H.F. 2192 Section 1. Section 357A.1, Code 2014, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 6A. “Rural water association” or 3 “association” means a rural water association organized and 4 incorporated as a cooperative association under chapter 499 or 5 as a nonprofit corporation under chapter 504. 6 Sec. 2. Section 357A.2, subsections 3 and 4, Code 2014, are 7 amended to read as follows: 8 3. Water services, other than water services provided as 9 of April 1, 1987, shall not be provided within two miles of 10 the limits of a city by a rural water district incorporated 11 under this chapter or chapter 504 except as provided in this 12 section . Except as otherwise provided in this section, a rural 13 water association shall not provide water services within two 14 miles of a city, other than water services provided as of July 15 1, 2014. 16 4. a. A rural water district incorporated under this 17 chapter or chapter 504 or rural water association may give 18 notice of intent to provide water service to a new area within 19 two miles of a city by submitting a water plan to the city. 20 This subsection shall not apply in the case of a district or 21 association extending service to new customers or improving 22 existing facilities within existing district or association 23 service areas or under existing district or association 24 agreements. If water service is provided by a city utility 25 established under chapter 388, the water plan shall be filed 26 with the governing body of that city utility. The district 27 or association shall provide written notice pursuant to this 28 subsection by certified mail. 29 b. The water plan is only required to shall indicate 30 the area within two miles of the city which the rural water 31 district or association intends to serve within the next three 32 years . Upon request, the city or city utility shall provide 33 a district or association with a map of the city limits that 34 indicates areas that are currently provided water service by 35 -1- LSB 2004HZ (2) 85 aw/sc 1/ 6

H.F. 2192 a city utility or enterprise. 1 c. If the city fails to respond to the rural water 2 district’s water plan within ninety seventy-five days of 3 receipt of the plan, the rural water district or association 4 may provide service in the area designated in the plan. The 5 city may inform the rural water district or association within 6 ninety seventy-five days of receipt of the plan that the city 7 requires additional time or information to study the question 8 of providing water service outside the limits of the city. If 9 additional time or information is required, the city shall 10 respond to the rural water district’s plan by certified mail 11 within one hundred eighty sixty-five days of receipt of the 12 plan. 13 d. (1) In responding to the plan, the city may 14 affirmatively waive its right to provide water service within 15 the areas designated for water service by the rural water 16 district, or the city may reserve the right to provide water 17 service in some or all of the areas which the rural water 18 district or association intends to serve. 19 (2) (a) If the city reserves the right to provide water 20 service, the city shall provide the district or association 21 with a copy of the city’s water plan relating to the city’s 22 intent and ability to provide water service to such an area. 23 (b) If the city reserves the right to provide water service 24 within some or all of the areas which the rural water district 25 or association intends to serve, the city shall provide service 26 within four three years of receipt of the water plan submitted 27 under paragraph “a” . This section does not preclude a city 28 from providing water service in an area which is annexed by the 29 city. 30 (c) If the city reserving the right to provide service 31 fails to provide service within three years, the city waives 32 its right to provide water service and shall provide notice to 33 the district or association by certified mail and the district 34 or association may provide service within the area of the water 35 -2- LSB 2004HZ (2) 85 aw/sc 2/ 6

H.F. 2192 plan submitted under paragraph “a” . 1 (3) If the district or association fails to provide 2 service within three years after a city waives the right to 3 provide water service under this paragraph “d” , the district or 4 association shall provide notice to the city by certified mail 5 and the city may provide service within the area of the water 6 plan submitted under paragraph “a” . 7 (4) For purposes of this paragraph “d” , “provide water 8 service” and “provide service” mean to deliver water in 9 sufficient quantity and quality to meet customer demand. The 10 department of natural resources shall determine whether such 11 service is adequately provided. 12 Sec. 3. Section 357A.2, Code 2014, is amended by adding the 13 following new subsection: 14 NEW SUBSECTION . 5. This section does not preclude a city 15 from providing water service in an area which is annexed by the 16 city pursuant to section 357A.21. 17 Sec. 4. Section 357A.21, Code 2014, is amended to read as 18 follows: 19 357A.21 Annexation of land by a city —— mediation —— 20 arbitration. 21 1. A water district organized under this chapter , chapter 22 357 , 499 , or 504 or association shall be fairly compensated for 23 losses resulting from annexation. The governing body of a city 24 or water utility and the board of directors or trustees of the 25 water district or association may agree to terms which provide 26 that the facilities owned by the water district or association 27 and located within the city shall be retained by the water 28 district or association for the purpose of transporting water 29 to customers outside the city. 30 2. If an agreement is not reached under subsection 1, 31 the governing body of the city or water utility or the board 32 of directors or trustees of the district or association may 33 request mediation pursuant to chapter 679C. The governing 34 body or board requesting mediation shall be responsible for 35 -3- LSB 2004HZ (2) 85 aw/sc 3/ 6

H.F. 2192 the costs of the mediation. A mediation committee shall be 1 established if a governing body or board requests mediation 2 pursuant to this subsection. The mediation committee shall 3 consist of one member of the governing body of the city or the 4 governing body’s designee, one member of the board of directors 5 or trustees of the district or association, as applicable, and 6 one disinterested member chosen by the other two members. A 7 list of qualified mediators may be obtained from the American 8 arbitration association, the public employment relations board 9 established pursuant to section 20.5, or a recognized mediation 10 organization or association. 11 3. If an agreement is not reached within ninety days, the 12 issues may be submitted to arbitration. If submitted, an 13 arbitrator shall be selected by a committee which includes 14 one member of the governing body of the city or its designee, 15 one member of the water district’s or association’s board of 16 directors or trustees or its designee, as applicable, and a 17 disinterested party selected by the other two members of the 18 committee. A list of qualified arbitrators may be obtained 19 from the American arbitration association or other recognized 20 arbitration organization or association. 21 Sec. 5. NEW SECTION . 388.11 Liability within two miles. 22 A city or city utility providing water service within two 23 miles of the limits of the city shall not be liable for a claim 24 for failure to provide or maintain fire hydrants, facilities, 25 or an adequate supply of water or water pressure for fire 26 protection purposes in the area receiving water service if such 27 hydrants, facilities, or water are not intended to be used for 28 fire protection purposes. 29 EXPLANATION 30 The inclusion of this explanation does not constitute agreement with 31 the explanation’s substance by the members of the general assembly. 32 This bill relates to rural water providers by making changes 33 to water service requirements. 34 The bill defines “rural water association”. 35 -4- LSB 2004HZ (2) 85 aw/sc 4/ 6

H.F. 2192 The bill places certain limitations on the provision of 1 water services by rural water associations to areas that are 2 within two miles of a city after July 1, 2014. 3 Current law provides that a rural water district may provide 4 notice of intent to provide water service to a new area within 5 two miles of a city by submitting a water service plan to the 6 city. The bill requires that if a city’s water service is 7 provided by a city utility, notice shall be provided to the 8 governing board of the city utility. The bill also provides 9 that the written notice be provided by certified mail. 10 Current law requires that a water plan submitted by a rural 11 water district include the new area that the district intends 12 to serve. The bill requires that a district or association 13 include in its water plan any area that the district or 14 association intends to serve within three years. 15 Current law provides that a city may waive its right to 16 provide water service within the areas designated in a water 17 plan. The bill lowers the number of days for allowable 18 responses to a water plan. The bill requires that a city 19 provide water service to an area within three years if the 20 city reserves the right to provide such service to the area 21 and requires that the city provide the district or association 22 with a copy of the city’s water plan relating to the city’s 23 intent and ability to provide such service. The bill requires 24 that such water service be provided in sufficient quantity and 25 quality to meet customer demand. The bill provides that if a 26 city reserves such a right and fails to provide service within 27 three years, the city waives its right to provide service. If 28 a city waives the right to provide service, the district or 29 association is permitted to provide service as described in 30 the district or association water plan. The bill requires 31 that such water service be provided in sufficient quantity and 32 quality to meet customer demand. 33 The bill further provides that if the city or city utility 34 cannot reach an agreement for the retention of certain rights 35 -5- LSB 2004HZ (2) 85 aw/sc 5/ 6

H.F. 2192 by a district or association, the issues may be submitted to 1 mediation. 2 The bill further provides that a city or city utility 3 providing water service within two miles of the limits of the 4 city is not liable for failure to provide or maintain fire 5 hydrants, facilities, or an adequate supply of water or water 6 pressure for fire protection purposes in the area receiving 7 water service if such hydrants, facilities, or water supplies 8 are not intended to be used for fire protection purposes. 9 -6- LSB 2004HZ (2) 85 aw/sc 6/ 6