1.1 	A bill for an act
1.2 	relating to agriculture; defining a term; requiring
1.3 	certain payments; establishing a base funding level
1.4 	for rural economic development including ethanol
1.5 	producer payments; amending Minnesota Statutes 2004,
1.6 	section 41A.09, subdivisions 2a, 3a.
1.7 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.8 	Section 1. Minnesota Statutes 2004, section 41A.09,
1.9 	subdivision 2a, is amended to read:
1.10 		Subd. 2a.Definitions.  For the purposes of this section,
1.11 	the terms defined in this subdivision have the meanings given
1.12 	them.
1.13 	(a) "Ethanol" means fermentation ethyl alcohol derived from
1.14 	agricultural products, including potatoes, cereal grains, cheese
1.15 	whey, and sugar beets; forest products; or other renewable
1.16 	resources, including residue and waste generated from the
1.17 	production, processing, and marketing of agricultural products,
1.18 	forest products, and other renewable resources, that:
1.19 	(1) meets all of the specifications in ASTM specification
1.20 	D4806-01; and
1.21 	(2) is denatured as specified in Code of Federal
1.22 	Regulations, title 27, parts 20 and 21.
1.23 	(b) "Ethanol plant" means a plant at which ethanol is
1.24 	produced.
1.25 	(c) "Commissioner" means the commissioner of agriculture.
1.26 	(d) "Rural economic infrastructure" means the development
2.1 	activities that will enhance the value of agricultural crop or
2.2 	livestock commodities or by-products or waste from farming
2.3 	operations.

2.4 	Sec. 2. Minnesota Statutes 2004, section 41A.09,
2.5 	subdivision 3a, is amended to read:
2.6 		Subd. 3a.Ethanol producer payments.  (a) The
2.7 	commissioner shall make cash payments to producers of ethanol
2.8 	located in the state that have begun production by June 30, 2000.
2.9 	For the purpose of this subdivision, an entity that holds a
2.10 	controlling interest in more than one ethanol plant is
2.11 	considered a single producer.  The amount of the payment for
2.12 	each producer's annual production, except as provided in
2.13 	paragraph (c), is 20 cents per gallon for each gallon of ethanol
2.14 	produced on or before June 30, 2000, or ten years after the
2.15 	start of production, whichever is later.  Annually, within 90
2.16 	days of the end of its fiscal year, an ethanol producer
2.17 	receiving payments under this subdivision must file a disclosure
2.18 	statement on a form provided by the commissioner.  The initial
2.19 	disclosure statement must include a summary description of the
2.20 	organization of the business structure of the claimant, a
2.21 	listing of the percentages of ownership by any person or other
2.22 	entity with an ownership interest of five percent or greater,
2.23 	and a copy of its annual audited financial statements, including
2.24 	the auditor's report and footnotes.  The disclosure statement
2.25 	must include information demonstrating what percentage of the
2.26 	entity receiving payments under this section is owned by farmers
2.27 	or other entities eligible to farm or own agricultural land in
2.28 	Minnesota under the provisions of section 500.24.  Subsequent
2.29 	annual reports must reflect noncumulative changes in ownership
2.30 	of ten percent or more of the entity.  The report need not
2.31 	disclose the identity of the persons or entities eligible to
2.32 	farm or own agricultural land with ownership interests,
2.33 	individuals residing within 30 miles of the plant, or of any
2.34 	other entity with less than ten percent ownership interest, but
2.35 	the claimant must retain information within its files confirming
2.36 	the accuracy of the data provided.  This data must be made
3.1 	available to the commissioner upon request.  Not later than the
3.2 	15th day of February in each year the commissioner shall deliver
3.3 	to the chairs of the standing committees of the senate and the
3.4 	house of representatives that deal with agricultural policy and
3.5 	agricultural finance issues an annual report summarizing
3.6 	aggregated data from plants receiving payments under this
3.7 	section during the preceding calendar year.  Audited financial
3.8 	statements and notes and disclosure statements submitted to the
3.9 	commissioner are nonpublic data under section 13.02, subdivision
3.10 	9.  Notwithstanding the provisions of chapter 13 relating to
3.11 	nonpublic data, summaries of the submitted audited financial
3.12 	reports and notes and disclosure statements will be contained in
3.13 	the report to the committee chairs and will be public data.
3.14 	(b) No payments shall be made for ethanol production that
3.15 	occurs after June 30, 2010.
3.16 	(c) If the level of production at an ethanol plant
3.17 	increases due to an increase in the production capacity of the
3.18 	plant, the payment under paragraph (a) applies to the additional
3.19 	increment of production until ten years after the increased
3.20 	production began.  Once a plant's production capacity reaches
3.21 	15,000,000 gallons per year, no additional increment will
3.22 	qualify for the payment.
3.23 	(d) Total payments under paragraphs (a) and (c) to a
3.24 	producer in a fiscal year may not exceed $3,000,000.
3.25 	(e) By the last day of October, January, April, and July,
3.26 	each producer shall file a claim for payment for ethanol
3.27 	production during the preceding three calendar months.  A
3.28 	producer that files a claim under this subdivision shall include
3.29 	a statement of the producer's total ethanol production in
3.30 	Minnesota during the quarter covered by the claim.  For each
3.31 	claim and statement of total ethanol production filed under this
3.32 	subdivision, the volume of ethanol production must be examined
3.33 	by an independent certified public accountant in accordance with
3.34 	standards established by the American Institute of Certified
3.35 	Public Accountants.
3.36 	(f) Payments shall be made November 15, February 15, May
4.1 	15, and August 15.  A separate payment shall be made for each
4.2 	claim filed.  Except as provided in paragraph (g), the total
4.3 	quarterly payment to a producer under this paragraph may not
4.4 	exceed $750,000.
4.5 	(g) Notwithstanding the quarterly payment limits of
4.6 	paragraph (f), the commissioner shall make an additional payment
4.7 	in the fourth quarter of each fiscal year to ethanol producers
4.8 	for the lesser of:  (1) 20 cents per gallon of production in the
4.9 	fourth quarter of the year that is greater than 3,750,000
4.10 	gallons; or (2) the total amount of payments lost during the
4.11 	first three quarters of the fiscal year due to plant outages,
4.12 	repair, or major maintenance.  Total payments to an ethanol
4.13 	producer in a fiscal year, including any payment under this
4.14 	paragraph, must not exceed the total amount the producer is
4.15 	eligible to receive based on the producer's approved production
4.16 	capacity.  The provisions of this paragraph apply only to
4.17 	production losses that occur in quarters beginning after
4.18 	December 31, 1999.
4.19 	(h) The commissioner shall reimburse ethanol producers for
4.20 	any deficiency in payments during earlier quarters if the
4.21 	deficiency occurred because appropriated money was insufficient
4.22 	to make timely payments in the full amount provided in paragraph
4.23 	(a).  Notwithstanding the quarterly or annual payment
4.24 	limitations in this subdivision, the commissioner shall begin
4.25 	making payments for earlier deficiencies in each fiscal year
4.26 	that appropriations for ethanol payments exceed the amount
4.27 	required to make eligible scheduled payments.  Payments for
4.28 	earlier deficiencies must continue until the deficiencies for
4.29 	each producer are paid in full.
4.30 	(i) The commissioner may make direct payments to producers
4.31 	of rural economic infrastructure with any amount of the annual
4.32 	appropriation for ethanol producer payments and rural economic
4.33 	infrastructure that is in excess of the amount required to make
4.34 	scheduled ethanol producer payments and deficiency payments for
4.35 	payments delayed because appropriated funds in earlier fiscal
4.36 	years were insufficient.

5.1 	Sec. 3. ESTABLISHMENT OF BASE LEVEL FUNDING.
 5.2 	The appropriation for value-added agricultural products for
5.3 	fiscal year 2005 under Laws 2003, chapter 128, article 3,
5.4 	section 2, subdivision 4, is established as base level funding
5.5 	for fiscal years 2006 and thereafter for purposes of ethanol
5.6 	producer payments and payments to providers of rural economic
5.7 	infrastructure.