House File 2692 - Introduced HOUSE FILE 2692 BY ISENHART A BILL FOR An Act providing for a surface water protection user fee 1 assessed and imposed on the sale of nitrogen-based 2 fertilizer and making appropriations. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 5845YH (3) 90 da/ns

H.F. 2692 Section 1. LEGISLATIVE DECLARATION. The general assembly 1 finds and declares all of the following: 2 1. The Iowa nutrient reduction strategy represents a water 3 quality initiative developed and updated in order to assess 4 and reduce nutrients in this state’s watersheds based on 5 the science-based determination that ninety-five percent of 6 nitrogen and phosphorus pollution stems from nonpoint sources, 7 a majority of which originates from agricultural field runoff 8 of nitrogen fertilizers. 9 2. Waters of the state are being used to collect and 10 transport contamination throughout Iowa, damaging lakes and 11 streams and infiltrating groundwater aquifers, putting drinking 12 water sources and public health at risk. 13 3. Since the publication of the Iowa nutrient reduction 14 strategy in 2013, significant public resources have been 15 expended to support demonstration projects in attempts to show 16 how the volume of nutrients reaching waters of the state can 17 be reduced. 18 4. Users depending on the state’s hydrological systems to 19 dispose of pollutants should be assessed user fees to protect, 20 maintain, and restore water resources most important to human 21 and ecosystem health, with such funds dedicated to making 22 watershed-scale investments to prevent further degradation of 23 the state’s natural wealth. 24 Sec. 2. Section 200.8, Code 2024, is amended by adding the 25 following new subsection: 26 NEW SUBSECTION . 5. In addition to the fees imposed under 27 subsections 1 and 4, a surface water protection user fee 28 shall be assessed and imposed upon nitrogen-based fertilizer. 29 The user fee shall be based upon the percentage of actual 30 nitrogen contained in the product. An eighty-two percent 31 nitrogen solution shall be subject to a rate of eight dollars 32 and seventy cents per ton. The user fee amount for other 33 nitrogen-based product formulations shall be based on the 34 percentage of actual nitrogen contained in the formulations 35 -1- LSB 5845YH (3) 90 da/ns 1/ 3

H.F. 2692 with the eighty-two percent nitrogen solution serving as the 1 base. The user fee shall be paid by each licensee registering 2 to sell fertilizer to the secretary of agriculture. The 3 user fees collected shall be deposited in the water quality 4 initiative fund created in section 466B.45. The secretary 5 of agriculture shall adopt rules for the payment, filing, 6 and collection of the user fees. The secretary shall, by 7 rule, allow an exemption to the payment of the user fee for 8 fertilizers which contain trace amounts of nitrogen. 9 Sec. 3. Section 466B.45, subsection 3, Code 2024, is amended 10 to read as follows: 11 3. a. Moneys Except as provided in paragraph “b” , moneys 12 in the fund are appropriated to the division and shall be used 13 exclusively to carry out the provisions of this subchapter 14 as determined by the division, and shall not require further 15 special authorization by the general assembly. 16 b. (1) Moneys contributed to the fund from surface water 17 protection user fees collected pursuant to section 200.8 are 18 appropriated to the division and shall be expended according to 19 the following allocation schedule: 20 (a) At least ten percent shall be allocated to the IIHR —— 21 hydroscience and engineering within the college of engineering 22 of the state university of Iowa for water quality monitoring, 23 measuring, and reporting in priority watersheds or in support 24 of projects conducted or approved by a watershed management 25 authority benefiting that watershed. 26 (b) At least twenty-five percent shall be allocated 27 to support projects conducted or approved by a watershed 28 management authority in the benefited watershed. 29 (c) Any remaining moneys shall be expended as provided in 30 paragraph “a” . 31 (2) All moneys contributed to the fund from surface water 32 protection fees shall be expended to support a project in a 33 manner consistent with the source water protection plans of 34 public and private water utilities in the benefited watershed. 35 -2- LSB 5845YH (3) 90 da/ns 2/ 3

H.F. 2692 EXPLANATION 1 The inclusion of this explanation does not constitute agreement with 2 the explanation’s substance by the members of the general assembly. 3 This bill includes a provision finding and declaring that 4 waters of the state are being used to collect and transport 5 contamination throughout Iowa, damaging lakes and streams and 6 infiltrating groundwater aquifers. The bill imposes a surface 7 water protection user fee on the sale of fertilizer based on 8 the percentage of nitrogen contained in the fertilizer. An 9 82 percent solution is assessed a rate of $.70 per ton (Code 10 section 200.8). The bill requires that the collected user fees 11 be deposited in the water quality initiative fund administered 12 by the division of soil conservation and water quality of 13 the department of agriculture and land stewardship (Code 14 section 466B.45). The bill provides for the expenditure of 15 moneys collected from user fees to support clean water efforts 16 administered by the division. A portion of the user fees are 17 allocated to support the IIHR —— hydroscience and engineering 18 within the college of engineering of the state university 19 of Iowa and to support projects conducted or approved by a 20 watershed management authority in a benefited watershed. 21 -3- LSB 5845YH (3) 90 da/ns 3/ 3