House File 612 H-1439 Amend House File 612 as follows: 1 1. By striking everything after the enacting clause and 2 inserting: 3 < Section 1. Section 8.57, subsection 5, paragraph f, 4 subparagraph (1), Code 2017, is amended by adding the following 5 new subparagraph division: 6 NEW SUBPARAGRAPH DIVISION . (0c) (i) For each fiscal year 7 of the period beginning July 1, 2020, and ending June 30, 2029, 8 of the wagering tax receipts received pursuant to sections 9 99D.17 and 99F.11, the next fifteen million dollars shall be 10 deposited in the water quality infrastructure fund created in 11 section 8.57B. 12 (ii) Notwithstanding subparagraph subdivision (i), this 13 subparagraph division (0c) is repealed on one of the following 14 dates, whichever is earlier: 15 (A) On July 1 following the enactment date that the tax 16 rate for the sales tax imposed upon the retail sales price of 17 tangible personal property and the furnishing of enumerated 18 services sold in this state in effect on July 1, 2016, is 19 increased. 20 (B) On July 1, 2029. 21 Sec. 2. Section 8.57, subsection 5, paragraph f, 22 subparagraph (1), subparagraph division (d), Code 2017, is 23 amended to read as follows: 24 (d) For the fiscal year beginning July 1, 2013, and for 25 each fiscal year thereafter, the total moneys in excess of the 26 moneys deposited under this paragraph “f” in the revenue bonds 27 debt service fund, the revenue bonds federal subsidy holdback 28 fund, the vision Iowa fund, the water quality infrastructure 29 fund, and the Iowa skilled worker and job creation fund shall 30 be deposited in the rebuild Iowa infrastructure fund and shall 31 be used as provided in this section , notwithstanding section 32 8.60 . 33 Sec. 3. NEW SECTION . 8.57B Water quality infrastructure 34 fund —— creation —— appropriations. 35 -1- HF612.2624 (3) 87 (amending this HF 612 to CONFORM to SF 512) mm/rj 1/ 20 #1.

1. A water quality infrastructure fund is created within 1 the division of soil conservation and water quality of the 2 department of agriculture and land stewardship. The fund 3 shall consist of moneys transferred pursuant to section 8.57, 4 subsection 5, paragraph “f” , subparagraph (1), subparagraph 5 division (0c), moneys transferred to the fund pursuant to 6 section 423G.6, and appropriations made to the fund and 7 transfers of interest, earnings, and moneys from other funds 8 as provided by law. 9 2. The fund shall be separate from the general fund of the 10 state and the balance in the fund shall not be considered part 11 of the balance of the general fund of the state. However, the 12 fund shall be considered a special account for the purposes 13 of section 8.53, relating to generally accepted accounting 14 principles. 15 3. Moneys in the fund are appropriated to the division 16 of soil conservation and water quality of the department of 17 agriculture and land stewardship for the exclusive purpose of 18 supporting water quality agriculture infrastructure programs 19 created in section 466B.43. 20 4. Notwithstanding section 8.33, moneys in the fund 21 that remain unencumbered or unobligated at the close of a 22 fiscal year shall not revert but shall remain available for 23 expenditure for the purposes designated. Notwithstanding 24 section 12C.7, subsection 2, interest or earnings on moneys in 25 the fund shall be credited to the fund. 26 Sec. 4. Section 16.134, Code 2017, is amended to read as 27 follows: 28 16.134 Wastewater and drinking water treatment financial 29 assistance program. 30 1. The Iowa finance authority shall establish and 31 administer a wastewater and drinking water treatment financial 32 assistance program. The purpose of the program shall be to 33 provide financial assistance to enhance water quality. The 34 program shall be administered in accordance with rules adopted 35 -2- HF612.2624 (3) 87 (amending this HF 612 to CONFORM to SF 512) mm/rj 2/ 20

by the authority pursuant to chapter 17A . For purposes of 1 this section , “program” means the wastewater and drinking water 2 treatment financial assistance program and “committee” means the 3 water quality financing review committee created in subsection 4 9 . 5 2. A wastewater and drinking water treatment financial 6 assistance fund is created and shall consist of appropriations 7 made to the fund and transfers of interest, earnings, and 8 moneys from other funds as provided by law. Moneys transferred 9 to the fund pursuant to section 16.134A are appropriated to the 10 authority for purposes of the program. Moneys in the fund are 11 not subject to section 8.33 . Notwithstanding section 12C.7, 12 subsection 2 , interest or earnings on moneys in the fund shall 13 be credited to the fund. 14 3. Financial assistance under the program shall be used 15 to install or upgrade wastewater treatment facilities and 16 systems and drinking water treatment facilities and systems, 17 including source water protection projects , and for engineering 18 or technical assistance for facility planning and design. 19 4. The authority committee shall distribute approve 20 financial assistance in from the fund in accordance with the 21 following: 22 a. The goal of the program shall be to base awards on the 23 impact of the grant combined with other sources of financing to 24 ensure that sewer rates do not exceed one and one-half percent 25 of a community’s median household income. 26 b. a. Communities shall be eligible for financial 27 assistance by qualifying as Priority shall be given for 28 projects in which a disadvantaged community and is seeking 29 financial assistance for the installation or upgrade of 30 wastewater treatment facilities due to regulatory activity 31 by the department of natural resources and drinking water 32 treatment facilities . For purposes of this section , the term 33 “disadvantaged community” means the same as defined by the 34 department. 35 -3- HF612.2624 (3) 87 (amending this HF 612 to CONFORM to SF 512) mm/rj 3/ 20

c. b. Priority shall be given to projects in which the 1 meeting criteria established in section 455B.199B in which the 2 applicant seeks financial assistance is to be used to obtain 3 with financing under the water pollution control works and 4 drinking water facilities financing program pursuant to section 5 16.131 or other federal , or state , or private financing. 6 d. c. Priority shall also be given to projects whose 7 completion will provide significant improvement to water 8 quality in the relevant watershed. 9 e. d. Priority shall also be given to communities that 10 employ an alternative wastewater treatment technology pursuant 11 to section 455B.199C . 12 f. e. Priority shall be also be given to those communities 13 where sewer or water rates are the highest as a percentage of 14 that community’s median household income. 15 f. Priority shall also be given to communities that employ 16 technology to address the latest version of the “Iowa Nutrient 17 Reduction Strategy” initially presented in November 2012 by the 18 department of agriculture and land stewardship, the department 19 of natural resources, and Iowa state university of science and 20 technology. 21 g. Financial assistance in the form of grants shall be 22 issued on an annual basis. 23 h. An applicant shall not receive a grant that exceeds five 24 hundred thousand dollars. 25 4A. A utility management organization formed under chapter 26 28E or operated by a rural water system organized under chapter 27 357A or chapter 504 shall be considered eligible for financial 28 assistance under the program. 29 5. The authority in cooperation with the department of 30 natural resources shall share provide information and resources 31 to the committee when the committee is determining the 32 qualifications of a community for financial assistance from the 33 fund. 34 6. The authority shall enter into agreements with financial 35 -4- HF612.2624 (3) 87 (amending this HF 612 to CONFORM to SF 512) mm/rj 4/ 20

assistance recipients and distribute moneys under the program 1 pursuant to financial assistance determinations made by the 2 committee. The authority may use an amount of not more than 3 four one percent of any moneys appropriated for deposit in the 4 fund for administration purposes. 5 7. By October 1 of each year, the authority shall submit 6 a report to the governor and the general assembly itemizing 7 expenditures under the program during the previous fiscal year, 8 if any. 9 8. a. Beginning September 1, 2027, and every ten years 10 thereafter, a program review committee is established for 11 purposes of reviewing the wastewater and drinking water 12 treatment financial assistance program. By December 1 of the 13 same year, the program review committee shall file a report 14 with the governor and the general assembly that reviews the 15 effectiveness of the program during the prior ten fiscal years. 16 b. The program review committee shall consist of the 17 following members: 18 (1) The governor or the governor’s designee. 19 (2) The secretary of agriculture or the secretary’s 20 designee. 21 (3) The executive director of the authority or the executive 22 director’s designee. 23 (4) The director of the department of natural resources or 24 the director’s designee. 25 (5) Four members of the general assembly, with two from the 26 senate and two from the house of representatives and not more 27 than one member from each chamber being from the same political 28 party. The two senators shall be designated one member each 29 by the president of the senate, after consultation with the 30 majority leader of the senate, and by the minority leader of 31 the senate. The two representatives shall be designated one 32 member each by the speaker of the house of representatives, 33 after consultation with the majority leader of the house of 34 representatives, and by the minority leader of the house of 35 -5- HF612.2624 (3) 87 (amending this HF 612 to CONFORM to SF 512) mm/rj 5/ 20 #7.

representatives. 1 c. Staffing services shall be provided by the authority. 2 9. a. A water quality financing review committee is 3 created consisting of the secretary of agriculture or the 4 secretary’s designee, the executive director of the authority 5 or the executive director’s designee, and the director of the 6 department of natural resources or the director’s designee. 7 b. The committee shall review and approve or deny 8 applications for financial assistance under the wastewater 9 and drinking water treatment financial assistance program 10 established in this section. 11 Sec. 5. NEW SECTION . 16.134A Water quality financial 12 assistance fund. 13 1. A water quality financial assistance fund is created in 14 the state treasury as a revolving fund. 15 2. The fund shall consist of all of the following: 16 a. (1) Moneys transferred to the fund pursuant to section 17 423G.6. 18 (2) This paragraph “a” is repealed on January 1, 2030. 19 b. Appropriations made to the fund and transfers of 20 interest, earnings, and moneys from other funds as provided by 21 law. 22 3. For each fiscal year in the fiscal period beginning 23 July 1, 2018, and ending June 30, 2029, there is appropriated 24 the following percentages of the balance of the fund for the 25 following purposes: 26 a. Forty percent to the Iowa finance authority to support 27 the wastewater and drinking water treatment financial 28 assistance program created in section 16.134. 29 b. Forty-five percent to the Iowa finance authority to be 30 credited to the water quality financing program fund created 31 pursuant to section 16.144. 32 c. Fifteen percent to the division of soil conservation 33 and water quality of the department of agriculture and land 34 stewardship to support the water quality urban infrastructure 35 -6- HF612.2624 (3) 87 (amending this HF 612 to CONFORM to SF 512) mm/rj 6/ 20

program created in section 466B.44. 1 4. Moneys in the fund are not subject to section 8.33. 2 Notwithstanding section 12C.7, subsection 2, interest or 3 earnings on moneys in the fund shall be credited to the fund. 4 Sec. 6. NEW SECTION . 16.142 Definitions. 5 As used in this part, unless the context otherwise requires: 6 1. “Cost” means all costs, charges, expenses, or other 7 indebtedness incurred by a loan recipient and determined by 8 the authority as reasonable and necessary for carrying out 9 all works and undertakings necessary or incidental to the 10 accomplishment of any project. 11 2. “Eligible entity” means a municipality or a landowner, 12 as determined by the authority, a public utility as defined 13 in section 476.1, or a rural water district or rural water 14 association as defined in section 357A.1. 15 3. “Loan recipient” means an eligible entity that has 16 received a loan under the program. 17 4. “Municipality” means a governmental body such as a state 18 agency or a political subdivision of the state. Municipality 19 includes but is not limited to a city, city utility, county, 20 soil and water conservation district, sanitary district, a 21 subdistrict of any of the foregoing districts, a state agency, 22 or other governmental body or corporation empowered to provide 23 sewage collection and treatment services or drinking water, or 24 any entity jointly exercising governmental powers pursuant to 25 chapter 28E or 28F, or any other combination of two or more 26 governmental bodies or corporations acting jointly under the 27 laws of this state in connection with a project. 28 5. “Program” means the water quality financing program 29 created in this part. 30 6. “Project” means any combination of improvements, 31 structures, developments, tasks, actions, constructions, 32 modifications, operations, or practices designed to improve 33 water quality that are proposed by an eligible entity and 34 approved by the authority. “Project” includes but is not 35 -7- HF612.2624 (3) 87 (amending this HF 612 to CONFORM to SF 512) mm/rj 7/ 20

limited to any of the following: 1 a. A project meeting the requirements of part 2 of this 2 subchapter. 3 b. A project, operation, or practice undertaken or carried 4 out to address watershed protection, flood prevention, or water 5 quality improvement. 6 c. A project meeting the requirements of a sponsor project 7 under section 455B.199. 8 Sec. 7. NEW SECTION . 16.143 Water quality financing 9 program. 10 1. The authority, in cooperation with the department of 11 natural resources and the department of agriculture and land 12 stewardship, shall establish and administer a water quality 13 financing program. The purpose of the program shall be to 14 provide financial assistance to enhance the quality of surface 15 water and groundwater, particularly by providing financial 16 assistance for projects designed to improve water quality 17 by addressing point and nonpoint sources, with a higher 18 prioritization provided to collaborative efforts. 19 2. The authority shall determine the interest rate 20 and repayment terms for loans made under the program, in 21 cooperation with the department of natural resources and 22 the department of agriculture and land stewardship, and the 23 authority shall enter into loan agreements with eligible 24 entities in compliance with and subject to the terms and 25 conditions of the program as described in this part. 26 3. The authority may charge loan recipients fees and assess 27 costs against such recipients necessary for the continued 28 operation of the program. Such fees and costs shall not exceed 29 the costs directly associated with the administration of the 30 program. Fees and costs collected pursuant to this subsection 31 shall be deposited in the appropriate fund or account created 32 in section 16.144. 33 4. The program shall be administered by the authority in 34 accordance with rules adopted by the authority pursuant to 35 -8- HF612.2624 (3) 87 (amending this HF 612 to CONFORM to SF 512) mm/rj 8/ 20

chapter 17A. 1 Sec. 8. NEW SECTION . 16.144 Water quality financing program 2 fund —— appropriation —— other funds. 3 1. a. A water quality financing program fund is created 4 and shall consist of appropriations made to the fund, moneys 5 credited to the fund pursuant to section 16.134A, and transfers 6 of interest, earnings, and moneys from other funds as provided 7 by law. The fund shall be administered by the authority as 8 a revolving fund. Moneys in the fund are appropriated to 9 the authority for purposes of the program. Notwithstanding 10 section 8.33, moneys in the fund that remain unencumbered or 11 unobligated at the close of a fiscal year shall not revert 12 but shall remain available for expenditure for the purposes 13 designated. Notwithstanding section 12C.7, subsection 2, 14 interest or earnings on moneys in the fund shall be credited 15 to the fund. 16 b. The authority shall use the moneys in the fund to provide 17 financial assistance to eligible entities under the program. 18 The authority may provide financial assistance in the form 19 deemed most convenient for the efficient financing of projects, 20 including loans, forgivable loans, or grants. The authority 21 shall administer the fund and the program in such a manner 22 as to provide a permanent source of water quality project 23 financial assistance to eligible entities. 24 c. The authority may annually use an amount of not more 25 than one percent of the moneys in the fund for administrative 26 purposes. 27 2. a. The authority may establish and maintain other 28 funds and accounts determined to be necessary to carry out the 29 purposes of the program and shall provide for the funding, 30 administration, investment, restrictions, and disposition of 31 the funds and accounts. 32 b. Moneys appropriated to and used by the authority for 33 purposes of paying the costs and expenses associated with 34 the administration of the program shall be administered as 35 -9- HF612.2624 (3) 87 (amending this HF 612 to CONFORM to SF 512) mm/rj 9/ 20

determined by the authority. 1 c. All moneys transferred to the authority for purposes of 2 the program shall be deposited and held in a fund or account 3 established and maintained pursuant to this section. 4 3. The funds or accounts held by the authority, or a trustee 5 acting on behalf of the authority pursuant to a trust agreement 6 related to the program, shall not be considered part of the 7 general fund of the state, are not subject to appropriation for 8 any other purpose by the general assembly, and in determining 9 a general fund balance shall not be included in the general 10 fund of the state, but shall remain in the funds and accounts 11 maintained by the authority or trustee pursuant to a trust 12 agreement. Funds and accounts held by the authority, or a 13 trustee acting on behalf of the authority pursuant to a trust 14 agreement related to the program, are separate dedicated funds 15 and accounts under the administration and control of the 16 authority and subject to section 16.31. 17 4. By October 1, 2018, and by October 1 of each year 18 thereafter, the authority shall submit a report to the governor 19 and the general assembly itemizing expenditures from the fund, 20 if any, during the previous fiscal year. 21 Sec. 9. NEW SECTION . 16.145 Eligible entities —— agreements 22 required. 23 1. An eligible entity may apply to the authority for 24 financial assistance under the program by submitting a plan 25 that meets the following requirements: 26 a. The plan includes one or more projects that improve 27 water quality in the local area or watershed. Projects shall 28 use practices identified in the latest version of the document 29 entitled “Iowa Nutrient Reduction Strategy” initially presented 30 in November 2012 by the department of agriculture and land 31 stewardship, the department of natural resources, and Iowa 32 state university of science and technology. A drainage or 33 levee district established under chapter 468 shall utilize the 34 installation of edge-of-field infrastructure as described in 35 -10- HF612.2624 (3) 87 (amending this HF 612 to CONFORM to SF 512) mm/rj 10/ 20 #4.

section 466B.43. 1 b. The plan describes in detail the manner in which the 2 projects will be financed and undertaken, including, as 3 applicable, the sources of revenue directed to financing the 4 improvements as well as the eligible entities that will be 5 receiving the revenues and how such revenues will be spent on 6 the projects. 7 2. The authority shall review and approve or deny 8 applications for financial assistance. The provision of 9 financial assistance under the program shall take into account, 10 as applicable, the number of municipalities, landowners, public 11 utilities, rural water districts, or rural water associations 12 comprising an eligible entity and the eligible entity’s 13 financing capacity. The authority shall score applications 14 for financial assistance according to rules adopted pursuant 15 to this part. The authority shall only provide financial 16 assistance to eligible entities that have sufficient financing 17 capacity and that submit an appropriate plan designed to 18 improve water quality. 19 3. An approved eligible entity shall enter into an agreement 20 with the authority for the provision of financial assistance. 21 The agreement shall include standard terms for the receipt 22 of program moneys and any other terms the authority deems 23 necessary or convenient for the efficient administration of the 24 program. 25 Sec. 10. Section 423.3, Code 2017, is amended by adding the 26 following new subsection: 27 NEW SUBSECTION . 103. a. The sales price from the sale or 28 furnishing by a water utility of a water service in the state 29 to consumers or users. 30 b. For purposes of this subsection: 31 (1) “Water service” means the delivery of water by piped 32 distribution system. 33 (2) “Water utility” means a public utility as defined in 34 section 476.1 that furnishes water by piped distribution system 35 -11- HF612.2624 (3) 87 (amending this HF 612 to CONFORM to SF 512) mm/rj 11/ 20

to the public for compensation. 1 Sec. 11. NEW SECTION . 423G.1 Short title. 2 This chapter may be cited as the “Water Service Tax Act” . 3 Sec. 12. NEW SECTION . 423G.2 Definitions. 4 1. All words and phrases used in this chapter and defined in 5 section 423.1 have the same meaning given them by section 423.1 6 for purposes of this chapter. 7 2. As used in this chapter, “water service” and “water 8 utility” mean the same as defined in section 423.3, subsection 9 103. 10 Sec. 13. NEW SECTION . 423G.3 Water service tax. 11 An excise tax at the rate of six percent is imposed on the 12 sales price from the sale or furnishing by a water utility of a 13 water service in the state to consumers or users. 14 Sec. 14. NEW SECTION . 423G.4 Exemptions. 15 The sales price from transactions exempt from state sales 16 tax under section 423.3, except section 423.3, subsection 103, 17 is also exempt from the tax imposed by this chapter. 18 Sec. 15. NEW SECTION . 423G.5 Administration by director. 19 1. The director of revenue shall administer the water 20 service tax as nearly as possible in conjunction with the 21 administration of the state sales and use tax law, except that 22 portion of the law that implements the streamlined sales and 23 use tax agreement. The director shall provide appropriate 24 forms, or provide on the regular state tax forms, for reporting 25 water service tax liability. 26 2. The director may require all persons who are engaged 27 in the business of deriving any sales price or purchase 28 price subject to tax under this chapter to register with 29 the department. The director may also require a tax permit 30 applicable only to this chapter for any retailer not 31 collecting, or any user not paying, taxes under chapter 423. 32 3. Section 422.25, subsection 4, sections 422.30, 422.67, 33 and 422.68, section 422.69, subsection 1, sections 422.70, 34 422.71, 422.72, 422.74, and 422.75, section 423.14, subsection 35 -12- HF612.2624 (3) 87 (amending this HF 612 to CONFORM to SF 512) mm/rj 12/ 20

1, and sections 423.23, 423.24, 423.25, 423.31 through 1 423.35, 423.37 through 423.42, and 423.47, consistent with the 2 provisions of this chapter, shall apply with respect to the tax 3 authorized under this chapter, in the same manner and with the 4 same effect as if the excise taxes on the sale or furnishing of 5 a water service were retail sales taxes within the meaning of 6 those statutes. Notwithstanding this subsection, the director 7 shall provide for quarterly filing of returns and for other 8 than quarterly filing of returns both as prescribed in section 9 423.31. All taxes collected under this chapter by a retailer 10 or any user are deemed to be held in trust for the state of 11 Iowa. 12 Sec. 16. NEW SECTION . 423G.6 Deposit of revenues. 13 1. All moneys received and all refunds shall be deposited in 14 or withdrawn from the general fund of the state. 15 2. Subsequent to the deposit in the general fund of the 16 state, the department shall transfer the following amounts to 17 the following funds: 18 a. For revenues collected on or after July 1, 2018, but 19 before August 1, 2019, one-twelfth of the revenues to the 20 water quality infrastructure fund created in section 8.57B, 21 and one-twelfth of the revenues to the water quality financial 22 assistance fund created in section 16.134A. 23 b. For revenues collected on or after August 1, 2019, 24 but before August 1, 2020, one-sixth of the revenues to the 25 water quality infrastructure fund created in section 8.57B, 26 and one-sixth of the revenues to the water quality financial 27 assistance fund created in section 16.134A. 28 c. For revenues collected on or after August 1, 2020, 29 one-half of the revenues to the water quality financial 30 assistance fund created in section 16.134A. 31 Sec. 17. NEW SECTION . 423G.7 Future repeal. 32 This chapter is repealed upon the occurrence of one of the 33 following, whichever is earlier: 34 1. The enactment date that the tax rate for the sales 35 -13- HF612.2624 (3) 87 (amending this HF 612 to CONFORM to SF 512) mm/rj 13/ 20

tax imposed upon the retail sales price of tangible personal 1 property and the furnishing of enumerated services sold in this 2 state in effect on July 1, 2016, is increased. 3 2. July 1, 2029. 4 Sec. 18. Section 455B.171, Code 2017, is amended by adding 5 the following new subsections: 6 NEW SUBSECTION . 10A. “Iowa nutrient reduction strategy” 7 means a water quality initiative developed and updated by the 8 department of agriculture and land stewardship, the department 9 of natural resources, and the college of agriculture and life 10 sciences at Iowa state university of science and technology in 11 order to assess and reduce nutrients in this state’s watersheds 12 that utilize a pragmatic, strategic, and coordinated approach 13 with the goal of accomplishing reductions over time. 14 NEW SUBSECTION . 15A. “Nutrient” means total nitrogen and 15 total phosphorus. 16 Sec. 19. Section 455B.171, subsection 19, Code 2017, is 17 amended to read as follows: 18 19. “Point source” means any discernible, confined, and 19 discrete conveyance, including but not limited to any pipe, 20 ditch, channel, tunnel, conduit, well, discrete fissure, 21 container, rolling stock, concentrated animal feeding 22 operation, or vessel or other floating craft, from which 23 pollutants are or may be discharged. “Point source” does not 24 include agricultural storm water discharge and return flows 25 from irrigated agriculture. 26 Sec. 20. Section 455B.177, Code 2017, is amended by adding 27 the following new subsection: 28 NEW SUBSECTION . 3. The general assembly further finds 29 and declares that it is in the interest of the people of Iowa 30 to assess and reduce nutrients in surface waters over time by 31 implementing the Iowa nutrient reduction strategy. To evaluate 32 the progress achieved over time toward the goals of the Iowa 33 nutrient reduction strategy and the United States environmental 34 protection agency gulf hypoxia action plan, the baseline 35 -14- HF612.2624 (3) 87 (amending this HF 612 to CONFORM to SF 512) mm/rj 14/ 20

condition shall be calculated for the time period from 1980 to 1 1996. 2 Sec. 21. Section 466B.3, subsection 3, paragraph c, Code 3 2017, is amended to read as follows: 4 c. Whether the funds, programs, and regulatory efforts 5 coordinated by the council eventually result in a long-term 6 improvement to the quality of surface water in Iowa. To 7 evaluate the progress achieved over time toward the goals of 8 the Iowa nutrient reduction strategy, as defined in section 9 455B.171, and the United States environmental protection agency 10 gulf hypoxia action plan, the baseline condition shall be 11 calculated for the time period from 1980 to 1996. 12 Sec. 22. Section 466B.42, Code 2017, is amended to read as 13 follows: 14 466B.42 Water quality initiative. 15 The division shall establish a water quality initiative 16 in order to assess and reduce nutrients in this state’s 17 watersheds, including subwatersheds , and regional watersheds , 18 and for implementing its responsibilities under the Iowa 19 nutrient reduction strategy as defined in section 455B.171 . 20 The division shall establish and administer projects to 21 reduce nutrients in surface waters from nonpoint sources in 22 a scientific, reasonable, and cost-effective manner. The 23 division shall utilize a pragmatic, strategic, and coordinated 24 approach with the goal of accomplishing reductions over time. 25 To evaluate the progress achieved over time toward the goals 26 of the Iowa nutrient reduction strategy and the United States 27 environmental protection agency gulf hypoxia action plan, the 28 baseline condition shall be calculated for the time period from 29 1980 to 1996. 30 Sec. 23. NEW SECTION . 466B.43 Water quality agriculture 31 infrastructure programs. 32 1. As part of the water quality initiative established 33 pursuant to section 466B.42, the division shall administer 34 water quality agriculture infrastructure programs created in 35 -15- HF612.2624 (3) 87 (amending this HF 612 to CONFORM to SF 512) mm/rj 15/ 20

this section. 1 2. The purpose of the programs is to support projects for 2 the installation of infrastructure, including conservation 3 structures, practices, or other measures that reduce 4 contributing nutrient loads, associated sediment, or 5 contaminants from sources to surface waters. The programs 6 shall be administered in a manner that is consistent with 7 the latest version of the “Iowa Nutrient Reduction Strategy” 8 initially presented in November 2012 by the department of 9 agriculture and land stewardship, the department of natural 10 resources, and Iowa state university of science and technology. 11 3. An edge-of-field infrastructure program is created. 12 The program shall support projects located on agricultural 13 land, which may include demonstration projects, that capture 14 or filter nutrients entering into a surface water. The 15 program’s projects shall be limited to infrastructure designed 16 and installed for use over multiple years, including but not 17 limited to wetlands, bioreactor systems, saturated buffers, 18 or land use changes. The program shall be financed on a 19 cost-share basis. 20 4. An in-field infrastructure program is created. The 21 program shall support projects located on agricultural land, 22 which may include demonstration projects, that decrease erosion 23 and precipitation-induced surface runoff, increase water 24 infiltration rates, and increase soil sustainability. The 25 program’s projects shall be limited to infrastructure designed 26 and installed for use over multiple years, including but not 27 limited to structures, terraces, and waterways located on 28 cropland or pastureland, and including but not limited to soil 29 conservation or erosion control structures or managed drainage 30 systems. The program shall be financed on a cost-share basis. 31 5. Any state moneys used to finance a project under a 32 water quality agriculture infrastructure program shall be 33 administered according to an agreement entered into by the 34 division and the owner of the land where the infrastructure 35 -16- HF612.2624 (3) 87 (amending this HF 612 to CONFORM to SF 512) mm/rj 16/ 20

is to be installed. The agreement shall include standard 1 terms and conditions for the receipt of program moneys and 2 any other terms and conditions the division deems necessary 3 or convenient for the efficient administration of the project 4 or program. The division may support multiple installations 5 of infrastructure on a single parcel of land. The division 6 may also combine programs if cost effective. The division 7 may annually use an amount of not more than four percent of 8 the moneys used to support each program for administrative 9 purposes. 10 6. By October 1, 2018, and each October 1, thereafter, the 11 division shall submit a report to the governor and the general 12 assembly itemizing expenditures, by hydrologic unit code 8 13 watershed, under the programs during the previous fiscal year, 14 if any. 15 7. Any information obtained by the division identifying 16 a person holding a legal interest in agricultural land or 17 specific agricultural land shall be a confidential record under 18 section 22.7. 19 Sec. 24. NEW SECTION . 466B.44 Water quality urban 20 infrastructure program. 21 1. As part of the water quality initiative established 22 pursuant to section 466B.42, the division shall administer a 23 water quality urban infrastructure program. 24 2. The purpose of the program is to support watershed 25 projects and advance implementation of the latest version of 26 the “Iowa Nutrient Reduction Strategy” initially presented 27 in November 2012 by the department of agriculture and land 28 stewardship, the department of natural resources, and Iowa 29 state university of science and technology, which program 30 support may include demonstration projects that decrease 31 erosion, precipitation-induced surface runoff, and storm 32 water discharges and that increase water infiltration rates. 33 The program’s projects shall be based on Iowa’s storm water 34 management manual published by the department of natural 35 -17- HF612.2624 (3) 87 (amending this HF 612 to CONFORM to SF 512) mm/rj 17/ 20 #6.

resources. 1 3. The program shall be financed on a cost-share basis or 2 through cooperative agreements with watershed projects funded 3 through section 455B.199 whose project activities fall outside 4 the territorial boundaries of a city. 5 4. Any state moneys used to finance a project under a water 6 quality urban infrastructure program shall be administered 7 according to an agreement entered into by the division and the 8 owner of the land where the infrastructure is to be installed. 9 The agreement shall include standard terms and conditions 10 for the receipt of program moneys and any other terms and 11 conditions the division deems necessary or convenient for 12 the efficient administration of the project or program. The 13 division may support multiple installations of infrastructure 14 on a single parcel of land. The division may annually use an 15 amount of not more than four percent of the moneys used to 16 support the program for administrative purposes. 17 5. Notwithstanding any other provision in this section 18 to the contrary, beginning on July 1, 2018, the division may 19 use any amount available to support the water quality urban 20 infrastructure program to instead extend and support the 21 three-year data collection of in-field agricultural practices 22 project as enacted in 2015 Iowa Acts, ch. 132, §18. 23 6. Notwithstanding any other provision of this section 24 to the contrary, the division may use any amount available 25 to support the water quality urban infrastructure program to 26 develop and maintain an online resource displaying measurable 27 indicators of desirable change in water quality within the 28 state’s watersheds. These measurable indicators may include 29 but are not limited to public and private funding inputs, 30 involvement in water quality projects, and improvements, land 31 use, practice adoption, calculated load reduction, and measured 32 loads at existing monitoring stations. 33 7. By October 1, 2018, and by October 1 of each year 34 thereafter, the division shall submit a report to the governor 35 -18- HF612.2624 (3) 87 (amending this HF 612 to CONFORM to SF 512) mm/rj 18/ 20

and the general assembly itemizing expenditures under the 1 program, if any, during the previous fiscal year. 2 8. Any information obtained by the division identifying a 3 person holding a legal interest in land or specific land shall 4 be a confidential record under section 22.7. 5 Sec. 25. INTERIM STUDY COMMITTEE ON SMALL CITIES AND CLEAN 6 WATER STANDARDS. 7 1. The legislative council is requested to establish a study 8 committee for the 2017 interim to identify and comprehensively 9 review the financial and other challenges faced by small 10 cities in complying with the various state and federal clean 11 water standards, and to consider options for addressing those 12 challenges. 13 2. The interim committee’s review shall include an 14 evaluation of the future effectiveness of the wastewater 15 and drinking water treatment financial assistance program 16 created in this Act in section 16.134 and the water quality 17 financing program created in sections 16.142 through 16.145, 18 and may include evaluations of other existing or proposed 19 state programs as desired. The committee shall seek input 20 and may request information or assistance from public and 21 private stakeholders and experts, including utility management 22 organizations, the Iowa association of business and industry, 23 the department of natural resources, the Iowa finance 24 authority, the department of agriculture and land stewardship, 25 the economic development authority, the Iowa chamber alliance, 26 the Iowa league of cities, and the Iowa state association of 27 counties. 28 3. The interim committee shall submit its findings and 29 recommendations to the general assembly for consideration 30 during the 2018 legislative session. 31 Sec. 26. LEGISLATIVE INTENT. It is the intent of the 32 general assembly that the amendment in this Act to the 33 definition of point source in section 455B.171, subsection 34 19, is a conforming amendment consistent with current state 35 -19- HF612.2624 (3) 87 (amending this HF 612 to CONFORM to SF 512) mm/rj 19/ 20