SF 13

as introduced - 91st Legislature, 2019 1st Special Session (2019 - 2020) Posted on 05/29/2019 10:02am

A bill for an act
relating to energy; establishing various renewable energy grant programs; providing
for certain business compensation; requiring reports; appropriating money;
proposing coding for new law in Minnesota Statutes, chapter 116J.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

[116J.55] COMMUNITY ENERGY TRANSITION GRANTS.

Subdivision 1.

Definitions.

(a) For the purposes of this section, the terms in this
subdivision have the meanings given.

(b) "Advisory council" means the Community Energy Transition Grant Advisory Council
created in this section.

(c) "Commissioner" means the commissioner of employment and economic development.

(d) "Eligible community" means a county, municipality, or tribal government located
within a county that hosts an investor-owned electric generating plant powered by coal,
nuclear energy, or natural gas.

Subd. 2.

Establishment.

The commissioner shall establish a community energy transition
grant program to award grants to promote economic development in eligible communities.

Subd. 3.

Funding.

(a) A community energy transition account is created in the special
revenue fund in the state treasury. Money in the account is appropriated to the commissioner
for grants as provided in this section and must be expended only as provided in this section.

(b) On July 1, 2020, $1,000,000; on July 1, 2021, $2,000,000; on July 1, 2022,
$3,000,000; and on July 1, 2023, $3,000,000 is transferred from the renewable development
account under section 116C.779 to the commissioner for deposit in the community energy
transition account. This transfer must be made before any other payments or transfers
required under section 116C.779.

(c) Grants to eligible communities in which an investor-owned electric generating plant
is located but has not been scheduled for retirement or decommissioning may not exceed
$1,000,000. Grants to eligible communities in which an investor-owned electric generating
plant is located and is scheduled for retirement or decommissioning may not exceed
$5,000,000.

(d) Unless amounts are otherwise appropriated for administrative costs, the commissioner
of employment and economic development may retain up to five percent of the amount
appropriated for grants under this section for administrative and personnel costs.

Subd. 4.

Cancellation of grant; return of grant money.

If after five years, the
commissioner determines that a project has not proceeded in a timely manner and is unlikely
to be completed, the commissioner must cancel the grant and require the grantee to return
all grant money awarded for that project. Grant money returned to the commissioner is
appropriated to the commissioner to make additional grants under this section.

Subd. 5.

Grants to eligible communities.

(a) The commissioner must award grants to
eligible communities through a competitive grant process. Eligible communities must be
located in the service territory of the public utility subject to section 116C.779.

(b) To receive grant funds, an eligible community must submit a written application to
the commissioner, using a form developed by the commissioner.

(c) The commissioner must consider the recommendations of the Community Energy
Transition Grant Advisory Council before selecting grant recipients.

(d) Grants must be used to plan for or address the economic and social impact on the
community of plant retirement or transition. Specific uses may include but are not limited
to:

(1) research;

(2) planning;

(3) studies;

(4) capital improvements; and

(5) incentives for businesses to open, relocate, or expand.

Subd. 6.

Priorities.

(a) In evaluating projects, the advisory council shall give priority
to eligible projects with one or more of the following characteristics:

(1) the potential of the eligible community to attract a viable business;

(2) the potential increase in the property tax base of the eligible community, considered
relative to the fiscal impact of the retirement of the electric generating plant located in the
eligible community;

(3) the extent to which the grant will assist the eligible community in addressing the
fiscal and social impacts of plant retirement; and

(4) the extent to which the grant will help the state transition away from fossil fuels.

(b) The factors listed in paragraph (a) are not ranked in order of priority. The
commissioner may weigh each factor, depending upon the facts and circumstances, as
appropriate. The commissioner may consider other factors that support the goals of this
program.

Subd. 7.

Advisory council.

(a) By September 1, 2019, the commissioner shall appoint
representatives to a Community Energy Transition Grant Advisory Council composed of
the following members:

(1) the commissioner of employment and economic development, or a designee;

(2) the commissioner of transportation, or a designee;

(3) the commissioner of the Minnesota Pollution Control Agency, or a designee;

(4) the commissioner of natural resources, or a designee;

(5) the commissioner of commerce, or a designee;

(6) one representative of the Prairie Island Indian community;

(7) two representatives of workers at investor-owned electric generating plants powered
by coal, nuclear energy, or natural gas; and

(8) four representatives of eligible communities, of which, two must be counties, two
must be municipalities, at least one must host a coal plant, at least one must host a nuclear
plant, and at least one must host a natural gas plant.

After the initial appointments, members of the advisory council shall be appointed no later
than January 15 of every odd-numbered year and shall serve until January 15 of the next
odd-numbered year. Members may be removed and vacancies filled as provided in section
15.059, subdivision 4. Appointed members are eligible for reappointment.

(b) The advisory council shall elect a chair and other officers at its first meeting.

(c) The advisory council shall review applications for community energy transition
grants and make recommendations to the commissioner of employment and economic
development.

(d) The commissioner of employment and economic development shall select projects
from the recommendations made by the advisory council under this subdivision with
consideration given to the priorities listed in subdivision 6.

(e) A member of the advisory council must not participate in the consideration of an
application from the community that member represents.

(f) Members of the advisory council serve without compensation or payment of expenses.

(g) The commissioner of employment and economic development or the commissioner's
designee shall provide meeting space and administrative services for the advisory council.
All costs necessary to support the advisory council's operations must be absorbed using
existing appropriations available to the commissioner.

(h) The advisory council is subject to chapter 13D, but may close a meeting to discuss
sensitive private business information included in grant applications. Data related to an
application for a grant submitted to the advisory council is governed by section 13.599.

(i) The commissioner shall convene the first meeting of the advisory council no later
than September 1, 2019.

Subd. 8.

Reports to the legislature.

By January 15, 2021, and each January 15 thereafter,
the commissioner must submit a report to the chairs and ranking minority members of the
committees of the house of representatives and the senate having jurisdiction over economic
development that details the use of grant funds. When possible, this report must include
data on the economic impact achieved by each grant.

Sec. 2.

BIOMASS BUSINESS COMPENSATION.

Subdivision 1.

Definitions.

(a) For the purposes of this section, the following terms have
the meanings given.

(b) "Biomass plant" means the biomass plant identified under Minnesota Statutes, section
116C.779, subdivision 1, paragraph (f).

(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.

(d) "Operating income" means a business's revenue minus its operating expenses.

Subd. 2.

Office of Administrative Hearings; claims process.

(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.

(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.

(c) Records submitted to the Office of Administrative Hearings as part of the claims
process constitute business data under Minnesota Statutes, section 13.591.

(d) An award made under this section is final and is not subject to judicial review.

(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.

Subd. 3.

Eligibility.

To be eligible for an award of compensation, an affected business
must meet the following criteria:

(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 sufficiently 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;

(2) the affected business is located in the state; and

(3) as the result of the early termination, the affected business suffered:

(i) decreased operating income; or

(ii) the loss of value of investments in real or personal property essential to its business
operations with the biomass plant.

Subd. 4.

Types of claims.

(a) An eligible business may make claims for a compensation
award based on either or both:

(1) decreased operating income; or

(2) the loss of value of investments in real or personal property essential to its business
operations with the biomass plant.

(b) To establish and quantify a claim for decreased operating income, an eligible business
must:

(1) demonstrate its operating income over the past five years derived from supplying or
managing material for, or receiving material from, the biomass plant;

(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

(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.

(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:

(1) the essential nature of the investment made in the property to fulfill the contract with
the biomass plant;

(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

(3) the value of the eligible business's nondepreciated investment in the property.

Subd. 5.

Limitations on awards.

(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.

(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.

(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.

Subd. 6.

Priority.

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.

Subd. 7.

Awarding claims.

If the amount provided for compensation in the biomass
business compensation account established under section 3 is insufficient to fully award all
claims eligible for an award, all awards must be adjusted proportionally based on the value
of the claim.

Subd. 8.

Deadlines.

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 chief administrative law judge makes the application process for eligible claims
available. 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.

Subd. 9.

Expiration.

This section expires June 30, 2022.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 3.

BIOMASS BUSINESS COMPENSATION ACCOUNT.

Subdivision 1.

Account established.

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.

Subd. 2.

Funding for the special account.

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 3. The transferred
funds are appropriated to pay eligible obligations under the biomass business compensation
program established under section 2.

Subd. 3.

Payment of expenses.

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.

Subd. 4.

Expiration.

This section expires June 30, 2022.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 4.

PRAIRIE ISLAND NET ZERO PROJECT.

Subdivision 1.

Program established.

The Prairie Island net zero project is established
with the goal of the Prairie Island Indian community developing an energy system that
results in net zero emissions.

Subd. 2.

Grant.

The commissioner of employment and economic development must
enter into a grant contract with the Prairie Island Indian community to provide the amount
appropriated under section 5 to stimulate research, development, and implementation of
renewable energy projects benefiting the Prairie Island Indian community or its members.
Any examination conducted by the commissioner of employment and economic development
to determine the sufficiency of the financial stability and capacity of the Prairie Island Indian
community to carry out the purposes of this grant is limited to the Community Services
Department of the Prairie Island Indian community.

Subd. 3.

Plan; report.

The Prairie Island Indian community must file a plan with the
commissioner of employment and economic development no later than July 1, 2019,
describing the Prairie Island net zero project elements and implementation strategy. The
Prairie Island Indian community must file a report on July 1, 2020, and each July 1 thereafter
until the project is complete, describing the progress made in implementing the project and
the uses of expended funds. A final report must be completed within 90 days of the date
the project is complete.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 5. APPROPRIATION; PRAIRIE ISLAND NET ZERO PROJECT.

Notwithstanding Minnesota Statutes, section 116C.779, subdivision 1, paragraph (j),
$8,000,000 each year in fiscal years 2020 and 2021; $15,000,000 in fiscal year 2022; and
$15,200,000 in fiscal year 2023 are appropriated from the renewable development account
under Minnesota Statutes, section 116C.779, subdivision 1, to the commissioner of
employment and economic development for a grant to the Prairie Island Indian community
to establish the net zero project under section 4.

EFFECTIVE DATE.

This section is effective the day following final enactment.