the process and time
frames for removing a vapor products manufacturer or vapor
product from the directory. A determination by the director
to not include or to remove a vapor products manufacturer or
a vapor product from the directory shall be subject to review
by the filing of a civil action for prospective declaratory
or injunctive relief. If a vapor product is removed from the
directory, the bill provides the process and time frames by
which a retailer, distributor, or wholesaler must remove the
vapor product from inventory and return the vapor product to
the vapor products manufacturer for disposal. After the time
frame specified, the vapor products in the notice of removal
are contraband and are subject to seizure, forfeiture, and
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destruction, and shall not be purchased or sold in the state.
The bill provides that beginning October 1, 2024, or on the
date the director first makes the vapor products directory
available for public inspection on DOR’s internet site,
whichever is later, a person shall not sell or offer for sale
a vapor product in this state that is not included in the
vapor products directory and a vapor products manufacturer
shall not sell, either directly or through an intermediary,
a vapor product in this state that is not included in the
vapor products directory; and a retailer shall purchase vapor
products for resale to consumers only from a distributor or
subjobber with a valid license issued pursuant to Code chapter
453A.
The bill provides for civil penalties and licensee
discipline for a retailer, distributor, or wholesaler who sells
or offers for sale a vapor product in this state that is not
included in the vapor products directory, based on the number
of violations in a period of years.
A vapor products manufacturer whose vapor products are not
listed in the vapor products directory and are sold in this
state, whether directly or through an intermediary, is subject
to a civil penalty of $1,000 per day for each vapor product
offered for sale in violation of the bill. A vapor products
manufacturer that knowingly makes a false representation in
any of the information required by the new Code subchapter is
guilty of a serious misdemeanor for each false representation.
A serious misdemeanor is punishable by confinement for no more
than one year and a fine of at least $430 but not more than
$2,560.
Under the bill, knowingly shipping or receiving vapor
products in violation of the new Code subchapter is an unfair
practice and a violation of Code section 714.16 (consumer
frauds).
The bill provides that each distributor or retailer that
distributes or sells vapor products in the state shall be
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subject to unannounced compliance checks conducted by DOR
or peace officers for purposes of enforcing the new Code
subchapter. Peace officers who conduct compliance checks
shall forward the results to DOR as prescribed by DOR within
30 business days. Any unannounced follow-up compliance checks
of a noncompliant retailer or distributor shall be conducted
within 30 business days after any violation of the new Code
subchapter. The director shall publish the results of all
compliance checks performed at least annually and shall make
the results available to the public upon request.
The bill requires a nonresident vapor products manufacturer
that has not registered to do business in the state as a
foreign corporation or business entity to, as a condition
precedent to being included or retained in the vapor products
directory, appoint and continually engage without interruption
the services of an agent in this state to act as agent for the
service of process. The bill provides the requirements for
instances in which a vapor products manufacturer terminates
the authority of an agent or an agent terminates an agency
appointment. If a vapor products manufacturer whose vapor
products are sold in the state has not appointed and engaged
the services of an agent as required, the vapor products
manufacturer is deemed to have appointed the secretary of state
as its agent for service of process. However, the appointment
of the secretary of state as agent shall not satisfy the
condition precedent for the vapor products manufacturer to be
included or retained in the vapor products directory.
The bill provides that the revenues generated from the
payment of fees and penalties provided for under the new Code
subchapter shall be credited to the health care trust fund and
used for the administration and enforcement of the new Code
subchapter. The bill makes conforming changes in Code section
453A.35 (proceeds made to general fund —— health care trust
fund) and Code section 453A.35A (health care trust fund) to
reflect this provision.
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The bill also makes a conforming change in Code section
453A.19 (examination of records and premises) to authorize
DOR, in determining compliance with the new Code subchapter,
to have the right to inspect any premises of the holder of
an Iowa permit located within the state of Iowa where vapor
products are stored, transported, sold, or offered for sale
or exchanged, to examine all stocks of vapor products of the
permit holder, and to examine all of the records required to
be kept or any other records that may be kept incident to the
conduct of the vapor products business of the permit holder or
any other person dealing in vapor products.
The bill requires that by January 15, annually, following
the director first makes the vapor products directory
publicly available, the director shall submit a report to the
general assembly regarding the status of the vapor products
directory, vapor products manufacturers, the vapor products
included in the directory, revenue and expenditures related
to administration of the new Code subchapter, and enforcement
activities undertaken pursuant to the new Code subchapter.
The bill directs the director to adopt administrative rules
to administer the new Code subchapter, and provides Code editor
directives to provide for creation of the new Code subchapter,
a conforming transfer, and other modifications necessitated by
the bill.
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