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SF 2490

A bill for 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.

2025-2026 Regular Session

Allocates severance tax revenue to counties for roads and tax offsets, plus 10% to the Environment First Fund for water quality demonstration projects tied to nutrient reduction go

NOBA: Final
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Bill Summary · SF 2490

Summary of S.F. 2490 (Session 2025-2026) – Iowa

Note: The text provided appears to be excerpts related to distributions from severance tax revenues and the use of funds for road, water quality, and demonstration projects. The summary below focuses on the substantive provisions and likely fiscal/operational impacts based on the included material.

Purpose and intent

  • The bill appears to establish or modify how severance tax revenue from oil and gas production is allocated and used in Iowa.
  • It outlines specific distributions to counties, the road use fund, and the environment-first fund (water quality initiatives), as well as the framework for demonstration projects related to watershed management and nutrient reduction practices.

Key provisions and changes

County distributions and road funding

  • A portion of severance tax revenue is dedicated to counties for specific purposes:

    • (a) Construction and maintenance of county roads.
    • (b) Offsetting county property tax collections.
    • For purposes under this subparagraph, counties must adopt a corresponding levy rate reduction.

  • A specified share of severance tax revenue is deposited into:

    • 5% per year into the road use tax fund established under section 312.1.

Environment-first fund and water quality initiatives

  • 10% of severance tax revenue per year is deposited into the severance tax account within the Environment First Fund (established under section 8.57A) for the water quality initiative administered by the Department of Natural Resources, including salaries, support, maintenance, and miscellaneous purposes. This is stated to occur notwithstanding a certain subsection (8.57A(3)).

  • The funds deposited under this provision must be used to support demonstration projects in water-related areas, subject to designations:

    • Subwatersheds denoted by the Department of Agriculture and Land Stewardship as part of high-priority watersheds identified by the Water Resources Coordinating Council.
    • Additionally, funds may be used to support demonstration projects in broader watersheds (including regional watersheds) designated by the Division, and also identified as high-priority by the Water Resources Coordinating Council.

Demonstration project requirements and participation

  • Demonstration projects in watersheds and subwatersheds must:
    • Utilize water quality practices described in the Iowa Nutrient Reduction Strategy (as defined in section 455B.171).
    • Involve participation by persons who hold a legal interest in property where the project is implemented, ensuring engagement of affected landowners or stakeholders.

Affected entities and impacts

  • Counties: Will receive severance tax distributions to fund road construction/maintenance and to offset property tax collections; counties must enact corresponding levy rate reductions as part of the funding mechanism.

  • Iowa Department of Natural Resources (DNR): Receives a designated portion of severance tax revenue for the Water Quality Initiative under the Environment First Fund; responsible for program administration, including salaries and ongoing support.

  • Department of Agriculture and Land Stewardship (DALS): Designates high-priority watersheds and subwatersheds for demonstration projects.

  • Water Resources Coordinating Council: Identifies high-priority watersheds for project focus.

  • Private landowners and other legal interests: Participation in demonstration projects is required or encouraged where land is affected, aligning with nutrient reduction practices.

Procedural and timeline aspects

  • Fiscal year allocations: 10% to the Environment First Fund’s water quality initiative and 5% to the road use tax fund are established as annual allocations from severance tax revenue, with additional direct distributions to counties.

  • Administrative framework: The bill references existing sections to govern fund establishment and administration (Environment First Fund and road use tax fund), as well as the Iowa Nutrient Reduction Strategy as the standard for project practices.

  • Action history indicates:

    • The bill was introduced in April 2026 and referred to Appropriations, with subcommittee review and committee passage occurring in mid-April 2026.
    • It progressed through the appropriations process, signaling a focus on budgetary implications and line-item funding.

Overall effect

  • Creates a structured, multi-faceted use of severance tax revenue from oil and gas production:
    • Supports local transportation infrastructure and offsetting property taxes at the county level.
    • Allocates funds to environmental and water quality initiatives, with an emphasis on demonstrable watershed-based projects aligned with nutrient reduction goals.
    • Requires stakeholder participation, particularly from landowners affected by demonstration projects.

If you’d like, I can tailor this summary to a specific reader audience (e.g., policymakers, county officials, environmental groups) or compare it with related Iowa statutes for context.

Compiled from official sources — confirm details with the bill’s official record.

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