1.1                          A bill for an act 
  1.2             relating to state government; appropriating and 
  1.3             reducing money for agricultural purposes; establishing 
  1.4             and modifying certain programs; providing for 
  1.5             regulation of certain activities and practices; 
  1.6             providing for accounts, assessments, and fees; 
  1.7             amending Minnesota Statutes 2000, sections 38.331, 
  1.8             subdivision 2; 41A.09, subdivisions 3a, 5a; proposing 
  1.9             coding for new law in Minnesota Statutes, chapter 41B. 
  1.10  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.11  Section 1.  [AGRICULTURE APPROPRIATIONS AND REDUCTIONS.] 
  1.12     The dollar amounts in the columns under "APPROPRIATIONS" 
  1.13  are added to or, if shown in parentheses, are subtracted from 
  1.14  the appropriations in Laws 2001, First Special Session chapter 
  1.15  2, or other law, to the specified agencies.  The appropriations 
  1.16  are from the general fund or other named fund and are available 
  1.17  for the fiscal years indicated for each purpose.  The figure 
  1.18  "2002" or "2003" means that the addition to or subtraction from 
  1.19  the appropriations listed under the figure are for the fiscal 
  1.20  year ending June 30, 2002, or June 30, 2003, respectively.  The 
  1.21  term "the first year" means the year ending June 30, 2002, and 
  1.22  the term "the second year" means the year ending June 30, 2003. 
  1.23                                             APPROPRIATIONS 
  1.24                                         Available for the Year 
  1.25                                             Ending June 30 
  1.26                                            2002         2003 
  1.27  Sec. 2.  AGRICULTURE
  1.28  Subdivision 1.  Total
  1.29  Appropriation Reductions                 (26,000)      (810,000)
  2.1   The amounts reduced from the 
  2.2   appropriations in Laws 2001, First 
  2.3   Special Session chapter 2, are 
  2.4   specified in the following subdivisions.
  2.5   Subd. 2.  Protection Services
  2.6          -0-          (250,000) 
  2.7   Base funding for the protection service 
  2.8   program is $11,451,000 in the fiscal 
  2.9   year beginning July 1, 2003. 
  2.10  Subd. 3.  Agricultural 
  2.11  Marketing and Development
  2.12       (21,000)        (71,000) 
  2.13  Base funding for the agricultural 
  2.14  marketing and development program is 
  2.15  $5,514,000 for the fiscal year 
  2.16  beginning July 1, 2003. 
  2.17  Beginning in fiscal year 2003, the 
  2.18  commissioner shall contract with 
  2.19  counties or other qualified entities to 
  2.20  deliver the manure management program. 
  2.21  Subd. 4.  Administration and
  2.22  Financial Assistance 
  2.23        (5,000)       (489,000)
  2.24  $5,000 the first year and $2,000 the 
  2.25  second year of this reduction are from 
  2.26  family farm security interest payment 
  2.27  adjustments. 
  2.28  $175,000 the second year of this 
  2.29  reduction is from grants to agriculture 
  2.30  information centers. 
  2.31  $11,500 the second year of this 
  2.32  reduction is from the appropriation for 
  2.33  the Seaway Port Authority of Duluth. 
  2.34  Base funding for the administration and 
  2.35  financial assistance program is 
  2.36  $4,344,000 for the fiscal year 
  2.37  beginning July 1, 2003. 
  2.38  Subd. 5.  Cancellations
  2.39  $43,000 from Laws 2000, chapter 488, 
  2.40  article 3, section 5, for grants to one 
  2.41  or more cooperative associations for 
  2.42  the purpose of facilitating the 
  2.43  production and marketing of short 
  2.44  rotation woody crops is canceled to the 
  2.45  general fund. 
  2.46  Subd. 6.  Transfers 
  2.47  (a) By June 30, 2002, the commissioner 
  2.48  shall transfer the unencumbered cash 
  2.49  balance in the ethanol development fund 
  2.50  established in Minnesota Statutes, 
  2.51  section 41B.044, to the general fund. 
  2.52  (b) By June 30, 2002, the commissioner 
  2.53  shall transfer $106,000 from the 
  3.1   balance in the family farm security 
  3.2   account established in Minnesota 
  3.3   Statutes, section 41.61, to the general 
  3.4   fund. 
  3.5   (c) By June 30, 2002, the commissioner 
  3.6   shall transfer $1,690,000 from the 
  3.7   unencumbered bond proceeds balance in 
  3.8   the family farm security account 
  3.9   established in Minnesota Statutes, 
  3.10  section 41.61, to the debt service fund.
  3.11  (d) By June 30, 2004, the commissioner 
  3.12  shall transfer $50,000 from the balance 
  3.13  in the family farm security account 
  3.14  established in Minnesota Statutes, 
  3.15  section 41.61, to the general fund. 
  3.16  (e) By June 30, 2005, the commissioner 
  3.17  shall transfer $410,000 from the 
  3.18  unencumbered bond proceeds balance in 
  3.19  the family farm security account 
  3.20  established in Minnesota Statutes, 
  3.21  section 41.61, to the debt service fund.
  3.22  Sec. 3.  MINNESOTA HORTICULTURE
  3.23  SOCIETY                                    -0-          (16,000)
  3.24  Sec. 4.  AGRICULTURAL UTILIZATION
  3.25  RESEARCH INSTITUTE                      (400,000)      (401,000)
  3.26  $20,000 each year of the reduction is 
  3.27  from the money appropriated for hybrid 
  3.28  tree management research and 
  3.29  development. 
  3.30  Base funding of the agricultural 
  3.31  utilization research institute is 
  3.32  $3,717,000 for the fiscal year 
  3.33  beginning July 1, 2003. 
  3.34     Sec. 5.  Minnesota Statutes 2000, section 38.331, 
  3.35  subdivision 2, is amended to read: 
  3.36     Subd. 2.  [COUNTY EXTENSION WORK.] "County extension work" 
  3.37  means educational programs and services provided by extension 
  3.38  agents in the areas of agriculture, economic and human 
  3.39  development, community, agricultural finance, economic 
  3.40  development, nutrition, youth leadership development including 
  3.41  4-H programs, leadership, and environment and natural resources. 
  3.42     Sec. 6.  Minnesota Statutes 2000, section 41A.09, 
  3.43  subdivision 3a, is amended to read: 
  3.44     Subd. 3a.  [PAYMENTS.] (a) The commissioner of agriculture 
  3.45  shall make cash payments to producers of ethanol, anhydrous 
  3.46  alcohol, and wet alcohol located in the state.  These payments 
  3.47  shall apply only to ethanol, anhydrous alcohol, and wet alcohol 
  3.48  fermented in the state and produced at plants that have begun 
  4.1   production by June 30, 2000, except that a plant eligible for 
  4.2   payments under paragraph (l) must begin production by June 30, 
  4.3   2004.  For the purpose of this subdivision, an entity that holds 
  4.4   a controlling interest in more than one ethanol plant is 
  4.5   considered a single producer.  The amount of the payment for 
  4.6   each producer's annual production is: 
  4.7      (1) except as provided in paragraph paragraphs (b) or (l), 
  4.8   (m), and (n), for each gallon of ethanol or anhydrous alcohol 
  4.9   produced on or before June 30, 2000, or ten years after the 
  4.10  start of production, whichever is later, 20 cents per gallon; 
  4.11  and 
  4.12     (2) for each gallon produced of wet alcohol on or before 
  4.13  June 30, 2000, or ten years after the start of production, 
  4.14  whichever is later, a payment in cents per gallon calculated by 
  4.15  the formula "alcohol purity in percent divided by five," and 
  4.16  rounded to the nearest cent per gallon, but not less than 11 
  4.17  cents per gallon. 
  4.18     The producer payments for anhydrous alcohol and wet alcohol 
  4.19  under this section may be paid to either the original producer 
  4.20  of anhydrous alcohol or wet alcohol or the secondary processor, 
  4.21  at the option of the original producer, but not to both. 
  4.22     Except as provided in paragraphs (l), (m), and (n), no 
  4.23  payments shall be made for production that occurs after June 30, 
  4.24  2010. 
  4.25     (b) If the level of production at an ethanol plant 
  4.26  increases due to an increase in the production capacity of the 
  4.27  plant, the payment under paragraph (a), clause (1), applies to 
  4.28  the additional increment of production until ten years after the 
  4.29  increased production began.  Once a plant's production capacity 
  4.30  reaches 15,000,000 gallons per year, no additional increment 
  4.31  will qualify for the payment.  A plant eligible for payments 
  4.32  under paragraph (l) is not eligible for payments in excess of 
  4.33  the production capacity certified to the commissioner on June 
  4.34  30, 2004. 
  4.35     (c) The commissioner shall make payments to producers of 
  4.36  ethanol or wet alcohol in the amount of 1.5 cents for each 
  5.1   kilowatt hour of electricity generated using closed-loop biomass 
  5.2   in a cogeneration facility at an ethanol plant located in the 
  5.3   state.  Payments under this paragraph shall be made only for 
  5.4   electricity generated at cogeneration facilities that begin 
  5.5   operation by June 30, 2000.  The payments apply to electricity 
  5.6   generated on or before the date ten years after the producer 
  5.7   first qualifies for payment under this paragraph.  Total 
  5.8   payments under this paragraph in any fiscal year may not exceed 
  5.9   $750,000.  For the purposes of this paragraph: 
  5.10     (1) "closed-loop biomass" means any organic material from a 
  5.11  plant that is planted for the purpose of being used to generate 
  5.12  electricity or for multiple purposes that include being used to 
  5.13  generate electricity; and 
  5.14     (2) "cogeneration" means the combined generation of: 
  5.15     (i) electrical or mechanical power; and 
  5.16     (ii) steam or forms of useful energy, such as heat, that 
  5.17  are used for industrial, commercial, heating, or cooling 
  5.18  purposes. 
  5.19     (d) Payments under paragraphs (a) and, (b), and (l) to all 
  5.20  producers may not exceed $37,000,000 in a fiscal year.  Total 
  5.21  payments under paragraphs (a) and, (b), and (l) to a producer in 
  5.22  a fiscal year may not exceed $3,000,000. 
  5.23     (e) By the last day of October, January, April, and July, 
  5.24  each producer shall file a claim for payment for ethanol, 
  5.25  anhydrous alcohol, and wet alcohol production during the 
  5.26  preceding three calendar months.  A producer with more than one 
  5.27  plant shall file a separate claim for each plant.  A producer 
  5.28  that files a claim under this subdivision shall include a 
  5.29  statement of the producer's total ethanol, anhydrous alcohol, 
  5.30  and wet alcohol production in Minnesota during the quarter 
  5.31  covered by the claim, including anhydrous alcohol and wet 
  5.32  alcohol produced or received from an outside source.  A producer 
  5.33  shall file a separate claim for any amount claimed under 
  5.34  paragraph (c).  For each claim and statement of total ethanol, 
  5.35  anhydrous alcohol, and wet alcohol production filed under this 
  5.36  subdivision, the volume of ethanol, anhydrous alcohol, and wet 
  6.1   alcohol production or amounts of electricity generated using 
  6.2   closed-loop biomass must be examined by an independent certified 
  6.3   public accountant in accordance with standards established by 
  6.4   the American Institute of Certified Public Accountants. 
  6.5      (f) Payments shall be made November 15, February 15, May 
  6.6   15, and August 15.  A separate payment shall be made for each 
  6.7   claim filed.  Except as provided in paragraph (j), the total 
  6.8   quarterly payment to a producer under this paragraph, excluding 
  6.9   amounts paid under paragraph (c), may not exceed $750,000.  
  6.10     (g) If the total amount for which all producers are 
  6.11  eligible in a quarter under paragraph (c) exceeds the amount 
  6.12  available for payments, the commissioner shall make payments in 
  6.13  the order in which the plants covered by the claims began 
  6.14  generating electricity using closed-loop biomass. 
  6.15     (h) After July 1, 1997, new production capacity is only 
  6.16  eligible for payment under this subdivision if the commissioner 
  6.17  receives: 
  6.18     (1) an application for approval of the new production 
  6.19  capacity; 
  6.20     (2) an appropriate letter of long-term financial commitment 
  6.21  for construction of the new production capacity; and 
  6.22     (3) copies of all necessary permits for construction of the 
  6.23  new production capacity. 
  6.24     The commissioner may approve new production capacity based 
  6.25  on the order in which the applications are received.  
  6.26     (i) Except as provided in paragraph (l), the commissioner 
  6.27  may not approve any new production capacity after July 1, 1998, 
  6.28  except that a producer with an approved production capacity of 
  6.29  at least 12,000,000 gallons per year but less than 15,000,000 
  6.30  gallons per year prior to July 1, 1998, is approved for 
  6.31  15,000,000 gallons of production capacity. 
  6.32     (j) Notwithstanding the quarterly payment limits of 
  6.33  paragraph (f), the commissioner shall make an additional payment 
  6.34  in the eighth quarter of each fiscal biennium to ethanol 
  6.35  producers for the lesser of:  (1) 20 cents per gallon of 
  6.36  production in the eighth quarter of the biennium that is greater 
  7.1   than 3,750,000 gallons; or (2) the total amount of payments lost 
  7.2   during the first seven quarters of the biennium due to plant 
  7.3   outages, repair, or major maintenance.  Total payments to an 
  7.4   ethanol producer in a fiscal biennium, including any payment 
  7.5   under this paragraph, must not exceed the total amount the 
  7.6   producer is eligible to receive based on the producer's approved 
  7.7   production capacity.  The provisions of this paragraph apply 
  7.8   only to production losses that occur in quarters beginning after 
  7.9   December 31, 1999. 
  7.10     (k) For the purposes of this subdivision "new production 
  7.11  capacity" means annual ethanol production capacity that was not 
  7.12  allowed under a permit issued by the pollution control agency 
  7.13  prior to July 1, 1997, or for which construction did not begin 
  7.14  prior to July 1, 1997. 
  7.15     (l) Beginning in fiscal year 2005, to the extent funding is 
  7.16  available as provided in paragraph (n), the commissioner may 
  7.17  make ethanol producer payments for one additional second 
  7.18  generation cooperative-owned plant that meets the following 
  7.19  conditions: 
  7.20     (1) the cooperative owning the plant makes application to 
  7.21  the commissioner and includes copies of all major construction 
  7.22  or operating permits and a letter of financial commitment for 
  7.23  the plant; 
  7.24     (2) the plant is located in west central or northwestern 
  7.25  Minnesota; 
  7.26     (3) the plant is designed to accommodate nontraditional 
  7.27  feedstocks and may also be capable of utilizing traditional 
  7.28  feedstocks; and 
  7.29     (4) construction on the plant is begun after January 1, 
  7.30  2003. 
  7.31     (m) A plant eligible to receive ethanol producer payments 
  7.32  under paragraph (l) shall receive payments for eligible 
  7.33  production for a period of ten years after payments are begun or 
  7.34  until expiration of this section under subdivision 5a. 
  7.35     (n) To the extent that anticipated producer payments in a 
  7.36  fiscal year for eligible ethanol plant capacity in production on 
  8.1   January 1, 2002, total less than $37,000,000, the commissioner 
  8.2   of agriculture shall make cash payments to an ethanol plant 
  8.3   eligible for payments under paragraphs (l) and (m). 
  8.4      Sec. 7.  Minnesota Statutes 2000, section 41A.09, 
  8.5   subdivision 5a, is amended to read: 
  8.6      Subd. 5a.  [EXPIRATION.] This section expires June 30, 2010 
  8.7   2015, and the unobligated balance of each appropriation under 
  8.8   this section on that date reverts to the general fund. 
  8.9      Sec. 8.  [41B.049] [RENEWABLE ENERGY LOAN PROGRAM.] 
  8.10     Subdivision 1.  [ESTABLISHMENT.] The authority shall 
  8.11  establish and implement a methane digester loan program to help 
  8.12  finance the purchase of necessary equipment and the construction 
  8.13  of a system that will utilize manure to produce electricity. 
  8.14     Subd. 2.  [REVOLVING ACCOUNT.] There is established in the 
  8.15  state treasury a revolving account which is eligible to receive 
  8.16  appropriations and the transfer of funds from other services.  
  8.17  All repayments of financial assistance granted under subdivision 
  8.18  1, including principal and interest, must be deposited into this 
  8.19  account.  Interest earned on money in the account accrues to the 
  8.20  account, and money in the fund is appropriated to the 
  8.21  commissioner of agriculture for purposes of this section, 
  8.22  including costs incurred by the authority to establish and 
  8.23  administer the program.  
  8.24     Subd. 3.  [ELIGIBILITY.] Notwithstanding section 41B.03, to 
  8.25  be eligible for these programs a borrower must: 
  8.26     (1) locate the projects and utilize the equipment and 
  8.27  practices on land located in Minnesota; 
  8.28     (2) provide evidence of financial stability; 
  8.29     (3) demonstrate an ability to repay the loan; and 
  8.30     (4) provide evidence that the practices implemented and 
  8.31  capital assets purchased will be properly managed and maintained.
  8.32     Subd. 4.  [LOANS.] (a) The authority may participate in a 
  8.33  loan with an eligible lender to a farmer who is eligible under 
  8.34  subdivision 3.  The interest rates and repayment terms of the 
  8.35  authority's participation interest may differ from the interest 
  8.36  rates and repayment terms of the lender's retained portion of 
  9.1   the loan, but the authority's interest rate must not exceed four 
  9.2   percent. 
  9.3      (b) Application for loan participation must be made on 
  9.4   forms prescribed by the authority. 
  9.5      (c) Standards for loan amortization must be set by the 
  9.6   rural finance authority not to exceed ten years. 
  9.7      (d) Security for the loans must be a personal note executed 
  9.8   by the borrower and whatever other security is required by the 
  9.9   eligible lender or the authority. 
  9.10     (e) No loan proceeds may be used to refinance a debt 
  9.11  existing prior to application. 
  9.12     (f) The authority may impose a reasonable nonrefundable 
  9.13  application fee for each application for loan participation.  
  9.14  The authority may review the application fees annually and make 
  9.15  adjustments as necessary.  The application fee is initially set 
  9.16  at $100 for a methane digester loan under subdivision 1.  The 
  9.17  fees received by the authority must be deposited in the 
  9.18  revolving account created in subdivision 2. 
  9.19     Subd. 5.  [METHANE DIGESTER LOAN CRITERIA.] (a) To be 
  9.20  eligible, a borrower must be a resident of Minnesota or an 
  9.21  entity that is not prohibited from owning agricultural land 
  9.22  under section 500.24. 
  9.23     (b) Participation is limited to 45 percent of the principal 
  9.24  amount of the loan or $250,000, whichever is less. 
  9.25     (c) Loans under this program may be used as a match for 
  9.26  federal loans or grants. 
  9.27     (d) A borrower who has previously participated in a loan 
  9.28  under subdivision 1 is prohibited from participating in another 
  9.29  methane digester loan under subdivision 1. 
  9.30     Sec. 9.  [TRANSFER OF FUNDS; DEPOSIT OF REPAYMENTS.] 
  9.31     The remaining balance in the disaster recovery revolving 
  9.32  fund established under Minnesota Statutes, section 41B.047, 
  9.33  subdivision 2, is transferred to the revolving account 
  9.34  established under Minnesota Statutes, section 41B.049, 
  9.35  subdivision 2, and the fund is abolished on the effective date 
  9.36  of this section.  Notwithstanding Minnesota Statutes, section 
 10.1   41B.047, subdivision 2, all future receipts from loans 
 10.2   originated under Minnesota Statutes, section 41B.047, shall be 
 10.3   deposited in the revolving account established under Minnesota 
 10.4   Statutes, section 41B.049, subdivision 2. 
 10.5      Sec. 10.  [UNIVERSITY OF MINNESOTA.] 
 10.6      Notwithstanding the restrictions in Minnesota Statutes, 
 10.7   section 41B.049, subdivision 4, the commissioner may participate 
 10.8   in a zero interest loan to the University of Minnesota for up to 
 10.9   $75,000 to contract for the design and construction of a 
 10.10  demonstration, small-scale methane digester under Minnesota 
 10.11  Statutes, section 41B.049, subdivision 1.  For purposes of this 
 10.12  section, "small scale" means a methane digester suitable for 
 10.13  processing the waste produced by no more than 150 animal units. 
 10.14     Sec. 11.  [LOCATION OF DEPARTMENT OF AGRICULTURE PRINCIPAL 
 10.15  ADMINISTRATIVE OFFICES.] 
 10.16     (a) The commissioner of administration, in consultation 
 10.17  with the commissioner of agriculture, shall develop 
 10.18  comprehensive plans and timelines for relocation of the 
 10.19  principal administrative offices of the department of 
 10.20  agriculture to a location outside the metropolitan counties 
 10.21  listed in Minnesota Statutes, section 473.121, subdivision 4.  
 10.22  Planning for the relocation must be completed no later than June 
 10.23  30, 2003, the date on which the current lease on the agriculture 
 10.24  department headquarters at 90 West Plato Blvd., St. Paul, 
 10.25  Minnesota expires. 
 10.26     (b) Priority to be used in determining a nonmetropolitan 
 10.27  area location of the principal administrative offices shall be 
 10.28  relocation to: 
 10.29     (1) an existing state-owned building that is currently 
 10.30  vacant; 
 10.31     (2) suitable existing space available for lease or 
 10.32  purchase; and 
 10.33     (3) newly constructed administrative space. 
 10.34     (c) This section is not intended to preclude colocation of 
 10.35  agriculture department laboratories with laboratory facilities 
 10.36  of other appropriate departments, or to specify the location of 
 11.1   a colocated laboratory. 
 11.2      Sec. 12.  [EFFECTIVE DATE.] 
 11.3      Except as otherwise specified, sections 1 to 11 are 
 11.4   effective the day following final enactment.