HF 801

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to agriculture; bioenergy development; establishing a bioenergy
producer payment program for cellulosic biofuel production; establishing a
bioenergy production incentive program; establishing a bioenergy working lands
conservation program; authorizing rulemaking; authorizing general obligation
bonds; appropriating money; proposing coding for new law in Minnesota
Statutes, chapters 17; 41A; 103F.

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

Section 1.

new text begin [17.118] RENEWABLE ENERGY CAPITAL EQUIPMENT LOANS.
new text end

new text begin (a) There is established a renewable energy revolving loan fund that is eligible
to receive appropriations and make loans under this section. The commissioner shall
establish a renewable energy loan program to make loans for capital equipment to persons
participating in the reinvest in Minnesota renewable energy program under section
103F.518 and other persons using native, perennial cropping systems for energy or seed
production. The commissioner, in consultation with the technical committee established
under section 103F.518, subdivision 11, shall establish guidelines for loans made under
this section. All repayments of loans granted from this fund, including principal and
interest, must be deposited into this fund. Interest earned on money in the fund accrues
to the fund, and the money in the fund is appropriated to the commissioner to make
renewable energy capital equipment loans under this section.
new text end

new text begin (b) The definitions in section 41A.10, subdivision 2, apply to this section.
new text end

Sec. 2.

new text begin [41A.10] CELLULOSIC BIOFUEL DEVELOPMENT.
new text end

new text begin Subdivision 1. new text end

new text begin Appropriation. new text end

new text begin A sum sufficient to make the payments required
by this section is annually appropriated from the general fund to the commissioner of
agriculture and all money so appropriated is available until expended.
new text end

new text begin Subd. 2. new text end

new text begin Definitions. new text end

new text begin For the purposes of this section and sections 41A.11 and
103F.518, the terms defined in this subdivision have the meanings given them.
new text end

new text begin (a) "Cellulosic biofuel" means transportation fuel derived from cellulosic materials.
new text end

new text begin (b) "Cellulosic material" means an agricultural feedstock primarily comprised
of cellulose, hemicellulose, or lignan or a combination of those ingredients grown on
agricultural lands.
new text end

new text begin (c) "Cellulosic biofuel facility" means a facility at which cellulosic biofuel is
produced.
new text end

new text begin (d) "Perennial crops" means agriculturally produced plants that have a life cycle of
at least three years at the location where the plants are being cultivated.
new text end

new text begin (e) "Perennial cropping system" means an agricultural production system that
utilizes a perennial crop.
new text end

new text begin (f) "Native species" means a plant species which was present in a defined area of
Minnesota prior to European settlement (circa 1850). A defined area may be an ecological
classification province. Wild-type varieties therefore are regional or local ecotypes that
have not undergone a selection process.
new text end

new text begin (g) "Commissioner" means the commissioner of agriculture.
new text end

new text begin (h) "Eligible biofuel producer" means a biofuel producer that has at least 60 percent
of the ownership interest and at least 70 percent of the governance rights held by persons
residing in the county where the cellulosic biofuel facility is located or in an adjoining
county. At least 50 percent of the required local ownership interest and governance rights
must be held by persons providing feedstock to the cellulosic biofuel facility.
new text end

new text begin Subd. 3. new text end

new text begin Cellulosic biofuel production goal. new text end

new text begin The state cellulosic biofuel production
goal is one-quarter of the total amount necessary for ethanol use required under section
239.791, subdivision 1a, by 2015 or when cellulosic biofuel facilities in the state attain a
total annual production level of 60,000,000 gallons, whichever is first.
new text end

new text begin Subd. 4. new text end

new text begin Cellulosic biofuel producer payments. new text end

new text begin (a) The commissioner shall
make cash payments to eligible producers of cellulosic biofuel located in the state that
have begun production at a specific location by June 30, 2012. For the purpose of this
subdivision, an entity that holds a controlling interest in more than one cellulosic biofuel
plant is considered a single eligible producer. The amount of the payment for each eligible
producer's annual production, except as provided in paragraph (d), is 20 cents per gallon
for each gallon of cellulosic biofuel produced at a specific location for ten years after the
start of production.
new text end

new text begin new text end new text begin (b) In lieu of the payment under paragraph (a), the commissioner shall make cash
payments to eligible producers of cellulosic biofuel located in the state that follow the
standards derived under section 103F.518, subdivision 11, that have begun production at a
specific location by June 30, 2015. For the purpose of this subdivision, an entity that holds
a controlling interest in more than one cellulosic biofuel facility is considered a single
eligible producer. The amount of the payment for each eligible biofuel producer's annual
production, except as provided in paragraph (d), is 30 cents per gallon for each gallon of
cellulosic biofuel produced at a specific location for ten years after the start of production.
new text end

new text begin (c) No payments shall be made for cellulosic biofuel production that occurs after
June 30, 2022, for those eligible biofuel producers under paragraph (a), and 2025 for
those eligible biofuel producers under paragraph (b). An eligible producer of cellulosic
biofuel shall not transfer the producer's eligibility for payments under this section to a
cellulosic biofuel facility at a different location.
new text end

new text begin (d) If the level of production at a cellulosic biofuel facility increases due to an
increase in the production capacity of the facility, the payment under paragraphs (a) and
(b) apply to the additional increment of production until ten years after the increased
production began. Once a facility's production capacity reaches 15,000,000 gallons per
year, no additional increment will qualify for the payment.
new text end

new text begin (e) Payments under paragraphs (a) and (b) to all eligible biofuel producers may not
exceed $27,000,000 in a fiscal year. Total payments under paragraph (a) to an eligible
biofuel producer in a fiscal year may not exceed the amount necessary for 15,000,000
gallons of biofuel production.
new text end

new text begin (f) By the last day of October, January, April, and July, each eligible biofuel producer
shall file a claim for payment for cellulosic biofuel production during the preceding three
calendar months. An eligible biofuel producer that files a claim under this subdivision shall
include a statement of the eligible biofuel producer's total cellulosic biofuel production in
Minnesota during the quarter covered by the claim. For each claim and statement of total
cellulosic biofuel production filed under this subdivision, the volume of cellulosic biofuel
production must be examined by an independent certified public accountant in accordance
with standards established by the American Institute of Certified Public Accountants.
new text end

new text begin (g) Payments must be made November 15, February 15, May 15, and August 15.
A separate payment must be made for each claim filed. The total quarterly payment
to an eligible producer under this paragraph may not exceed the amount necessary for
3,750,000 gallons of biofuel production.
new text end

new text begin (h) If an eligible biofuel producer becomes ineligible within ten years after the
last payment has been received under this section, all payments received for biofuel
production must be refunded to the commissioner. Refunded payments received under this
paragraph shall be deposited in the general fund.
new text end

new text begin (i) Annually, within 90 days of the end of its fiscal year, a cellulosic biofuel producer
receiving payments under this subdivision must file a disclosure statement on a form
provided by the commissioner. The initial disclosure statement must include a summary
description of the organization of the business structure of the claimant, a listing of the
percentages of ownership and governance by any person or other entity with an ownership
interest or governance rights of five percent or greater, and a copy of its annual audited
financial statements, including the auditor's report and footnotes. The disclosure statement
must include information demonstrating what percentage of the entity receiving payments
under this section is owned and governed by farmers or other entities that reside within the
county where the cellulosic biofuel facility is located. Subsequent annual reports must
reflect noncumulative changes in ownership of ten percent or more of the entity. The
report need not disclose the identity of the persons or entities, but the claimant must
retain information within its files confirming the accuracy of the data provided. This data
must be made available to the commissioner upon request. Not later than the 15th day
of February in each year, the commissioner shall deliver to the chairs of the standing
committees of the senate and the house of representatives that deal with agricultural
policy and agricultural finance an annual report summarizing aggregated data from
plants receiving payments under this section during the preceding calendar year. Audited
financial statements and notes and disclosure statements submitted to the commissioner
are nonpublic data under section 13.02, subdivision 9. Notwithstanding the provisions of
chapter 13 relating to nonpublic data, summaries of the submitted audited financial reports
and notes and disclosure statements will be contained in the report to the committee chairs
and will be public data.
new text end

new text begin (j) Bioenergy production for which payment has been received under section 41A.11
is not eligible for payment under this section.
new text end

Sec. 3.

new text begin [41A.11] BIOENERGY PRODUCTION INCENTIVE.
new text end

new text begin Subdivision 1. new text end

new text begin Appropriation. new text end

new text begin A sum sufficient to make the payments required
by this section is annually appropriated from the general fund to the commissioner of
agriculture and all money so appropriated is available until expended.
new text end

new text begin Subd. 2. new text end

new text begin Definitions. new text end

new text begin The definitions in this subdivision and section 41A.10 apply
to this section.
new text end

new text begin (a) "Bioenergy production" means the generation of energy for commercial heat,
industrial process heat, or electrical power from perennial, native bioenergy crops grown
according to standards developed for the reinvest in Minnesota renewable energy program
under section 103F.518.
new text end

new text begin (b) "Bioenergy crops" means perennial, native crops grown according to standards
developed under section 103F.518 or intermediary fuels processed from the crops.
new text end

new text begin (c) "Project area" means a geographically defined area in which reinvest in
Minnesota easements are secured in order to provide a bioenergy fuel supply to an
identified bioenergy facility.
new text end

new text begin (d) "Commissioner" means the commissioner of agriculture.
new text end

new text begin Subd. 3. new text end

new text begin Bioenergy producer payments. new text end

new text begin (a) The commissioner shall make cash
payments to producers of bioenergy located in the state that have begun production at a
specific location by June 30, 2010. For the purpose of this subdivision, an entity that holds
a controlling interest in more than one bioenergy production plant is considered a single
producer. The amount of the payment for each producer's annual production, except as
provided in paragraph (c), is $1.50 per 1,000,000 British thermal units (Btu) of bioenergy
production produced at a specific location for ten years after the start of production.
new text end

new text begin (b) No payments shall be made for bioenergy production that occurs after June 30,
2020. A producer of bioenergy production shall not transfer the producer's eligibility for
payments under this section to a bioenergy production plant at a different location.
new text end

new text begin (c) If the level of production at a bioenergy production plant increases due to an
increase in the production capacity of the plant, the payment under paragraph (a) applies
to the additional increment of production until ten years after the increased production
began. Once a plant's bioenergy production capacity reaches 1,500,000,000,000 Btu per
year, no additional increment will qualify for the payment.
new text end

new text begin (d) Total payments under paragraph (a) to all producers may not exceed $11,000,000
in a fiscal year. Total payments under paragraph (a) to a producer in a fiscal year may
not exceed $2,500,000.
new text end

new text begin (e) By the last day of October, January, April, and July, each producer shall file a
claim for payment for bioenergy production during the preceding three calendar months.
A producer that files a claim under this subdivision shall include a statement of the
producer's total bioenergy production in Minnesota during the quarter covered by the
claim. For each claim and statement of total bioenergy production filed under this
subdivision, the volume of bioenergy production must be examined by an independent
certified public accountant in accordance with standards established by the American
Institute of Certified Public Accountants.
new text end

new text begin (f) Payments shall be made November 15, February 15, May 15, and August 15.
A separate payment shall be made for each claim filed. The total quarterly payment to a
producer under this paragraph may not exceed $750,000.
new text end

new text begin (g) Biofuel production for which payment has been received under section 41A.10 is
not eligible for payment under this section.
new text end

Sec. 4.

new text begin [103F.518] REINVEST IN MINNESOTA CLEAN ENERGY PROGRAM.
new text end

new text begin Subdivision 1. new text end

new text begin Establishment of program. new text end

new text begin (a) The board, in consultation with
the technical committee established in subdivision 11, shall establish and administer a
reinvest in Minnesota clean energy program that is in addition to the program under
section 103F.515. The board may adopt rules to implement this section. Selection of land
for the clean energy program must be based on its potential benefits for bioenergy crop
production, water quality, soil health, reduction of chemical inputs, soil carbon storage,
biodiversity, and wildlife habitat.
new text end

new text begin (b) The definitions in section 41A.10 apply to this section.
new text end

new text begin Subd. 2. new text end

new text begin Eligible land. new text end

new text begin Eligible land under this section must:
new text end

new text begin (1) be owned by the landowner, or a parent or other blood relative of the landowner,
for at least one year before the date of application;
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new text begin (2) be at least five acres in size;
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new text begin (3) not be currently set aside, enrolled, or diverted under another federal or state
government program; and
new text end

new text begin (4) have been in agricultural use, as defined in Minnesota Statutes 2006, section
17.81, subdivision 4, or have been set aside, enrolled, or diverted under another federal or
state program for at least two of the last five years before the date of application.
new text end

new text begin Subd. 3. new text end

new text begin Designation of project areas. new text end

new text begin The board shall develop a process to
designate defined project areas. The designation process shall prioritize projects that
include coordinated cooperation of a cellulosic biofuel plant or a bioenergy production
plant, target impaired waters, or support other state or local natural resource plans, goals,
or objectives.
new text end

new text begin Subd. 4. new text end

new text begin Easements. new text end

new text begin The board may acquire, or accept by gift or donation,
easements on eligible land. An easement may be permanent or of limited duration. An
easement of limited duration may not be acquired if it is for a period less than 20 years.
The negotiation and acquisition of easements authorized by this section are exempt from
the contractual provisions of chapters 16B and 16C.
new text end

new text begin Subd. 5. new text end

new text begin Nature of property rights acquired. new text end

new text begin (a) An easement must prohibit:
new text end

new text begin (1) agricultural crop production, unless approved by the board for energy production
purposes;
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new text begin (2) grazing of livestock, unless approved by the board; and
new text end

new text begin (3) spraying with chemicals, except as necessary to comply with noxious weed
control laws, emergency pest control necessary to protect public health, or as needed to
maintain and manage a productive planting.
new text end

new text begin (b) An easement is subject to the terms of the agreement provided in subdivision 6.
new text end

new text begin (c) Agricultural crop production and harvest are limited to native, perennial
bioenergy crops. Harvest shall occur outside of bird nesting season.
new text end

new text begin (d) An easement must allow repairs, improvements, and inspections necessary to
maintain public drainage systems provided the easement area is restored to the condition
required by the terms of the easement.
new text end

new text begin Subd. 6. new text end

new text begin Agreements by landowner. new text end

new text begin The board may enroll eligible land in the
reinvest in Minnesota renewable energy program by signing an agreement in recordable
form with a landowner in which the landowner agrees:
new text end

new text begin (1) to convey to the state an easement that is not subject to any prior title, lien, or
encumbrance;
new text end

new text begin (2) to seed the land subject to the easement, as specified in the agreement, at
seeding rates determined by the board, or carry out other long-term capital improvements
approved by the board; and
new text end

new text begin (3) that the easement duration may be lengthened through mutual agreement with
the board.
new text end

new text begin Subd. 7. new text end

new text begin Payments for easements. new text end

new text begin The board must develop a tiered payment system
for easements partially based on the benefits of the bioenergy crop production for water
quality, soil health, reduction in chemical inputs, soil carbon storage, biodiversity, and
wildlife habitat using cash rent or a similar system as may be determined by the board. The
payment system must provide that the highest per-acre payment is for mixed perennials.
new text end

new text begin Subd. 8. new text end

new text begin Easement renewal. new text end

new text begin When an easement of limited duration expires, a
new easement and agreement for an additional period of not less than 20 years may be
acquired by agreement of the board and the landowner under the terms of this section.
The board may adjust payment rates as a result of renewing an agreement and easement
only after examining the condition of the established plantings, conservation practices,
and land values.
new text end

new text begin Subd. 9. new text end

new text begin Correction of easement boundary lines. new text end

new text begin To correct errors in legal
descriptions for easements that affect the ownership interest in the state and adjacent
landowners, the board may, in the name of the state, with the approval of the attorney
general, convey, without consideration, interests of the state necessary to correct legal
descriptions of boundaries. The conveyance must be by quitclaim deed or release in
a form approved by the attorney general.
new text end

new text begin Subd. 10. new text end

new text begin Enforcement and damages. new text end

new text begin (a) A landowner who violates the term of
an easement or agreement under this section, or induces, assists, or allows another to do
so, is liable to the state for treble damages if the trespass is willful, but liable for double
damages only if the trespass is not willful. The amount of damages is the amount needed
to make the state whole or the amount the landowner has gained due to the violation,
whichever is greater.
new text end

new text begin (b) Upon the request of the board, the attorney general may commence an action for
specific performances, injunctive relief, damages, including attorney fees, and any other
appropriate relief to enforce this section in district court in the county where all or part
of the violation is alleged to have been committed, or where the landowner resides or
has a principal place of business.
new text end

new text begin Subd. 11. new text end

new text begin Technical committee. new text end

new text begin To ensure that public benefits, including water
quality, soil health, reduction of chemical inputs, soil carbon storage, biodiversity, and
wildlife habitat are secured along with bioenergy crop production, the Board of Water
and Soil Resources shall appoint a technical committee consisting of representatives
from the Departments of Agriculture, Natural Resources, and Commerce, the Pollution
Control Agency, and other appropriate public and private stakeholders to develop program
guidelines, standards, and rules, as appropriate to ensure that reinvest in Minnesota
renewable energy program contracts provide public benefits commensurate with the public
investment. The technical committee shall review and make recommendations on the
guidelines, standards, and rules every five years.
new text end

Sec. 5. new text begin APPROPRIATION; CLEAN ENERGY RESERVE STANDARDS.
new text end

new text begin $500,000 in fiscal year 2008 is appropriated from the general fund to the Board
of Water and Soil Resources to develop, in consultation with the technical committee
established under section 4, subdivision 11, clean energy reserve program guidelines,
standards, and rules. This is a onetime appropriation and is available until June 30, 2009.
new text end

Sec. 6. new text begin APPROPRIATION; CLEAN ENERGY RESERVE EASEMENTS.
new text end

new text begin Subdivision 1. new text end

new text begin Appropriation. new text end

new text begin $20,000,000 is appropriated from the bond proceeds
fund to the Board of Water and Soil Resources to acquire clean energy reserve easements
under section 4.
new text end

new text begin Subd. 2. new text end

new text begin Bond sale. new text end

new text begin To provide the money appropriated in this act from the bond
proceeds fund, the commissioner of finance shall sell and issue bonds of the state in an
amount up to $20,000,000 in the manner, upon the terms, and with the effect prescribed by
Minnesota Statutes, sections 16A.631 to 16A.675, and by the Minnesota Constitution,
article XI, sections 4 to 7.
new text end

Sec. 7. new text begin TRANSFER; RENEWABLE ENERGY CAPITAL EQUIPMENT
REVOLVING LOAN FUND.
new text end

new text begin By June 30, 2008, the commissioner of finance shall transfer $3,000,000 from the
general fund to the renewable energy capital equipment revolving fund.
new text end

Sec. 8. new text begin APPROPRIATION; BIOENERGY CROP UTILIZATION
TECHNOLOGY PERMITTING.
new text end

new text begin $500,000 in fiscal year 2008 is appropriated from the general fund to the Pollution
Control Agency to permit new and emerging bioenergy crop utilization technologies. This
appropriation is available until June 30, 2009.
new text end

Sec. 9. new text begin APPROPRIATION; BIOENERGY PRODUCTION AND UTILIZATION
TECHNICAL ASSISTANCE.
new text end

new text begin $600,000 in fiscal year 2008 is appropriated from the general fund to the Agricultural
Utilization Research Institute for technical assistance and technology transfer to bioenergy
crop producers and users. This appropriation is available until June 30, 2009.
new text end

Sec. 10. new text begin APPROPRIATION; BIOENERGY PRODUCTION RESEARCH AND
MONITORING.
new text end

new text begin $1,000,000 in fiscal year 2008 is appropriated from the general fund to the Board of
Water and Soil Resources to provide grants, in consultation with the technical committee
established under section 4, subdivision 11, for bioenergy crop research and monitoring
including, but not limited to, water quality, soil carbon storage, biological diversity,
wildlife and habitat impacts and benefits, and small diameter woody bioenergy. This
appropriation is available until June 30, 2009.
new text end

Sec. 11. new text begin APPROPRIATION; BIOENERGY AGRONOMIC ECONOMIC AND
POLICY RESEARCH.
new text end

new text begin $1,000,000 in fiscal year 2008 and $1,000,000 in fiscal year 2009 are appropriated
from the general fund to the Minnesota Institute for Sustainable Agriculture at the
University of Minnesota to provide funds for on-station and on-farm field scale research
and outreach to develop and test the agronomic and economic requirements of diverse
stands of prairie plants and other perennials for bioenergy systems including, but not
limited to, multiple species selection and establishment, ecological management between
planting and harvest, harvest technologies, financial and agronomic risk management,
farmer goal setting and adoption of technologies, integration of wildlife habitat into
management approaches, evaluation of carbon and other benefits, and robust policies
needed to induce farmer conversion on marginal lands.
new text end

Sec. 12. new text begin APPROPRIATION; BUSINESS DEVELOPMENT ASSISTANCE
GRANTS.
new text end

new text begin $150,000 in fiscal year 2008 is appropriated from the general fund to the
commissioner of agriculture for grants to nongovernmental entities to assist in the
development of business plans and structures related to community ownership of eligible
cellulosic biofuel facilities under Minnesota Statutes, section 41A.10. This is a onetime
appropriation and is available until June 30, 2009.
new text end