July 12, 2008

            The Iowa Department of Public Health smoking ban enforcement rules are promulgated by an executive branch agency. HF 2212 expressly delegates rulemaking powers for the Iowa smoking ban to the Iowa Department of Public Health. Such rules are, however, subject to legislative branch and other oversight (such as the Governor and state Attorney General). This page discusses that oversight process and is focused in the General Assembly’s Administrative Rules Review Committee. This overview is prepared by laypersons. Accordingly, any person seeking to take legal action based on the contents of this Web page should only do so with the advice of competent counsel.
A copy of the current overview of rules review as published on the Iowa administrative rules Web site appears below this commentary text. In addition to the below rules review text it is important to understand both the source statute Iowa Smoke Free Air Act (HF 2212) and the current enforcement rules that have been promulgated by the Iowa Department of Public Health. Those two documents can be accessed at the following links:

House File 2212 as Passed April 8, 2008

Iowa Department of Public Health smoking ban enforcement rules as posted June 27, 2008

            In general layperson terms, Administrative Rules Review Committee and other oversight activities are directed toward outcomes that assure executive branch rules:

1. Accomplish the purposes and intent of the source legislation.

2. Are consistent with the scope of the source statute. In other words, to assure that the rules adopted do not exceed the intent and findings of the source legislation (HF 2212), which is can also be referred to as the enabling statute.

3. Are adopted and promulgated in conformance with established state rulemaking procedures and powers and does not have unresolved conflicts with other rules or law.

4. Provide enforcement remedies or powers that are consistent with state law and accepted regulatory procedures.

            Failure to achieve any of the above outcomes can result in the rules being modified, rescinded or overturned. Should the rules be rescinded or overturned the legislature must amend or repeal the source statute because no lawful means to carry out the intent of the law exists. 

Current Status and Review Procedures

            As of this writing serious questions concerning all four of the above outcome criteria have been raised about the Iowa Department of Public Health’s highly controversial smoking ban enforcement rules as published June 27, 2008. Those issues will be discussed on different web pages.
The current smoking ban enforcement questions and controversy place the Iowa legislature’s Administrative Rules Review Committee in a very important and highly visible role. Iowa small business owners, taxpayers and consumers should become involved in the rules review process to protect their legitimate interests and to gather information that may be important to them for voting decisions in the November 2008 general election. Considered in this light, the ten members of the Iowa Administrative Rules Review Committee (five members of the Senate and five members of the House of Representatives) face a daunting task to pass on or approve the smoking ban enforcement rules as presently written.

The Iowa Department of Public Health smoking ban enforcement rules are in the public comment phase, which is scheduled to end August 22, 2008. After that public comment phase the final rules will be published by the department. The Administrative Rules Review Committee should then review the rules and file its conclusions. Given the current schedule committee action on the enforcement rules could occur in September or October 2008.
The Iowa Department of Public Health rules are adopted pursuant to an emergency declaration (see link to Iowa Code 17A.5 in Other Sources below), which means the rules in their present form are currently effective. Accordingly, the rules are currently enforceable. The content of the rules may still be reviewed by the Administrative Rules Review committee. The committee may still file an objection to all or a portion the rules because the rules are “deemed to be unreasonable, arbitrary, capricious, or otherwise beyond the authority delegated to the agency.” Should such an objection be filed the health department must meet the burden of proof to establish that the rule(s) are not be unreasonable, arbitrary, capricious, or otherwise beyond the authority delegated to the agency. If the health department fails to meet that burden of proof the court shall declare the rule(s) to be invalid. Legal costs can be awarded against the health department if it fails to meet its burden of proof. The governor may also rescind an agency rule by executive order.
Several important issues concerning the Iowa Department of Health smoking ban enforcement rules have already been raised by members of the Iowa General Assembly and members of the general public. See, for example, June 2008 Minutes of the Administrative Rules Review Committee. In that document scroll down to the “Public Health Department” section, then begin reading at the part that is identified as “Informal review.” Several more issues in addition to those raised by speakers in the June 2008 minutes promise to present themselves in the near future concerning the health department rules. 

Administrative Rules Review Committee Members

The ten members of the Iowa Administrative Rules Review Committee and their votes on the source legislation, Smoke Free Air Act HF 2212, are as listed below. A “Yes” vote was to pass the Iowa smoking ban legislation and a “No” vote was to prevent the legislation.

Senate:

Michael Connolly               (D, District 14), Chair             Yes
Jeff Angelo                        (R, District 48)                        No
Thomas G. Courtney        (D, District 44)                        Yes
John P. "Jack" Kibbie        (D, District 4)                          Yes
James A. Seymour           (R, District 28)                        No

House:

Philip L. Wise                    (D, District 92), Vice Chair      Yes
Marcella Frevert                (D, District 7)                          Yes
Dave Heaton                     (R, District 91)                        No
David Jacoby                    (D, District 30)                        Yes
Linda Upmeyer                  (R, District 12)                        Absent or not voting

Fiscal Impact

Fiscal impact and projected costs of any legislation are legitimately within the scope of issues that the Administrative Rules Review Committee should consider. Important fiscal impact information for the Iowa Smoke Free Air Act can be accessed through the below links to the four Fiscal Notes reports prepared for different versions of HF 2212 by the Iowa Legislative Services Agency. Since members of the Iowa Administrative Rules Review Committee have previously voted on HF 2212 in the House and Senate, they are presumably aware of the below agency Fiscal Notes reports and their contents. The April 9, 2008 report most accurately reflects the bill content and provides the most recent economic impact (according to the Legislative Services Agency) for HF 2212, as passed by the Iowa Senate and House on April 8, 2008.

Legislative Services Agency February 19, 2008 Fiscal Services Division Report

Legislative Services Agency, February 27, 2008 Fiscal Services Division Report

Legislative Services Agency March 12, 2008 Fiscal Services Division Report

Legislative Services Agency, April 9, 2008 Fiscal Services Division Report

13.  "Place of employment" means an area under the control of an employer and includes all areas that an employee frequents during the course of employment or volunteering, including but not limited to work areas, private offices, conference and meeting rooms, classrooms, auditoriums, employee lounges and cafeterias, hallways, medical facilities, restrooms, elevators, stairways and stairwells, and vehicles owned, leased, or provided by the employer unless otherwise provided under this chapter.

16. "Public place” means an enclosed area to which the public is invited or in which the public is permitted, including common areas, and including but not limited to all of the following:

The April 9, 2008 agency report omits the distance-specific 50 foot prohibition discussion and that requirement is not included in the Smoke Free air Act as passed. Considering the above definitions, the 50 foot rule would prohibit smoking in virtually all urban or high population density areas, and impose corresponding greater financial impact. It is fortunate that the distance provision was removed from the current legislation. Voters, taxpayers and consumers may rest assured, however, that – as with the current gambling floor exemption -- tobacco control will be back again in future legislative sessions to advocate a similar distance-specific mandate. Along with those ever-expanding mandates come ever-escalating fiscal and business impact costs.  An Administrative Rules Committee Vote to pass the current health department rules is a vote to establish the enforcement infrastructure that will predictably impose those increasing costs in the future through expanding mandates. 
The February 19, 2008 report does not provide any estimate for state gambling tax revenue losses, even though gaming facilities would not have been exempt under the legislative bill at the time. The February 27, 2008 report projects a reduction in state gambling funds revenue of $31.7 million, which also appears in the March 12, 2008 report. That $31.7 million in lost gambling fund revenues is in all probability a significant understatement because it assumes a mere 10 percent reduction in gaming revenues due to the smoking ban. In contrast, casinos in Illinois and Colorado have reported revenue losses greater than 10 percent since smoking bans have been passed in those states. In Washington, significant migration of patrons from tax-paying private casinos to tax-exempt and smoking-ban-exempt tribal casinos has occurred after statewide smoking ban I-901 was passed in November 2005. The most recent April 9, 2008 report omits reference to the $31.7 million in gambling fund reductions since an exemption for gaming floors (but not an exemption for restaurants or bars in gambling structures) is included in the final bill as passed.
A July 2, 2008 Des Moines Register article, For smokers, it's almost lights out, by Krista Kielsmeier, reports:

Accordingly, taxpayers and voters who are concerned about the negative fiscal impact of the Smoke Free Air Act on state revenues should consider lost gambling revenues in their conclusions.
Other costs imposed by HF 2212 that are discussed in the April 8, 2008 Legislative Services Agency report include net cigarette and sales tax reductions of $8.7 million, $400,000 reductions in local revenues and department of health costs of $106,900 for FY 2009. Those specified amounts exclude nonspecific amounts for increased court costs to process complaints and to local governments for onsite inspections and enforcement. In addition, the specified costs do not include expenses that may be related to a statewide media campaign to promote the smoking ban, which the agency estimates to be $500,000 to $800,000. The Legislative Service Agency’s cost analysis includes $9.2 million in specified costs plus another $800,000 to launch a statewide smoking ban media promotion campaign, or costs of $10 million. To those costs one must add prospective gambling revenue losses of at least $31.7 million. Those total costs of $41.7 million could double when factoring in the actual post smoking ban revenue experience of casinos in other states. Those facts highlight the fiscal importance of the Administrative Rules Review Committee and its deliberations concerning the Iowa Department of Public Health’s smoking ban enforcement rules.
It is important to note that the above cost estimates are for state revenue fiscal impact only. The February 19, 2008 Legislative Services Agency report includes the following statement concerning economic impact or costs other than on state revenues:

“Other indirect tax impacts, such as corporate or personal income taxes resulting from business profits, personal income taxes of employees of potentially affected businesses, and State beer and liquor taxes and profits, are not addressed by this estimate.”

The above statement is not included in the April 8, 2008 Fiscal Notes report, which downplays the important subject of adverse economic impact on small business owners. While the most recent report does include cursory discussion of changes in consumer spending patterns, it does not adequately address the known smoking ban impacts on small business, nor are any specific amounts included in the report’s data tables. Data from other states where smoking bans have previously passed strongly state that revenue declines, business closings, and cross-sector hospitality trade revenue migration are extraordinarily important costs to be included. Those additional costs would be added to the $41.7 million state fiscal impact discussed above. 
In contrast with the well-established and significant costs to taxpayers of the Smoke Free Air Act the Legislative Services Agency provides scant comfort concerning the offsetting savings that Iowa taxpayers can expect in return for their $40 million per year investment in the statewide smoking ban. About cost savings, the April 8, 2008 agency report says the following:

“Potential Savings. If the smoking ban results in less tobacco-related illness over time, there may be a reduction in State health care expenditures paid under Medicaid and consumer health care expenditures in general. This estimated savings is unknown.”

            Considering the above information about the rulemaking process and the Smoke Free Air Act’s fiscal impact it appears that the Iowa Administrative Rules Review Committee certainly has its work cur out for it over the next several months. How do committee members sell to voters and taxpayers the idea that they approved of rules that the Legislative Services Agency projects can cost Iowa taxpayers about $40 million per year, with no specified cost savings to offset that loss, when the special interest advocates who support the rules proclaim the smoking ban is “good for business” and will increase state revenues? The deliberations and conclusions of the rules review committee will prove to be of great interest over the coming months.

Iowa Executive Branch Rules Oversight Process

Source for Below Text: Updating Regulatory Activity in Iowa State Government

Other Iowa Code Sources

Iowa Code 17A.4, Procedure for Adoption of Rules

Iowa Code 17A.5, Filing and Taking Effect of Rules

Iowa Code 17A.8, Administrative Rules Review Committee

The Oversight Process Introduction

The oversight process for administrative rulemaking is not a single process and is not codified in a single provision. Statutes relating to review of rules appear in Iowa Code, sections 7.17, 17A.4, 17A.5, 17A.6, 17A.8. Moreover, review of administrative rules is not limited to the legislature; there are several entities responsible for rules review, each is independent of the other.

General Assembly. The legislature can reverse or modify any rule through a joint resolution approved by both chambers.

Governor. As the "supreme executive authority" (Iowa Constitution, Art. IV, sec. 1) the Governor has a constitutional mandate to direct the operations of the executive branch.

Administrative Rules Coordinator (ARC). The ARC provides the Governor with direct control and oversight of the rulemaking process. The office of the ARC serves as the repository for the original copies of all rules changes, and generally advises the Governor on rulemaking and administrative law issues.

The Administrative Rules Review Committee (ARRC). This special legislative committee was established in 1963 to provide general oversight of the rulemaking process on behalf of the legislature.

The Attorney General. In addition to providing legal advice to most agencies, the Attorney General is empowered to "object" to administrative rules by Iowa Code section 17A.4. Historically, the Attorney General has not used this objection process nor taken a prominent role in rules review. The Attorney General regularly advises agencies on rulemaking matters and the office itself maintains a client-attorney relationship with government agencies. This relationship generally precludes public review and criticism of agency rulemaking.

The Major Powers and Framework

Each reviewing entity has one or more powers that it may exercise over agency rulemaking to influence or delay the process. Only the governor and the legislature have the right to rescind a rule. The more significant powers are:

• The objection. The objection is the workhorse of the rules review process. It is used almost exclusively by the Administrative Rules Review Committee, but is also available to the Governor and the Attorney General. The objection removes the presumption of validity that courts accord administrative rules. This power may be exercised over any rule, whether proposed or in effect {§17A.4(4)}.

• The Gubernatorial rescission {veto}. The Governor may rescind any administrative rule within seventy days after it becomes effective. This action is accomplished by executive order {§17A.4(6)}.

• The session delay. The ARRC may delay the effective date of a rule until the adjournment of the next session of the General Assembly. The committee refers the delayed rule to the Speaker of the House and the President of the Senate. The rule is then forwarded to the appropriate standing committee for study and possible legislative action {§17A.8(10)}.

• The 70 day delay. A temporary, 70 day delay may be imposed by the ARRC in order to allow additional time to study and discuss an adopted rule {§17A.4(5)}.

• The general referral. The ARRC may refer any rule, whether proposed or in effect, to the General Assembly for further study. This action does not impact the legality or implementation of a rule, it is simply a mechanism to bring particular rules issue to the attention of the legislature. {§17A.8(7)}.

• The legislative veto. Under the Iowa Constitution the General Assembly has an independent power to rescind any administrative rule The process known as nullification is identical to the enactment of a bill, requiring an absolute majority vote in each chamber, except that it does not require the signature of the Governor (Iowa Constitution, Art. III, section 40).

With the exception of the objection and the legislative veto, all of these powers are tied to the rulemaking process. Informal review can occur at any time, but only limited authority can be exerted. In essence the framework extends to the period between the publication of the first notice of intended action to the final effective date.

The public segment of the review process occurs on the second Tuesday of each month, at the meetings of the Administrative Rules Review Committee. The Administrative Rules Coordinator sits on the committee as an ex officio, non-voting member. The meetings generally review all rules currently in the notice or adopted waiting period. Note that the ARC can independently review rule at any time during the process.