SF 378

as introduced - 83rd Legislature (2003 - 2004) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to agriculture; reducing ethanol producer 
  1.3             payments after five years of production; establishing 
  1.4             counter-cyclical ethanol producer payments after five 
  1.5             years of production; extending the time period for 
  1.6             eligibility for certain ethanol producers; providing 
  1.7             funding for feedlot cost-share grants; appropriating 
  1.8             money; amending Minnesota Statutes 2002, section 
  1.9             41A.09, subdivisions 3a, 5a, by adding subdivisions. 
  1.10  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.11     Section 1.  Minnesota Statutes 2002, section 41A.09, 
  1.12  subdivision 3a, is amended to read: 
  1.13     Subd. 3a.  [PAYMENTS.] (a) The commissioner of agriculture 
  1.14  shall make cash payments to producers of ethanol, anhydrous 
  1.15  alcohol, and wet alcohol located in the state.  These payments 
  1.16  shall apply only to ethanol, anhydrous alcohol, and wet alcohol 
  1.17  fermented in the state and produced at plants that have begun 
  1.18  production by June 30, 2000.  For the purpose of this 
  1.19  subdivision, an entity that holds a controlling interest in more 
  1.20  than one ethanol plant is considered a single producer.  The 
  1.21  amount of the payment for each producer's annual production is: 
  1.22     (1) except as provided in paragraph (b), for each gallon of 
  1.23  ethanol or anhydrous alcohol produced on or before June 30, 
  1.24  2000, or ten five years after the start of production, whichever 
  1.25  is later, 19 cents per gallon; and 
  1.26     (2) for each gallon produced of wet alcohol on or before 
  1.27  June 30, 2000, or ten years after the start of production, 
  2.1   whichever is later, a payment in cents per gallon calculated by 
  2.2   the formula "alcohol purity in percent divided by five," and 
  2.3   rounded to the nearest cent per gallon, but not less than 11 
  2.4   cents per gallon; 
  2.5      (3) for each gallon of ethanol or anhydrous alcohol 
  2.6   produced after five years of production and before ten years 
  2.7   after the start of production, seven cents per gallon, plus any 
  2.8   counter-cyclical payments under subdivision 3b; and 
  2.9      (4) for each gallon of ethanol or anhydrous alcohol 
  2.10  eligible for payment under clause (1), produced after ten years 
  2.11  of production, seven cents per gallon, plus any counter-cyclical 
  2.12  payments under subdivision 3b. 
  2.13     The producer payments for anhydrous alcohol and wet alcohol 
  2.14  under this section may be paid to either the original producer 
  2.15  of anhydrous alcohol or wet alcohol or the secondary processor, 
  2.16  at the option of the original producer, but not to both. 
  2.17     No payments shall be made for production that occurs after 
  2.18  June 30, 2010 2011. 
  2.19     (b) If the level of production at an ethanol plant 
  2.20  increases due to an increase in the production capacity of the 
  2.21  plant, the payment under paragraph (a), clause (1), applies to 
  2.22  the additional increment of production until ten years after the 
  2.23  increased production began.  Once a plant's production capacity 
  2.24  reaches 15,000,000 gallons per year, no additional increment 
  2.25  will qualify for the payment. 
  2.26     (c) The commissioner shall make payments to producers of 
  2.27  ethanol or wet alcohol in the amount of 1.5 cents for each 
  2.28  kilowatt hour of electricity generated using closed-loop biomass 
  2.29  in a cogeneration facility at an ethanol plant located in the 
  2.30  state.  Payments under this paragraph shall be made only for 
  2.31  electricity generated at cogeneration facilities that begin 
  2.32  operation by June 30, 2000.  The payments apply to electricity 
  2.33  generated on or before the date ten years after the producer 
  2.34  first qualifies for payment under this paragraph.  Total 
  2.35  payments under this paragraph in any fiscal year may not exceed 
  2.36  $750,000.  For the purposes of this paragraph: 
  3.1      (1) "closed-loop biomass" means any organic material from a 
  3.2   plant that is planted for the purpose of being used to generate 
  3.3   electricity or for multiple purposes that include being used to 
  3.4   generate electricity; and 
  3.5      (2) "cogeneration" means the combined generation of: 
  3.6      (i) electrical or mechanical power; and 
  3.7      (ii) steam or forms of useful energy, such as heat, that 
  3.8   are used for industrial, commercial, heating, or cooling 
  3.9   purposes. 
  3.10     (d) Payments under paragraphs (a) and (b) to all producers 
  3.11  may not exceed $35,150,000 $31,450,000 in a fiscal year.  Total 
  3.12  payments under paragraphs (a) and, (b), and (l) to a producer in 
  3.13  a fiscal year may not exceed $2,850,000 $2,550,000. 
  3.14     (e) By the last day of October, January, April, and July, 
  3.15  each producer shall file a claim for payment for ethanol, 
  3.16  anhydrous alcohol, and wet alcohol production during the 
  3.17  preceding three calendar months.  A producer with more than one 
  3.18  plant shall file a separate claim for each plant.  A producer 
  3.19  that files a claim under this subdivision shall include a 
  3.20  statement of the producer's total ethanol, anhydrous alcohol, 
  3.21  and wet alcohol production in Minnesota during the quarter 
  3.22  covered by the claim, including anhydrous alcohol and wet 
  3.23  alcohol produced or received from an outside source.  A producer 
  3.24  shall file a separate claim for any amount claimed under 
  3.25  paragraph (c).  For each claim and statement of total ethanol, 
  3.26  anhydrous alcohol, and wet alcohol production filed under this 
  3.27  subdivision, the volume of ethanol, anhydrous alcohol, and wet 
  3.28  alcohol production or amounts of electricity generated using 
  3.29  closed-loop biomass must be examined by an independent certified 
  3.30  public accountant in accordance with standards established by 
  3.31  the American Institute of Certified Public Accountants. 
  3.32     (f) Payments shall be made November 15, February 15, May 
  3.33  15, and August 15.  A separate payment shall be made for each 
  3.34  claim filed.  Except as provided in paragraph (j), the total 
  3.35  quarterly payment to a producer under this paragraph, excluding 
  3.36  amounts paid under paragraph (c), may not 
  4.1   exceed $750,000 $637,500.  
  4.2      (g) If the total amount for which all producers are 
  4.3   eligible in a quarter under paragraph (c) exceeds the amount 
  4.4   available for payments, the commissioner shall make payments in 
  4.5   the order in which the plants covered by the claims began 
  4.6   generating electricity using closed-loop biomass. 
  4.7      (h) After July 1, 1997, new production capacity is only 
  4.8   eligible for payment under this subdivision if the commissioner 
  4.9   receives: 
  4.10     (1) an application for approval of the new production 
  4.11  capacity; 
  4.12     (2) an appropriate letter of long-term financial commitment 
  4.13  for construction of the new production capacity; and 
  4.14     (3) copies of all necessary permits for construction of the 
  4.15  new production capacity. 
  4.16     The commissioner may approve new production capacity based 
  4.17  on the order in which the applications are received.  
  4.18     (i) The commissioner may not approve any new production 
  4.19  capacity after July 1, 1998, except that a producer with an 
  4.20  approved production capacity of at least 12,000,000 gallons per 
  4.21  year but less than 15,000,000 gallons per year prior to July 1, 
  4.22  1998, is approved for 15,000,000 gallons of production capacity. 
  4.23     (j) Notwithstanding the quarterly payment limits of 
  4.24  paragraph (f), the commissioner shall make an additional payment 
  4.25  in the eighth quarter of each fiscal biennium to ethanol 
  4.26  producers for the lesser of:  (1) 19 cents per gallon of 
  4.27  production in the eighth quarter of the biennium that is greater 
  4.28  than 3,750,000 gallons; or (2) the total amount of payments lost 
  4.29  during the first seven quarters of the biennium due to plant 
  4.30  outages, repair, or major maintenance.  Total payments to an 
  4.31  ethanol producer in a fiscal biennium, including any payment 
  4.32  under this paragraph, must not exceed the total amount the 
  4.33  producer is eligible to receive based on the producer's approved 
  4.34  production capacity.  The provisions of this paragraph apply 
  4.35  only to production losses that occur in quarters beginning after 
  4.36  December 31, 1999. 
  5.1      (k) For the purposes of this subdivision "new production 
  5.2   capacity" means annual ethanol production capacity that was not 
  5.3   allowed under a permit issued by the pollution control agency 
  5.4   prior to July 1, 1997, or for which construction did not begin 
  5.5   prior to July 1, 1997. 
  5.6      (l) Ethanol producers who have received ethanol payments 
  5.7   under paragraph (a), clause (3), are eligible to receive 
  5.8   payments under paragraph (a), clause (4).  The total gallons of 
  5.9   ethanol for which a producer is eligible to receive producer 
  5.10  payments under paragraph (a), clause (4), is equal to the total 
  5.11  gallons for which payment was received under paragraph (a), 
  5.12  clause (3), divided by 8.5, rounded up to the nearest whole 
  5.13  number. 
  5.14     Sec. 2.  Minnesota Statutes 2002, section 41A.09, is 
  5.15  amended by adding a subdivision to read: 
  5.16     Subd. 3b.  [COUNTER-CYCLICAL PAYMENTS.] (a) The 
  5.17  commissioner of agriculture shall make cash payments of up to 
  5.18  ten cents for each gallon of ethanol or anhydrous alcohol after 
  5.19  five years of production and before ten years after the start of 
  5.20  production to producers of ethanol that are eligible for 
  5.21  payments under subdivision 3a.  The payment under this 
  5.22  subdivision shall be based on the ethanol-corn price ratio 
  5.23  determined in paragraph (b) and the payment schedule in 
  5.24  paragraph (c). 
  5.25     (b) The commissioner shall determine the ethanol-corn price 
  5.26  ratio for each quarterly payment by multiplying the average 
  5.27  ethanol price in the previous quarter by 2.6, then dividing the 
  5.28  resulting amount by the average price of corn for the previous 
  5.29  quarter.  The ethanol-corn price ratio, rounded to the nearest 
  5.30  cent, shall be used to determine the counter-cyclical payment 
  5.31  under paragraph (c). 
  5.32     (c) The per gallon counter-cyclical payment is: 
  5.33       ethanol-corn price ratio          counter-cyclical payment
  5.34                 2.12                            one cent
  5.35                 2.11                            two cents
  5.36                 2.10                            three cents
  6.1                  2.09                            four cents
  6.2                  2.08                            five cents
  6.3                  2.07                            six cents
  6.4                  2.06                            seven cents
  6.5                  2.05                            eight cents
  6.6                  2.04                            nine cents
  6.7                  2.03 or less                    ten cents
  6.8      Sec. 3.  Minnesota Statutes 2002, section 41A.09, is 
  6.9   amended by adding a subdivision to read: 
  6.10     Subd. 3c.  [EXCESS FUNDS; APPROPRIATION.] In any quarter 
  6.11  where the counter-cyclical payment under subdivision 3b is less 
  6.12  than ten cents per gallon of ethanol, the difference between the 
  6.13  amount necessary to make counter-cyclical payments of ten cents 
  6.14  per gallon and the actual counter-cyclical payments is 
  6.15  appropriated from the general fund to the board of water and 
  6.16  soil resources for cost-share grants under section 103C.501, for 
  6.17  erosion or sediment control, or feedlot water quality 
  6.18  improvements. 
  6.19     Sec. 4.  Minnesota Statutes 2002, section 41A.09, 
  6.20  subdivision 5a, is amended to read: 
  6.21     Subd. 5a.  [EXPIRATION.] This section expires June 30, 2010 
  6.22  2011, and the unobligated balance of each appropriation under 
  6.23  this section on that date reverts to the general fund. 
  6.24     Sec. 5.  [EFFECTIVE DATE.] 
  6.25     Sections 1 to 4 are effective July 1, 2004, and apply to 
  6.26  ethanol production after that date.