Minnesota Legislature
HF 1677
as introduced - 91st Legislature (2019 - 2020) Posted on 02/27/2019 01:06pm
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A bill for an act
relating to energy; establishing a process to compensate businesses for loss of
business opportunity resulting from sale and closure of a biomass energy plant.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1.
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BIOMASS BUSINESS COMPENSATION.
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new text begin Subdivision 1. new text end
new text begin Definitions. new text end
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(a) For the purposes of this section, the following terms have
the meanings given.
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(b) "Biomass plant" means the biomass plant identified under Minnesota Statutes, section
116C.779, subdivision 1, paragraph (f).
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(c) "Early termination" means the early termination of the power purchase agreement
authorized under Minnesota Statutes, section 216B.2424, subdivision 9, with the biomass
plant.
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(d) "Operating income" means a business's revenue minus its operating expenses.
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new text begin Subd. 2. new text end
new text begin Office of Administrative Hearings; claims process. new text end
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(a) The chief
administrative law judge of the Office of Administrative Hearings must assign an
administrative law judge to administer a claims award process to compensate businesses
negatively affected by the early termination. The chief administrative law judge may develop
a process, prescribe forms, identify documentation affected businesses must submit with
claims, and issue awards to eligible businesses consistent with this section. The process
must allow, but not require, an authorized representative from each business that applies
for compensation to appear in person before the assigned administrative law judge to provide
evidence in support of the business's claim.
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(b) The chief administrative law judge may contract with and use the services of financial
or other consultants to examine financial documentation presented by claimants or otherwise
assist in the evaluation and award of claims.
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(c) Records submitted to the Office of Administrative Hearings as part of the claims
process constitute business data under Minnesota Statutes, section 13.591.
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(d) An award made under this section is final is and not subject to judicial review.
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(e) An award made under this section does not constitute an admission of liability by
the state for any damages or other losses suffered by a business affected by the early
termination.
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new text begin Subd. 3. new text end
new text begin Eligibility. new text end
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To be eligible for an award of compensation, an affected business
must meet the following criteria:
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(1) as of May 1, 2017, the affected business was operating under the terms of a valid
written contract, or an oral contract that is supported by business records, with the company
operating the biomass plant or the fertilizer plant integrated with the biomass plant to supply
or manage material for, or receive material from, the biomass plant or the fertilizer plant
integrated with the biomass plant;
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(2) the affected business is located in the state; and
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(3) as the result of the early termination, the affected business suffered:
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(i) decreased operating income; or
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(ii) the loss of value of investments in real or personal property essential to its business
operations with the biomass plant.
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new text begin Subd. 4. new text end
new text begin Types of claims. new text end
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(a) An eligible business may make claims for a compensation
award based on either or both:
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(1) decreased operating income; or
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(2) the loss of value of investments in real or personal property essential to its business
operations with the biomass plant.
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(b) To establish and quantify a claim for decreased operating income, an eligible business
must:
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(1) demonstrate its operating income over the past five years derived from supplying or
managing material for, or receiving material from, the biomass plant;
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(2) present evidence of any alternative business opportunities it has pursued or could
pursue to mitigate the loss of revenue from the termination of its contract with the biomass
plant; and
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(3) demonstrate the amount that the business's annual operating income, including
operating income from any alternative business opportunities, after the termination of the
business's contract with the biomass plant is less than the five-year average of the business's
annual operating income before the early termination;
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(c) To establish and quantify a loss of value of investments in real or personal property
claim, an eligible business must provide sufficient evidence of:
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(1) the essential nature of the investment made in the property to fulfill the contract with
the biomass plant;
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(2) the extent to which the eligible business is able to repurpose the property for another
productive use after the early termination, including but not limited to the use, sales, salvage,
or scrap value of the property for which the loss is claimed; and
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(3) the value of the eligible business's nondepreciated investment in the property.
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new text begin Subd. 5. new text end
new text begin Limitations on awards. new text end
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(a) A compensation award for a decreased operating
income claim must not exceed the amount calculated under subdivision 4, paragraph (b),
clause (3), multiplied by two.
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(b) The use, sales, salvage, or scrap value of the property for which a loss is claimed
must be deducted from a compensation award for a loss of value of investments in real or
personal property claim.
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(c) A payment received from business interruption insurance policies, settlements, or
other forms of compensation related to the termination of the business's contract with the
biomass plant must be deducted from any compensation award provided under this section.
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new text begin Subd. 6. new text end
new text begin Priority. new text end
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The chief administrative law judge may give priority to claims by
eligible businesses that demonstrate a significant effort to pursue alternative business
opportunities or to conduct other loss mitigation efforts to reduce its claimed losses related
to the termination of its contract with the company operating the biomass plant.
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new text begin Subd. 7. new text end
new text begin Awarding claims. new text end
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If the amount provided for compensation in the biomass
business compensation account established under section 2 is insufficient to fully award all
claims eligible for an award, all awards must be adjusted proportionally based on the value
of the claim.
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new text begin Subd. 8. new text end
new text begin Deadlines. new text end
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The chief administrative law judge must make the application
process for eligible claims available by August 1, 2019. A business seeking an award under
this section must file all claims with the chief administrative law judge within 60 days of
the date the biomass plant closes. All preliminary awards on eligible claims must be made
within 120 days of the deadline date to file claims. Any requests to reconsider an award
denial must be filed with the chief administrative law judge within 60 days of the notice
date for preliminary awards. All final awards for eligible claims must be made within 60
days of the deadline date to file reconsideration requests. The commissioner of management
and budget must pay all awarded claims within 45 days of the date the commissioner of
management and budget receives notice of the final awards from the chief administrative
law judge.
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new text begin Subd. 9. new text end
new text begin Expiration. new text end
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This section expires June 30, 2022.
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new text begin EFFECTIVE DATE. new text end
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This section is effective June 1, 2019.
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Sec. 2.
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BIOMASS BUSINESS COMPENSATION ACCOUNT.
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new text begin Subdivision 1. new text end
new text begin Account established. new text end
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A biomass business compensation account is
established as a separate account in the special revenue fund in the state treasury.
Appropriations and transfers to the account must be credited to the account. Earnings, such
as interest, and any other earnings arising from the assets of the account are credited to the
account. Funds remaining in the account as of December 31, 2021, must be transferred to
the renewable development account established under Minnesota Statutes, section 116C.779.
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new text begin Subd. 2. new text end
new text begin Funding for the special account. new text end
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Notwithstanding Minnesota Statutes, section
116C.779, subdivision 1, paragraph (j), on July 1, 2019, $40,000,000 must be transferred
from the renewable development account under Minnesota Statutes, section 116C.779, to
the biomass business compensation account established under subdivision 1. The transferred
funds are appropriated to pay eligible obligations under the biomass business compensation
program established under section 1.
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new text begin Subd. 3. new text end
new text begin Payment of expenses. new text end
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The chief administrative law judge must certify to the
commissioner of management and budget the total costs incurred to administer the biomass
business compensation claims process. The commissioner of management and budget must
transfer an amount equal to the certified costs incurred for biomass business compensation
claim activities from the renewable development account under Minnesota Statutes, section
116C.779, and deposit it in the administrative hearings account under Minnesota Statutes,
section 14.54. Transfers may occur quarterly throughout the fiscal year and must be based
on quarterly cost and revenue reports, with final certification and reconciliation after each
fiscal year. The total amount transferred under this subdivision must not exceed $200,000.
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new text begin Subd. 4. new text end
new text begin Expiration. new text end
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This section expires June 30, 2022.
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new text begin EFFECTIVE DATE. new text end
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This section is effective June 1, 2019.
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