SF 2490

Senate
File
2490
-
Enrolled
Senate
File
2490
AN
ACT
RELATING
TO
OIL
AND
GAS
PRODUCTION,
INCLUDING
FILING
REQUIREMENTS,
THE
AUTHORITY
OF
THE
DEPARTMENT
OF
NATURAL
RESOURCES,
CONFIDENTIAL
INFORMATION,
POOLING
ORDERS,
NEGOTIATION
OF
SURFACE
DAMAGE,
IMPOSITION
AND
DISTRIBUTION
OF
A
TAX,
AND
JURISDICTION,
AND
PROVIDING
CIVIL
PENALTIES.
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
Section
1.
Section
8.57A,
Code
2026,
is
amended
by
adding
the
following
new
subsection:
NEW
SUBSECTION
.
3A.
A
severance
tax
account
is
created
in
the
environment
first
fund.
Moneys
in
the
account
in
a
fiscal
year
shall
be
used
as
appropriated
by
the
general
assembly
for
purposes
of
supporting
water
quality
projects.
Senate
File
2490,
p.
2
Sec.
2.
Section
22.7,
Code
2026,
is
amended
by
adding
the
following
new
subsection:
NEW
SUBSECTION
.
78.
Records
received,
collected,
or
created
in
the
administration
of
severance
tax
for
oil
and
gas
production
pursuant
to
section
458A.29,
subsection
3.
Sec.
3.
Section
458A.2,
Code
2026,
is
amended
by
adding
the
following
new
subsections:
NEW
SUBSECTION
.
01.
“Casing”
means
the
practice
of
providing
structural
integrity,
stability
for
unstable
geologic
formations,
and
formation
isolation,
allowing
for
pressure
control
via
blowout
preventer
equipment,
and
allowing
for
flowback
if
applicable.
NEW
SUBSECTION
.
2A.
“Correlative
rights”
means
the
opportunity
afforded
to
the
owner
of
each
property
in
a
pool
to
produce,
so
far
as
it
is
reasonably
practicable
to
do
so
without
waste,
a
just
and
equitable
share
of
the
oil
or
gas,
or
both,
in
the
pool.
NEW
SUBSECTION
.
5A.
“Exploratory
well”
means
a
well
drilled
beyond
the
known
producing
limits
of
a
pool.
NEW
SUBSECTION
.
20A.
“Well
log”
means
a
record
of
geologic
formations
penetrated
by
the
borehole
with
respect
to
both
time
and
depth
during
drilling
operations.
Sec.
4.
Section
458A.4,
subsection
1,
Code
2026,
is
amended
by
adding
the
following
new
paragraph:
NEW
PARAGRAPH
.
0b.
Every
person
acting
as
a
principal
or
agent
for
another
or
independently
engaged
in
the
production,
storage,
transportation,
except
by
railroad,
refining,
reclaiming,
treating,
marketing,
or
processing
of
oil
or
gas,
or
engaged
in
the
exploration
for
or
production
of
metallic
minerals
to
file
the
following
with
the
department
on
or
before
April
1
of
each
year:
(1)
The
name
under
which
the
business
is
being
operated.
(2)
The
name
and
contact
information
of
the
person,
business,
or
businesses
engaged
in
the
activity.
(3)
The
plan
of
organization.
(4)
For
a
corporation,
the
following
filings
apply:
(a)
The
law
under
which
the
corporation
is
chartered.
(b)
The
names
and
contact
information
for
any
person
acting
as
a
trustee.
Senate
File
2490,
p.
3
(c)
The
names
of
the
manager,
agent,
or
executive.
(d)
The
names
and
contact
information
of
all
officers.
(5)
The
names
and
contact
information
of
all
owners
if
the
business
is
conducted
under
an
assumed
name.
Sec.
5.
Section
458A.4,
subsection
1,
paragraph
b,
Code
2026,
is
amended
to
read
as
follows:
b.
The
making
and
filing
of
all
mechanical
well
logs
and
the
filing
of
directional
surveys
if
taken,
and
the
filing
of
reports
on
well
location,
drilling
,
and
production,
and
the
filing
free
of
charge
of
samples
and
core
chips
and
of
complete
cores
less
tested
sections
when
requested
in
the
department
within
six
months
after
the
completion
or
abandonment
of
the
well
,
unless
otherwise
extended
pursuant
to
section
458A.6A
;
Sec.
6.
Section
458A.4,
Code
2026,
is
amended
by
adding
the
following
new
subsection:
NEW
SUBSECTION
.
4A.
To
allow
for
variances
to
any
of
the
department’s
rules,
regulations,
or
orders.
A
variance
shall
be
granted
in
writing
by
the
director
without
a
hearing
upon
written
request
of
an
owner
or
applicant.
The
owner
or
the
applicant
requesting
the
variance
shall
demonstrate
that
it
has
made
a
good
faith
effort
to
comply
or
is
unable
to
comply
with
the
specific
requirements
contained
in
the
rules,
regulations,
or
orders
from
which
it
seeks
a
variance,
and
that
the
requested
variance
will
not
violate
the
basic
intent
of
this
chapter.
Upon
proper
submission
to
the
director,
the
director
shall
approve
or
deny
the
variance
request
within
fourteen
days
of
receipt.
The
director
shall
report
any
variance
granted
at
the
subsequent
hearing
or
otherwise
make
public
any
variance
granted.
Sec.
7.
NEW
SECTION
.
458A.6A
Confidential
information.
If
an
owner
seeks
to
submit
information
that
is
listed
as
confidential,
the
owner
will
confer
with
the
department
prior
to
submitting
the
information
to
verify
it
qualifies
as
confidential
pursuant
to
the
department’s
rules
or
otherwise
under
law.
If
the
information
is
determined
to
be
confidential,
the
owner
will
submit
hard
copies
of
the
information
in
nonredacted
form
but
labeled
confidential
in
a
conspicuous
location
on
the
document.
Confidential
information
shall
be
maintained
as
confidential
and
held
without
public
Senate
File
2490,
p.
4
access
for
a
period
of
five
years,
unless
otherwise
extended
by
the
director
for
good
cause.
Confidential
information
may
include
the
following:
1.
Monetary
amounts,
payment
terms,
drilling
obligations,
or
personal
information
listed
on
surface
use
agreements,
oil
and
gas
leases,
or
rights-of-way
agreements.
2.
Information
concerning
ongoing
commercial
negotiations
regarding
potential
or
planned
routing
and
location
of
off-lease
midstream
gathering
systems
or
infrastructure.
3.
Confidential
geological
or
geophysical
well
records
pertaining
to
exploratory
wells.
4.
Information
about
a
proposed
transfer
of
permits
and
assets.
5.
Proprietary
stimulation
or
completion
chemicals
that
qualify
as
trade
secrets.
6.
Personal
medical
information.
7.
Commercial
information
that,
if
disclosed,
would
be
likely
to
cause
substantial
harm
to
the
competitive
position
of
the
person
providing
the
information.
Sec.
8.
Section
458A.7,
subsections
3
and
4,
Code
2026,
are
amended
to
read
as
follows:
3.
An
order
establishing
spacing
units
for
a
pool
shall
specify
the
size
and
shape
of
each
unit
and
the
location
and
number
of
the
permitted
well
thereon
wells
in
accordance
with
a
reasonably
uniform
spacing
plan.
Upon
application,
if
the
director
finds
that
a
well
drilled
at
the
prescribed
location
would
not
produce
in
paying
quantities,
or
that
surface
conditions
would
substantially
add
to
the
burden
or
hazard
of
drilling
such
well,
the
director
is
authorized
to
enter
an
order
permitting
the
a
well
to
be
drilled
at
a
location
other
than
that
prescribed
by
such
spacing
order;
however,
the
director
shall
include
in
the
order
suitable
provisions
to
prevent
the
production
from
the
spacing
unit
of
more
than
its
just
and
equitable
share
of
the
oil
and
gas
in
the
pool.
4.
An
order
establishing
units
for
a
pool
shall
cover
all
lands
determined
or
believed
to
be
underlaid
by
the
pool,
and
may
be
modified
by
the
director
from
time
to
time
to
include
additional
areas
determined
to
be
underlaid
by
the
pool.
When
found
necessary
for
the
prevention
of
waste,
or
to
avoid
the
Senate
File
2490,
p.
5
drilling
of
unnecessary
wells
or
to
protect
correlative
rights,
an
order
establishing
spacing
units
in
a
pool
may
be
modified
by
the
director
to
increase
the
size
of
spacing
units
in
the
pool
or
any
zone
of
the
pool,
or
to
permit
the
drilling
of
additional
wells
within
a
spacing
unit
on
a
reasonable
uniform
plan
in
the
pool,
or
any
zone
of
the
pool.
Orders
of
the
director
may
be
appealed
to
the
department
within
thirty
days.
Sec.
9.
Section
458A.7,
Code
2026,
is
amended
by
adding
the
following
new
subsection:
NEW
SUBSECTION
.
5.
If
the
department
is
unable
to
determine
the
existence
of
a
pool
and
the
appropriate
acreage
to
be
embraced
within
a
spacing
unit
and
the
shape
thereof
based
on
the
evidence
introduced
at
hearing,
the
department
may
establish
an
exploratory
spacing
unit
for
the
purpose
of
drilling
one
or
more
exploratory
wells
in
order
to
establish
the
existence
of
a
pool
and
the
appropriate
size
and
shape
of
the
spacing
unit
to
be
applied
for
future
development
of
the
pool.
In
establishing
the
size
and
shape
of
the
exploratory
spacing
unit,
the
department
may
consider
the
size
and
shape
of
spacing
units
established
by
the
department
for
the
same
pool
or
formation
in
other
areas,
the
size
and
shape
of
units
for
similar
development
in
other
basins,
reservoir
modeling
or
other
preliminary
data
on
the
pool
or
formation,
and
any
other
information
the
department
deems
relevant.
Sec.
10.
Section
458A.8,
Code
2026,
is
amended
to
read
as
follows:
458A.8
Integration
of
fractional
tracts.
1.
When
two
or
more
separately
owned
tracts
are
embraced
within
a
spacing
unit,
or
when
there
are
separately
owned
interests
in
all
or
a
part
of
the
spacing
unit,
then
the
owners
and
royalty
owners
of
the
tracts
may
pool
their
interests
for
the
development
and
operation
of
the
spacing
unit.
In
the
absence
of
voluntary
pooling,
the
department,
upon
the
application
of
any
interested
person,
shall
enter
an
order
pooling
all
interests
in
the
spacing
unit
for
the
development
and
operations
of
the
unit.
Each
pooling
order
shall
be
made
after
notice
and
hearing,
and
shall
be
upon
terms
and
conditions
that
are
just
and
reasonable,
and
that
afford
to
the
owner
of
each
tract
or
interest
in
the
spacing
unit
the
Senate
File
2490,
p.
6
opportunity
to
recover
or
receive,
without
unnecessary
expense,
a
just
and
equitable
share.
Operations
incident
to
the
drilling
of
a
well
upon
any
portion
of
a
spacing
unit
covered
by
a
pooling
order
shall
be
deemed
for
all
purposes
to
be
the
conduct
of
the
operations
upon
each
separately
owned
tract
in
the
drilling
unit
by
the
several
owners
of
the
unit.
That
portion
of
the
production
allocated
to
each
tract
included
in
a
spacing
unit
covered
by
a
pooling
order
shall,
when
produced,
be
deemed
for
all
purposes
to
have
been
produced
from
the
tract
by
a
well
drilled
on
it.
2.
Each
pooling
order
shall
make
provision
for
the
drilling
and
operation
of
a
well
on
the
spacing
unit,
and
for
the
payment
of
the
reasonable
actual
cost
of
the
well
by
the
owners
of
interests
in
the
spacing
unit,
plus
a
reasonable
charge
for
supervision.
In
the
event
of
any
dispute
as
to
such
costs,
the
department
shall
determine
the
proper
costs.
If
an
owner
shall
drill
and
operate,
or
pay
the
expenses
of
drilling
and
operating
the
well
for
the
benefit
of
others,
then,
the
owner
so
drilling
or
operating
shall,
upon
complying
with
the
terms
of
section
458A.10
,
have
a
lien
on
the
share
of
production
from
the
spacing
unit
accruing
to
the
interest
of
each
of
the
other
owners
for
the
payment
of
a
proportionate
share
of
the
expenses.
All
the
oil
and
gas
subject
to
the
lien
shall
be
marketed
and
sold
and
the
proceeds
applied
in
payment
of
the
expenses
secured
by
the
lien
as
provided
for
in
section
458A.10
.
2.
In
the
absence
of
voluntary
pooling
pursuant
to
subsection
1,
and
only
if
the
producer
has
identified
pools
of
existing
natural
hydrogen
within
the
spacing
unit,
the
director,
upon
the
application
by
the
owner
or
owners
of
not
less
than
twenty-five
percent
of
the
area
of
the
spacing
unit,
shall
enter
an
order
pooling
all
interests
in
the
spacing
unit
for
the
development
and
operation
thereof.
Any
such
pooling
order
may
authorize
cost
recovery
and
risk
penalties
against
nonconsenting
owners
for
a
specific
well.
Each
such
pooling
order
shall
be
made
after
notice
and
hearing
and
with
terms
and
conditions
that
are
just
and
reasonable.
Operations
incident
to
the
drilling
of
a
well
upon
any
portion
of
a
spacing
unit
covered
by
a
pooling
order
shall
be
deemed
for
all
purposes
Senate
File
2490,
p.
7
to
be
the
conduct
of
such
operations
upon
each
separately
owned
tract
in
the
unit
by
the
several
owners
thereof.
When
produced,
that
portion
of
the
production
allocated
or
applicable
to
each
tract
included
in
a
unit
covered
by
a
pooling
order
shall
be
deemed
for
all
purposes
to
have
been
produced
from
such
tract
by
a
well
drilled
thereon.
3.
Each
pooling
order
shall
provide
for
the
drilling
and
operation
of
a
well
in
the
spacing
unit,
and
for
the
payment
of
the
cost
thereof,
as
provided
in
this
subsection.
The
director
is
specifically
authorized
to
provide
that
the
producer
shall
be
entitled
to
all
production
from
the
well
that
would
be
received
by
the
owner
or
owners,
for
whose
benefit
the
well
was
drilled
or
operated,
after
payment
of
royalty
as
provided
in
the
lease,
if
any,
applicable
to
each
tract
or
interest
or
after
payment
of
the
royalty
if
required
under
subsection
4,
and
obligations
payable
out
of
production,
until
the
producers
have
been
paid
the
amount
due
under
the
terms
of
the
pooling
order
or
order
settling
the
dispute.
In
the
event
of
any
disputed
cost,
the
director
shall
determine
the
proper
cost.
The
pooling
order
shall
determine
the
interest
of
each
owner
in
the
unit,
and
may
provide
that
each
owner
who
agrees
with
the
producer
for
the
payment
by
the
owner
of
the
owner’s
share
of
the
costs,
unless
the
owner
has
agreed
otherwise,
shall
be
entitled
to
receive,
subject
to
royalty
or
similar
obligations,
the
share
of
the
production
of
the
well
applicable
to
the
tract
of
the
nonconsenting
owner.
Each
owner
who
does
not
agree
shall
be
entitled
to
receive
from
the
producer
the
owner’s
share
of
the
production
applicable
to
the
owner’s
interest
after
the
producer
has
recovered
the
following,
subject
to
the
provisions
of
subsection
4:
a.
One
hundred
percent
of
the
nonconsenting
owner’s
share
of
the
cost
of
any
newly
acquired
surface
equipment
beyond
the
wellhead
connections,
including
stock
tanks,
separators,
treaters,
or
pumping
equipment
and
piping,
plus
one
hundred
percent
of
the
nonconsenting
owner’s
share
of
the
cost
of
operating
the
well
commencing
with
first
production
and
continuing
until
the
nonconsenting
owner’s
relinquished
interest
reverts
under
other
provisions
in
this
section.
b.
Up
to
two
hundred
percent
of
that
portion
of
the
costs
Senate
File
2490,
p.
8
and
expenses
of
drilling,
reworking,
deepening
or
plugging
back,
testing,
and
completing,
after
deducting
any
cash
contributions
received,
and
up
to
two
hundred
percent
of
that
portion
of
the
cost
of
newly
acquired
equipment
in
the
well,
up
to
and
including
the
wellhead
connections,
which
would
have
been
chargeable
to
the
nonconsenting
owner
if
the
owner
had
participated
therein,
if
the
nonconsenting
owner’s
tract
or
interest
is
subject
to
a
lease
or
other
contract
for
oil
and
gas
development.
4.
During
the
time
the
producer
is
recovering
costs
from
a
nonconsenting
owner
as
authorized
in
a
pooling
order
issued
pursuant
to
subsection
2,
a
nonconsenting
owner
of
a
tract
or
interest
in
a
spacing
unit
that
is
not
subject
to
a
lease
or
other
contract
for
oil
and
gas
development
shall
be
entitled
to
a
cost-free
royalty
interest
equal
to
twelve
and
one-half
percent.
5.
Upon
full
payment
of
the
recoverable
costs
as
specified
in
subsection
3,
the
following
shall
occur:
a.
Within
thirty
days
the
producer
shall
notify
the
nonconsenting
owner
to
offer
to
the
nonconsenting
owner
the
opportunity
to
participate
under
the
pooling
order
as
a
working
interest
owner.
The
notice
shall
state
that
the
nonconsenting
owner
may
elect
to
participate
in
the
pooling
order
or
may
elect
to
continue
receiving
the
royalty
specified
in
subsection
4.
b.
Within
sixty
days
after
receiving
notice,
the
nonconsenting
owner
shall
inform
the
producer
whether
the
nonconsenting
owner
wishes
to
make
an
election
to
participate
under
the
pooling
order
as
a
working
interest
owner
or
continue
receiving
the
royalty
specified
in
subsection
4.
c.
If
the
nonconsenting
owner
fails
to
respond
to
the
notice
within
the
time
specified
in
paragraph
“b”
,
the
nonconsenting
owner
shall
be
deemed
to
elect
to
continue
receiving
the
royalty
specified
in
subsection
4.
d.
Within
five
business
days
after
receiving
notice
of
election
from
a
nonconsenting
owner
or
upon
expiration
of
the
time
specified
in
paragraph
“b”
,
the
producer
shall
notify
the
director
regarding
the
nonconsenting
owner’s
election
or
lack
thereof.
Senate
File
2490,
p.
9
6.
An
application
for
pooling
shall
provide
at
least
the
following:
a.
A
certificate
of
service
containing
all
persons
that
have
a
royalty
interest
or
are
owners
inside
the
drilling
and
spacing
unit.
b.
The
applicant’s
interest
type
in
the
drilling
and
spacing
unit.
c.
The
legal
description
of
the
lands
and
the
department
docket
number
establishing
the
drilling
and
spacing
unit
sought
to
be
pooled.
d.
A
statement
that
two
or
more
separately
owned
tracts
or
separately
owned
interests
in
the
drilling
and
spacing
unit
have
not
voluntarily
pooled
their
interests
and
any
valid
pooling
order
for
the
drilling
and
spacing
unit.
e.
The
American
petroleum
institute
well
number
of
the
well
subject
to
the
application,
if
requesting
cost
recovery
or
risk
penalties.
f.
A
list
of
all
nonconsenting
owners
in
the
well
that
the
applicant
is
seeking
cost
recovery
and
risk
penalties
against
at
the
time
of
filing
the
application.
g.
The
cost
recovery
and
risk
penalties
the
applicant
is
requesting,
if
any.
7.
An
applicant
shall
provide
at
hearing
at
least
the
following:
a.
A
copy
of
the
election
letter,
well
proposal,
and
authorization
for
expenditure
sent
to
the
owners
in
the
drilling
and
spacing
unit.
b.
The
names
and
interests
of
all
nonconsenting
owners
and
unleased
nonconsenting
owners
in
the
well.
c.
Evidence
to
justify
the
application
of
a
risk
penalty.
Sec.
11.
NEW
SECTION
.
458A.26
Permission
to
enter
site
——
negotiation
of
surface
damages.
1.
Before
entering
a
site
that
is
subject
to
a
pooling
order
under
section
458A.8,
or
that
is
within
an
exploratory
spacing
unit,
for
purposes
of
an
oil
and
gas
operation,
an
operator
shall
receive
written
permission
from
the
surface
owner
to
enter
the
site.
If
the
surface
owner
does
not
grant
written
permission
to
the
operator
to
enter
the
site,
the
operator
shall
not
enter
the
site
for
purposes
of
an
oil
and
Senate
File
2490,
p.
10
gas
operation.
2.
a.
Before
entering
a
site
that
is
subject
to
a
pooling
order
under
section
458A.8,
or
that
is
within
an
exploratory
spacing
unit,
with
heavy
equipment
for
the
purpose
of
drilling,
an
operator
shall
negotiate
with
the
surface
owner
for
the
payment
of
any
damages
that
may
be
caused
by
the
drilling
operation.
If
the
parties
agree
and
execute
a
written
contract
for
payment
of
damages,
the
operator
may
enter
the
site
to
drill.
If
the
parties
do
not
reach
an
agreement
for
payment
of
damages,
the
operator
shall
not
enter
the
site
to
drill.
b.
Before
entering
into
a
negotiation
under
paragraph
“a”
,
the
operator
shall
provide
a
written
description
of
the
opt-out
procedure
described
in
paragraph
“c”
.
c.
A
surface
owner
may
decline
further
communication
with
an
operator
concerning
a
possible
agreement
for
the
payment
of
any
damage
that
may
be
caused
by
the
drilling
operation
by
providing
verbal
or
written
notice
to
the
operator
that
states
that
the
surface
owner
does
not
wish
to
discuss
the
matter
further,
and
by
submitting
to
the
attorney
general
notice
through
mail
or
electronic
means
stating
the
same.
Upon
receipt
of
such
notice
from
the
surface
owner,
the
attorney
general
shall
forward
a
copy
to
the
operator.
d.
After
receipt
of
notice
from
the
surface
owner
pursuant
to
paragraph
“c”
,
the
operator
shall
not
initiate
further
contact
with
the
surface
owner
for
purposes
of
an
agreement
for
the
payment
of
any
damages
that
may
be
caused
by
the
drilling
operation,
except
that
the
operator
shall
continue
to
provide
the
surface
owner
with
notices
otherwise
required
by
law.
The
surface
owner
may
rescind
such
refusal
by
contacting
the
operator
and
notifying
the
attorney
general
through
mail
or
electronic
means.
Unless
the
surface
owner
rescinds
the
refusal,
the
surface
owner’s
land
shall
be
deemed
unavailable
for
an
agreement.
e.
An
operator
violating
the
contact
prohibition
in
paragraph
“d”
is
subject
to
a
civil
penalty
of
not
less
than
ten
thousand
dollars
for
each
violation.
3.
For
purposes
of
this
section,
“oil
and
gas
operation”
means
the
same
as
defined
in
section
458A.30.
Sec.
12.
NEW
SECTION
.
458A.27
Imposition
of
tax
——
tax
rate
Senate
File
2490,
p.
11
——
valuation
taxpayers.
1.
For
the
privilege
of
severing
or
extracting
oil
or
gas
from
the
lands
within
the
state,
there
is
levied
a
severance
tax
on
the
value
of
the
oil
and
gas
extracted,
which
shall
be
in
addition
to
any
other
taxes
imposed
by
law.
2.
The
severance
tax
shall
be
six
percent
of
the
fair
market
value
of
the
oil
or
gas
upon
extraction
at
the
wellhead.
3.
Expenses
incurred
by
the
producer
prior
to
valuation
are
not
deductible
from
taxable
value.
4.
When
ownership
of
oil
or
gas
produced
is
shared,
each
owner
shall
be
responsible
for
payment
of
its
proportionate
share
of
severance
tax.
A
taxpayer
paying
severance
tax
on
oil
or
gas
production
may
deduct
the
taxes
paid
from
any
royalty
or
other
amounts
due
or
to
become
due
to
the
interest
owners
of
such
production,
in
proportion
to
the
interest
ownership,
in
which
case
the
person
receiving
the
royalty
or
other
payment
shall
not
be
liable
for
severance
tax.
5.
The
department
of
revenue
may
adopt
rules
pursuant
to
chapter
17A
to
administer
this
section.
Sec.
13.
NEW
SECTION
.
458A.28
Revenue
distribution.
1.
Revenues
received
from
the
severance
tax
collected
pursuant
to
section
458A.27
shall
be
distributed
as
follows:
a.
(1)
The
severance
tax
revenues
shall
be
distributed
to
counties
as
follows:
(a)
Nine
and
nine-tenths
percent
of
severance
tax
revenue
each
year
shall
be
distributed
to
each
county
in
the
state
in
proportion
to
the
county’s
share
of
total
state
population
according
to
the
most
recent
federal
decennial
census.
(b)
Five
percent
of
severance
tax
revenue
each
year
shall
be
distributed
to
the
counties
in
which
land
is
located
from
which
oil
or
gas
is
produced
in
proportion
to
each
county’s
share
of
the
value
of
oil
and
gas
production
for
that
year.
(2)
Distributions
to
counties
under
this
paragraph
shall
be
used
exclusively
for
any
of
the
following
purposes:
(a)
To
construct
and
maintain
county
roads.
(b)
To
offset
county
property
tax
collections.
For
distributions
used
for
purposes
of
this
subparagraph
division,
the
county
shall
adopt
a
corresponding
levy
rate
reduction.
b.
Five
percent
of
severance
tax
revenue
each
year
shall
be
Senate
File
2490,
p.
12
deposited
in
the
road
use
tax
fund
established
under
section
312.1.
c.
(1)
Ten
percent
of
severance
tax
revenue
each
year
shall
be
deposited
in
the
severance
tax
account
within
the
environment
first
fund
established
under
section
8.57A
for
purposes
of
supporting
the
water
quality
initiative
administered
by
the
division
pursuant
to
section
466B.42,
including
salaries,
support,
maintenance,
and
miscellaneous
purposes,
including
as
provided
in
this
paragraph,
notwithstanding
section
8.57A,
subsection
3.
(2)
(a)
The
moneys
deposited
pursuant
to
this
paragraph
shall
be
used
to
support
demonstration
projects
in
subwatersheds
as
designated
by
the
department
of
agriculture
and
land
stewardship
that
are
part
of
high-priority
watersheds
identified
by
the
water
resources
coordinating
council.
(b)
The
moneys
deposited
pursuant
to
this
paragraph
shall
be
used
to
support
demonstration
projects
in
watersheds
generally,
including
regional
watersheds,
as
designated
by
the
division,
and
high-priority
watersheds
identified
by
the
water
resources
coordinating
council.
(3)
In
supporting
projects
in
watersheds
and
subwatersheds
as
provided
in
subparagraph
(2),
all
of
the
following
apply:
(a)
The
demonstration
projects
must
utilize
water
quality
practices
as
described
in
the
Iowa
nutrient
reduction
strategy
as
defined
in
section
455B.171.
(b)
The
division
shall
implement
demonstration
projects
as
provided
in
subparagraph
division
(a)
by
providing
for
participation
by
persons
who
hold
a
legal
interest
in
agricultural
land
used
in
farming.
To
every
extent
practical,
the
division
shall
provide
for
collaborative
participation
by
such
persons
who
hold
a
legal
interest
in
agricultural
land
located
within
the
same
subwatershed.
(c)
The
division
shall
implement
demonstration
projects
on
a
cost-share
basis
as
determined
by
the
division.
Except
for
edge-of-field
practices,
the
state’s
share
of
the
amount
shall
not
exceed
fifty
percent
of
the
estimated
cost
of
establishing
the
practice
as
determined
by
the
division
or
fifty
percent
of
the
actual
cost
of
establishing
the
practice,
whichever
is
less.
Senate
File
2490,
p.
13
(d)
The
demonstration
projects
shall
be
used
to
educate
other
persons
about
the
feasibility
and
value
of
establishing
similar
water
quality
practices.
The
division
shall
promote
field
day
events
for
purposes
of
allowing
interested
persons
to
establish
water
quality
practices
on
such
persons’
agricultural
land.
(e)
The
division
shall
conduct
water
quality
evaluations
within
supported
subwatersheds.
Within
a
reasonable
period
after
accumulating
information
from
such
evaluations,
the
division
shall
create
an
aggregated
database
of
water
quality
practices.
Any
information
identifying
a
person
holding
a
legal
interest
in
agricultural
land
or
specific
agricultural
land
shall
be
a
confidential
record.
(4)
The
moneys
deposited
pursuant
to
this
paragraph
shall
be
used
to
support
education
and
outreach
in
a
manner
that
encourages
persons
who
hold
a
legal
interest
in
agricultural
land
used
for
farming
to
implement
water
quality
practices,
including
the
establishment
of
such
practices
in
watersheds
generally,
and
not
limited
to
subwatersheds
or
high-priority
watersheds.
(5)
The
moneys
deposited
pursuant
to
this
paragraph
may
be
used
to
contract
with
persons
to
coordinate
the
implementation
of
efforts
provided
in
this
paragraph.
(6)
The
moneys
deposited
pursuant
to
this
paragraph
may
be
used
by
the
department
of
agriculture
and
land
stewardship
to
support
urban
soil
and
water
conservation
efforts,
which
may
include
but
are
not
limited
to
management
practices
related
to
bioretention,
landscaping,
the
use
of
permeable
or
pervious
pavement,
and
soil
quality
restoration.
The
moneys
shall
be
allocated
on
a
cost-share
basis
as
provided
in
chapter
161A
.
(7)
Notwithstanding
any
other
provision
of
law
to
the
contrary,
the
department
of
agriculture
and
land
stewardship
may
use
moneys
deposited
pursuant
to
this
paragraph
to
carry
out
the
provisions
of
this
paragraph
on
a
cost-share
basis
in
combination
with
other
moneys
available
to
the
department
of
agriculture
and
land
stewardship
from
a
state
or
federal
source.
(8)
Not
more
than
ten
percent
of
the
moneys
deposited
pursuant
to
this
paragraph
may
be
used
for
costs
of
Senate
File
2490,
p.
14
administration
and
implementation
of
the
water
quality
initiative
administered
by
the
division.
d.
Seventy
and
one-tenth
percent
of
severance
tax
revenue
each
year
shall
be
deposited
in
the
taxpayer
relief
fund
established
under
section
8.57E.
e.
Distributions
to
the
counties
and
to
the
funds
under
this
subsection
shall
be
made
quarterly
in
an
amount
equal
to
one-fourth
of
the
estimate
of
annual
total
severance
tax
revenues
estimated
for
the
current
fiscal
year
by
the
revenue
estimating
committee.
The
share
for
producing
counties
shall
be
calculated
using
county
production
data
from
the
prior
fiscal
year’s
severance
tax
returns.
2.
By
September
15
of
each
year,
the
department
of
revenue
shall
report
actual
earnings
for
the
months
of
the
preceding
fiscal
year
for
which
estimates
were
used
in
computing
distributions.
The
department
of
revenue
shall
make
adjustments
to
distributions
during
the
current
fiscal
year
in
an
amount
equal
to
the
difference
between
revenues
earned
and
actual
distributions
for
the
preceding
fiscal
year.
3.
For
purposes
of
this
section,
“division”
means
the
division
of
soil
conservation
and
water
quality
created
within
the
department
of
agriculture
and
land
stewardship
pursuant
to
section
159.5.
Sec.
14.
NEW
SECTION
.
458A.29
Administration
confidentiality.
1.
The
department
of
revenue
shall
annually
value
and
assess
oil
or
gas
production
for
taxation,
in
appropriate
unit
measures,
at
the
fair
market
value
of
the
product,
after
the
mining
is
completed
or
the
oil
or
gas
is
extracted
at
the
wellhead.
2.
Annually,
on
or
before
June
1,
or
as
soon
thereafter
as
the
fair
market
value
is
determined
under
subsection
1,
the
department
of
revenue
shall
certify
the
valuation
of
the
product
to
the
county
assessor
of
the
county
from
which
the
oil
or
gas
was
produced,
and
such
valuation
shall
be
entered
upon
the
assessment
rolls
of
the
county.
3.
Records
received,
collected,
or
created
in
the
administration
of
the
severance
tax
shall
be
confidential
as
follows:
Senate
File
2490,
p.
15
a.
All
taxpayer
returns
and
return
information
shall
be
confidential
and,
except
as
authorized
below,
no
current
or
former
official,
officer,
employee,
or
agent
of
the
state
or
any
political
subdivision
thereof
shall
disclose
any
such
information
obtained
in
the
course
of
service
as
an
official,
officer,
employee,
or
agent.
Taxpayer
returns
and
return
information
shall
include
without
limitation
all
statements,
reports,
summaries,
and
all
other
data
and
documents
under
audit
or
provided
by
the
taxpayer
in
accordance
with
the
provisions
of
this
chapter
regarding
severance
tax.
b.
Without
written
authorization
from
the
taxpayer,
no
current
or
former
official,
officer,
employee,
or
agent
of
the
state
or
any
political
subdivision
thereof
shall
release
taxpayer
returns
and
return
information
pertaining
to
taxes
imposed
by
this
chapter,
except
for
any
of
the
following
reasons:
(1)
Information
may
be
released
to
employees
of
the
department
of
revenue
and
employees
of
the
department
of
justice
for
official
purposes.
(2)
Upon
prior
notice
to
the
taxpayer,
information
may
be
released
by
the
department
of
revenue,
upon
written
application,
to
any
other
governmental
entity
if
the
entity
shows
sufficient
reason
to
obtain
the
information
for
official
business,
subject
to
execution
of
a
confidentiality
agreement.
(3)
Information
shall
be
admissible
in
court
or
administrative
proceedings
related
to
the
severance
tax
or
other
taxes
on
oil
or
gas
production
or
on
income
of
producers
or
owners,
or
royalties.
c.
Units
of
production
reported
by
the
taxpayer
and
the
taxpayer’s
taxable
value
are
not
confidential
and
may
be
released.
4.
Violations
of
this
section
shall
be
subject
to
the
same
prohibitions
and
penalties
that
apply
to
other
violations
of
confidentiality
requirements
applicable
to
data
and
records
in
the
custody
of
the
department
of
revenue
for
purposes
of
carrying
out
its
duties.
Sec.
15.
NEW
SECTION
.
458A.30
Exclusive
jurisdiction
and
express
preemption.
1.
For
purposes
of
this
section:
Senate
File
2490,
p.
16
a.
“Commercially
reasonable”
means
a
condition
that
would
allow
a
reasonably
prudent
operator
to
fully,
effectively,
and
economically
exploit,
develop,
produce,
process,
and
transport
oil
and
gas,
as
determined
based
on
the
objective
standard
of
a
reasonably
prudent
operator
and
not
on
an
individualized
assessment
of
an
actual
operator’s
capacity
to
act.
b.
“Oil
and
gas
operation”
means
an
activity
associated
with
the
exploration,
development,
production,
processing,
and
transportation
of
oil
and
gas,
including
drilling,
testing,
geological
sampling,
boring,
excavation,
hydraulic
fracture
stimulation,
completion,
maintenance,
reworking,
recompletion,
disposal,
plugging
and
abandonment,
secondary
and
tertiary
recovery,
geophysical
surveys
related
to
oil
and
gas
development,
and
remediation
activities.
2.
An
oil
and
gas
operation
is
subject
to
the
exclusive
jurisdiction
of
this
state.
Except
as
provided
in
subsection
3,
a
county,
city,
or
other
political
subdivision
shall
not
enact
or
enforce
an
ordinance
or
other
measure,
or
an
amendment
or
revision
of
an
ordinance
or
other
measure,
that
bans,
limits,
or
otherwise
regulates
an
oil
and
gas
operation
within
the
boundaries
or
jurisdiction
of
the
respective
county,
city,
or
political
subdivision.
3.
The
authority
of
a
county,
city,
or
other
political
subdivision
to
regulate
an
oil
and
gas
operation
is
expressly
preempted,
except
that
a
county
or
city
may
enact,
amend,
or
enforce
an
ordinance
or
other
measure
if
the
ordinance
or
other
measure
does
all
of
the
following:
a.
Only
regulates
activity
related
to
an
oil
and
gas
operation
that
occurs
at
or
above
the
surface
of
the
ground
and
concerns
governing
fire
and
emergency
response,
traffic,
lights,
or
noise,
or
imposes
notice
or
reasonable
setback
requirements.
b.
(1)
Is
commercially
reasonable.
(2)
An
ordinance
or
other
measure
is
considered
prima
facie
to
be
commercially
reasonable
if
the
ordinance
or
other
measure
has
been
in
effect
for
at
least
five
years
and
has
allowed
the
oil
and
gas
operations
at
issue
to
continue
during
that
period.
c.
Does
not
prohibit
or
effectively
prohibit
an
oil
and
gas
operation
conducted
by
a
reasonably
prudent
operator.
Senate
File
2490,
p.
17
d.
Is
not
otherwise
preempted
by
state
or
federal
law.
Sec.
16.
REPEAL.
Section
458A.6,
Code
2026,
is
repealed.
______________________________
AMY
SINCLAIR
President
of
the
Senate
______________________________
PAT
GRASSLEY
Speaker
of
the
House
I
hereby
certify
that
this
bill
originated
in
the
Senate
and
is
known
as
Senate
File
2490,
Ninety-first
General
Assembly.
______________________________
W.
CHARLES
SMITHSON
Secretary
of
the
Senate
Approved
_______________,
2026
______________________________
KIM
REYNOLDS
Governor