S.F. _____ Section 1. NEW SECTION . 16.140 Water quality protection 1 grant program —— fund. 2 1. As used in this section and section 16.140A, unless the 3 context otherwise requires: 4 a. “Clean Water Act” means the federal Water Pollution 5 Control Act of 1972, Pub. L. No. 92-500, as amended by the 6 Water Quality Act of 1987, Pub. L. No. 100-4, as published in 7 33 U.S.C. §1251 – 1376, as amended. 8 b. “Industry” means any major industry, as defined by the 9 department of natural resources according to process wastewater 10 flows and loads of the industry, and any minor industry named 11 in the Iowa nutrient reduction strategy that will be required 12 to collect data on the source, concentration, and mass of total 13 nitrogen and total phosphorus in their effluent and to evaluate 14 alternatives for reducing the amounts of nutrients in their 15 discharge, pursuant to the Iowa nutrient reduction strategy. 16 c. “Iowa nutrient reduction strategy” means the document 17 released May 29, 2013, titled “Iowa Nutrient Reduction 18 Strategy” that was jointly prepared by the department of 19 agriculture and land stewardship, the department of natural 20 resources, and Iowa state university of science and technology, 21 or the latest revision of the document. 22 d. “Municipality” means a city or rural water district 23 or association empowered to provide sewage collection and 24 treatment services or drinking water. 25 e. “Safe Drinking Water Act” means Tit. XIV of the federal 26 Public Health Service Act, commonly known as the “Safe Drinking 27 Water Act”, 42 U.S.C. §300f et seq., as amended by the Safe 28 Drinking Water Amendments of 1996, Pub. L. No. 104-182, as 29 amended. 30 2. The authority shall establish and administer a water 31 quality protection grant fund program for purposes of providing 32 financial assistance to enhance water quality, upgrade water 33 and wastewater infrastructure, and to implement the Iowa 34 nutrient reduction strategy. The program shall be administered 35 -1- LSB 5794XC (4) 85 tm/rj 1/ 5

S.F. _____ in accordance with rules adopted by the authority pursuant to 1 chapter 17A. 2 3. A water quality protection grant fund is created in the 3 state treasury under the control of the authority and includes 4 moneys appropriated by the general assembly and other moneys 5 available to and obtained or accepted by the authority for 6 deposit in the fund, including moneys from public or private 7 sources. Moneys in the fund are appropriated to the authority 8 and shall be used exclusively to carry out the provisions of 9 this section. 10 4. Grants may be awarded to municipalities or industries 11 participating in a nutrient trading pilot project or 12 demonstration project to purchase trading credits or to 13 implement water quality practices as described in the Iowa 14 nutrient reduction strategy to comply with technology-based 15 effluent limits for nutrients at a facility. A grant under 16 this subsection shall not exceed five hundred thousand dollars. 17 5. Grants may be awarded to municipalities for wastewater 18 or drinking water infrastructure improvements, including 19 costs due to invasive zebra mussel infestation, with awarded 20 moneys being divided evenly between wastewater and drinking 21 water infrastructure projects. In order to receive an award 22 under this subsection, an applicant must undergo a wastewater 23 viability assessment under section 16.135 or a similar 24 assessment developed by the authority, in cooperation with the 25 department of natural resources and the economic development 26 authority, to determine the long-term operational and financial 27 capacity of the facility and its ratepayers. Municipalities 28 and industries seeking grants under subsection 4 are exempted 29 from this requirement. A grant under this subsection shall not 30 exceed five hundred thousand dollars. 31 a. In the context of water pollution control facilities, 32 a grant may be awarded for the acquisition, construction, 33 reconstruction, extension, equipping, improvement, or 34 rehabilitation of any works or facilities useful for the 35 -2- LSB 5794XC (4) 85 tm/rj 2/ 5

S.F. _____ collection, treatment, and disposal of sewage or industrial 1 waste in a sanitary manner including treatment works as defined 2 in section 212 of the Clean Water Act, or the implementation 3 and development of water resource restoration sponsor projects 4 pursuant to section 455B.199. 5 b. In the context of drinking water facilities, a grant may 6 be awarded for the acquisition, construction, reconstruction, 7 extending, remodeling, improving, repairing, or equipping of 8 waterworks, water mains, extensions, or treatment facilities 9 useful for providing potable water to residents served by a 10 water system, including the acquisition of real property needed 11 for such purposes, and such other purposes and programs as may 12 be authorized under the Safe Drinking Water Act. 13 6. Notwithstanding section 12C.7, interest or earnings 14 on moneys in the fund shall be credited to the fund. 15 Notwithstanding section 8.33, unless specifically provided 16 otherwise, unencumbered or unobligated moneys appropriated 17 to the fund shall not revert but shall remain available for 18 expenditure for the purposes designated until the close of the 19 fiscal year that ends five years after the end of the fiscal 20 year for which the appropriation was made. 21 Sec. 2. NEW SECTION . 16.140A Cost-share assistance —— 22 feasibility assessments. 23 The authority shall establish a cost-share assistance 24 program for municipalities and industries required to conduct 25 economic and technical feasibility studies and develop 26 implementation plans and reports required by the Iowa nutrient 27 reduction strategy. Assistance recipients may receive up 28 to fifty percent cost-share assistance for costs associated 29 with the study or development of the implementation plans and 30 reports. 31 Sec. 3. APPROPRIATION —— WATER QUALITY PROTECTION GRANT 32 FUND. 33 1. There is appropriated from the general fund of the state 34 to the Iowa finance authority for the fiscal year beginning 35 -3- LSB 5794XC (4) 85 tm/rj 3/ 5

S.F. _____ July 1, 2015, and ending June 30, 2016, the following amount, 1 or so much thereof as is necessary, to be used for the purposes 2 designated: 3 For deposit in the water quality protection grant fund 4 created in section 16.140, subsection 3: 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 23,000,000 6 2. Of the moneys appropriated in subsection 1, up to 7 $3,000,000 shall be awarded in the form of grants pursuant to 8 section 16.140, subsection 4. 9 3. Of the moneys appropriated in subsection 1, up to 10 $20,000,000 shall be awarded in the form of grants pursuant to 11 section 16.140, subsection 5. 12 EXPLANATION 13 The inclusion of this explanation does not constitute agreement with 14 the explanation’s substance by the members of the general assembly. 15 This bill relates to water quality programs. 16 The bill requires the Iowa finance authority to establish 17 and administer a water quality protection grant fund program 18 for purposes of providing financial assistance to enhance water 19 quality, upgrade water and wastewater infrastructure, and to 20 implement the Iowa nutrient reduction strategy. The bill 21 creates a water quality protection grant fund for purposes of 22 the water quality protection grant fund program. 23 The bill provides that grants may be awarded to 24 municipalities or industries participating in a nutrient 25 trading pilot project or demonstration project to purchase 26 trading credits or to implement water quality practices as 27 described in the Iowa nutrient reduction strategy to comply 28 with technology-based effluent limits for nutrients at a 29 facility. Such a grant cannot exceed $500,000. Municipalities 30 are defined as cities or rural water districts or associations 31 empowered to provide sewage collection and treatment services 32 or drinking water. 33 The bill provides that grants may be awarded to 34 municipalities for wastewater or drinking water infrastructure 35 -4- LSB 5794XC (4) 85 tm/rj 4/ 5

S.F. _____ improvements, including costs due to invasive zebra mussel 1 infestation, with awarded moneys being divided evenly between 2 wastewater and drinking water infrastructure projects. The 3 bill requires an applicant to undergo a wastewater viability 4 assessment to determine the long-term operational and financial 5 capacity of the facility and its ratepayers. Such a grant 6 cannot exceed $500,000. 7 The bill requires the authority to establish a cost-share 8 assistance program for municipalities and industries required 9 to conduct economic and technical feasibility studies and 10 develop implementation plans and reports required by the Iowa 11 nutrient reduction strategy. 12 The bill appropriates $23 million to the Iowa finance 13 authority for the 2015-2016 fiscal year for deposit in the 14 water quality protection grant fund. 15 -5- LSB 5794XC (4) 85 tm/rj 5/ 5