S.F. 129 Section 1. Section 479B.2, Code 2015, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 1A. “Financial assurance instrument” 3 means an instrument submitted by an applicant to ensure the 4 applicant’s financial capability to respond as provided in 5 section 479B.13A, in the form of one or more of the following: 6 a. The establishment of a secured trust fund. 7 b. The use of a cash or surety bond. 8 c. The obtaining of insurance. 9 d. The satisfaction of a corporate financial test. 10 e. The satisfaction of a local government financial test. 11 f. The obtaining of a corporate guarantee. 12 g. The obtaining of a local government guarantee. 13 h. The use of a local government dedicated fund. 14 i. The obtaining of an irrevocable letter of credit. 15 Sec. 2. Section 479B.13, Code 2015, is amended to read as 16 follows: 17 479B.13 Financial condition of permittee —— construction, 18 maintenance, or operation damages —— bond. 19 Before a permit is granted under this chapter the applicant 20 must satisfy the board that the applicant has property within 21 this state other than pipelines or underground storage 22 facilities, subject to execution of a value in excess of two 23 hundred fifty thousand dollars, or the applicant must file 24 and maintain with the board a surety bond in the penal sum 25 of two hundred fifty thousand dollars with surety approved 26 by the board, conditioned that the applicant will pay any 27 and all damages legally recovered against it growing out of 28 the construction, maintenance, or operation of its pipeline 29 or underground storage facilities in this state. When the 30 pipeline company deposits with the board security satisfactory 31 to the board as a guaranty for the payment of the damages, or 32 furnishes to the board satisfactory proofs of its solvency and 33 financial ability to pay the damages, the pipeline company is 34 relieved of the provisions requiring bond. 35 -1- LSB 1479XS (4) 86 rn/nh 1/ 4

S.F. 129 Sec. 3. NEW SECTION . 479B.13A Financial condition of 1 permittee —— damages for discharge. 2 1. Before a permit is granted under this chapter for a 3 pipeline to be constructed on or after January 1, 2015, and in 4 addition to the requirements of section 479B.13, an applicant 5 must provide to the board a financial assurance instrument 6 verifying that the applicant has the financial capability to 7 provide reasonable and necessary remedial response and to 8 respond in damages for claims arising from the accidental 9 discharge of hazardous liquid. The financial assurance 10 instrument shall meet all requirements adopted by rule by the 11 board, and shall not be issued, canceled, revoked, disbursed, 12 released, or allowed to terminate without board approval. 13 2. For the first calendar year during which hazardous liquid 14 is shipped, the amount of financial assurance required pursuant 15 to this section shall be two hundred fifty thousand dollars 16 per mile of pipeline. For the second calendar year during 17 which hazardous liquid is shipped, and every calendar year 18 thereafter, the amount of financial assurance required shall 19 be the greater of one dollar per barrel of hazardous liquid 20 shipped per calendar year by the applicant based on the most 21 recent calendar year for which such information is available 22 to the applicant, or two hundred fifty thousand dollars per 23 mile of pipeline. In no event shall the amount of financial 24 assurance required pursuant to this section in any calendar 25 year be less than two hundred fifty thousand dollars. 26 Sec. 4. Section 479B.14, unnumbered paragraph 6, Code 2015, 27 is amended to read as follows: 28 A pipeline company may petition the board for an extension 29 of a permit granted under this section by filing a petition 30 containing the information required by section 479B.5, 31 subsections 1 through 5 , and meeting the requirements of 32 section sections 479B.13 and 479B.13A . 33 Sec. 5. EFFECTIVE UPON ENACTMENT. This Act, being deemed of 34 immediate importance, takes effect upon enactment. 35 -2- LSB 1479XS (4) 86 rn/nh 2/ 4

S.F. 129 Sec. 6. RETROACTIVE APPLICABILITY. This Act applies 1 retroactively to January 1, 2015. 2 EXPLANATION 3 The inclusion of this explanation does not constitute agreement with 4 the explanation’s substance by the members of the general assembly. 5 This bill requires the submission of proof of financial 6 assurance prior to issuance of a permit to construct, maintain, 7 and operate a hazardous liquid pipeline by the Iowa utilities 8 board. 9 Current provisions contained in Code section 479B.13 10 require an applicant to satisfy the board that the applicant 11 has property within Iowa other than pipelines or underground 12 storage facilities subject to execution of a value in excess 13 of $250,000, or requires the applicant to file and maintain a 14 surety bond in that amount. These provisions relate to damages 15 attributable to the construction, maintenance, or operation of 16 the pipeline or underground storage facility. 17 The bill creates a new Code section 479B.13A which 18 requires that before a permit is granted for a pipeline to be 19 constructed on or after January 1, 2015, and in addition to 20 the requirements of Code section 479B.13, an applicant must 21 provide to the board a financial assurance instrument verifying 22 that the applicant has the financial capability to provide 23 reasonable and necessary remedial response and to respond in 24 damages for claims arising from the accidental discharge of 25 hazardous liquid. The bill states that the financial assurance 26 instrument shall meet all requirements adopted by rule by the 27 board, and shall not be issued, canceled, revoked, disbursed, 28 released, or allowed to terminate without board approval. 29 The bill defines a “financial assurance instrument” to mean 30 one or a combination of establishing a secured trust fund, 31 using a cash or surety bond, obtaining insurance, satisfying 32 a corporate or local government financial test, obtaining 33 a corporate or local government guarantee, using a local 34 government dedicated fund, or obtaining an irrevocable letter 35 -3- LSB 1479XS (4) 86 rn/nh 3/ 4

S.F. 129 of credit. 1 The bill provides that the amount of financial assurance 2 required for accidental hazardous liquid discharge liability 3 for the first calendar year during which hazardous liquid is 4 shipped, and shall be $250,000 per mile of pipeline. For 5 the second calendar year during which hazardous liquid is 6 shipped, and every calendar year thereafter, the amount of 7 financial assurance required shall be the greater of $1 per 8 barrel of hazardous liquid shipped per calendar year by the 9 applicant based on the most recent calendar year for which such 10 information is available to the applicant, or $250,000 per mile 11 of pipeline. The bill states that in no event shall the amount 12 of financial assurance required in any calendar year be less 13 than $250,000. 14 The bill takes effect upon enactment and is retroactively 15 applicable to January 1, 2015. 16 -4- LSB 1479XS (4) 86 rn/nh 4/ 4