HF 1348

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

A bill for an act
relating to agriculture; replacing the ethanol producer payment program with a
need-based, market-driven subsidy; amending Minnesota Statutes 2006, section
41A.09, subdivision 2a, by adding subdivisions; repealing Minnesota Statutes
2006, section 41A.09, subdivision 3a.

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

Section 1.

Minnesota Statutes 2006, section 41A.09, subdivision 2a, is amended to read:

Subd. 2a.

Definitions.

For the purposes of this section, the terms defined in this
subdivision have the meanings given them.

(a) "Ethanol" means fermentation ethyl alcohol derived from agricultural products,
including potatoes, cereal grains, cheese whey, and sugar beets; forest products; or
other renewable resources, including residue and waste generated from the production,
processing, and marketing of agricultural products, forest products, and other renewable
resources, that:

(1) meets all of the specifications in ASTM specification D4806-04a; and

(2) is denatured as specified in Code of Federal Regulations, title 27, parts 20 and 21.

(b) "Ethanol plant" means a plant at which ethanol is produced.

(c) "Commissioner" means the commissioner of agriculture.

(d) "Rural economic infrastructure" means the development of activities that will
enhance the value of new text begin cellulosic biomass, new text end agricultural crop new text begin , new text end or livestock commodities or
by-products or waste from farming operations through new and improved value-added
conversion processes and technologies, new text begin the development and demonstration of promising
bioenergy technology, new text end the development of more timely and efficient infrastructure
delivery systems, and the enhancement of marketing opportunities. "Rural economic
infrastructure" also means land, buildings, structures, fixtures, and improvements located
or to be located in Minnesota and used or operated primarily for the processing or the
support of production of marketable products from agricultural commodities or wind
energy produced in Minnesota.

Sec. 2.

Minnesota Statutes 2006, section 41A.09, is amended by adding a subdivision
to read:

new text begin Subd. 3b. new text end

new text begin Market-based ethanol producer payments; deficiency payments.
new text end

new text begin (a) The commissioner shall replace the state's remaining obligations under the ethanol
producer payment program with a safety net subsidy, providing support for eligible
ethanol producers only when market forces put the state's ethanol industry in jeopardy.
new text end new text begin new text end

new text begin (b) The commissioner may make quarterly payments to producers eligible under the
provisions of subdivision 3c. The commissioner shall use the formula in paragraph (c)
to estimate the average per gallon margin for eligible producers in the preceding three
months. If the commissioner estimates per gallon margins were positive, no market-based
ethanol producer payments or deficiency payments may be paid. If the commissioner
estimates per gallon profits were negative, market-based ethanol producer payments
must be paid at a rate equal to the absolute value of the estimated per gallon loss, up
to a maximum of 20 cents per eligible gallon produced. The commissioner may make
market-based payments to eligible producers until June 30, 2010. If the estimated
per gallon loss for the preceding three months is greater than 20 cents per gallon, the
commissioner may also pay deficiency payments according to paragraph (d).
new text end

new text begin (c) The per gallon margin for eligible producers is presumed to equal the per gallon
wholesale ethanol price, minus 38 cents, minus the product of 35 cents and the per
bushel corn price. The source for the per gallon wholesale ethanol price is the average
Minneapolis/St. Paul rack price for denatured ethanol in the preceding three months, as
determined by the commissioner, minus ten cents per gallon. The source for the per bushel
market corn price is the average price received by Minnesota farmers in the preceding
three months as compiled by the Minnesota field office of the United States Department
of Agriculture's National Agricultural Statistics Service.
new text end

new text begin (d) Deficiency payments must be paid at a rate equal to the lesser of:
new text end

new text begin (1) the per gallon rate that, when added to any market-based producer payments
payable during the period, equals the per gallon loss estimated in paragraph (c); or
new text end

new text begin (2) seven cents per gallon.
new text end

new text begin Deficiency payments may be paid to eligible producers until June 30, 2013, or until
accrued deficiency obligations under the ethanol producer payment program in effect prior
to August 1, 2007, are paid in full, whichever comes first.
new text end

new text begin (e) An eligible producer who complies with the provisions of subdivision 3c is
eligible to receive market-based payments for the first 15,000,000 gallons of ethanol
produced annually. The commissioner shall make any required payments on February
15, May 15, August 15, and November 15, according to the provisions in paragraph (b).
A separate payment must be made for each claim filed. Notwithstanding paragraph (b),
producer and deficiency payments made on August 15, 2007, must be paid according to
the ethanol producer payment program in effect as of July 31, 2007.
new text end

new text begin (f) The commissioner may make direct payments to producers of rural economic
infrastructure with up to $5,000,000 of the amount of the annual appropriation for
market-based ethanol producer payments and rural economic infrastructure that is in
excess of the amount required to make market-based ethanol producer payments and
deficiency payments under this subdivision. If an excess appropriation exists in any year
after these rural economic infrastructure payments are made, the commissioner must remit
the excess to the commissioner of finance for deposit in the state general fund.
new text end

Sec. 3.

Minnesota Statutes 2006, section 41A.09, is amended by adding a subdivision
to read:

new text begin Subd. 3c. new text end

new text begin Eligible producers; reporting requirements. new text end

new text begin (a) The commissioner may
make quarterly market-based ethanol producer payments to producers of ethanol enrolled
in the ethanol producer payment program as of July 31, 2007, and eligible under the
provisions of that program to receive additional producer payments or deficiency payments
accrued in previous fiscal years. Not including deficiency payments accrued in previous
years, no producer is eligible for more than ten years of payments, including any ethanol
producer payments and deficiency payments received before September 1, 2007, and any
market-based ethanol producer payments and deficiency payments received after that date.
new text end

new text begin (b) Annually, within 90 days of the end of its fiscal year, an ethanol producer
receiving payments under subdivision 3b must file a disclosure statement on a form
provided by the commissioner. This disclosure statement must reflect noncumulative
changes in ownership of ten percent or more of the entity during the preceding year and
include both a summary description of the organization of the business structure of the
claimant and a copy of its annual audited financial statements, including the auditor's
report and footnotes. The report need not disclose the identity of the persons or entities
eligible to farm or own agricultural land with ownership interests, individuals residing
within 30 miles of the plant, or of any other entity with less than ten percent ownership
interest, 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. By February 15 of each year the commissioner shall deliver to the chairs of the
standing committees of the senate and the house of representatives with jurisdiction over
agricultural policy and agricultural finance a 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 must be contained in the report to the committee
chairs and is public data.
new text end

Sec. 4. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2006, section 41A.09, subdivision 3a, new text end new text begin is repealed.
new text end