H.F. 2440 Section 1. Section 16.1, Code 2018, is amended by adding the 1 following new subsection: 2 NEW SUBSECTION . 18A. “Iowa nutrient reduction strategy” 3 means the same as defined in section 455B.171, as amended by 4 2018 Iowa Acts, Senate File 512, section 18. 5 Sec. 2. Section 16.134, subsection 4, paragraph f, as 6 enacted by 2018 Iowa Acts, Senate File 512, section 4, is 7 amended to read as follows: 8 f. Priority shall also be given to communities that employ 9 technology to address the latest version goals of the “Iowa 10 Nutrient Reduction Strategy” initially presented in November 11 2012 by the department of agriculture and land stewardship, the 12 department of natural resources, and Iowa state university of 13 science and technology Iowa nutrient reduction strategy . 14 Sec. 3. Section 16.134, subsection 4, Code 2017, as amended 15 by 2018 Iowa Acts, Senate File 512, section 4, is amended by 16 adding the following new paragraph: 17 NEW PARAGRAPH . 0g. Priority shall also be given to 18 communities whose drinking water facilities and systems use as 19 a supply, or to projects whose completion will improve, surface 20 waters on the state’s impaired waters list as described in 21 section 455B.194 and 455B.195. 22 Sec. 4. Section 16.142, subsection 2, as enacted by 2018 23 Iowa Acts, Senate File 512, section 6, is amended to read as 24 follows: 25 2. “Eligible entity” means a municipality or a landowner, 26 as determined by the authority, a public utility as defined in 27 section 476.1, a specified industry, or a rural water district 28 or rural water association as defined in section 357A.1. 29 Sec. 5. Section 16.142, as enacted by 2018 Iowa Acts, Senate 30 File 512, section 6, is amended by adding the following new 31 subsection: 32 NEW SUBSECTION . 7. “Specified industry” means any of the 33 following: 34 a. An entity engaged in an industry identified in the Iowa 35 -1- LSB 6167HV (3) 87 da/rj 1/ 8

H.F. 2440 nutrient reduction strategy, as determined by the authority, 1 which industry is or will be required pursuant to the Iowa 2 nutrient reduction strategy to collect data on the source, 3 concentration, and mass of total nitrogen or total phosphorus 4 in its effluent, and to evaluate alternatives for reducing the 5 amount of nutrients in its discharge. 6 b. An entity implementing technology or operational 7 improvements to reduce nutrients in its discharge. 8 Sec. 6. Section 16.144, subsection 4, as enacted by 2018 9 Iowa Acts, Senate File 512, section 8, is amended to read as 10 follows: 11 4. By October 1, 2018 2019 , and by October 1 of each year 12 thereafter, the authority shall submit a report to the governor 13 and the general assembly itemizing expenditures from the fund, 14 if any, during the previous fiscal year. 15 Sec. 7. Section 16.145, subsection 1, paragraph a, as 16 enacted by 2018 Iowa Acts, Senate File 512, section 9, is 17 amended to read as follows: 18 a. The plan includes one or more projects that improve 19 water quality in the local area or watershed. Projects 20 shall use practices identified in the latest version of the 21 document entitled “Iowa Nutrient Reduction Strategy” initially 22 presented in November 2012 by the department of agriculture 23 and land stewardship, the department of natural resources, 24 and Iowa state university of science and technology Iowa 25 nutrient reduction strategy . A drainage or levee district 26 established under chapter 468 shall utilize the installation of 27 edge-of-field infrastructure as described in section 466B.43. 28 Sec. 8. Section 16.145, subsection 2, as enacted by 2018 29 Iowa Acts, Senate File 512, section 9, is amended to read as 30 follows: 31 2. The authority shall review and approve or deny 32 applications for financial assistance. The provision of 33 financial assistance under the program shall take into account, 34 as applicable, the number of municipalities, landowners, 35 -2- LSB 6167HV (3) 87 da/rj 2/ 8

H.F. 2440 public utilities, specified industries, rural water districts, 1 or rural water associations comprising an eligible entity 2 and the eligible entity’s financing capacity. The authority 3 shall score applications for financial assistance according to 4 rules adopted pursuant to this part. The authority shall only 5 provide financial assistance to eligible entities that have 6 sufficient financing capacity and that submit an appropriate 7 plan designed to improve water quality. 8 Sec. 9. Section 466B.2, Code 2018, is amended by adding the 9 following new subsection: 10 NEW SUBSECTION . 2A. “Iowa nutrient reduction strategy” 11 means the same as defined in section 455B.171, as amended by 12 2018 Iowa Acts, Senate File 512, section 18. 13 Sec. 10. Section 466B.2, subsection 3, Code 2018, is amended 14 by adding the following new paragraph: 15 NEW PARAGRAPH . e. A rural improvement zone established 16 pursuant to chapter 357H. 17 Sec. 11. Section 466B.3, subsection 3 , paragraph c, Code 18 2017, as amended by 2018 Iowa Acts, Senate File 512, section 19 21, is amended to read as follows: 20 c. Whether the funds, programs, and regulatory efforts 21 coordinated by the council eventually result in a long-term 22 improvement to the quality of surface water in Iowa. To 23 evaluate the progress achieved over time toward the goals of 24 the Iowa nutrient reduction strategy , as defined in section 25 455B.171 , and the United States environmental protection agency 26 gulf hypoxia action plan, the baseline condition shall be 27 calculated for the time period from 1980 to 1996. 28 Sec. 12. Section 466B.42, Code 2017 , as amended by 2018 29 Iowa Acts, Senate File 512, section 22, is amended to read as 30 follows: 31 466B.42 Water quality initiative. 32 The division shall establish a water quality initiative 33 in order to assess and reduce nutrients in this state’s 34 watersheds, including subwatersheds and regional watersheds, 35 -3- LSB 6167HV (3) 87 da/rj 3/ 8

H.F. 2440 and for implementing its responsibilities under the Iowa 1 nutrient reduction strategy as defined in section 455B.171 . 2 The division shall establish and administer projects to 3 reduce nutrients in surface waters from nonpoint sources in 4 a scientific, reasonable, and cost-effective manner. The 5 division shall utilize a pragmatic, strategic, and coordinated 6 approach with the goal of accomplishing reductions over time. 7 To evaluate the progress achieved over time toward the goals 8 of the Iowa nutrient reduction strategy and the United States 9 environmental protection agency gulf hypoxia action plan, the 10 baseline condition shall be calculated for the time period from 11 1980 to 1996. 12 Sec. 13. Section 466B.43, subsection 2, as enacted by 2018 13 Iowa Acts, Senate File 512, section 23, is amended to read as 14 follows: 15 2. The purpose of the programs is to support projects for 16 the installation of infrastructure, including conservation 17 structures, practices, or other measures that reduce 18 contributing nutrient loads, associated sediment, or 19 contaminants from sources to surface waters including but not 20 limited to surface waters on the impaired waters list of the 21 state that are used as a drinking water supply . The programs 22 shall be administered in a manner that is consistent with 23 the latest version of the “Iowa Nutrient Reduction Strategy” 24 initially presented in November 2012 by the department of 25 agriculture and land stewardship, the department of natural 26 resources, and Iowa state university of science and technology 27 Iowa nutrient reduction strategy . 28 Sec. 14. Section 466B.43, subsection 6, as enacted by 2018 29 Iowa Acts, Senate File 512, section 23, is amended to read as 30 follows: 31 6. By October 1, 2018 2019 , and each October 1, thereafter, 32 the division shall submit a report to the governor and the 33 general assembly itemizing expenditures, by hydrologic unit 34 code 8 watershed, under the programs during the previous fiscal 35 -4- LSB 6167HV (3) 87 da/rj 4/ 8

H.F. 2440 year, if any. 1 Sec. 15. Section 466B.44, subsections 2 and 7, as enacted 2 by 2018 Iowa Acts, Senate File 512, section 24, are amended to 3 read as follows: 4 2. The purpose of the program is to support watershed 5 projects and advance implementation of the latest version of 6 the “Iowa Nutrient Reduction Strategy” initially presented 7 in November 2012 by the department of agriculture and 8 land stewardship, the department of natural resources, 9 and Iowa state university of science and technology Iowa 10 nutrient reduction strategy , which program support may 11 include demonstration projects that decrease erosion, 12 precipitation-induced surface runoff, and storm water 13 discharges and that increase water infiltration rates. The 14 program’s projects shall be based on Iowa’s storm water 15 management manual published by the department of natural 16 resources. 17 7. By October 1, 2018 2019 , and by October 1 of each year 18 thereafter, the division shall submit a report to the governor 19 and the general assembly itemizing expenditures under the 20 program, if any, during the previous fiscal year. 21 Sec. 16. 2018 Iowa Acts, Senate File 512, section 25, 22 subsections 1 and 3, are amended to read as follows: 23 1. The legislative council is requested to establish a 24 study committee for the 2017 2018 interim to identify and 25 comprehensively review the financial and other challenges faced 26 by small cities in complying with the various state and federal 27 clean water standards, and to consider options for addressing 28 those challenges. 29 3. The interim committee shall submit its findings and 30 recommendations to the general assembly for consideration 31 during the 2018 2019 legislative session. 32 Sec. 17. 2015 Iowa Acts, chapter 132, section 18, subsection 33 1, is amended by adding the following new paragraph: 34 NEW PARAGRAPH . 0b. The soil conservation and water quality 35 -5- LSB 6167HV (3) 87 da/rj 5/ 8

H.F. 2440 division of the department of agriculture and land stewardship, 1 in cooperation with Iowa state university of science and 2 technology, shall use moneys appropriated in paragraph “a” 3 to administer education and outreach programs that provide 4 information regarding in-field agricultural practices, and 5 their value, in order to further enhance the rate that such 6 practices are adopted. 7 Sec. 18. 2015 Iowa Acts, chapter 132, section 18, subsection 8 1, paragraph b, is amended to read as follows: 9 b. Notwithstanding section 8.33 , moneys appropriated in 10 paragraph “a” that remain unencumbered or unobligated at the 11 close of the fiscal year shall not revert but shall remain 12 available for expenditure for the purposes designated until the 13 close of the fiscal year beginning July 1, 2017 2019 . 14 Sec. 19. EFFECTIVE UPON ENACTMENT. The sections of this Act 15 amending 2015 Iowa Acts, chapter 132, section 18, take effect 16 upon enactment. 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 BACKGROUND. Senate File 512 (SF 512), as enacted by the 21 general assembly in 2018, creates new water quality programs, 22 amends an existing water quality program, provides for 23 transfers and appropriations related to water quality, creates 24 a water service excise tax and related sales tax exemption, and 25 provides for other changes properly related to water quality. 26 GENERAL AMENDMENTS TO SF 512. This bill eliminates the 27 way in which the Iowa nutrient reduction strategy is cited in 28 various provisions. 29 The bill eliminates a provision that requires drainage or 30 levee districts to utilize the installation of edge-of-field 31 infrastructure. 32 The bill relates to the wastewater treatment financial 33 assistance program (Code section 16.134). SF 512 provides 34 grants for the installation and upgrade of drinking water 35 -6- LSB 6167HV (3) 87 da/rj 6/ 8

H.F. 2440 facilities and by giving priority under that program to various 1 communities and projects. The bill provides that priority 2 under that program must also be given to communities whose 3 drinking water facilities and systems use as a supply, or to 4 projects whose completion will improve, surface waters on the 5 impaired waters list of the state. 6 The bill amends the water quality financing program by 7 providing that a specified industry is eligible to participate 8 and receive financial assistance under that program. 9 The bill amends water quality agriculture infrastructure 10 programs. SF 512 provides that the purpose of those programs 11 is to support certain measures that reduce nutrient loads, 12 associated sediment, or contaminants from sources to surface 13 waters. The bill provides that surface waters include but are 14 not limited to those described as the state’s impaired waters 15 list that are used as a drinking water supply. 16 The bill adds rural improvement zones to the list of 17 political subdivisions that are eligible to participate as a 18 member of a watershed management authority. 19 The bill updates the inaugural date that annual reports 20 from the economic development authority and the division of 21 soil conservation and water quality within the department 22 of agriculture and land stewardship are due under the water 23 quality financing program and the water quality agriculture 24 infrastructure programs, respectively, from October 1, 2018, 25 to October 1, 2019. 26 The bill updates the establishment date for the legislative 27 interim study committee on small cities and clean water 28 standards, from the 2017 legislative interim to the 2018 29 legislative interim. The bill also updates from 2018 to 2019 30 the legislative session for which that interim committee, 31 is required to submit its findings for consideration by the 32 general assembly. 33 AMENDMENT TO PRIOR ACT. The bill amends a provision enacted 34 in 2015 (2015 Iowa Acts, chapter 132) that appropriated moneys 35 -7- LSB 6167HV (3) 87 da/rj 7/ 8

H.F. 2440 from the agriculture management account of the groundwater 1 protection fund to Iowa state university of science and 2 technology for purposes of supporting the collection and use 3 of data associated with in-field practices. The bill provides 4 that the remaining moneys may also be used to finance related 5 education and outreach programs. The bill provides that the 6 moneys may be expended for those purposes until the close of 7 the fiscal year beginning July 1, 2019. 8 EFFECTIVE DATE. The bill makes the provision authorizing 9 the use of moneys appropriated from the groundwater protection 10 fund effective upon enactment. 11 -8- LSB 6167HV (3) 87 da/rj 8/ 8