H.F. _____ 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 6167YC (10) 87 da/rj 1/ 8

H.F. _____ 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 6167YC (10) 87 da/rj 2/ 8

H.F. _____ 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.3, subsection 3 , paragraph c, Code 14 2017, as amended by 2018 Iowa Acts, Senate File 512, section 15 21, is amended to read as follows: 16 c. Whether the funds, programs, and regulatory efforts 17 coordinated by the council eventually result in a long-term 18 improvement to the quality of surface water in Iowa. To 19 evaluate the progress achieved over time toward the goals of 20 the Iowa nutrient reduction strategy , as defined in section 21 455B.171 , and the United States environmental protection agency 22 gulf hypoxia action plan, the baseline condition shall be 23 calculated for the time period from 1980 to 1996. 24 Sec. 11. Section 466B.42, Code 2017 , as amended by 2018 25 Iowa Acts, Senate File 512, section 22, is amended to read as 26 follows: 27 466B.42 Water quality initiative. 28 The division shall establish a water quality initiative 29 in order to assess and reduce nutrients in this state’s 30 watersheds, including subwatersheds and regional watersheds, 31 and for implementing its responsibilities under the Iowa 32 nutrient reduction strategy as defined in section 455B.171 . 33 The division shall establish and administer projects to 34 reduce nutrients in surface waters from nonpoint sources in 35 -3- LSB 6167YC (10) 87 da/rj 3/ 8

H.F. _____ a scientific, reasonable, and cost-effective manner. The 1 division shall utilize a pragmatic, strategic, and coordinated 2 approach with the goal of accomplishing reductions over time. 3 To evaluate the progress achieved over time toward the goals 4 of the Iowa nutrient reduction strategy and the United States 5 environmental protection agency gulf hypoxia action plan, the 6 baseline condition shall be calculated for the time period from 7 1980 to 1996. 8 Sec. 12. Section 466B.43, subsection 2, as enacted by 2018 9 Iowa Acts, Senate File 512, section 23, is amended to read as 10 follows: 11 2. The purpose of the programs is to support projects for 12 the installation of infrastructure, including conservation 13 structures, practices, or other measures that reduce 14 contributing nutrient loads, associated sediment, or 15 contaminants from sources to surface waters including but not 16 limited to surface waters on the impaired waters list of the 17 state that are used as a drinking water supply . The programs 18 shall be administered in a manner that is consistent with 19 the latest version of the “Iowa Nutrient Reduction Strategy” 20 initially presented in November 2012 by the department of 21 agriculture and land stewardship, the department of natural 22 resources, and Iowa state university of science and technology 23 Iowa nutrient reduction strategy . 24 Sec. 13. Section 466B.43, subsection 6, as enacted by 2018 25 Iowa Acts, Senate File 512, section 23, is amended to read as 26 follows: 27 6. By October 1, 2018 2019 , and each October 1, thereafter, 28 the division shall submit a report to the governor and the 29 general assembly itemizing expenditures, by hydrologic unit 30 code 8 watershed, under the programs during the previous fiscal 31 year, if any. 32 Sec. 14. Section 466B.44, subsections 2 and 7, as enacted 33 by 2018 Iowa Acts, Senate File 512, section 24, are amended to 34 read as follows: 35 -4- LSB 6167YC (10) 87 da/rj 4/ 8

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

H.F. _____ information regarding in-field agricultural practices, and 1 their value, in order to further enhance the rate that such 2 practices are adopted. 3 Sec. 17. 2015 Iowa Acts, chapter 132, section 18, subsection 4 1, paragraph b, is amended to read as follows: 5 b. Notwithstanding section 8.33 , moneys appropriated in 6 paragraph “a” that remain unencumbered or unobligated at the 7 close of the fiscal year shall not revert but shall remain 8 available for expenditure for the purposes designated until the 9 close of the fiscal year beginning July 1, 2017 2019 . 10 Sec. 18. EFFECTIVE UPON ENACTMENT. The sections of this Act 11 amending 2015 Iowa Acts, chapter 132, section 18, take effect 12 upon enactment. 13 EXPLANATION 14 The inclusion of this explanation does not constitute agreement with 15 the explanation’s substance by the members of the general assembly. 16 BACKGROUND. Senate File 512 (SF 512), as enacted by the 17 general assembly in 2018, creates new water quality programs, 18 amends an existing water quality program, provides for 19 transfers and appropriations related to water quality, creates 20 a water service excise tax and related sales tax exemption, and 21 provides for other changes properly related to water quality. 22 GENERAL AMENDMENTS TO SF 512. This bill eliminates the 23 way in which the Iowa nutrient reduction strategy is cited in 24 various provisions. 25 The bill eliminates a provision that requires drainage or 26 levee districts to utilize the installation of edge-of-field 27 infrastructure. 28 The bill relates to the wastewater treatment financial 29 assistance program (Code section 16.134). SF 512 provides 30 grants for the installation and upgrade of drinking water 31 facilities and by giving priority under that program to various 32 communities and projects. The bill provides that priority 33 under that program must also be given to communities whose 34 drinking water facilities and systems use as a supply, or to 35 -6- LSB 6167YC (10) 87 da/rj 6/ 8

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