(1) The Natural Resources Water Quality Fund shall be allocated by contractual agreement with natural resources districts for the purpose of funding programs listed in subsection (2) of this section. A natural resources district receiving an allocation shall provide a one hundred fifty percent match of district funds. The initial allocations each fiscal year shall be made by the department, based on needs of individual natural resources districts relative to needs of other districts, to districts which have qualifying programs. The director shall have sole discretion to decide whether a district's program qualifies for funding pursuant to this section. The unused allocations may be reallocated to another district if the director determines that one or more districts cannot reasonably be expected to use their full allocation for that fiscal year. The commission shall adopt and promulgate rules and regulations to administer the Natural Resources Water Quality Fund.
(2) The fund shall be allocated to natural resources districts for programs related to water quality, including, but not limited to:
(a) Natural resources districts' water quality programs;
(b) Natural resources districts' illegal water wells decommissioning programs;
(c) Inspections by natural resources districts conducted pursuant to the Nebraska Chemigation Act;
(d) Source water protection programs undertaken by natural resources districts;
(e) Purchases of special equipment required by natural resources districts in management areas and control areas formed pursuant to the Nebraska Ground Water Management and Protection Act; and
(f) Application of soil and water conservation practices.