1.1 	A bill for an act
1.2 	relating to energy; amending allocations from the renewable development 
1.3 	account for renewable energy production incentive payments and grants; 
1.4 	establishing ownership criteria for projects to contribute to a utility's renewable 
1.5 	energy standard; requiring a proportion of conservation improvement program 
1.6 	funds to be spent on renewable energy projects; establishing rebates for home 
1.7 	furnaces burning biomass; requiring electric cooperatives and municipal 
1.8 	utilities to transfer a proportion of conservation improvement program funds 
1.9 	to the University of Minnesota; making landfill gas and gas generated from 
1.10 	anaerobic digesters eligible for renewable energy production incentive payments; 
1.11 	establishing a grant program for on-farm anaerobic digesters; establishing a 
1.12 	rebuttable presumption that a wind energy conversion system is not a public or 
1.13 	private nuisance two years after it begins operations; directing that petroleum 
1.14 	violation escrow funds be used for grants to K-12 schools to develop conservation 
1.15 	and renewable energy projects; appropriating money;amending Minnesota 
1.16 	Statutes 2006, sections 116C.779, subdivision 2; 216B.1691, as amended, by 
1.17 	adding a subdivision; 216B.241, subdivision 6, by adding subdivisions; 216C.41, 
1.18 	subdivisions 1, 2, 3; proposing coding for new law in Minnesota Statutes, 
1.19 	chapters 216C; 561.
1.20 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.21 	Section 1. Minnesota Statutes 2006, section 116C.779, subdivision 2, is amended to 
1.22 	read:
1.23 		Subd. 2.Renewable energy production incentive. (a) Until January 1, 2018, up to 
1.24 	$10,900,000 $11,400,000 annually must be allocated from available funds in the account 
1.25 	to fund renewable energy production incentives. $9,400,000 of this annual amount is for 
1.26 	incentives for up to 200 megawatts of electricity generated by wind energy conversion 
1.27 	systems that are eligible for the incentives under section 216C.41. The balance of this 
1.28 	amount, Up to $1,500,000 $1,000,000 annually, may be used for production incentives for 
1.29 	on-farm biogas recovery facilities and landfill gas recovery facilities that are eligible for 
1.30 	the incentive under section 216C.41 or for production incentives for other renewables, to 
2.1 	be provided in the same manner as under section 216C.41. Of this amount, no more than 
2.2 	$500,000 may be used for production incentives for landfill gas recovery facilities. Up 
2.3 	to $1,000,000 may be used for grants for qualified on-farm biogas recovery facilities as 
2.4 	provided in section 216C.42. Any portion of the $10,900,000 $11,400,000 not expended 
2.5 	in any calendar year for the incentive is available for other spending purposes under this 
2.6 	section. This subdivision does not create an obligation to contribute funds to the account.
2.7 	(b) The Department of Commerce shall determine eligibility of projects under 
2.8 	section 216C.41 for the purposes of this subdivision. At least quarterly, the Department of 
2.9 	Commerce shall notify the public utility of the name and address of each eligible project 
2.10 	owner and the amount due to each project under section 216C.41. The public utility shall 
2.11 	make payments within 15 working days after receipt of notification of payments due.

2.12 	Sec. 2. Minnesota Statutes 2006, section 216B.1691, as amended by Laws 2007, 
2.13 	chapter 3, section 1, is amended by adding a subdivision to read:
2.14 		Subd. 2e.Project location; ownership. Electricity generated by an eligible energy 
2.15 	technology must meet the following conditions in order to be counted toward satisfying a 
2.16 	utility's standard obligation under subdivision 2a:
2.17 	(1) at least 50 percent of the electricity must be generated in Minnesota; and
2.18 	(2) at least 25 percent of the electricity generated in Minnesota and in a state other 
2.19 	than Minnesota must be owned by a qualifying owner as defined in section 216B.1612, 
2.20 	subdivision 2, paragraph (c).

2.21 	Sec. 3. Minnesota Statutes 2006, section 216B.241, is amended by adding a 
2.22 	subdivision to read:
2.23 		Subd. 2c.Renewable energy projects. A utility must spend five percent, and 
2.24 	may spend up to ten percent, of its conservation spending obligation under this section 
2.25 	to develop one or more projects located in this state that:
2.26 	(1) produce electricity from an eligible energy technology as defined in section 
2.27 	216B.1691, subdivision 1, paragraph (a), clauses (1) and (2);
2.28 	(2) are eligible to be counted toward a utility's renewable energy objective, as 
2.29 	defined in section 216B.1691, subdivision 2, paragraph (a);
2.30 	(3) produce electricity continuously at an essentially constant rate; and
2.31 	(4) are owned by a qualifying owner as defined in section 216B.1612, subdivision 2, 
2.32 	paragraph (c).

3.1 	Sec. 4. Minnesota Statutes 2006, section 216B.241, is amended by adding a 
3.2 	subdivision to read:
3.3 		Subd. 2d.Homeowner rebates. A utility may spend up to ten percent of its 
3.4 	conservation spending obligation under this section to provide rebates to homeowners 
3.5 	who install a heating unit in a dwelling unit in this state that burns shelled corn, trees 
3.6 	or other woody crops, or biomass grown in Minnesota. Rebates may be provided 
3.7 	under this paragraph only for a heating unit purchased after July 1, 2007, that is listed 
3.8 	by Underwriters Laboratories. A rebate must not exceed the lesser of 25 percent of 
3.9 	the purchase and installation costs of the heating unit or $500. For purposes of this 
3.10 	subdivision, "biomass" means agricultural crops, agricultural waste, trees and other woody 
3.11 	crops, and aquatic plant matter that is processed into a solid fuel for use as a heating fuel, 
3.12 	but does not include trees and other woody crops.

3.13 	EFFECTIVE DATE. This section is effective the day following final enactment.

3.14 	Sec. 5. Minnesota Statutes 2006, section 216B.241, subdivision 6, is amended to read:
3.15 		Subd. 6.Renewable energy research. (a) A public utility that owns a nuclear 
3.16 	generation facility in the state shall spend five percent of the total amount that utility
3.17 	it is required to spend under this section to support basic and applied research and 
3.18 	demonstration activities at the University of Minnesota Initiative for Renewable Energy 
3.19 	and the Environment for the development of renewable energy sources and technologies. 
3.20 	The utility shall transfer the required amount to the University of Minnesota on or before 
3.21 	July 1 of each year and that annual amount shall be deducted from the amount of money the 
3.22 	utility is required to spend under this section. The University of Minnesota shall transfer 
3.23 	at least ten percent of these funds to at least one rural campus or experiment station.
3.24 	(b) Research funded under this subdivision shall include:
3.25 	(1) development of environmentally sound production, distribution, and use of 
3.26 	energy, chemicals, and materials from renewable sources;
3.27 	(2) processing and utilization of agricultural and forestry plant products and other 
3.28 	bio-based, renewable sources as a substitute for fossil-fuel-based energy, chemicals, and 
3.29 	materials using a variety of means including biocatalysis, biorefining, and fermentation;
3.30 	(3) conversion of state wind resources to hydrogen for energy storage and 
3.31 	transportation to areas of energy demand;
3.32 	(4) improvements in scalable hydrogen fuel cell technologies; and
3.33 	(5) production of hydrogen from bio-based, renewable sources; and sequestration 
3.34 	of carbon.
4.1 	(c) Notwithstanding other law to the contrary, the utility may, but is not required to, 
4.2 	spend more than two percent of its gross operating revenues from service provided in this 
4.3 	state under this section or section 216B.2411. 
4.4 	(d) This subdivision expires June 30, 2008 2020.

4.5 	Sec. 6. Minnesota Statutes 2006, section 216C.41, subdivision 1, is amended to read:
4.6 		Subdivision 1.Definitions. (a) Unless otherwise provided, the definitions in this 
4.7 	subdivision apply to this section.
4.8 	(b) "Qualified hydroelectric facility" means a hydroelectric generating facility in 
4.9 	this state that:
4.10 	(1) is located at the site of a dam, if the dam was in existence as of March 31, 
4.11 	1994; and
4.12 	(2) begins generating electricity after July 1, 1994, or generates electricity after 
4.13 	substantial refurbishing of a facility that begins after July 1, 2001.
4.14 	(c) "Qualified wind energy conversion facility" means a wind energy conversion 
4.15 	system in this state that:
4.16 	(1) produces two megawatts or less of electricity as measured by nameplate rating 
4.17 	and begins generating electricity after December 31, 1996, and before July 1, 1999;
4.18 	(2) begins generating electricity after June 30, 1999, produces two megawatts or 
4.19 	less of electricity as measured by nameplate rating, and is:
4.20 	(i) owned by a resident of Minnesota or an entity that is organized under the laws 
4.21 	of this state, is not prohibited from owning agricultural land under section 500.24, and 
4.22 	owns the land where the facility is sited;
4.23 	(ii) owned by a Minnesota small business as defined in section 645.445;
4.24 	(iii) owned by a Minnesota nonprofit organization;
4.25 	(iv) owned by a tribal council if the facility is located within the boundaries of 
4.26 	the reservation;
4.27 	(v) owned by a Minnesota municipal utility or a Minnesota cooperative electric 
4.28 	association; or
4.29 	(vi) owned by a Minnesota political subdivision or local government, including, 
4.30 	but not limited to, a county, statutory or home rule charter city, town, school district, or 
4.31 	any other local or regional governmental organization such as a board, commission, or 
4.32 	association; or
4.33 	(3) begins generating electricity after June 30, 1999, produces seven megawatts or 
4.34 	less of electricity as measured by nameplate rating, and:
5.1 	(i) is owned by a cooperative organized under chapter 308A other than a Minnesota 
5.2 	cooperative electric association; and
5.3 	(ii) all shares and membership in the cooperative are held by an entity that is not 
5.4 	prohibited from owning agricultural land under section 500.24.
5.5 	(d) "Qualified on-farm biogas recovery facility" means an anaerobic digester system 
5.6 	that:
5.7 	(1) is located at the site of an agricultural operation; and
5.8 	(2) is owned by an entity that is not prohibited from owning agricultural land under 
5.9 	section 500.24 and that owns or rents the land where the facility is located.
5.10 	(e) "Anaerobic digester system" means a system of components that processes 
5.11 	animal waste based on the absence of oxygen and produces gas used to generate electricity.
5.12 	(f) "Qualified landfill gas recovery facility" means a landfill that is operating or 
5.13 	closed, that generates gas from the decomposition of organic matter, and that installs a 
5.14 	system to collect the gas after July 1, 2007.

5.15 	Sec. 7. Minnesota Statutes 2006, section 216C.41, subdivision 2, is amended to read:
5.16 		Subd. 2.Incentive payment; appropriation. (a) Incentive payments must be made 
5.17 	according to this section to (1) a qualified on-farm biogas recovery facility, (2) the owner 
5.18 	or operator of a qualified hydropower facility or qualified wind energy conversion facility 
5.19 	for electric energy generated and sold by the facility, (3) a publicly owned hydropower 
5.20 	facility for electric energy that is generated by the facility and used by the owner of the 
5.21 	facility outside the facility, or (4) the owner of a publicly owned dam that is in need of 
5.22 	substantial repair, for electric energy that is generated by a hydropower facility at the 
5.23 	dam and the annual incentive payments will be used to fund the structural repairs and 
5.24 	replacement of structural components of the dam, or to retire debt incurred to fund those 
5.25 	repairs, or (5) a qualified landfill gas recovery facility.
5.26 	(b) Payment may only be made upon receipt by the commissioner of commerce of 
5.27 	an incentive payment application that establishes that the applicant is eligible to receive an 
5.28 	incentive payment and that satisfies other requirements the commissioner deems necessary. 
5.29 	The application must be in a form and submitted at a time the commissioner establishes.
5.30 	(c) There is annually appropriated from the renewable development account 
5.31 	under section 116C.779 to the commissioner of commerce sums sufficient to make the 
5.32 	payments required under this section, in addition to the amounts funded by the renewable 
5.33 	development account as specified in subdivision 5a.

5.34 	Sec. 8. Minnesota Statutes 2006, section 216C.41, subdivision 3, is amended to read:
6.1 		Subd. 3.Eligibility window. Payments may be made under this section only for:
6.2 	(a) electricity generated from:
6.3 	(1) from a qualified hydroelectric facility that is operational and generating 
6.4 	electricity before December 31, 2009;
6.5 	(2) from a qualified wind energy conversion facility that is operational and 
6.6 	generating electricity before January 1, 2008; or
6.7 	(3) from a qualified on-farm biogas recovery facility from July 1, 2001, through 
6.8 	December 31, 2017; and
6.9 	(b) gas generated from: 
6.10 	(1) a qualified on-farm biogas recovery facility from July 1, 2007, through December 
6.11 	31, 2017; or 
6.12 	(2) a qualified landfill gas recovery facility from July 1, 2007 through December 
6.13 	31, 2017.

6.14 	Sec. 9. [216C.42] ON-FARM BIOGAS RECOVERY GRANTS.
6.15 		Subdivision 1.Definitions. For the purpose of this section, the following terms 
6.16 	have the meanings given.
6.17 	(a) "Qualified on-farm biogas recovery facility" means an anaerobic digester system 
6.18 	that:
6.19 	(1) is located at the site of an agricultural operation;
6.20 	(2) is owned by an entity that is not prohibited from owning agricultural land under 
6.21 	section 500.24 and that owns or rents the land where the facility is located; and
6.22 	(3) is owned by a qualified owner as defined in section 216B.1612, subdivision 2, 
6.23 	paragraph (c).
6.24 	(b) "Anaerobic digester system" means a system of components that processes 
6.25 	animal waste based on the absence of oxygen and produces gas.
6.26 	(c) "Commissioner" means the commissioner of agriculture.
6.27 		Subd. 2.Eligibility. Subject to the availability of funds, the commissioner must 
6.28 	approve grants to a qualified owner of a qualified on-farm biogas recovery facility for the 
6.29 	total installed costs of capital investments associated with the facility, up to a maximum of 
6.30 	$500,000.
6.31 		Subd. 3.Application. Application for a grant under this section must be made by a 
6.32 	qualified owner to the commissioner on a form the commissioner prescribes by rule. The 
6.33 	commissioner must review each application to determine:
6.34 	(1) whether the application is complete;
7.1 	(2) whether the information, calculations, and estimates contained in the application 
7.2 	are appropriate, accurate, and reasonable;
7.3 	(3) whether the project is eligible for a grant;
7.4 	(4) the amount of the grant for which the project is eligible; and
7.5 	(5) other funding sources the owner proposes to use to finance the project in addition 
7.6 	to a grant authorized by this section. 
7.7 	An applicant may submit only one grant application each year under this section.
7.8 		Subd. 4.Additional information. During application review, the commissioner 
7.9 	may request additional information about a proposed project, including information on 
7.10 	project cost. Failure to provide information requested disqualifies a grant application.
7.11 		Subd. 5.Public accessibility of grant application data. Data contained in an 
7.12 	application submitted to the commissioner for a grant under this section, including 
7.13 	supporting technical documentation, is classified as public data not on individuals under 
7.14 	section 13.02, subdivision 14.
7.15 		Subd. 6.Rules. The commissioner must adopt rules necessary to implement this 
7.16 	section. The rules must contain at a minimum:
7.17 	(1) standards for project eligibility;
7.18 	(2) criteria for reviewing grant applications; and
7.19 	(3) procedures and guidelines for program monitoring and evaluation.
7.20 		Subd. 7.Right of first refusal. A utility that provides electric service at retail in 
7.21 	the area where the qualified on-farm biogas recovery facility is located has the right of 
7.22 	first refusal for any gas produced by a qualified on-farm biogas recovery facility that has 
7.23 	received a grant under this section. A utility's right of first refusal expires if:
7.24 	(1) within 45 days after the qualified owner files an incentive payment application 
7.25 	with the commissioner, the utility fails to send a letter of intent to the qualified owner 
7.26 	indicating the utility's willingness to negotiate a purchase agreement; or
7.27 	(2) the parties enter negotiations but fail to reach agreement within 120 days after 
7.28 	the qualified owner files an incentive payment application with the commissioner.
7.29 		Subd. 8.Eligibility toward renewable energy objective. Any gas generated by 
7.30 	a qualified on-farm biogas recovery facility awarded a grant under this section that is 
7.31 	purchased by a utility may be counted toward the utility's renewable energy objective 
7.32 	under section 216B.1691, subdivision 2.
7.33 		Subd. 9.Appropriation. Up to $1,000,000 is appropriated annually from the 
7.34 	renewable development account through fiscal year 2015 to the commissioner of 
7.35 	agriculture for the purpose of providing grants to qualified on-farm biogas recovery 
7.36 	facilities.

8.1 	Sec. 10. [561.20] NUISANCE LIABILITY OF WIND ENERGY CONVERSION 
8.2 	SYSTEMS.
8.3 		Subdivision 1.Definition. For the purposes of this section, "wind energy conversion 
8.4 	system" has the meaning given in section 216C.06.
8.5 		Subd. 2.Wind energy conversion system not a nuisance.  (a) A wind energy 
8.6 	conversion system is not and does not become a private or public nuisance after two years 
8.7 	from the date it begins generating electricity as a matter of law if the system:
8.8 	(1) complies with all applicable federal, state, or county laws, regulations, rules, and 
8.9 	ordinances and any permits issued for it; and
8.10 	(2) operates according to generally accepted practices.
8.11 	(b) For a period of two years from the date it begins generating electricity, there is 
8.12 	a rebuttable presumption that a wind energy conversion system in compliance with the 
8.13 	requirements of paragraph (a) is not a public or private nuisance.
8.14 	(c) This subdivision does not apply:
8.15 	(1) to any prosecution for the crime of public nuisance as provided in section 
8.16 	609.74 or to an action by a public authority to abate a particular condition that is a public 
8.17 	nuisance; or
8.18 	(2) to any enforcement action brought by a local unit of government related to 
8.19 	zoning under chapter 394 or 462.
8.20 		Subd. 3.Existing contracts. This section must not be construed to invalidate any 
8.21 	contracts or commitments made before the effective date of this section.
8.22 		Subd. 4.Severability. If a provision of this section, or application thereof to any 
8.23 	person or set of circumstances, is held invalid or unconstitutional, the invalidity does not 
8.24 	affect other  provisions or applications of this section that can be given effect without the 
8.25 	invalid provision  or application. To that end, the provisions of this section are declared to 
8.26 	be severable.

8.27 	EFFECTIVE DATE. This section is effective the day following final enactment.

8.28 	Sec. 11. PETROLEUM VIOLATION ESCROW FUNDS.
 8.29 	(a) Petroleum violation escrow funds appropriated to the commissioner of commerce 
8.30 	by  Laws 1988, chapter 686, article 1, section 38, for state energy loan programs for 
8.31 	schools,  hospitals, and public buildings must be used for grants to K-12 schools to develop 
8.32 	energy conservation or renewable energy projects. A grant may not exceed $500,000. The 
8.33 	commissioner must endeavor to award grants throughout the regions of the state. No more 
8.34 	than one grant may be awarded in a county, unless an insufficient number of applications 
8.35 	is received from schools located in other counties to exhaust available funds.
9.1 	(b) The commissioner of commerce must petition the federal Department of Energy 
9.2 	for a waiver from any federal regulation that limits the proportion of federal funds 
9.3 	expended on state energy programs that may be spent on energy efficiency.
9.4 	(c) For purposes of this subdivision, "renewable energy" means wind, solar, 
9.5 	hydroelectric with a capacity of less than 60 megawatts, geothermal, hydrogen, fuel cells 
9.6 	made from renewable resources, herbaceous crops, agricultural crops, agricultural waste, 
9.7 	and aquatic plant matter.

9.8 	EFFECTIVE DATE. This section is effective the day after the commissioner of 
9.9 	commerce receives the waiver described in paragraph (b).