1.1 	A bill for an act
1.2 	relating to natural resources; creating a farmland and
1.3 	natural areas fund; establishing a cigarette fee;
1.4 	creating a council; appropriating money; proposing
1.5 	coding for new law as Minnesota Statutes, chapter 116V.
1.6 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.7 	Section 1. [116V.01] DEFINITIONS.
1.8 		Subdivision 1.Applicability. The definitions in this
1.9 	section apply to this chapter.
1.10 		Subd. 2.Board. "Board" means the State Board of
1.11 	Investment.
1.12 		Subd. 3.Council. "Council" means the Council on
1.13 	Farmland and Natural Areas.
1.14 		Subd. 4.Fund. "Fund" means the farmland and natural
1.15 	areas fund established in section 116V.05.

1.16 	Sec. 2. [116V.05] FARMLAND AND NATURAL AREAS FUND.
1.17 		Subdivision 1.Establishment of fund and investment. A
1.18 	farmland and natural areas fund is established as an account in
1.19 	the state treasury.  Its purpose is to acquire, preserve, and
1.20 	protect farmland and natural areas as described in section
1.21 	116V.25.  The commissioner of finance shall credit to the fund
1.22 	the amounts authorized under this section and section 116V.10.
1.23 	The State Board of Investment shall ensure that fund money is
1.24 	invested under section 11A.24.  All money earned by the fund
1.25 	must be credited to the fund.  The principal of the fund and any
2.1 	unexpended earnings must be invested and reinvested by the State
2.2 	Board of Investment.
2.3 		Subd. 2.Revenue. Nothing in this chapter limits the
2.4 	source of contributions to the fund.
2.5 		Subd. 3.Gifts and donations. Gifts and donations,
2.6 	including land or interests in land, may be made to the fund.
2.7 	Noncash gifts and donations must be disposed of for cash as soon
2.8 	as the board prudently can maximize the value of the gift or
2.9 	donation.  Gifts and donations of marketable securities may be
2.10 	held or disposed of for cash at the option of the board.  The
2.11 	cash receipts of gifts and donations of cash or capital assets
2.12 	and marketable securities disposed of for cash must be credited
2.13 	immediately to the principal of the fund.  The value of
2.14 	marketable securities at the time the gift or donation is made
2.15 	must be credited to the principal of the fund and any earnings
2.16 	from the marketable securities are earnings of the fund.
2.17 		Subd. 4.Audits required. The legislative auditor shall
2.18 	audit fund expenditures to ensure that the money is spent for
2.19 	the purposes provided in the council's budget plan.

2.20 	Sec. 3. [116V.10] CIGARETTE FEE.
2.21 		Subdivision 1.Imposition of fee. A cigarette fee is
2.22 	imposed on and collected from cigarette distributors.
2.23 		Subd. 2.Definitions. The definitions under section
2.24 	297F.01 apply to this section.
2.25 		Subd. 3.Computation of fee. (a) The fee for fiscal year
2.26 	2006 and for each succeeding fiscal year is two cents per pack.
2.27 	(b) For each fiscal year, the commissioner shall determine
2.28 	each cigarette distributor's fee and notify the distributor by
2.29 	the first day of May preceding the beginning of the fiscal
2.30 	year.  A distributor's fee is determined by multiplying the
2.31 	total fee under paragraph (a) by a fraction, the numerator of
2.32 	which is the number of tax stamps purchased by the distributor
2.33 	under chapter 297F in the calendar year ending during the
2.34 	previous fiscal year and the denominator of which is the total
2.35 	number of tax stamps purchased under chapter 297F in that period
2.36 	by all distributors.
3.1 		Subd. 4.Successors in interest; new entrants. (a) A
3.2 	"distributor" includes any individual or entity that is the
3.3 	successor in interest to a distributor, including any entity
3.4 	that has substantially acquired the business assets of a
3.5 	distributor.  The successor in interest is liable for the fee
3.6 	under this section.  The commissioner shall calculate and impose
3.7 	the fee on a successor in interest on a basis that includes the
3.8 	purchases of tax stamps by its predecessor, as well as any
3.9 	purchases made by the successor entity or person itself, during
3.10 	the relevant period.
3.11 	(b) If a distributor did not purchase tax stamps for at
3.12 	least 500,000 cigarettes in each month of the calendar year
3.13 	ending during the previous fiscal year, the fee under this
3.14 	section must be applied at the rate under subdivision 6 for the
3.15 	fiscal year.  The commissioner shall notify the distributor that
3.16 	its fee will be calculated and imposed under this paragraph by
3.17 	the first day of May preceding the fiscal year and the
3.18 	distributor shall pay the fee with each of its monthly tax
3.19 	returns filed under section 297F.09 for the fiscal year.
3.20 		Subd. 5.Payment. A distributor must pay the fee in
3.21 	equal monthly installments in the same time and manner as
3.22 	provided for payment of tax under chapter 297F.  The
3.23 	commissioner shall bill distributors for the fee.  This may be
3.24 	done at the time the commissioner notifies the distributor of
3.25 	its annual liability for the fee or at another time or in a
3.26 	manner the commissioner determines to be adequate and
3.27 	appropriate.
3.28 		Subd. 6.Administration. The audit, assessment,
3.29 	interest, appeal, refund, and collection provisions applicable
3.30 	to the taxes imposed under chapter 297F apply to the fee imposed
3.31 	under this section.
3.32 		Subd. 7.License revocation. (a) The commissioner may
3.33 	revoke or suspend the license of a distributor for failure to
3.34 	pay the fee or otherwise comply with the requirements under this
3.35 	section.  The provisions and procedures under section 297F.04
3.36 	apply to a suspension or revocation under this subdivision.
4.1 	(b) The commissioner may revoke a retailer's sales or use
4.2 	tax permit under section 297F.185 if:
4.3 	(1) the retailer, directly or indirectly, purchases for
4.4 	resale 20,000 cigarettes or more from a distributor that has not
4.5 	paid the fee under this section; and 
4.6 	(2) the commissioner has notified the person that the
4.7 	distributor has not paid the fee before the purchase was made or
4.8 	the commissioner has posted notice that the distributor is in
4.9 	violation of the fee law on the department's Web site at least
4.10 	15 days before the sale was made.
4.11 		Subd. 8.Deposit of revenues. The commissioner shall
4.12 	deposit the revenues from the fee under this section in the
4.13 	farmland and natural areas fund.
4.14 	
EFFECTIVE DATE. This section is effective July 1, 2005.
4.15 	The fee for fiscal year 2006 applies at five-sixths the amount
4.16 	under subdivision 3, and payments are due in ten equal monthly
4.17 	installments beginning in September 2005.  The commissioner of
4.18 	revenue shall notify distributors of their liability for the fee
4.19 	and monthly payment schedule by no later than August 15, 2005.

4.20 	Sec. 4. [116V.15] FARMLAND AND NATURAL AREAS COUNCIL.
4.21 		Subdivision 1.Council. (a) A Farmland and Natural Areas
4.22 	Council of ten members is created, consisting of:
4.23 	(1) one member of the senate appointed by the president of
4.24 	the senate;
4.25 	(2) one member of the house of representatives appointed by
4.26 	the speaker of the house; and 
4.27 	(3) eight public members, one from each congressional
4.28 	district, appointed by the governor.
4.29 	(b) Legislative members are entitled to reimbursement for
4.30 	per diem expenses plus travel expenses incurred in the services
4.31 	of the council.  The removal and, beginning July 1, 2006, the
4.32 	compensation of, public members are as provided in section
4.33 	15.0575.
4.34 	(c) Members shall elect a chair, vice-chair, secretary, and
4.35 	other officers as determined by the council.  The chair may
4.36 	convene meetings as necessary to conduct the duties prescribed
5.1 	by this section.
5.2 	(d) Public membership terms are four years, except that the
5.3 	terms for four of the first members appointed are two years and
5.4 	members shall serve on the council until their successors are
5.5 	appointed.  Legislative membership terms are two years.
5.6 	(e) Vacancies occurring on the council do not affect the
5.7 	authority of the remaining members of the council to carry out
5.8 	their duties.  Vacancies must be filled in the same manner as
5.9 	under paragraph (a).
5.10 		Subd. 2.Duties of the council. (a) The council, in
5.11 	consultation with statewide and local farmland, natural areas,
5.12 	fishing, forestry, hunting, and wildlife groups, shall develop a
5.13 	biennial budget plan for expenditures from the farmland and
5.14 	natural areas fund.
5.15 	(b) In the biennial budget submitted to the legislature,
5.16 	the governor shall submit separate budget details for planned
5.17 	expenditures from the fund as recommended by the council.
5.18 		Subd. 3.Council administration. (a) The council may
5.19 	employ personnel and contract with consultants as necessary to
5.20 	carry out functions and duties of the council.  Permanent
5.21 	employees are in the unclassified service.  The council may
5.22 	request staff assistance, legal opinion, and data from agencies
5.23 	of state government as needed for the execution of the
5.24 	responsibilities of the council.
5.25 	(b) Beginning July 1, 2006, the administrative expenses of
5.26 	the council must be paid from the fund.
5.27 	(c) A council member or an employee of the council may not
5.28 	participate in or vote on a decision of the council relating to
5.29 	a property in which the member or employee has either a direct
5.30 	or indirect personal financial interest.  While serving on or
5.31 	employed by the council, a person shall avoid any potential
5.32 	conflict of interest.
5.33 		Subd. 4.Council meetings. Meetings of the council and
5.34 	other groups the council may establish must be conducted in
5.35 	accordance with chapter 13D.  Except where prohibited by law,
5.36 	the council shall establish additional processes to broaden
6.1 	public involvement in all aspects of its deliberations.

6.2 	Sec. 5. [116V.20] FUND EXPENDITURES.
6.3 		Subdivision 1.Authorized expenditures. Money in the
6.4 	fund may be spent only:
6.5 	(1) to acquire natural areas and to obtain permanent
6.6 	agricultural and conservation easements from willing landowners;
6.7 	(2) to pay costs of conveying lands to local units of
6.8 	government;
6.9 	(3) for maintaining lands and easements retained by the
6.10 	state;
6.11 	(4) for administrative and investment expenses incurred by
6.12 	the State Board of Investment in investing deposits to the fund;
6.13 	and 
6.14 	(5) for administrative expenses.
6.15 		Subd. 2.Strategic plan required. The council shall
6.16 	adopt a strategic plan for making expenditures from the fund,
6.17 	including identifying the priority areas for funding for the
6.18 	next ten years.  The strategic plan must be updated every two
6.19 	years.  The plan is advisory only.  The council shall submit the
6.20 	plan, as a recommendation, to the house of representatives Ways
6.21 	and Means and senate Finance Committees by January 1 of each
6.22 	odd-numbered year.
6.23 		Subd. 3.Budget plan. (a) Funding may be provided only
6.24 	for those projects that meet the categories established in
6.25 	subdivision 1.
6.26 	(b) The council must adopt a budget plan to make
6.27 	expenditures from the fund for the purposes provided in
6.28 	subdivision 1.  The budget plan must be submitted to the
6.29 	governor for inclusion in the biennial budget and supplemental
6.30 	budget submitted to the legislature.
6.31 	(c) Money in the fund may not be spent except under an
6.32 	appropriation by law.

6.33 	Sec. 6. [116V.25] PROPERTY ACQUISITION.
6.34 	(a) All property interests under this chapter must be
6.35 	acquired by the commissioner of natural resources by fee title
6.36 	or easement and by purchase or donation.  The council shall make
7.1 	a recommendation to the legislature as to which lands should be
7.2 	retained and maintained by the state and which lands should be
7.3 	conveyed to local units of government.
7.4 	(b) Acquisitions must be divided equally between farmlands
7.5 	and natural areas.
7.6 	(c) For their applications to be considered, owners of
7.7 	farmland or natural areas in the state must apply to the council
7.8 	each year by a deadline to be determined by the council.
7.9 	(d) Criteria for acquisition are as described in sections
7.10 	116V.30 and 116V.35.

7.11 	Sec. 7. [116V.30] FARMLAND ELIGIBILITY CRITERIA.
7.12 		Subdivision 1.General. The goal of farmland protection
7.13 	is to preserve high-quality farmland within one-half mile of
7.14 	identified waterways and adjacent to natural areas.  A farmland
7.15 	project must meet eligibility criteria in this section to be
7.16 	considered by the program.
7.17 		Subd. 2.Locally zoned and planned for agriculture. The
7.18 	property must be located in an area currently zoned for a
7.19 	maximum of one residential unit per 40 acres.  The agricultural
7.20 	use must also be consistent with town or city comprehensive land
7.21 	use plan policies.
7.22 		Subd. 3.Regionally planned for agriculture. The
7.23 	property must be located outside the Metropolitan Council's 2040
7.24 	municipal urban services area.
7.25 		Subd. 4.Agricultural use of parcel. A majority of the
7.26 	property must be classified as agricultural by the county
7.27 	assessor.
7.28 		Subd. 5.Landowner commitment to farming. The property
7.29 	must be currently enrolled in the metropolitan agricultural
7.30 	preserve program, or the landowner must agree to enrollment
7.31 	before selling an easement under this section.
7.32 		Subd. 6.Quality of farmland. The quality of the
7.33 	farmland must be evaluated only for those areas of the property
7.34 	that have a history of agricultural use.  At least 75 percent of
7.35 	the area with a history of agricultural use must be classified
7.36 	as category 1, 2, or 3 soils by the Natural Resource
8.1 	Conservation Service soil survey.
8.2 		Subd. 7.Minimum size. The property must contain at
8.3 	least 40 acres, or a quarter-quarter section, with at least half
8.4 	of the property in active agricultural use.  Smaller properties
8.5 	may be considered if they are shown to contribute to a
8.6 	contiguous greenway or farming area.
8.7 		Subd. 8.Water quality benefits. Some portion of the
8.8 	property must be within one-half mile from streams and rivers on
8.9 	the Department of Natural Resources protected water inventory as
8.10 	identified on the farmland and natural area map.  Preference
8.11 	must be given to farms with natural areas that include the
8.12 	natural area acreage as part of the property in the
8.13 	application.  Farmland that is not located within one-half mile
8.14 	of any identified streams and rivers is still eligible if the
8.15 	property is adjacent to already protected land.

8.16 	Sec. 8. [116V.35] NATURAL AREA ELIGIBILITY CRITERIA.
8.17 	Natural areas are lands with significant natural features
8.18 	or land with the potential for restoration of significant
8.19 	natural characteristics and ecological functions.  The natural
8.20 	areas must:
8.21 	(1) contain and protect features of ecological
8.22 	significance;
8.23 	(2) improve or expand wildlife habitat;
8.24 	(3) be adjacent to a stream, river, or lake; or 
8.25 	(4) provide additional environmental benefits such as
8.26 	protecting or improving surface or ground water quality.

8.27 	Sec. 9. [116V.40] EXPIRATION.
8.28 	Sections 116V.01 to 116V.35 expire July 1, 2020.

8.29 	Sec. 10. EFFECTIVE DATE.
 8.30 	Sections 1 to 9 are effective July 1, 2005.