House Study Bill 80 - Introduced SENATE/HOUSE FILE _____ BY (PROPOSED DEPARTMENT OF NATURAL RESOURCES BILL) A BILL FOR An Act relating to fee programs for permittee participation 1 in lieu of required compensatory mitigation of stream and 2 wetland impacts and making appropriations. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 1245DP (5) 88 js/tm

S.F. _____ H.F. _____ Section 1. PURPOSE. The general assembly finds and declares 1 that because the federal Water Pollution Control Act of 1972, 2 Pub. L. No. 92-500, as amended by the Water Quality Act of 3 1987, Pub. L. No. 100-4, as published in 33 U.S.C. §1251 – 4 1387, as amended, provides for a permit system to regulate the 5 discharge of dredge and fill materials to the waters subject 6 to the jurisdiction of that Act, and because the terms of such 7 federal permits may provide for the mitigation of impacts to 8 aquatic resources by permitted entities, it is in the interest 9 of the people of Iowa to enact provisions authorizing the 10 establishment of programs for the payment of a fee in lieu of 11 other compensatory mitigation actions required by the United 12 States army corps of engineers. 13 Sec. 2. NEW SECTION . 456B.16 Definitions. 14 As used in this subchapter, unless the context otherwise 15 requires: 16 1. “Compensatory mitigation” means the restoration, 17 establishment, enhancement, or preservation of aquatic 18 resources for the purpose of offsetting unavoidable adverse 19 impacts that remain after all appropriate and practicable 20 avoidance and minimization have been achieved. 21 2. “Federal Water Pollution Control Act” means the federal 22 Water Pollution Control Act of 1972, Pub. L. No. 92-500, as 23 amended by the Water Quality Act of 1987, Pub. L. No. 100-4, as 24 published in 33 U.S.C. §1251 – 1387, as amended. 25 3. “Geographic service area” means the geographic area 26 within which impacts can be mitigated at a specific mitigation 27 bank or an in-lieu fee program, as designated in the mitigation 28 bank or in-lieu fee program instrument. 29 4. “In-lieu fee program” means a program involving the 30 restoration, establishment, enhancement, or preservation 31 of aquatic resources through funds paid to a governmental 32 or nonprofit natural resources management entity to satisfy 33 compensatory mitigation requirements for permits issued by the 34 United States army corps of engineers. 35 -1- LSB 1245DP (5) 88 js/tm 1/ 5

S.F. _____ H.F. _____ 5. “Mitigation bank” means a site, or suite of sites, where 1 resources such as wetlands, streams, and riparian areas are 2 restored, established, enhanced, or preserved for the purpose 3 of providing compensatory mitigation for impacts authorized by 4 permits issued by the United States army corps of engineers. 5 6. “Mitigation credit” means a unit of measure such 6 as a functional or areal measure or other suitable metric 7 representing the accrual or attainment of aquatic functions 8 at a compensatory mitigation site. The measure of aquatic 9 functions is based on the resources restored, established, 10 enhanced, or preserved. 11 Sec. 3. NEW SECTION . 456B.17 Authorization. 12 1. The department may establish in-lieu fee programs 13 providing for the payment of a fee to compensate for impacts 14 to aquatic resources by permittees under section 404 of the 15 federal Water Pollution Control Act whose activities have been 16 determined by the United States army corps of engineers to 17 require mitigation. 18 2. Any in-lieu fee program established by the department 19 shall: 20 a. Provide a mitigation alternative that will effectively 21 replace aquatic life functions and values lost through 22 permitted impacts. 23 b. Provide permittees with an additional method to 24 compensate for adverse impacts to aquatic resources. 25 c. Achieve ecological success on a watershed basis by 26 directing funds to protected natural resource types and 27 functions that are appropriate to the geographic service area, 28 and by integrating projects with other conservation activities 29 whenever possible. 30 d. Provide for the sale of mitigation credits to be 31 purchased by permittees in lieu of other forms of compensatory 32 mitigation. 33 e. Using the proceeds from the sale of mitigation 34 credits, provide funding for the restoration, establishment, 35 -2- LSB 1245DP (5) 88 js/tm 2/ 5

S.F. _____ H.F. _____ enhancement, and preservation of aquatic resources within the 1 state. 2 3. The department may enter into agreements with entities 3 for the administration of all or part of an in-lieu fee 4 program, the establishment of appropriate compensation for 5 such administration, and such further terms and conditions 6 as necessary to fulfill the purposes of the program and the 7 requirements of state and federal law. 8 4. If the department establishes an in-lieu fee program, it 9 shall enter into agreements with the army corps of engineers as 10 required for the establishment of an in-lieu fee program. 11 5. If a mitigation bank authorized by the army corps of 12 engineers exists in a given geographic service area, the 13 program shall only accept payment of fees in lieu of mitigation 14 for projects in that geographic service area if the mitigation 15 bank is unavailable to provide the needed credits. Payment of 16 fees in lieu of mitigation made prior to the authorization of a 17 mitigation bank in a geographic service area shall be expended 18 as soon as practicable by the department. 19 6. Utilization of an in-lieu fee program shall not be based 20 upon market price of available mitigation bank credits and a 21 program shall review the market price of mitigation banks by 22 geographic service areas to establish costs for the program by 23 geographic service area. 24 Sec. 4. NEW SECTION . 456B.18 Compensatory mitigation fund 25 established. 26 1. A compensatory mitigation fund is created in the state 27 treasury. Moneys received from payments of fees in lieu of 28 mitigation shall be deposited into the fund. Notwithstanding 29 section 8.33, any unexpended balances in the compensatory 30 mitigation fund and in any accounts within the compensatory 31 mitigation fund at the end of each fiscal year shall be 32 retained in the fund and any respective accounts within the 33 fund. Notwithstanding section 12C.7, subsection 2, interest 34 or earnings on investments or time deposits of the moneys in 35 -3- LSB 1245DP (5) 88 js/tm 3/ 5

S.F. _____ H.F. _____ the compensatory mitigation fund or in any accounts within the 1 compensatory mitigation fund shall be credited to the fund or 2 accounts within the fund. 3 2. Moneys in the fund are appropriated to the department for 4 the restoration, establishment, enhancement, and preservation 5 of aquatic resources within the state to offset impacts to 6 aquatic resources by permittees who are required to provide 7 compensatory mitigation pursuant to section 404 of the federal 8 Water Pollution Control Act. In establishing the amount of 9 the in-lieu fee to be charged, the department shall include 10 an amount for the expenses of administering the program. The 11 administrative costs shall be a percentage of the fee. 12 Sec. 5. NEW SECTION . 456B.19 Rules. 13 The department shall adopt rules pursuant to chapter 17A as 14 necessary to carry out the purposes of this subchapter. 15 Sec. 6. CODE EDITOR DIRECTIVE. The Code editor is directed 16 to divide chapter 456B into subchapters. 17 EXPLANATION 18 The inclusion of this explanation does not constitute agreement with 19 the explanation’s substance by the members of the general assembly. 20 The United States army corps of engineers may require that a 21 permittee under the federal Water Pollution Control Act section 22 404 permitting program provide mitigation of impacts to the 23 streams and wetlands that arise from the permitted project. 24 Federal rules authorize states to establish fee programs in 25 lieu of requiring on-site mitigation. 26 This bill authorizes the department of natural resources 27 to establish in-lieu fee programs to provide for the payment 28 of a fee by a permit holder in lieu of performing mitigation. 29 The bill allows the department to enter into agreements with 30 entities for the administration of all or part of an in-lieu 31 fee program. Any in-lieu fee program must be approved by the 32 army corps of engineers. Fees collected from an in-lieu fee 33 program shall be deposited into a compensatory mitigation 34 fund created in the state treasury. The moneys in the fund 35 -4- LSB 1245DP (5) 88 js/tm 4/ 5

S.F. _____ H.F. _____ are appropriated to the department for the restoration, 1 establishment, enhancement, and preservation of aquatic 2 resources within the state to offset impacts to aquatic 3 resources by entities permitted under section 404 of the 4 federal Water Pollution Control Act. The departments shall 5 adopt rules to carry out the purpose of the bill. 6 -5- LSB 1245DP (5) 88 js/tm 5/ 5