SF 2530

as introduced - 94th Legislature (2025 - 2026) Posted on 03/21/2025 02:40pm

A bill for an act
relating to natural resources; facilitating the orderly and environmentally responsible
development of the state's gas resources; requiring rulemaking; appropriating
money; providing criminal penalties; amending Minnesota Statutes 2024, sections
11A.236; 86A.05, subdivision 6; 93.513, subdivision 1; 93.514; 93.516, subdivision
3, by adding a subdivision; 93.55, subdivision 1a; 103I.001; 103I.005, subdivisions
9, 21, by adding subdivisions; 103I.601, subdivision 1, by adding subdivisions;
272.02, subdivision 97; 272.03, subdivision 1; 273.12; 289A.02, subdivision 6;
289A.12, by adding a subdivision; 289A.19, subdivision 2; 290.0134, subdivision
9; 290.0135; 290.05, subdivision 1; 290.923, subdivision 1; 297A.68, subdivision
5; 297A.71, subdivision 14; 298.001, subdivision 3a, by adding subdivisions;
298.01, subdivisions 3, 3a, 3b, 4a, 4b, 5, 6; 298.015, subdivision 1; 298.016,
subdivisions 1, 2, 3, 4, by adding a subdivision; 298.018, subdivisions 1, 1a, 2, by
adding a subdivision; 298.17; proposing coding for new law in Minnesota Statutes,
chapters 93; 103I; repealing Minnesota Statutes 2024, section 93.513, subdivision
2.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

ARTICLE 1

NATURAL RESOURCES

Section 1.

Minnesota Statutes 2024, section 11A.236, is amended to read:

11A.236 ACCOUNT TO INVEST FINANCIAL ASSURANCE MONEY FROM
PERMITS TO MINE new text begin AND GAS RESOURCE DEVELOPMENT PERMITS new text end .

Subdivision 1.

Establishment; appropriation.

(a) The State Board of Investment, when
requested by the commissioner of natural resources, may invest money collected by the
commissioner as part of financial assurance provided under a permit to mine new text begin or gas resource
development permit new text end issued under chapter 93. The State Board of Investment may establish
one or more accounts into which money may be deposited for the purposes of this section,
subject to the policies and procedures of the State Board of Investment. Use of any money
in the account is restricted to the financial assurance purposes identified in sections 93.46
to deleted text begin 93.51 deleted text end new text begin 93.5182 new text end and rules adopted thereunder and as authorized under any trust fund
agreements or other conditions established under a permit to mine new text begin or gas resource
development permit new text end .

(b) Money in an account established under paragraph (a) is appropriated to the
commissioner of natural resources for the purposes for which the account is established
under this section.

Subd. 2.

Account maintenance and investment.

(a) The commissioner of natural
resources may deposit money in the appropriate account and may withdraw money from
the appropriate account for the financial assurance purposes identified in sections 93.46 to
deleted text begin 93.51 deleted text end new text begin 93.5182 new text end and rules adopted thereunder and as authorized under any trust fund
agreements or other conditions established under the permit to mine new text begin or gas resource
development permit new text end for which the financial assurance is provided, subject to the policies
and procedures of the State Board of Investment.

(b) Investment strategies related to an account established under this section must be
determined jointly by the commissioner of natural resources and the executive director of
the State Board of Investment. The authorized investments for an account are the investments
authorized under section 11A.24 that are made available for investment by the State Board
of Investment.

(c) Investment transactions must be at a time and in a manner determined by the executive
director of the State Board of Investment. Decisions to withdraw money from the account
must be determined by the commissioner of natural resources, subject to the policies and
procedures of the State Board of Investment. Investment earnings must be credited to the
appropriate account for financial assurance under the identified permit to mine new text begin or gas
resource development permit new text end .

(d) The commissioner of natural resources may terminate an account at any time, so
long as the termination is in accordance with applicable statutes, rules, trust fund agreements,
or other conditions established under the permit to mine new text begin or gas resource development permit new text end ,
subject to the policies and procedures of the State Board of Investment.

Sec. 2.

Minnesota Statutes 2024, section 86A.05, subdivision 6, is amended to read:

Subd. 6.

State wilderness area; purpose; resource and site qualifications;
administration.

(a) A state wilderness area shall be established to preserve, in a natural
wild and undeveloped condition, areas which offer outstanding opportunities for solitude
and primitive types of outdoor recreation.

(b) No unit shall be authorized as a state wilderness area unless its proposed location
substantially satisfies the following criteria: appears to have been primarily affected by the
forces of nature, with the evidence of humanity being substantially unnoticeable or where
the evidence of humanity may be eliminated by restoration.

(c) State wilderness areas shall be administered by the commissioner of natural resources
in a manner which is consistent with the purposes of this subdivision, and shall be managed
only to the extent necessary to control fire, insects, and disease, and to preserve existing
wilderness or reestablish wilderness conditions. There shall be no development of public
roads, permanent dwellings, or recreational facilities except trails for nonmotorized traffic.
Motorized traffic shall not be allowed. No commercial utilization of timber or minerals
shall be allowed new text begin , except for gas resources that are commercially developed without disturbing
the surface new text end . Facilities existing at the time of establishment shall be removed.

Sec. 3.

Minnesota Statutes 2024, section 93.513, subdivision 1, is amended to read:

Subdivision 1.

Permit required.

Except as provided in section 103I.681, a person must
not engage in or carry out production of gas or oil from consolidated or unconsolidated
formations in the state unless the person has first obtained a permit for the production of
gas or oil from the commissioner of natural resources. Any permit under this section must
be protective of natural resources and deleted text begin require a demonstration of control of the extraction
area through ownership, lease, or agreement deleted text end new text begin must not be issued until the requirements in
sections 93.517 to 93.5182 are met new text end . For purposes of this section, "gas" includes both
hydrocarbon and nonhydrocarbon gases. For purposes of this section, "production" includes
extraction and beneficiation of gas or oil.

Sec. 4.

Minnesota Statutes 2024, section 93.514, is amended to read:

93.514 GAS AND OIL PRODUCTION RULEMAKING.

(a) The following agencies may adopt rules governing gas and oil exploration or
production, as applicable:

(1) the commissioner of the Pollution Control Agency may adopt or amend rules
regulating air emissions; water discharges, including stormwater management; and storage
tanks as they pertain to gas and oil production;

deleted text begin (2) the commissioner of health may adopt or amend rules on groundwater and surface
water protection, exploratory boring construction, drilling registration and licensure, and
inspections as they pertain to the exploration and appraisal of gas and oil resources;
deleted text end

deleted text begin (3) deleted text end new text begin (2) new text end the Environmental Quality Board may adopt or amend rules to establish mandatory
categories for environmental review as they pertain to gas and oil production;

deleted text begin (4) deleted text end new text begin (3) new text end the commissioner of natural resources must adopt or amend rules pertaining to
deleted text begin the conversion of an exploratory boring to a production well, deleted text end pooling, spacing, unitization,
deleted text begin well abandonment, deleted text end siting, financial assurance, deleted text begin and deleted text end reclamation new text begin , and leasing state mineral
interests new text end for the production of gas and oil; and

deleted text begin (5) deleted text end new text begin (4) new text end the commissioner of labor and industry may adopt or amend rules to protect
workers from exposure and other potential hazards from gas and oil production.

(b) An agency adopting rules under this section must use the expedited procedure in
section 14.389. Rules adopted or amended under this authority are exempt from the 18-month
time limit under section 14.125. The agency must publish notice of intent to adopt expedited
rules within 24 months of May 22, 2024.

(c) For purposes of this section, "gas" includes both hydrocarbon and nonhydrocarbon
gases. "Production" includes extraction and beneficiation of gas or oil from consolidated
or unconsolidated formations in the state.

(d) Any grant of rulemaking authority in this section is in addition to existing rulemaking
authority and does not replace, impair, or interfere with any existing rulemaking authority.

Sec. 5.

Minnesota Statutes 2024, section 93.516, subdivision 3, is amended to read:

Subd. 3.

Lease terms.

The commissioner must negotiate the terms of each lease entered
into under this section on a case-by-case basis, taking into account the unique geological
and environmental aspects of each proposal, control of adjacent lands, and the best interests
of the state. A lease entered into under this section must be consistent with the following:

(1) the primary term of the lease may not exceed five years plus the unexpired portion
of the calendar year in which the lease is issued. The commissioner and applicant may
negotiate the conditions by which the lease may be extended beyond the primary term, in
whole or in part;

(2) a bonus consideration of not less than $15 per acre must be paid by the applicant to
the Department of Natural Resources before the lease is executed;

(3) the commissioner of natural resources may require an applicant to provide financial
assurance to ensure payment of any damages resulting from the production of gas or oil;

(4) the rental rates must not be less than $5 per acre per year for the unexpired portion
of the calendar year in which the lease is issued and in years thereafter; and

(5) on gas and oil produced and sold by the lessee from the lease area, the lessee must
pay a production royalty to the Department of Natural Resources of not less than 18.75
percent of the gross sales price of the product sold free on board at the delivery point deleted text begin , and
the royalty must be credited as provided in section 93.22 deleted text end . For purposes of this section, "gross
sales price" means the total consideration paid by the first purchaser that is not an affiliate
of the lessee for gas or oil produced from the leased premises.

Sec. 6.

Minnesota Statutes 2024, section 93.516, is amended by adding a subdivision to
read:

new text begin Subd. 4. new text end

new text begin Disposition of payments. new text end

new text begin Payments made under this section as a bonus
consideration, rental, or royalty must be made to the Department of Natural Resources and
must be credited as provided in section 93.22.
new text end

Sec. 7.

new text begin [93.517] DECLARATION OF POLICY.
new text end

new text begin It is the policy of the state to provide for the beneficial and orderly development of the
state's gas resources through laws and policies that:
new text end

new text begin (1) avoid drilling unnecessary wells by establishing spacing units that regulate the density
of drilling, pooling units that combine tracts and mineral interests, and implementing rules
for utilizing gas reservoirs;
new text end

new text begin (2) prevent waste;
new text end

new text begin (3) protect correlative rights;
new text end

new text begin (4) provide for reclamation of gas resource development locations in a manner that
controls adverse environmental effects and preserves the state's natural resources, both in
the interest of the general welfare and as an exercise of the police power of the state;
new text end

new text begin (5) encourage planning for future land utilization; and
new text end

new text begin (6) recognize the beneficial aspects of gas resource development.
new text end

Sec. 8.

new text begin [93.5171] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Applicability. new text end

new text begin The definitions in this section apply to sections 93.517 to
93.5182.
new text end

new text begin Subd. 2. new text end

new text begin Commissioner. new text end

new text begin "Commissioner" means the commissioner of natural resources.
new text end

new text begin Subd. 3. new text end

new text begin Contingency reclamation plan. new text end

new text begin "Contingency reclamation plan" means a plan
that:
new text end

new text begin (1) identifies reclamation activities, including closure and postclosure maintenance work,
to be implemented by the permittee if operations cease or if producing gas wells are idled
for more than 36 months; and
new text end

new text begin (2) includes the methods, sequence, and schedule of reclamation activities, maps and
cross sections that depict gas resource development locations both before and after
reclamation activities are completed, and cost estimates necessary to implement the
contingency reclamation plan.
new text end

new text begin Subd. 4. new text end

new text begin Corrective action. new text end

new text begin "Corrective action" means the immediate action that must
be taken to correct an observed violation of the gas resource development permit. Corrective
action may consist of immediately curing the violation or submitting within two weeks a
corrective action plan for approval before the permittee implements actions to correct an
observed violation.
new text end

new text begin Subd. 5. new text end

new text begin Correlative rights. new text end

new text begin "Correlative rights" means the right of each owner and
producer in a common pool or source of supply of gas resources to an equal opportunity to
obtain and produce the owner's or producer's just and equitable share of the gas resources
underlying the pool or source of supply.
new text end

new text begin Subd. 6. new text end

new text begin Department. new text end

new text begin "Department" means the Department of Natural Resources.
new text end

new text begin Subd. 7. new text end

new text begin Exploration and production waste. new text end

new text begin "Exploration and production waste" means
waste that is associated with operations to locate or remove gas resources from the ground
or to remove impurities from such substances and that is uniquely associated with and
intrinsic to gas exploration, development, or production operations that are exempt from
regulation under Subtitle C of the Resource Conservation and Recovery Act, United States
Code, title 42, section 6921, et seq.
new text end

new text begin Subd. 8. new text end

new text begin Gas. new text end

new text begin "Gas" means both hydrocarbon and nonhydrocarbon gas.
new text end

new text begin Subd. 9. new text end

new text begin Gas resource development facility. new text end

new text begin "Gas resource development facility" means
equipment or improvements used or installed for exploring, producing, withdrawing, treating,
or processing gas resources.
new text end

new text begin Subd. 10. new text end

new text begin Gas resource development location. new text end

new text begin "Gas resource development location"
means a definable area where an operator has disturbed or intends to disturb the land surface
to locate a gas resource development facility.
new text end

new text begin Subd. 11. new text end

new text begin Gas resource development operations. new text end

new text begin "Gas resource development
operations" means exploring for gas resources by drilling exploratory borings; siting, drilling,
deepening, recompleting, reworking, or abandoning a gas well; producing operations related
to any gas well, including installing flow lines; generating, transporting, storing, treating,
or disposing of exploration and production wastes; and any construction, site preparation,
or reclamation activities associated with such operations.
new text end

new text begin Subd. 12. new text end

new text begin Gas resource development plan. new text end

new text begin "Gas resource development plan" means
a plan to develop gas resources at one or more gas resource development locations.
new text end

new text begin Subd. 13. new text end

new text begin Gas well. new text end

new text begin "Gas well" means a gas well, as defined in section 103I.005,
subdivision 10b, that is sited at a gas resource development location.
new text end

new text begin Subd. 14. new text end

new text begin Interested party. new text end

new text begin "Interested party" means a person with an ownership or
leasehold interest in real property or in severed mineral rights.
new text end

new text begin Subd. 15. new text end

new text begin Natural resources. new text end

new text begin "Natural resources" has the meaning given in section
116B.02, subdivision 4.
new text end

new text begin Subd. 16. new text end

new text begin Notice. new text end

new text begin "Notice" means publishing the information required by the
commissioner at least once in each of the following at least 60 days but not more than 180
days before a public meeting:
new text end

new text begin (1) the State Register;
new text end

new text begin (2) the EQB Monitor;
new text end

new text begin (3) the department's website; and
new text end

new text begin (4) one of the following:
new text end

new text begin (i) a qualified newspaper as defined in chapter 331A that has its known office of issue
in the county seat of the county where the lands at issue are located; or
new text end

new text begin (ii) if no qualified newspaper has its known office of issue in the county seat of a
particular county, the qualified newspaper designated as the publisher of the official
proceedings of the county board of that county.
new text end

new text begin Subd. 17. new text end

new text begin Operator. new text end

new text begin "Operator" means an owner or lessee of mineral rights engaged in
or preparing to engage in gas resource development operations.
new text end

new text begin Subd. 18. new text end

new text begin Permittee. new text end

new text begin "Permittee" means a person who holds a gas resource development
permit.
new text end

new text begin Subd. 19. new text end

new text begin Person. new text end

new text begin "Person" includes firms, partnerships, corporations, and other groups.
new text end

new text begin Subd. 20. new text end

new text begin Reclamation. new text end

new text begin "Reclamation" means the actions required to comply with
sections 93.517 to 93.5182 regarding decommissioning a gas resource development facility
and restoring any associated gas resource development locations.
new text end

new text begin Subd. 21. new text end

new text begin Spacing order. new text end

new text begin "Spacing order" means the act by the commissioner of
allocating lands to a spacing unit.
new text end

new text begin Subd. 22. new text end

new text begin Spacing unit or unit. new text end

new text begin "Spacing unit" or "unit" means lands allocated by the
commissioner to a single gas well or multiple gas wells for developing gas resources under
a spacing order.
new text end

Sec. 9.

new text begin [93.5172] SPACING UNIT.
new text end

new text begin Subdivision 1. new text end

new text begin Spacing unit. new text end

new text begin An operator must propose to the commissioner a new
spacing unit for each gas well or set of gas wells that the operator plans to drill at a gas
resource development location. A spacing unit must include the maximum area that can be
efficiently and effectively drained by the operator's well or set of wells. The minimum area
of a proposed spacing unit is a quarter-quarter section of land.
new text end

new text begin Subd. 2. new text end

new text begin Spacing unit application. new text end

new text begin An operator must apply to the commissioner for a
spacing unit under this section. An operator must submit with the application a certified
check, cashier's check, or bank money order payable to the Department of Natural Resources
in the sum of $100 as a fee for filing the application. The application fee must not be refunded
under any circumstances. The state reserves the right to reject any or all applications for a
spacing unit. The commissioner must prescribe the information to be included in a spacing
unit application. Until the commissioner adopts rules regarding spacing, a spacing unit
application must include but is not limited to:
new text end

new text begin (1) for at least one portion of a mineral tract within the proposed unit, documentation
showing the applicant's status as an owner or lessee within the unit. Acceptable forms of
documentation include but are not limited to:
new text end

new text begin (i) a mineral deed;
new text end

new text begin (ii) a mineral lease or memorandum of lease;
new text end

new text begin (iii) any other agreement confirming the applicant's right to drill into and produce from
a pool or a memorandum of such agreement; or
new text end

new text begin (iv) for federal minerals, certification that the applicant will comply with any applicable
federal unit agreement or communitization agreement requirements;
new text end

new text begin (2) certification that the operations in the spacing unit will be conducted in a reasonable
manner to protect and minimize adverse impacts to public health, safety, and welfare; the
environment; and wildlife resources;
new text end

new text begin (3) a description of the unit boundary and, if proposing more than one well within a
spacing unit, the setback distances between each well;
new text end

new text begin (4) geologic and operational data used by the operator to establish the boundaries of a
spacing unit;
new text end

new text begin (5) the total number of wells within the proposed unit;
new text end

new text begin (6) the gas resource development locations that are proposed for the unit; and
new text end

new text begin (7) identification of the associated gas resource development permit application. If the
proposed spacing unit and drilling operations are tied to an existing gas resource development
plan, the operator must identify both the approved plan and associated application for a
permit amendment.
new text end

new text begin Subd. 3. new text end

new text begin Establishing spacing unit. new text end

new text begin (a) After notice and a public meeting in the county
or counties where the proposed spacing unit is located, the commissioner may establish
spacing units by issuing a spacing order. The commissioner may modify the size or shape
of the spacing unit proposed in the application.
new text end

new text begin (b) Until the commissioner adopts rules regarding spacing, in determining whether to
approve, approve with modifications, or deny a proposed spacing unit, the commissioner
must consider whether the proposed spacing unit:
new text end

new text begin (1) prevents waste of gas resources;
new text end

new text begin (2) avoids drilling unnecessary wells; and
new text end

new text begin (3) protects correlative rights.
new text end

new text begin Subd. 4. new text end

new text begin Amending established spacing unit. new text end

new text begin (a) The commissioner may amend or
modify a spacing unit established under a spacing order upon application or upon the
commissioner's own initiative. The size of the established spacing unit may be decreased
or increased or additional wells permitted to be drilled within the established unit to prevent
or assist in preventing waste, to avoid drilling unnecessary wells, or to protect correlative
rights.
new text end

new text begin (b) An operator or interested party may file an application to amend an established
spacing unit with the commissioner.
new text end

new text begin Subd. 5. new text end

new text begin Temporary exploratory spacing unit. new text end

new text begin If the commissioner is unable to
determine, based on information in the spacing unit application or presented at the public
meeting, the existence of a pool, the appropriate acreage to be included within a spacing
unit, or the shape of the spacing unit, the commissioner may establish an exploratory spacing
unit to obtain evidence as to the existence of a pool and the appropriate size and shape of
the spacing unit to be applied to the pool. In establishing the size and shape of the exploratory
spacing unit, the commissioner may consider, but is not limited to considering, the size and
shape of spacing units previously established by the commissioner for the same gas-bearing
rock units in other areas of the same geologic rock formation.
new text end

new text begin Subd. 6. new text end

new text begin Appeals. new text end

new text begin Spacing orders issued by the commissioner may be appealed according
to section 93.5181.
new text end

Sec. 10.

new text begin [93.5173] POOLING.
new text end

new text begin Subdivision 1. new text end

new text begin Voluntary pooling. new text end

new text begin When two or more separately owned tracts, including
any state-owned tracts, are embraced within a spacing unit or when there are separately
owned interests in all or a part of a spacing unit, the persons owning the interests may pool
their interests for developing and operating the spacing unit.
new text end

new text begin Subd. 2. new text end

new text begin Involuntary pooling. new text end

new text begin In the absence of voluntary pooling, the commissioner,
upon the application of a person that owns or leases at least 50 percent of the mineral interests
to be pooled, may issue an order pooling all interests in the spacing unit, including those
interests of nonconsenting owners, for developing and operating the spacing unit. The
commissioner must issue a draft pooling order after notice and a public meeting in the
county or counties where the pooling area is located. The order must be upon terms and
conditions that protect all owners' correlative rights and that afford to the owner of each
tract or interest in the spacing unit the opportunity to recover or receive, without unnecessary
expense, a just and equitable share. The goal of a pooling order is to allow for equitable and
efficient development of gas resources while minimizing waste and the drilling of
unnecessary wells. The commissioner must serve a copy of a draft pooling order by certified
mail on all owners listed in the affidavit provided under subdivision 3. The applicant, any
party served with the order, or any interested party within the spacing unit may demand a
contested case hearing within 30 days of the date of mailing. The contested case hearing
must be conducted according to chapter 14. After the contested case hearing, if any, the
commissioner must issue a final order.
new text end

new text begin Subd. 3. new text end

new text begin Pooling order application. new text end

new text begin (a) An operator must submit an application for a
pooling order under this section to the commissioner. An operator must submit with the
application a certified check, cashier's check, or bank money order payable to the Department
of Natural Resources in the sum of $100 as a fee for filing the application. The application
fee must not be refunded under any circumstances. The state reserves the right to reject any
or all applications for a pooling order. The commissioner must prescribe the information
to be included in a pooling order application.
new text end

new text begin (b) An application for a pooling order must include:
new text end

new text begin (1) proof that the applicant controls at least 50 percent of the mineral interests to be
pooled;
new text end

new text begin (2) a map showing the location of ownership interests within the spacing unit;
new text end

new text begin (3) identification of mineral interests within the spacing unit that the applicant does not
own or lease and the location of and owner's name and address for all such interests; and
new text end

new text begin (4) an affidavit by the applicant that the applicant made a good faith effort to lease the
mineral interests identified in clause (3) within the spacing unit, which must contain
information as to any lease offer made to a mineral interest owner or efforts to contact a
mineral interest owner.
new text end

new text begin Subd. 4. new text end

new text begin Drilling and extraction prohibited before pooling order issued. new text end

new text begin If a spacing
unit contains the mineral interests of any unleased mineral interest owner who has rejected
an offer to lease, an operator must not drill or extract gas resources from the spacing unit
before the commissioner issues a pooling order.
new text end

new text begin Subd. 5. new text end

new text begin Lands excluded from pooling order. new text end

new text begin (a) Notwithstanding any provision in
this section to the contrary, the commissioner must not issue a pooling order that pools the
mineral interests of an unleased mineral interest owner if the owner is:
new text end

new text begin (1) the federal government;
new text end

new text begin (2) an American Indian Tribe or Band; or
new text end

new text begin (3) a Tribal member and the land is located within that Tribe's reservation or community.
new text end

new text begin (b) If a pooling order application proposes to pool mineral interests described in paragraph
(a), the commissioner must deny the application unless the applicant amends the application
to no longer request the pooling of the unleased mineral interests described in paragraph
(a). Nothing in this subdivision affects, limits, or expands the authority of the federal
government or an American Indian Tribe or Band to lease, refuse to lease, voluntarily pool,
or otherwise dispose of their unleased mineral interests.
new text end

new text begin Subd. 6. new text end

new text begin Pooling orders. new text end

new text begin (a) On any portion of a spacing unit covered by a pooling
order, all operations incident to well drilling are deemed to be the conduct of operations on
each separately owned tract by the several owners of each separately owned tract. Any
portion of production allocated or applicable to each tract included in a spacing unit covered
by a pooling order is deemed to have been produced from the tract by a well drilled on the
tract.
new text end

new text begin (b) Each pooling order must:
new text end

new text begin (1) provide for drilling one or more wells, if not already drilled, within the spacing unit
in such a manner as to prevent waste;
new text end

new text begin (2) provide for payment of the reasonable actual cost of the wells, including drilling and
operating the wells, and a reasonable charge for supervision and storage;
new text end

new text begin (3) provide for the proportionate share of the costs and risks of drilling and operating
wells for each owner, including each nonconsenting owner, as follows:
new text end

new text begin (i) except as provided in subdivision 7, as to each nonconsenting owner who refuses to
bear a proportionate share of the costs and risks of drilling and operating the wells, the
pooling order must provide for reimbursement to consenting owners to be paid out of, and
only out of, production from the unit representing the nonconsenting owner's interest;
new text end

new text begin (ii) such reimbursement must exclude any royalty or other interest not obligated to pay
any part of the costs of drilling and operating the wells if, and to the extent that, the royalty
is consistent with the lease terms prevailing in the area and is not designed to avoid the
recovery of costs provided for in paragraph (c); and
new text end

new text begin (iii) in the event of any dispute as to the allocation of any costs of drilling and operating
the wells, the commissioner must determine the allocation of costs as specified in paragraph
(c);
new text end

new text begin (4) determine the interest of each owner in the spacing unit and provide that each
consenting owner is entitled to receive a share of the production from the wells applicable
to the owner's interest in the wells, subject to royalty or similar obligations;
new text end

new text begin (5) provide that each consenting owner is entitled to receive a proportionate part of any
nonconsenting owner's share of the production until costs are recovered;
new text end

new text begin (6) provide that each nonconsenting owner is entitled to own and receive that share of
the production applicable to the nonconsenting owner's interest in the spacing unit after all
consenting owners have recovered the nonconsenting owner's share of the costs out of
production;
new text end

new text begin (7) specify that any nonconsenting owner is immune from liability for costs arising from
spills, releases, damage, or injury resulting from gas resource development operations on
the spacing unit, to the extent that such liability is not the fault of the nonconsenting owner;
and
new text end

new text begin (8) prohibit operators from using the surface owned by a nonconsenting owner without
express permission from the nonconsenting owner.
new text end

new text begin (c) The commissioner must determine proper costs recoverable by the consenting owners
of a spacing unit from the nonconsenting owner's share of production from the unit as
follows:
new text end

new text begin (1) 100 percent of the nonconsenting owner's share of the cost of surface equipment
beyond the wellhead connections, including stock tanks, separators, treaters, pumping
equipment, and piping, plus 100 percent of the nonconsenting owner's share of the cost of
operating the well or wells beginning with first production and continuing until the consenting
owners have recovered such costs. Any nonconsenting owner's share of the costs of
equipment and operation is that interest that would have been chargeable to the nonconsenting
owner had the owner initially agreed to pay the owner's share of the costs of the well or
wells from the beginning of the operation; and
new text end

new text begin (2) 200 percent of that portion of the costs and expenses of permitting, environmental
review, surveying, well site preparation, obtaining rights-of-way, rigging up, drilling,
reworking, deepening or plugging back, testing, and completing the well, after deducting
any cash contributions received by the consenting owners, and 200 percent of that portion
of the cost of equipment in the well, including the wellhead connections.
new text end

new text begin Subd. 7. new text end

new text begin Costs and royalties for nonconsenting owners. new text end

new text begin A nonconsenting owner of a
tract within a spacing unit that is not subject to any lease or other contract for gas
development is entitled to a landowner's proportionate royalty of 18.75 percent until the
consenting owners recover the costs specified in subdivision 6, paragraph (c). Until costs
are recovered, the remaining 81.25 percent of the nonconsenting owner's proportionate
share is allocated to reimburse costs to the consenting owners, as described in subdivision
6, paragraph (b), clause (3). After recovery of costs, the nonconsenting owner is deemed to
own their full proportionate share of the wells, surface facilities, and production and is then
liable for any further costs as if the nonconsenting owner had been a consenting owner.
new text end

new text begin Subd. 8. new text end

new text begin Good faith effort of lease offer to nonconsenting owners. new text end

new text begin (a) The
commissioner must not enter an order pooling an unleased, nonconsenting mineral interest
owner under this section over the protest of the owner unless the commissioner receives
evidence that the unleased mineral interest owner has been:
new text end

new text begin (1) tendered, no less than 60 days before the hearing, a reasonable offer, made in good
faith, to participate and pay their proportionate share of costs or to lease upon terms no less
favorable than those currently prevailing in the area at the time application for the order is
made; and
new text end

new text begin (2) furnished, in writing, the owner's share of the estimated drilling and completion cost
of the gas wells, the location and objective depth of the gas wells, and the estimated spud
date for the gas wells or range of time within which spudding is to occur.
new text end

new text begin (b) The offer to participate or lease must include a copy of or link to a brochure supplied
by the commissioner that clearly and concisely describes the pooling procedures specified
in this section and the mineral interest owner's options under those procedures.
new text end

new text begin Subd. 9. new text end

new text begin Disputes between owners and operators. new text end

new text begin (a) During the period of cost recovery
provided for under this section, the commissioner does not have jurisdiction to determine
the reasonableness of costs of operating the wells attributable to the interest of the
nonconsenting owner. Any owners, consenting or nonconsenting, may file actions in district
court, against the operators or each other, to challenge the reasonableness of costs.
new text end

new text begin (b) The commissioner does not have jurisdiction to resolve disputes among owners or
operators regarding the ownership of mineral interests contained within spacing units.
new text end

new text begin Subd. 10. new text end

new text begin Duty of operator to nonconsenting owners. new text end

new text begin The operator of gas wells under
a pooling order in which there is a nonconsenting owner must furnish the nonconsenting
owner with a monthly statement of all costs incurred, together with the quantity of gas
produced, and the amount of proceeds realized from the sale of production during the
preceding month. If the consenting owners recover the costs specified in subdivision 6, the
nonconsenting owner must own the same interest in the wells and the production from the
wells and be liable for the further costs of the operation as if the nonconsenting owner had
participated in the initial drilling operations.
new text end

Sec. 11.

new text begin [93.5174] DUTIES AND AUTHORITY OF COMMISSIONER.
new text end

new text begin The commissioner must administer and enforce sections 93.517 to 93.5182 and the rules
adopted thereunder and authorized by section 93.514. In so doing, the commissioner may:
new text end

new text begin (1) conduct investigations and inspections that the commissioner deems necessary for
the proper administration of sections 93.517 to 93.5182;
new text end

new text begin (2) enter upon any part of a gas resource development location in connection with an
investigation and inspection without liability to the operator or landowner, provided the
commissioner gives the operator or landowner reasonable prior notice of the intent to do
so;
new text end

new text begin (3) conduct research or enter into contracts related to gas resource development locations
and the reclamation of gas resources that the commissioner deems necessary to implement
sections 93.517 to 93.5182; and
new text end

new text begin (4) allocate surplus wetland credits that are approved by the commissioner under a gas
resource development permit and that are not otherwise deposited in a state wetland bank.
new text end

Sec. 12.

new text begin [93.5175] VARIANCE.
new text end

new text begin The commissioner may, upon application by an operator, modify or permit variance
from the rules adopted under sections 93.514 and 93.517 to 93.5182 if the commissioner
determines that the modification or variance is consistent with the general welfare.
new text end

Sec. 13.

new text begin [93.5176] GAS RESOURCE DEVELOPMENT PERMIT.
new text end

new text begin Subdivision 1. new text end

new text begin Permit required; application. new text end

new text begin A person must not engage in or carry out
gas resource development operations at gas resource development locations within the state,
including drilling gas wells or extracting gas resources, unless the person has first obtained
a gas resource development permit from the commissioner. All persons engaged in the
operation must jointly hold the permit, including all parent companies of persons involved
in the operation. A person applying to the commissioner for a gas resource development
permit must submit information required by the commissioner, including but not limited
to:
new text end

new text begin (1) an application fee of $10,000;
new text end

new text begin (2) a certificate issued by an insurance company authorized to do business in the United
States certifying that the applicant has a public liability insurance policy in force for the
development of gas resources for which the permit is sought, or evidence that the applicant
has satisfied other state or federal self-insurance requirements, to provide personal injury
and property damage protection in an amount adequate to compensate any persons who
might be damaged as a result of the gas resource development operations or any reclamation
or restoration operations connected with gas resource development locations;
new text end

new text begin (3) a map that identifies the location of established or applicant-proposed spacing units
and the location and extent of all proposed gas resource development locations, access roads,
gas wells and setback distances between each gas well, and areas with special land uses
within the proposed spacing unit;
new text end

new text begin (4) a plan map that shows the planned locations of gas resource development facilities
on all gas resource development locations, including drill pads, gas enrichment facilities,
storage tanks, and flow lines;
new text end

new text begin (5) a proposed plan for constructing gas resource development facilities, including but
not limited to gas wells, processing or gas enrichment plants, and connecting flow lines;
new text end

new text begin (6) a proposed plan for gas resource development operations, including but not limited
to the duration of the project; processes and procedures for gas extraction, enrichment,
storage, and gas transport to market; and the isolation and management of noncommercial
gases extracted from gas wells;
new text end

new text begin (7) a proposed plan, including a timeline, for the reclamation or restoration, or both, of
any gas resource development location affected by operations to be conducted on and after
the date on which permits are required for the development of gas resources under this
section;
new text end

new text begin (8) characterization of any exploration and production waste to be stored temporarily
or permanently at a gas resource development location;
new text end

new text begin (9) plans for financial assurance instruments addressing the cost to close all gas resource
development facilities and reclaim all gas resource development locations; and
new text end

new text begin (10) a copy of the applicant's advertisement of the ownership, location, and boundaries
of the proposed gas resource development locations, which advertisement must be published
in a legal newspaper in the locality of the proposed site at least once a week for four
successive weeks before the application is filed.
new text end

new text begin Subd. 2. new text end

new text begin Permits issued during rulemaking. new text end

new text begin A gas resource development permit issued
during the pendency of expedited rulemaking authorized under section 93.514 does not
expire once the rules are adopted if the person holding the permit continues to operate under
permitted conditions. If a person holding such a permit applies for a permit amendment
after rules are adopted:
new text end

new text begin (1) the adopted rules apply to operations covered by both the amendment and the original
permit; and
new text end

new text begin (2) the application for a permit amendment must include information for the entire project
that is required under subdivision 1 and the adopted rules.
new text end

new text begin Subd. 3. new text end

new text begin Commissioner's review; hearing. new text end

new text begin After receiving an application that the
commissioner has deemed complete and filed, the commissioner must grant the permit
applied for, with or without modifications or conditions, or deny the application unless a
contested case hearing is requested or ordered under section 93.5178. The commissioner's
decision to grant the permit, with or without modifications or conditions, or deny the
application is a final order for purposes of section 93.5181. The commissioner, in granting
a permit with or without modifications or conditions, must determine that the reclamation
or restoration planned for the operation complies with lawful requirements and can be
accomplished under available technology and that a proposed reclamation or restoration
technique is practical and workable under available technology. The commissioner may
hold public meetings on the application.
new text end

new text begin Subd. 4. new text end

new text begin Term of permit; amendment. new text end

new text begin (a) A permit issued by the commissioner under
this section must be granted for the term determined necessary by the commissioner for
completing the proposed gas resource development plan, including reclamation or restoration.
new text end

new text begin (b) A permit may be amended upon written application to the commissioner. A permit
amendment application fee must be submitted with the written application. The permit
amendment application fee is ten percent of the amount provided for in subdivision 1, clause
(1), for an application for a gas resource development permit. If the commissioner determines
that the proposed amendment constitutes a substantial change to the permit, the applicant
must publish notice in the same manner as for a new permit. The commissioner may grant
an amendment if the commissioner determines that lawful requirements have been met.
new text end

new text begin Subd. 5. new text end

new text begin Revocation; modification; suspension. new text end

new text begin (a) A permit is irrevocable during its
term except that the commissioner may:
new text end

new text begin (1) revoke the permit if the permittee has not commenced substantial construction of
gas resource development facilities or actual production and reclamation or restoration
operations covered by the permit within 36 months of permit issuance;
new text end

new text begin (2) cancel a permit at the request of or with the consent of the permittee upon such
conditions as the commissioner determines necessary to protect the public interests;
new text end

new text begin (3) subject to paragraph (b), modify or revoke the permit:
new text end

new text begin (i) in case of any breach of the permit terms or conditions;
new text end

new text begin (ii) in case of a violation of law pertaining to the permit by the permittee or agents of
the permittee;
new text end

new text begin (iii) when the commissioner finds that the modification or revocation is necessary to
protect the public health or safety;
new text end

new text begin (iv) to protect the public interests in lands or waters against injury resulting in any manner
or to any extent not expressly authorized by the permit; or
new text end

new text begin (v) to prevent injury to persons or property resulting in any manner or to any extent not
authorized by the permit; and
new text end

new text begin (4) by written order to the permittee, suspend operations under a permit if the
commissioner finds it necessary in an emergency to protect the public health or safety; to
protect public interests in lands or waters against imminent danger of substantial injury in
any manner or to any extent not expressly authorized by the permit; or to protect persons
or property against such danger, and the commissioner may require the permittee to take
any measures necessary to prevent or remedy such injury. No suspension order under this
clause may be in effect more than 30 days after the date of the order without giving the
permittee at least ten days' written notice of the order and an opportunity to be heard on the
matter.
new text end

new text begin (b) Modification or revocation under paragraph (a), clause (3), is subject to the rights
of the permittee to contest the commissioner's actions under sections 14.57 to 14.59 and
related sections. The commissioner must give 30 days' written notice to the permittee, stating
the grounds of the proposed modification or revocation or providing a reasonable time of
not less than 15 days in which to take corrective action.
new text end

new text begin Subd. 6. new text end

new text begin Assignment. new text end

new text begin A permit may not be assigned or otherwise transferred without
the written approval of the commissioner. A permit assignment application fee must be
submitted with the written application. The permit assignment application fee is ten percent
of the amount provided for in subdivision 1, clause (1). A permit assignment application
may be combined with a permit.
new text end

new text begin Subd. 7. new text end

new text begin Gas resource administration account. new text end

new text begin The gas resource administration account
is established as an account in the natural resources fund. Fees charged to owners, operators,
or managers of operations under sections 93.515 to 93.5182 must be credited to the gas
resource administration account and are appropriated to the commissioner to cover the costs
of providing and monitoring gas resource development permits. Earnings accruing from
investment of the account remain with the account.
new text end

new text begin Subd. 8. new text end

new text begin Temporary regulatory framework. new text end

new text begin (a) To support a temporary regulatory
framework for permitting gas production projects during rulemaking, this subdivision applies
until rules are adopted for siting, permitting, and reclamation requirements for gas production
projects, as required under section 93.514.
new text end

new text begin (b) All gas resource development locations must incorporate setbacks or separations
that are needed to comply with air, water, and noise pollution standards; local land use
regulations; and the requirements of other applicable jurisdictions. Nothing in this section
is intended to supersede any more restrictive siting or setback requirements that may exist
in state or federal laws for the specific land designations listed in this subdivision. Gas
resource development operations at gas resource development locations must not modify
or alter the gas resources of certain areas, except in the event of a national emergency
declared by Congress.
new text end

new text begin (c) A gas resource development location must not be located within or alter the gas
resources of:
new text end

new text begin (1) the Boundary Waters Canoe Area Wilderness, as legally described in the Federal
Register, volume 45, number 67 (April 4, 1980), with state restrictions specified in section
84.523, subdivision 3;
new text end

new text begin (2) Voyageurs National Park, with state restrictions specified in section 84B.03,
subdivision 1; or
new text end

new text begin (3) the federal Agassiz and Tamarac Wilderness areas and Pipestone and Grand Portage
National Monuments.
new text end

new text begin (d) Passive subsurface gas resource development activities are allowed, but gas resource
development locations and subsurface directional drilling are prohibited in:
new text end

new text begin (1) state wilderness areas;
new text end

new text begin (2) state scientific and natural areas;
new text end

new text begin (3) within state peatland scientific and natural areas where directional drilling would
significantly modify or alter the peatland water levels or flows, peatland water chemistry,
plant or animal species or communities, or natural features of the peatland scientific and
natural areas, except in the event of a national emergency declared by Congress;
new text end

new text begin (4) calcareous fens identified under section 103G.223;
new text end

new text begin (5) a state park, except that gas resource development operations must be allowed if the
park has been established as a result of its association with mining; and
new text end

new text begin (6) designated trout streams and lakes.
new text end

new text begin (e) Subsurface gas resource development activities, including subsurface directional
drilling, are allowed, but gas resource development locations are prohibited:
new text end

new text begin (1) in the Boundary Waters Canoe Area Wilderness Mineral Management Corridor,
identified on the Department of Natural Resources map entitled Minnesota Department of
Natural Resources B.W.C.A.W. Mineral Management Corridor (February 1991);
new text end

new text begin (2) within 0.25 miles of Voyageurs National Park;
new text end

new text begin (3) within 0.25 miles of a state wilderness area;
new text end

new text begin (4) within 0.25 miles of the federal Agassiz and Tamarac Wilderness areas and Pipestone
and Grand Portage National Monuments;
new text end

new text begin (5) within 0.25 miles of a state scientific and natural area;
new text end

new text begin (6) within 0.25 miles of a state park, except surface and subsurface disturbances must
be allowed if the park has been established as a result of its association with mining;
new text end

new text begin (7) within 0.25 miles of a calcareous fen identified under section 103G.223;
new text end

new text begin (8) on sites designated in the National Register of Historic Places, except that gas resource
development operations must be allowed if the sites have been established as a result of
their association with mining;
new text end

new text begin (9) on sites designated in the registry of state historic sites, except gas resource
development operations must be allowed if the sites have been established as a result of
their association with mining;
new text end

new text begin (10) within national wild, scenic, or recreational river districts of a national wild, scenic,
or recreational river and within the areas identified by the document entitled A Management
Plan for the Upper Mississippi River, produced by the Mississippi Headwaters Board
(January 1981);
new text end

new text begin (11) within designated state land use districts of a state wild, scenic, or recreational river;
new text end

new text begin (12) within the area adjacent to the north shore of Lake Superior identified in the
document entitled North Shore Management Plan, produced by the North Shore Management
Board (December 1988); and
new text end

new text begin (13) in the following areas, provided they were in existence before a gas resource
development permit was issued:
new text end

new text begin (i) within 500 feet of an occupied dwelling, public school, church, public institution, or
county or municipal park, unless allowed by the owner; or
new text end

new text begin (ii) within 100 feet of a cemetery or the outside right-of-way line of a public roadway.
new text end

new text begin (f) Gas resource development locations must be allowed in the following areas only if
the commissioner determines that there is no prudent and feasible siting alternative:
new text end

new text begin (1) in a national wildlife refuge, a national waterfowl protection area, or on a national
trail;
new text end

new text begin (2) in a state wildlife management area or on a state-designated trail either listed in
section 85.015 or acquired under the authority of section 84.029, subdivision 2;
new text end

new text begin (3) in peatlands identified as peatland watershed protection areas in the Department of
Natural Resources report entitled Protection of Ecologically Significant Peatlands in
Minnesota (November 1984); and
new text end

new text begin (4) in waters identified in the public waters inventory under section 103G.201 that have
not been created or substantially altered in size by human activities or in the adjoining
shorelands, as defined in section 103F.205, subdivision 4, of the unaltered waters.
new text end

new text begin (g) A gas resource development permit must include as a permit condition a requirement
that a permittee submit to the commissioner a preproduction report at least 60 days before
the commercial extraction of gas resources from gas wells drilled at gas resource development
locations. The report must include data and test results from completed gas wells that can
be used to evaluate the production rates and extraction areas that were incorporated by the
permittee into their permit application before drilling the gas wells. The commissioner must
identify the specific types of data and other report components in the associated gas resource
development permit.
new text end

new text begin (h) A permittee must submit an annual report to the commissioner by March 31 each
year that describes actual gas production and reclamation completed during the past year,
gas production and reclamation activities planned for the upcoming year, and a contingency
reclamation plan to be implemented if operations cease or gas wells are idled for more than
36 months. The annual report must include at a minimum:
new text end

new text begin (1) reporting for the previous calendar year and projections for the upcoming calendar
year on the volume and average composition of raw gas extracted from each gas well covered
by the gas resource development plan;
new text end

new text begin (2) quantities and final grades of commercial gas products transported to market;
new text end

new text begin (3) any changes in the production or gas enrichment processes;
new text end

new text begin (4) a description of reclamation activities and corrective actions;
new text end

new text begin (5) evidence of continued liability insurance; and
new text end

new text begin (6) a discussion of any changes in ownership and organization structure of the permittee.
new text end

Sec. 14.

new text begin [93.5177] FEES.
new text end

new text begin Subdivision 1. new text end

new text begin Annual gas resource development permit fee. new text end

new text begin The commissioner must
charge every person holding a gas resource development permit an annual permit fee of
$25,000. The fee is payable to the Department of Natural Resources by June 30 each year,
beginning in 2025. If a temporary permit is issued after June 30 of any year, the permittee
must pay the annual fee within 60 days of permit issuance.
new text end

new text begin Subd. 2. new text end

new text begin Supplemental application fee. new text end

new text begin (a) In addition to the application fee specified
in section 93.5176, the commissioner must assess a person submitting an application for a
gas resource development permit the reasonable costs for reviewing the application and
preparing the permit. The commissioner must also assess reasonable costs for monitoring
construction of the gas resource development facilities.
new text end

new text begin (b) The commissioner must give the applicant an estimate of the supplemental application
fee under this subdivision. The estimate must include a brief description of the tasks to be
performed and the estimated cost of each task. The application fee under section 93.5176
must be subtracted from the estimate of costs to determine the supplemental application
fee.
new text end

new text begin (c) The applicant and the commissioner must enter into a written agreement to cover
the estimated costs to be incurred by the commissioner.
new text end

new text begin (d) The commissioner must not issue the gas resource development permit until the
applicant has paid all fees in full. Upon completion of construction of all gas resource
development facilities, the commissioner must refund the unobligated balance of the
supplemental application fee revenue.
new text end

Sec. 15.

new text begin [93.5178] CONTESTED CASE.
new text end

new text begin Subdivision 1. new text end

new text begin Petition for contested case hearing. new text end

new text begin Any person owning property that
will be affected by the proposed gas resource development operations or any federal, state,
or local government having responsibilities affected by the proposed operation identified
in an application for a gas resource development permit under section 93.5176 may file a
petition with the commissioner to hold a contested case hearing on the completed application.
To be considered by the commissioner, a petition must be submitted in writing, must contain
the information specified in subdivision 2, and must be submitted to the commissioner
within 30 days after the application is deemed complete and filed. The commissioner may,
on the commissioner's own motion, order a contested case hearing on the completed
application.
new text end

new text begin Subd. 2. new text end

new text begin Petition contents. new text end

new text begin (a) A petition for a contested case hearing must include:
new text end

new text begin (1) a statement of reasons or proposed findings supporting the commissioner's decision
to hold a contested case hearing according to the criteria in subdivision 3; and
new text end

new text begin (2) a statement of the issues proposed to be addressed by a contested case hearing and
the specific relief requested or resolution of the matter.
new text end

new text begin (b) To the extent known by the petitioner, a petition for a contested case hearing may
also include:
new text end

new text begin (1) a proposed list of prospective witnesses to be called, including experts, with a brief
description of the proposed testimony or a summary of evidence to be presented at a contested
case hearing;
new text end

new text begin (2) a proposed list of publications, references, or studies to be introduced and relied
upon at a contested case hearing; and
new text end

new text begin (3) an estimate of time required for the petitioner to present the matter at a contested
case hearing.
new text end

new text begin (c) A petitioner is not bound or limited to the witnesses, materials, or estimated time
identified in the petition if the commissioner grants the request for a contested case hearing.
new text end

new text begin (d) Any person may serve timely responses to a petition for a contested case hearing.
The commissioner must establish deadlines for responses to be submitted.
new text end

new text begin Subd. 3. new text end

new text begin Commissioner's decision to hold hearing. new text end

new text begin (a) The commissioner must grant
a petition to hold a contested case hearing or order upon the commissioner's own motion
that a contested case hearing be held if the commissioner finds that:
new text end

new text begin (1) there is a material issue of fact in dispute concerning the completed application before
the commissioner;
new text end

new text begin (2) the commissioner has jurisdiction to make a determination on the disputed material
issue of fact; and
new text end

new text begin (3) there is a reasonable basis underlying a disputed material issue of fact so that a
contested case hearing would allow the introduction of information that would aid the
commissioner in resolving the disputed facts in order to make a final decision on the
completed application.
new text end

new text begin (b) The commissioner must make the determination of whether to grant a petition or
otherwise order a contested case hearing within 120 days after the commissioner deems the
application complete and filed.
new text end

new text begin Subd. 4. new text end

new text begin Hearing upon request of applicant. new text end

new text begin The applicant may, within 30 days after
the application is deemed complete and filed, submit a request for a contested case hearing.
Within 30 days of the applicant's request, the commissioner must grant the petition and
initiate the contested case hearing process.
new text end

new text begin Subd. 5. new text end

new text begin Scope of hearing. new text end

new text begin If the commissioner decides to hold a contested case hearing,
the commissioner must identify the issues to be resolved and limit the scope and conduct
of the hearing in accordance with applicable law, due process, and fundamental fairness.
The commissioner may, before granting or ordering a contested case hearing, develop a
proposed permit or permit conditions to inform the contested case. The contested case
hearing must be conducted according to sections 14.57 to 14.62. The final decision by the
commissioner to grant, with or without modifications or conditions, or deny the application
after a contested case hearing is a final order for purposes of section 93.5181.
new text end

Sec. 16.

new text begin [93.5180] FINANCIAL ASSURANCE OF OPERATOR.
new text end

new text begin Subdivision 1. new text end

new text begin Requirement for financial assurance. new text end

new text begin The commissioner must require
from a permittee a bond, another security, or other financial assurance satisfactory to the
commissioner. The commissioner must review at least annually the extent of each operator's
financial assurance under this section.
new text end

new text begin Subd. 2. new text end

new text begin Temporary regulatory framework. new text end

new text begin (a) To support a temporary regulatory
framework for permitting gas production projects during rulemaking, this subdivision applies
until rules are adopted under section 93.514 for financial assurance requirements for gas
production projects.
new text end

new text begin (b) Financial assurance for reclamation and for corrective action must ensure that:
new text end

new text begin (1) funds will be available to cover the costs estimated in paragraph (c);
new text end

new text begin (2) funds will be made payable to the commissioner when needed;
new text end

new text begin (3) funds will be fully valid, binding, and enforceable under state and federal law;
new text end

new text begin (4) funds will not be dischargeable through bankruptcy;
new text end

new text begin (5) funds will not include any corporate guarantees unless a guarantee is deemed
necessary by the commissioner as an additional layer of assurance beyond the use of bonds,
other securities, or other financial assurance mechanisms under clauses (1) to (4) and (6),
and in no case may a corporate guarantee be approved as a standalone financial assurance;
and
new text end

new text begin (6) all terms and conditions of the financial assurance are approved by the commissioner.
new text end

new text begin (c) A person intending to develop gas resources must submit, as part of an application
for a gas resource development permit, a documented estimate of costs necessary for the
reclamation or restoration, or both, of any gas resource development locations upon which
the person proposes to conduct gas resource development operations. The commissioner
must determine the procedures for completing the cost estimate and its required elements.
new text end

new text begin (d) If a corrective action is required during implementation of the gas resource
development plan to minimize waste and protect human health or the environment, the
permittee must submit to the commissioner a cost estimate for completing the required
actions. The commissioner must determine the procedures and required elements for
completing this corrective action cost estimate.
new text end

new text begin (e) The commissioner must ensure that submitted cost estimates and cost estimate
adjustments are evaluated by individuals with documented experience in material handling
and reclamation or restoration of gas resource development locations. The applicant must
pay the costs incurred by the commissioner to hire third parties to perform the evaluation.
new text end

new text begin (f) Financial assurance in the amount equal to the contingency reclamation cost estimate
must be submitted to the commissioner for approval before issuance of a gas resource
development permit and before granting an amendment to the permit, must be continuously
maintained by the permittee, and must be annually adjusted based on the new cost estimate.
new text end

new text begin (g) Financial assurance in the amount equal to the corrective action cost estimate under
paragraph (d) must be submitted to the commissioner for approval as part of the corrective
action cost estimate, must be continuously maintained by the permittee until the commissioner
determines it is no longer necessary, and must be annually adjusted based on the new cost
estimate.
new text end

new text begin (h) Financial assurance may be canceled by the permittee, upon approval by the
commissioner, only after the financial assurance is replaced by an alternate mechanism or
after the permittee is released from financial assurance once the commissioner determines,
through inspection of the permitted gas resource development locations, that:
new text end

new text begin (1) all reclamation activities have been completed according to the gas resource
development permit;
new text end

new text begin (2) any conditions necessitating postclosure maintenance no longer exist and are not
likely to recur; and
new text end

new text begin (3) any corrective actions have been successfully accomplished.
new text end

new text begin (i) The permittee must ensure that the provider of financial assurance gives the
commissioner 120 days' notice before cancellation of the financial assurance mechanism.
Upon receipt of the notice, the commissioner must initiate a proceeding to access the financial
assurance.
new text end

new text begin (j) If the gas resource development permit is assigned, the new permittee must be in
compliance with sections 93.517 to 93.5182 before the commissioner approves the
assignment. On the assignee's demonstration of compliance, the former permittee must be
released from the compliance requirements.
new text end

new text begin (k) Financial assurance must be made available to the commissioner when the operator
is not in compliance with either a contingency reclamation plan or a corrective action plan.
new text end

new text begin (l) The commissioner may deny, suspend, revoke, or modify a gas resource development
permit or assess civil penalties if the permittee fails to comply with sections 93.517 to
93.5182.
new text end

Sec. 17.

new text begin [93.5181] APPEAL.
new text end

new text begin Any person aggrieved by a final order, ruling, or decision of the commissioner may
obtain judicial review of the order, ruling, or decision under sections 14.63 to 14.69.
new text end

Sec. 18.

new text begin [93.5182] PENALTIES FOR VIOLATION.
new text end

new text begin Subdivision 1. new text end

new text begin Civil penalty. new text end

new text begin If a person fails to comply with sections 93.517 to 93.5180,
any rules adopted thereunder, or any permit condition required under sections 93.517 to
93.5180 or rules adopted thereunder, then for 15 days after notice of the failure or after the
expiration of time for corrective action as provided for in section 93.5176, subdivision 5,
the person is liable for a civil penalty of not more than $10,000 per day per violation for
each day that the failure continues. The commissioner may assess and collect any penalty
for deposit in the gas resource administration account.
new text end

new text begin Subd. 2. new text end

new text begin Criminal penalty; injunctive relief. new text end

new text begin A person who knowingly and willfully
violates or refuses to comply with any rule, decision, order, or ruling of the commissioner
under sections 93.517 to 93.5180 is, upon conviction, guilty of a gross misdemeanor. At
the request of the commissioner, the attorney general may institute a civil action in a district
court of the state for a restraining order or injunction or other appropriate remedy to prevent
or preclude a violation of the terms and conditions of any rules adopted under sections
93.517 to 93.5180. The district court of the state of Minnesota in which district the affected
extraction operation is conducted has jurisdiction to issue such order or injunction or to
provide other appropriate remedies.
new text end

Sec. 19.

Minnesota Statutes 2024, section 93.55, subdivision 1a, is amended to read:

Subd. 1a.

Lease of forfeited interest.

If the owner of a severed mineral interest fails to
record the verified statement required by section 93.52 before the dates specified in
subdivision 1, the commissioner of natural resources may lease the mineral interest as
provided in this subdivision and subdivision 3 before completing the procedures set forth
in subdivision 2. In any lease issued under this subdivision, the commissioner shall cite, as
authority for issuing the lease, this subdivision, subdivision 3, and the United States Supreme
Court decision in Texaco, Inc., et al. v. Short, et al., 454 U.S. 516 (1982), where the Supreme
Court determined, under Amendment XIV to the Constitution of the United States, that
enactment of a state law requiring an owner of severed mineral interests to timely record a
statement of claim to the mineral interests was constitutional, without individual advance
notice of operation of the law, before the owner loses the mineral interests for failing to
timely record the statement of claim. A lessee holding a lease issued under this subdivision
may not mine new text begin or extract gas or other mineral resources new text end under the lease until the commissioner
completes the procedures set forth in subdivision 2 and a court has adjudged the forfeiture
of the mineral interest to be absolute. "Mine" for the purposes of this subdivision is defined
to exclude exploration activities, exploratory boring, trenching, test pitting, test shafts and
drifts, and related activities.

Sec. 20. new text begin APPROPRIATIONS; GAS EXPLORATION AND PRODUCTION
PERMITTING PROGRAM.
new text end

new text begin (a) $660,000 in fiscal year 2026 and $660,000 in fiscal year 2027 are appropriated from
the general fund to the commissioner of natural resources for use as provided under
Minnesota Statutes, chapter 93, for mineral resource management, including permitting
activities associated with gas resource development.
new text end

new text begin (b) $330,000 in fiscal year 2026 and $330,000 in fiscal year 2027 are appropriated from
the minerals management account in the natural resources fund to the commissioner of
natural resources for uses allowed under Minnesota Statutes, section 93.2236, paragraph
(c), including activities associated with leasing for gas exploration and development.
new text end

Sec. 21. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2024, section 93.513, subdivision 2, new text end new text begin is repealed.
new text end

ARTICLE 2

HEALTH

Section 1.

Minnesota Statutes 2024, section 103I.001, is amended to read:

103I.001 LEGISLATIVE INTENT.

This chapter is intended to protect the health and general welfare by providing a means
for the deleted text begin development and deleted text end protection of the natural resource of groundwater in an orderly,
healthful, and reasonable manner.

Sec. 2.

Minnesota Statutes 2024, section 103I.005, subdivision 9, is amended to read:

Subd. 9.

Exploratory boring.

"Exploratory boring" means a surface drilling done to
explore or prospect for deleted text begin oil, natural deleted text end gas, apatite, diamonds, graphite, gemstones, kaolin clay,
and metallic minerals, including iron, copper, zinc, lead, gold, silver, titanium, vanadium,
nickel, cadmium, molybdenum, chromium, manganese, cobalt, zirconium, beryllium,
thorium, uranium, aluminum, platinum, palladium, radium, tantalum, tin, and niobium deleted text begin , and
a drilling or boring for petroleum deleted text end .

Sec. 3.

Minnesota Statutes 2024, section 103I.005, is amended by adding a subdivision
to read:

new text begin Subd. 10a. new text end

new text begin Gas. new text end

new text begin "Gas" includes both hydrocarbon and nonhydrocarbon gases.
new text end

Sec. 4.

Minnesota Statutes 2024, section 103I.005, is amended by adding a subdivision
to read:

new text begin Subd. 10b. new text end

new text begin Gas well. new text end

new text begin "Gas well" means an excavation that is constructed to locate,
extract, or produce gas.
new text end

Sec. 5.

Minnesota Statutes 2024, section 103I.005, is amended by adding a subdivision
to read:

new text begin Subd. 10c. new text end

new text begin Gas well contractor. new text end

new text begin "Gas well contractor" means a person with a gas well
contractor's license issued by the commissioner.
new text end

Sec. 6.

Minnesota Statutes 2024, section 103I.005, subdivision 21, is amended to read:

Subd. 21.

Well.

"Well" means an excavation that is drilled, cored, bored, washed, driven,
dug, jetted, or otherwise constructed if the excavation is intended for the location, diversion,
artificial recharge, monitoring, testing, remediation, or acquisition of groundwater. Well
includes environmental wells, drive point wells, and dewatering wells. "Well" does not
include:

(1) an excavation by backhoe, or otherwise for temporary dewatering of groundwater
for nonpotable use during construction, if the depth of the excavation is 25 feet or less;

(2) an excavation made to obtain or prospect for oil, deleted text begin natural deleted text end gas, minerals, or products
of mining or quarrying;

(3) an excavation to insert media to repressure oil or deleted text begin natural deleted text end gas bearing formations or
to store petroleum, deleted text begin natural deleted text end gas, or other products;

(4) an excavation for nonpotable use for wildfire suppression activities; deleted text begin or
deleted text end

(5) borings new text begin ; or
new text end

new text begin (6) gas and oil wells new text end .

Sec. 7.

Minnesota Statutes 2024, section 103I.601, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

(a) For the purposes of this section, the following words
have the meanings given them.

(b) "Data" includes samples and factual noninterpreted data obtained from exploratory
borings and samples including analytical results.

(c) "Parcel" means a government section, fractional section, or government lot.

(d) "Samples" means at least a one-quarter portion of all samples from exploratory
borings that are customarily collected by the explorer. When the exploratory borings are
being done to explore or prospect for kaolin clay, "samples" means a representative sample
of at least two cubic inches of material per foot from exploratory borings of the material
that is customarily collected by the explorer.

new text begin (e) "Gas exploratory boring" means an exploratory boring encountering gas for at least
24 hours and in which gas has not dissipated prior to sealing.
new text end

Sec. 8.

Minnesota Statutes 2024, section 103I.601, is amended by adding a subdivision
to read:

new text begin Subd. 10. new text end

new text begin Borings encountering gas. new text end

new text begin (a) Requirements in this subdivision apply only
for gas exploratory borings.
new text end

new text begin (b) An explorer must notify the commissioners of health and natural resources:
new text end

new text begin (1) within 24 hours of drilling a gas exploratory boring; and
new text end

new text begin (2) prior to beginning a permanent sealing of a gas exploratory boring.
new text end

new text begin (c) An explorer must submit a permanent sealing notification and fee of $125 to the
commissioner prior to permanently sealing a gas exploratory boring.
new text end

new text begin (d) An explorer must begin permanently sealing a gas exploratory boring within ten
days of encountering gas.
new text end

new text begin (e) A gas exploratory boring is exempt from paragraph (d) if the boring is constructed
to prevent movement of gas and water from one formation to another. The boring must be
permanently sealed within 30 days after the completion of drilling unless gas is no longer
present in the boring.
new text end

new text begin (f) A gas exploratory boring must be permanently sealed from the bottom of the boring
to within two feet of the established ground surface.
new text end

new text begin (g) A permanent sealing report as required by subdivision 9 must also contain information
indicating gas was encountered during construction and at what depth it was encountered.
new text end

new text begin (h) A person must not use an exploratory boring to extract gas for production.
new text end

Sec. 9.

Minnesota Statutes 2024, section 103I.601, is amended by adding a subdivision
to read:

new text begin Subd. 11. new text end

new text begin Conversion of a gas well prohibited. new text end

new text begin A person must not convert a gas well
to any other type of well or boring.
new text end

Sec. 10.

Minnesota Statutes 2024, section 103I.601, is amended by adding a subdivision
to read:

new text begin Subd. 12. new text end

new text begin Conversion of a well or boring to a gas well. new text end

new text begin A person must not convert a
well or boring to a gas well, except that an exploratory boring constructed before enactment
of section 103I.707 may be converted to a gas well if constructed in accordance with
provisions of section 103I.707, except that the outermost casing may be:
new text end

new text begin (1) ASTM Standard A53;
new text end

new text begin (2) ASTM Standard A589, Types I, II, and III;
new text end

new text begin (3) API Specification 5L; or
new text end

new text begin (4) API Specification 5CT.
new text end

Sec. 11.

new text begin [103I.706] GAS WELLS.
new text end

new text begin Subdivision 1. new text end

new text begin Rulemaking authority. new text end

new text begin The commissioner of health must adopt rules
for gas wells. In adopting rules under this section, the commissioner must use the expedited
procedure in section 14.389. The commissioner must publish notice of intent to adopt
expedited rules within 24 months after May 22, 2024.
new text end

new text begin Subd. 2. new text end

new text begin Fees. new text end

new text begin (a) License, certification, and registration renewals are not prorated and
expire on December 31 of each year.
new text end

new text begin (b) An applicant must meet the gas well contractor license requirements and fee
requirements to construct, repair, or seal a gas well. The fee for a gas well contractor license
is $300. The annual renewal fee for a gas well contractor license is $300.
new text end

new text begin (c) A gas well contractor must designate a certified representative. The certified
representative must meet the application and fee requirements. The application fee for a
certified representative is $100. The annual renewal fee for a certified representative is
$100.
new text end

new text begin (d) A gas well contractor must meet the registration and fee requirements for rigs used
to construct, repair, service, or seal a gas well. The fee to register gas well rigs is $125. The
annual renewal fee for gas well rig registration is $125.
new text end

new text begin (e) If a gas well contractor or certified representative under paragraphs (b) and (c) fails
to submit all information required for renewal or submits the application and information
after the required renewal date:
new text end

new text begin (1) the gas well contractor or certified representative must include a late fee of $75; and
new text end

new text begin (2) the gas well contractor or certified representative may not conduct activities authorized
by the gas well contractor's license or certified representative's certification until the renewal
application, renewal application fee, and all other information required is submitted.
new text end

new text begin (f) A gas well contractor must submit a notification for construction of a proposed gas
well on a form prescribed by the commissioner, with a fee of $10,000.
new text end

new text begin (g) A gas well contractor must submit a notification for sealing a gas well on a form
prescribed by the commissioner, with a fee of $7,500.
new text end

new text begin Subd. 3. new text end

new text begin Rig registration. new text end

new text begin (a) Rigs used to drill, maintain, repair, or seal a gas well,
including drilling rigs and workover rigs, must be registered with the commissioner.
new text end

new text begin (b) A person must file an application to register a rig on a form provided by the
commissioner with the fee under subdivision 2, paragraph (d), with the commissioner.
new text end

new text begin (c) A registration is valid until the date prescribed by the commissioner in the registration.
new text end

new text begin (d) A person must file an application with the fee under subdivision 2, paragraph (d), to
renew the registration by the date prescribed by the commissioner in the registration.
new text end

new text begin Subd. 4. new text end

new text begin Gas well contractor's license. new text end

new text begin (a) A person must not construct, repair, or seal
a gas well without a gas well contractor's license issued by the commissioner.
new text end

new text begin (b) A person must file a complete application for a gas well contractor's license on a
form provided by the commissioner with the fee under subdivision 2, paragraph (b), with
the commissioner. The person applying must meet the qualifications for a gas well contractor
license.
new text end

new text begin (c) A gas well contractor's license is valid until the date prescribed by the commissioner
in the license.
new text end

new text begin (d) A gas well contractor must file a complete application with the fee under subdivision
2, paragraph (b), to renew the license by the date prescribed by the commissioner in the
license. A person must not construct, repair, or seal a gas well until a gas well contractor's
license is renewed. The commissioner may not renew a license until the renewal fee is paid.
new text end

new text begin (e) A gas well contractor must include information at the time of renewal that the
applicant has met the continuing education requirements established by the commissioner
for gas wells.
new text end

new text begin (f) A gas well contractor must designate a certified representative to supervise and
oversee regulated work on gas wells.
new text end

new text begin (g) A person must file a complete application on a form provided by the commissioner
with the fee under subdivision 2, paragraph (c), to qualify as a certified representative.
new text end

new text begin (h) A certified representative must file an application with the fee under subdivision 2,
paragraph (c), to renew the certification by the expiration date prescribed by the commissioner
on the certification. A certified representative may not supervise or oversee regulated work
on a gas well until the renewal application and application fee are submitted. The
commissioner may not review a certification until the renewal fee is paid.
new text end

new text begin (i) A certified representative must include information at the time of renewal that the
applicant has met the continuing education requirements established by the commissioner
for gas wells.
new text end

new text begin (j) The commissioner of natural resources may require a bond, security, or other assurance
from a gas well contractor if the commissioner of natural resources has reasonable doubts
about the person's financial ability to comply with the requirements of law relating to
reclamation of a gas well and the process to restore the land disturbed by a gas well drilling
and production operations back to the condition of original state.
new text end

new text begin (k) The commissioner may suspend or revoke a licensee's license according to section
144.99.
new text end

new text begin Subd. 5. new text end

new text begin Construction notification. new text end

new text begin (a) A gas well contractor must not begin drilling
or constructing a gas well unless it is included in a valid gas resource development permit
issued by the commissioner of natural resources.
new text end

new text begin (b) The contractor must submit a notification to the commissioner to construct a gas
well after receiving permit approval from the commissioner of natural resources and prior
to drilling or constructing a gas well. A gas well contractor must file the gas well notification
with the fee under subdivision 2, paragraph (f), with the commissioner.
new text end

new text begin Subd. 6. new text end

new text begin Access to drill sites. new text end

new text begin (a) The commissioner of health shall have access to gas
well sites to inspect gas wells, including the drilling, construction, and sealing of gas wells.
new text end

new text begin (b) The commissioner of health has enforcement authority according to section 144.99.
new text end

new text begin Subd. 7. new text end

new text begin Emergency notification. new text end

new text begin In the event of an occurrence during construction,
repair, or sealing of a gas well that has a potential for significant adverse public health or
environmental effects, the person drilling or constructing a gas or well must promptly:
new text end

new text begin (1) take reasonable action to minimize the adverse effects; and
new text end

new text begin (2) notify the commissioners of health, natural resources, and the Pollution Control
Agency immediately by informing the Minnesota Duty Officer.
new text end

new text begin Subd. 8. new text end

new text begin Sealing notification. new text end

new text begin (a) A gas well, including an unsuccessful gas well, that
is not in use must be sealed by a gas well contractor.
new text end

new text begin (b) A gas well contractor must file a notification and fee with the commissioner prior
to sealing a gas well.
new text end

new text begin Subd. 9. new text end

new text begin Report of work. new text end

new text begin Within 60 days after completion or sealing of a gas well, the
gas well contractor must submit a verified report to the commissioner on a form prescribed
by the commissioner or in a format approved by the commissioner.
new text end

Sec. 12.

new text begin [103I.707] GAS WELL NOTIFICATION AND CONSTRUCTION.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this section, the following terms have
the meanings given.
new text end

new text begin (b) "Casing" means an impervious durable pipe placed in a well to prevent the walls
from caving in and to seal off surface drainage or undesirable water, gas, or other fluids to
prevent entering the well and the groundwater.
new text end

new text begin (c) "Confining layer" means a geological material that restricts water movement relative
to an aquifer. A confining layer includes:
new text end

new text begin (1) a stratum of unconsolidated materials or bedrock ten feet or more in vertical thickness
that has a vertical hydraulic conductivity of [10-6] centimeters per second or less;
new text end

new text begin (2) a stratum of clay, sandy clay, or silty clay ten feet or more in vertical thickness, as
defined in the Soil Survey Manual, United States Department of Agriculture Handbook; or
new text end

new text begin (3) any portion of the Decorah, Glenwood, St. Lawrence, or Eau Claire sedimentary
bedrock formations as described in George Austin, "Paleozoic Lithostratigraphy of
Southeastern Minnesota," in Geology of Minnesota: A Centennial Volume.
new text end

new text begin (d) "Drilling fluid additive" is a substance added to the air or water used in the fluid
system of drilling a gas well.
new text end

new text begin (e) "Hydraulic Fracturing Treatment" means all stages of the treatment of a well by the
application of fluid under pressure that is expressly intended to initiate or propagate fractures
in a target geologic formation to enhance production of oil and gas.
new text end

new text begin (f) "Neat cement grout" means a mixture in the proportion of 94 pounds of Portland
cement and not more than six gallons of clean water. Bentonite up to five percent by weight
of cement (4.7 pounds of bentonite per 94 pounds of Portland cement) may be used to reduce
shrinkage. Admixtures meeting the standard specifications of ASTM Standard C494 may
be used to reduce permeability or control time of set.
new text end

new text begin (g) "Production" includes extraction and beneficiation of gas from consolidated or
unconsolidated formations in the state.
new text end

new text begin (h) "Surface casing" means a string of casing set and cemented in a gas well to prevent
lost circulation while drilling deeper and to protect strata known or reasonably expected to
serve as a source of drinking water for human consumption.
new text end

new text begin (i) "Tremie pipe" means a pipe or hose used to insert grout into an annular space or to
seal a gas well.
new text end

new text begin Subd. 2. new text end

new text begin Gas well contractor's license qualifications. new text end

new text begin (a) A person must have a gas
well contractor's license to supervise and oversee regulated work on gas wells.
new text end

new text begin (b) A certified representative must be a professional engineer or geoscientist licensed
under sections 326.02 to 326.15 or a professional geologist certified by the American Institute
of Professional Geologists.
new text end

new text begin Subd. 3. new text end

new text begin Gas well construction notification requirements. new text end

new text begin (a) A gas well contractor
must file a gas well notification, under section 103I.706, subdivision 5, with the fee under
section 103I.706, subdivision 2, paragraph (f).
new text end

new text begin (b) A gas well construction notification is valid for 18 months.
new text end

new text begin (c) A new notification must be filed with the commissioner:
new text end

new text begin (1) if a gas well contractor other than the one listed on the original notification will be
constructing the gas well;
new text end

new text begin (2) if the gas well is completed on a property other than that listed in the original
notification; and
new text end

new text begin (3) before a gas well is deepened or before a casing is installed or removed below the
frost line.
new text end

new text begin (d) A gas well contractor intending to construct a gas well must notify the commissioner
at least 24 hours prior to:
new text end

new text begin (1) beginning gas well construction;
new text end

new text begin (2) setting casing; and
new text end

new text begin (3) placing grout.
new text end

new text begin Subd. 4. new text end

new text begin Injection prohibited. new text end

new text begin A gas well must not be used to inject or dispose surface
water, groundwater, or any other liquid, gas, or chemical. This does not prohibit the injection:
new text end

new text begin (1) of approved drilling fluids as provided in subdivision 7; or
new text end

new text begin (2) if a class 2 injection well permit is obtained for a gas well, as authorized by the
Environmental Protection Agency.
new text end

new text begin Subd. 5. new text end

new text begin Hydraulic fracturing treatment prohibited. new text end

new text begin Hydraulic fracturing treatment
is prohibited in a gas well until the commissioner adopts rules under section 103I.706. The
commissioner must consider authorization of hydraulic fracturing during rulemaking.
new text end

new text begin Subd. 6. new text end

new text begin Disposal of material. new text end

new text begin Drilling fluid, cuttings, treatment chemicals, and discharge
water must be:
new text end

new text begin (1) containerized;
new text end

new text begin (2) disposed of off site or a class 2 injection well permit obtained and authorized by the
Environmental Protection Agency; and
new text end

new text begin (3) disposed of according to federal, state, and local requirements.
new text end

new text begin Subd. 7. new text end

new text begin Drilling fluids. new text end

new text begin (a) Drilling fluids used for a gas well must be water or air based.
Water must come from a potable water system and contain a free chlorine residual at all
times.
new text end

new text begin (b) Drilling fluid additives must meet the requirements of ANSI/NSF Standard 60.
new text end

new text begin Subd. 8. new text end

new text begin Casing and grout. new text end

new text begin (a) Casing for a gas well must be steel casing that meets
API Specification 5CT and is of appropriate grade for the pressures and conditions. Casing
installed for the construction of a gas well must be new casing. Casing must be marked by
the manufacturer according to API Specification 5CT.
new text end

new text begin (b) Centralizers must be installed at a minimum of 20-foot intervals on the casing.
new text end

new text begin (c) A blowout preventer that is appropriate for the gas pressures expected must be
installed on the casing during all drilling after a surface casing has been installed.
new text end

new text begin (d) Casing offsets are prohibited.
new text end

new text begin (e) Casing must not be driven.
new text end

new text begin (f) The diameter of the drilled hole in which surface casing will be set must be least 1.5
inches greater than the nominal outside diameter of the casing that will be installed. All
other casings must have at least 0.84 inches between the nominal outside diameter of the
casing being cemented and the previously set casing's inside nominal diameter.
new text end

new text begin (g) A gas well must be cased and grouted from the bottom of the casing up to the
established surface area with neat cement to prevent interconnection of different locations
within the uncased portion of the well encountering:
new text end

new text begin (1) gas and water; and
new text end

new text begin (2) water.
new text end

new text begin (h) Neat cement grout must be used for all grouting.
new text end

new text begin (i) Grouting must start immediately on completion of drilling.
new text end

new text begin (j) Grout must be pumped into the annular space from the bottom up through the casing,
drill rods, or a tremie pipe. Neat cement grout must be allowed to set a minimum of 24
hours. Rapid setting cement must be allowed to set a minimum of 12 hours. Drilling is
prohibited during the time the cement is setting.
new text end

new text begin (k) The annular space between an inner casing and an outer casing must be grouted for
its entire length by pumping neat cement grout through a tremie pipe, a drill rod, or the
casing. Neat cement grout must be allowed to set a minimum of 24 hours. Rapid setting
cement must be allowed to set a minimum of 12 hours. Drilling is prohibited during the
time the cement is setting.
new text end

new text begin (l) The casing or inner casing of a multi-cased gas well must extend vertically at least
one foot above the established ground surface and at least five feet above the regional flood
level. The established ground surface immediately adjacent to the casing must be graded
to divert water away from the casing. Termination of the top of the casing below the
established ground surface, such as in a vault or pit, is prohibited. Outer casings must
terminate no less than four feet below the established ground surface.
new text end

new text begin (m) The casing of a gas well must be covered with a threaded or bolted and flanged gas
tight cover equivalent to the casing in weight and strength.
new text end

new text begin (n) The casing of a gas well must be protected by placing three posts at least four inches
square or four inches in diameter around the boring at equal distances from each other and
two feet from the gas well. The posts must extend two feet above the established ground
surface and four feet below the established ground surface, or to a depth of two feet if each
post is set in concrete to a depth of two feet. The posts must be made of reinforced concrete,
decay-resistant wood, or schedule 40 steel pipe. Steel pipe must be covered with an
overlapping, threaded, or welded steel or iron cap or be filled with concrete or cement.
new text end

new text begin Subd. 9. new text end

new text begin Isolation distance. new text end

new text begin A person must not place, construct, or install a gas well
less than 500 feet from a residential building, 500 feet from a water supply well, or 2,000
feet from a school facility or child care center.
new text end

new text begin Subd. 10. new text end

new text begin Groundwater protection. new text end

new text begin (a) During the drilling and sealing process, the gas
well must be constructed and maintained to prevent the introduction of surface contaminants
into the well and to prevent the passage of water from one aquifer to another and covered
and protected to prevent vandalism or entry of debris into the well.
new text end

new text begin (b) A gas well must not be constructed to interconnect aquifers separated by a confining
layer.
new text end

new text begin Subd. 11. new text end

new text begin Sealing gas wells. new text end

new text begin (a) A gas well contractor must file a notification under
section 103I.706, subdivision 8, with the fee under section 103I.706, subdivision 2, to the
commissioner.
new text end

new text begin (b) A gas well sealing notification is valid for 18 months.
new text end

new text begin (c) A new sealing notification must be filed with the commissioner if a gas well contractor
other than the one listed on the original notification will seal the gas well.
new text end

new text begin (d) The gas well contractor must notify the commissioner of health:
new text end

new text begin (1) after receiving authorization from the department of natural resources to decommission
a gas well; and
new text end

new text begin (2) at least 24 hours prior to the start of sealing the gas well.
new text end

new text begin (e) Materials, debris, and obstructions that may interfere with sealing must be removed
from the gas well.
new text end

new text begin (f) A gas well must be sealed by filling the gas well, including any open annular space,
with neat cement grout. The grout must be pumped through a tremie pipe or the casing from
the bottom of the gas well or annular space upward to within two feet of the established
ground surface. The bottom of the tremie pipe must remain submerged in grout while
grouting.
new text end

new text begin (g) Open annular space surrounding a casing must be grouted by:
new text end

new text begin (1) filling the annular space with grout according to clause (3);
new text end

new text begin (2) removing the casing and filling the well with grout. If casing is to be removed from
a collapsing formation, grout must be inserted so the bottom of the casing remains submerged
in grout;
new text end

new text begin (3) perforating the casing with a minimum of one 1/2-square-inch hole in each foot of
casing and forcing grout through the perforations; or
new text end

new text begin (4) ripping a minimum of five feet of casing for every 20 feet of casing and forcing grout
through the ripped casing, except that casing must be ripped through the entire length of a
confining layer.
new text end

new text begin (h) The gas resource development permittee must have a licensed gas well contractor
seal a gas well if:
new text end

new text begin (1) the gas well contributes to the spread of contamination;
new text end

new text begin (2) the gas well was attempted to be sealed but was not sealed according to the provisions
of this chapter; or
new text end

new text begin (3) the gas well is located, constructed, or maintained in a manner that its continued use
or existence endangers groundwater quality or is a safety or health hazard.
new text end

new text begin (i) The licensed gas well contractor must seal the gas well consistent with provisions of
this chapter.
new text end

new text begin Subd. 12. new text end

new text begin Rules. new text end

new text begin A person requesting to construct a gas well must comply with this
section until permanent rules for gas wells adopted by the commissioner are published in
the State Register.
new text end

new text begin Subd. 13. new text end

new text begin Expiration. new text end

new text begin This section expires on December 31 of the year that the permanent
rules are adopted pursuant to section 103I.706.
new text end

Sec. 13.

new text begin [103I.708] OIL WELLS.
new text end

new text begin A person shall not explore, prospect, or construct an oil well until an environmental
review has been completed and a production permit has been obtained from the commissioner
of natural resources.
new text end

Sec. 14. new text begin APPROPRIATION; GAS WELL CONSTRUCTION AND SEALING
NOTIFICATION.
new text end

new text begin Subdivision 1. new text end

new text begin Programs; registration; licensing; rulemaking. new text end

new text begin $863,000 in fiscal year
2026 is appropriated from the general fund to the commissioner of health for the development
of a legislatively authorized gas well and sealing notification program, rig registration,
licensing program, inspection program, rulemaking, credentialing in an information
technology system for the electronic submission of gas well records, licensure, and
registration that accepts online fee payments, issues unique identifiers, has the ability to
retrieve records, and contains a searchable database. This is a onetime appropriation that is
available until December 31, 2027.
new text end

new text begin Subd. 2. new text end

new text begin Staffing. new text end

new text begin $395,000 in fiscal year 2026 and $395,000 in fiscal year 2027 are
appropriated from the general fund to the commissioner of health to hire staff who will
inspect, enforce, and manage oversight of a legislatively authorized gas well and sealing
notification, licensing, and inspection program in Minnesota. Staff will serve as subject
matter experts in gas well construction and sealing of Minnesota's newly discovered gas
reserves. The base appropriation for this subdivision in fiscal year 2028 and thereafter shall
be $........
new text end

Sec. 15. new text begin EFFECTIVE DATE.
new text end

new text begin This article is effective the day following final enactment.
new text end

ARTICLE 3

TAXATION

Section 1.

Minnesota Statutes 2024, section 272.02, subdivision 97, is amended to read:

Subd. 97.

Property used in business of mining subject to gross proceeds tax.

The
following property used in the business of mining that is subject to the gross proceeds tax
under section 298.015 is exempt:

(1) deposits of ores, metals, deleted text begin and deleted text end minerals new text begin , gas, and oil, new text end and the lands in which they are
contained;

(2) all real and personal property used in mining, quarrying, producing, or refining ores,
minerals, deleted text begin or deleted text end metals new text begin , gas, or oil new text end , including lands occupied by or used in connection with the
mining, quarrying, production, or ore refining facilities; and

(3) concentrate.

This exemption applies for each year that a person subject to tax under section 298.015
uses the property for mining, quarrying, producing, or refining ores, metals, deleted text begin or deleted text end minerals new text begin ,
gas, or oil new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2025 and thereafter.
new text end

Sec. 2.

Minnesota Statutes 2024, section 272.03, subdivision 1, is amended to read:

Subdivision 1.

Real property.

(a) For the purposes of taxation, but not for chapter 297A,
"real property" includes the land itself, rails, ties, and other track materials annexed to the
land, and all buildings, structures, and improvements or other fixtures on it, bridges of bridge
companies, and all rights and privileges belonging or appertaining to the land, and all mines,
iron ore and taconite minerals not otherwise exempt, quarries, fossils, and trees on or under
it.

(b) A building or structure shall include the building or structure itself, together with all
improvements or fixtures annexed to the building or structure, which are integrated with
and of permanent benefit to the building or structure, regardless of the present use of the
building, and which cannot be removed without substantial damage to itself or to the building
or structure.

(c)(i) Real property does not include tools, implements, machinery, and equipment
attached to or installed in real property for use in the business or production activity
conducted thereon, regardless of size, weight or method of attachment, and mine shafts,
tunnels, and other underground openings used to extract ores deleted text begin and deleted text end new text begin , new text end minerals new text begin , metals, gas, or
oil new text end taxed under chapter 298 together with steel, concrete, and other materials used to support
such openings.

(ii) The exclusion provided in clause (i) shall not apply to machinery and equipment
includable as real estate by paragraphs (a) and (b) even though such machinery and equipment
is used in the business or production activity conducted on the real property if and to the
extent such business or production activity consists of furnishing services or products to
other buildings or structures which are subject to taxation under this chapter.

(iii) The exclusion provided in clause (i) does not apply to the exterior shell of a structure
which constitutes walls, ceilings, roofs, or floors if the shell of the structure has structural,
insulation, or temperature control functions or provides protection from the elements, unless
the structure is primarily used in the production of biofuels, wine, beer, distilled beverages,
or dairy products. Such an exterior shell is included in the definition of real property even
if it also has special functions distinct from that of a building, or if such an exterior shell is
primarily used for the storage of ingredients or materials used in the production of biofuels,
wine, beer, distilled beverages, or dairy products, or for the storage of finished biofuels,
wine, beer, distilled beverages, or dairy products.

(d) The term real property does not include tools, implements, machinery, equipment,
poles, lines, cables, wires, conduit, and station connections which are part of a telephone
communications system, regardless of attachment to or installation in real property and
regardless of size, weight, or method of attachment or installation.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2025 and thereafter.
new text end

Sec. 3.

Minnesota Statutes 2024, section 273.12, is amended to read:

273.12 ASSESSMENT OF REAL PROPERTY.

It shall be the duty of every assessor and board, in estimating and determining the value
of lands for the purpose of taxation, to consider and give due weight to every element and
factor affecting the market value thereof, including its location with reference to roads and
streets and the location of roads and streets thereon or over the same, and to take into
consideration a reduction in the acreage of each tract or lot sufficient to cover the amount
of land actually used for any improved public highway and the reduction in area of land
caused thereby. It shall be the duty of every assessor and board, in estimating and determining
the value of lands for the purpose of taxation, to consider and give due weight to lands
which are comparable in character, quality, and location, to the end that all lands similarly
located and improved will be assessed upon a uniform basis and without discrimination
and, for agricultural lands, to consider and give recognition to its earning potential as
measured by its free market rental rate.

When mineral, clay, or gravel deposits exist on a property, and their extent, quality, and
costs of extraction are sufficiently well known so as to influence market value, such deposits
shall be recognized in valuing the property; except for mineral and energy-resource deposits new text begin ,
metals, gas, and oil, new text end which are subject to taxation under section 298.015, and except for
taconite and iron-sulphide deposits which are exempt from the general property tax under
section 298.25.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2025 and thereafter.
new text end

Sec. 4.

Minnesota Statutes 2024, section 289A.02, subdivision 6, is amended to read:

Subd. 6.

Mining company.

"Mining company" means a person engaged in the business
of mining or producing ores new text begin , minerals, metals, gas, or oil new text end in Minnesota subject to the taxes
imposed by section 298.01 or 298.015.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2024.
new text end

Sec. 5.

Minnesota Statutes 2024, section 289A.12, is amended by adding a subdivision to
read:

new text begin Subd. 19. new text end

new text begin Informational report by mining companies. new text end

new text begin (a) A mining company required
to file an annual tax return under section 289A.08, subdivision 15, for the payment of taxes
imposed under section 298.015, must also file an annual informational report with the
commissioner that contains the following information:
new text end

new text begin (1) sales used to compute gross proceeds under section 298.016;
new text end

new text begin (2) the location of the mine or well where the ore, mineral, metal, gas, or oil product is
mined, extracted, refined or produced that is used to compute gross proceeds under section
298.016; and
new text end

new text begin (3) other information necessary to collect tax under section 298.015 and to distribute
the tax proceeds under section 298.018.
new text end

new text begin (b) The commissioner must prescribe the format and manner of the annual informational
report. A mining company must file the report on or before May 1 following the close of
the calendar year.
new text end

new text begin (c) The extension of time provided in section 289A.19, subdivision 2, for the filing of
the annual tax return required under section 289A.08, subdivision 15, does not apply to the
filing of the annual informational report.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for annual informational reports due
after December 31, 2024.
new text end

Sec. 6.

Minnesota Statutes 2024, section 289A.19, subdivision 2, is amended to read:

Subd. 2.

Corporate franchise and mining company taxes.

new text begin (a) Except as provided in
paragraph (b), new text end corporations or mining companies shall receive an extension of seven months
or the amount of time granted by the Internal Revenue Service, whichever is longer, for
filing the return of a corporation subject to tax under chapter 290 or for filing the return of
a mining company subject to tax under sections 298.01 and 298.015. Interest on any balance
of tax not paid when the regularly required return is due must be paid at the rate specified
in section 270C.40, from the date such payment should have been made if no extension was
granted, until the date of payment of such tax.

If a corporation or mining company does not:

(1) pay at least 90 percent of the amount of tax shown on the return on or before the
regular due date of the return, the penalty prescribed by section 289A.60, subdivision 1,
shall be imposed on the unpaid balance of tax; or

(2) pay the balance due shown on the regularly required return on or before the extended
due date of the return, the penalty prescribed by section 289A.60, subdivision 1, shall be
imposed on the unpaid balance of tax from the original due date of the return.

new text begin (b) If a mining company does not file the annual informational report required under
section 289A.12, subdivision 19, by May 1 following the close of the calendar year, then
the mining company subject to tax under section 298.015 must not receive the extension of
time for filing its annual tax return.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for annual informational reports due
after December 31, 2024.
new text end

Sec. 7.

Minnesota Statutes 2024, section 290.0134, subdivision 9, is amended to read:

Subd. 9.

Exempt mining new text begin and production new text end income.

Income or gains from the business
of mining new text begin or the production of gas or oil new text end as defined in section 290.05, subdivision 1, clause
(a), that are not subject to Minnesota franchise tax are a subtraction.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2024.
new text end

Sec. 8.

Minnesota Statutes 2024, section 290.0135, is amended to read:

290.0135 BASIS MODIFICATIONS AFFECTING GAIN OR LOSS ON
DISPOSITION OF PROPERTY.

(a) For individuals, estates, and trusts, the basis of property is its adjusted basis for
federal income tax purposes except as set forth in paragraphs (e) and (f). For corporations,
the basis of property is its adjusted basis for federal income tax purposes, without regard
to the time when the property became subject to tax under this chapter or to whether
out-of-state losses or items of tax preference with respect to the property were not deductible
under this chapter, except that the modifications to the basis for federal income tax purposes
set forth in paragraphs (b) to (i) are allowed to corporations, and the resulting modifications
to federal taxable income must be made in the year in which gain or loss on the sale or other
disposition of property is recognized.

(b) The basis of property shall not be reduced to reflect federal investment tax credit.

(c) For property acquired before January 1, 1933, the basis for computing a gain is the
fair market value of the property as of that date. The basis for determining a loss is the cost
of the property to the taxpayer less any depreciation, amortization, or depletion, actually
sustained before that date. If the adjusted cost exceeds the fair market value of the property,
then the basis is the adjusted cost regardless of whether there is a gain or loss.

(d) The basis is reduced by the allowance for amortization of bond premium if an election
to amortize was made pursuant to Minnesota Statutes 1986, section 290.09, subdivision 13,
and the allowance could have been deducted by the taxpayer under this chapter during the
period of the taxpayer's ownership of the property.

(e) For assets placed in service before January 1, 1987, corporations, partnerships, or
individuals engaged in the business of mining new text begin or producing minerals, metals, gas, oil, or
new text end ores other than iron ore or taconite concentrates subject to the occupation tax under chapter
298 must use the occupation tax basis of property used in that business.

(f) For assets placed in service before January 1, 1990, corporations, partnerships, or
individuals engaged in the business of mining iron ore or taconite concentrates subject to
the occupation tax under chapter 298 must use the occupation tax basis of property used in
that business.

(g) In applying the provisions of sections 301(c)(3)(B), 312(f) and (g), and 316(a)(1) of
the Internal Revenue Code, the dates December 31, 1932, and January 1, 1933, shall be
substituted for February 28, 1913, and March 1, 1913, respectively.

(h) In applying the provisions of section 362(a) and (c) of the Internal Revenue Code,
the date December 31, 1956, shall be substituted for June 22, 1954.

(i) The basis of property shall be increased by the amount of intangible drilling costs
not previously allowed due to differences between this chapter and the Internal Revenue
Code.

(j) The adjusted basis of any corporate partner's interest in a partnership is the same as
the adjusted basis for federal income tax purposes modified as required to reflect the basis
modifications set forth in paragraphs (b) to (i). The adjusted basis of a partnership in which
the partner is an individual, estate, or trust is the same as the adjusted basis for federal
income tax purposes modified as required to reflect the basis modifications set forth in
paragraphs (e) and (f).

(k) The modifications contained in paragraphs (b) to (i) also apply to the basis of property
that is determined by reference to the basis of the same property in the hands of a different
taxpayer or by reference to the basis of different property.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2024.
new text end

Sec. 9.

Minnesota Statutes 2024, section 290.05, subdivision 1, is amended to read:

Subdivision 1.

Exempt entities.

The following corporations, individuals, estates, trusts,
and organizations shall be exempted from taxation under this chapter, provided that every
such person or corporation claiming exemption under this chapter, in whole or in part, must
establish to the satisfaction of the commissioner the taxable status of any income or activity:

(a) corporations, individuals, estates, and trusts engaged in the business of mining or
producing iron ore deleted text begin and deleted text end new text begin ; new text end mining, producing, or refining other ores, metals, and minerals deleted text begin , deleted text end new text begin ; or
producing gas or oil, new text end the mining, production, or refining of which is subject to the occupation
tax imposed by section 298.01; but if any such corporation, individual, estate, or trust
engages in any other business or activity or has income from any property not used in such
business it shall be subject to this tax computed on the net income from such property or
such other business or activity. Royalty shall not be considered as income from the business
of mining or producing iron ore new text begin ; mining, producing, or refining other ores, metals, and
minerals; or producing gas or oil, new text end within the meaning of this section;

(b) the United States of America, the state of Minnesota or any political subdivision of
either agencies or instrumentalities, whether engaged in the discharge of governmental or
proprietary functions; and

(c) any insurance company, other than a disqualified captive insurance company.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2024.
new text end

Sec. 10.

Minnesota Statutes 2024, section 290.923, subdivision 1, is amended to read:

Subdivision 1.

Definition.

In this section, "royalty" means the amount in money or value
of property received by any person having any right, title, or interest in any tract of land in
this state for permission to explore, mine, take out, and remove ore new text begin , mineral, metal, gas, or
oil new text end from the land.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2024.
new text end

Sec. 11.

Minnesota Statutes 2024, section 297A.68, subdivision 5, is amended to read:

Subd. 5.

Capital equipment.

(a) Capital equipment is exempt.

"Capital equipment" means machinery and equipment purchased or leased, and used in
this state by the purchaser or lessee primarily for manufacturing, fabricating, mining, or
refining tangible personal property to be sold ultimately at retail if the machinery and
equipment are essential to the integrated production process of manufacturing, fabricating,
mining, or refining. Capital equipment also includes machinery and equipment used primarily
to electronically transmit results retrieved by a customer of an online computerized data
retrieval system.

(b) Capital equipment includes, but is not limited to:

(1) machinery and equipment used to operate, control, or regulate the production
equipment;

(2) machinery and equipment used for research and development, design, quality control,
and testing activities;

(3) environmental control devices that are used to maintain conditions such as
temperature, humidity, light, or air pressure when those conditions are essential to and are
part of the production process;

(4) materials and supplies used to construct and install machinery or equipment;

(5) repair and replacement parts, including accessories, whether purchased as spare parts,
repair parts, or as upgrades or modifications to machinery or equipment;

(6) materials used for foundations that support machinery or equipment;

(7) materials used to construct and install special purpose buildings used in the production
process;

(8) ready-mixed concrete equipment in which the ready-mixed concrete is mixed as part
of the delivery process regardless if mounted on a chassis, repair parts for ready-mixed
concrete trucks, and leases of ready-mixed concrete trucks; and

(9) machinery or equipment used for research, development, design, or production of
computer software.

(c) Capital equipment does not include the following:

(1) motor vehicles taxed under chapter 297B;

(2) machinery or equipment used to receive or store raw materials;

(3) building materials, except for materials included in paragraph (b), clauses (6) and
(7);

(4) machinery or equipment used for nonproduction purposes, including, but not limited
to, the following: plant security, fire prevention, first aid, and hospital stations; support
operations or administration; pollution control; and plant cleaning, disposal of scrap and
waste, plant communications, space heating, cooling, lighting, or safety;

(5) farm machinery and aquaculture production equipment as defined by section 297A.61,
subdivisions 12 and 13;

(6) machinery or equipment purchased and installed by a contractor as part of an
improvement to real property;

(7) machinery and equipment used by restaurants in the furnishing, preparing, or serving
of prepared foods as defined in section 297A.61, subdivision 31;

(8) machinery and equipment used to furnish the services listed in section 297A.61,
subdivision 3, paragraph (g), clause (6), items (i) to (vi) and (viii);

(9) machinery or equipment used in the transportation, transmission, or distribution of
petroleum, liquefied gas, natural gas, water, or steam, in, by, or through pipes, lines, tanks,
mains, or other means of transporting those products. This clause does not apply to machinery
or equipment used to blend petroleum or biodiesel fuel as defined in section 239.77; or

(10) any other item that is not essential to the integrated process of manufacturing,
fabricating, mining, or refining.

(d) For purposes of this subdivision:

(1) "Equipment" means independent devices or tools separate from machinery but
essential to an integrated production process, including computers and computer software,
used in operating, controlling, or regulating machinery and equipment; and any subunit or
assembly comprising a component of any machinery or accessory or attachment parts of
machinery, such as tools, dies, jigs, patterns, and molds.

(2) "Fabricating" means to make, build, create, produce, or assemble components or
property to work in a new or different manner.

(3) "Integrated production process" means a process or series of operations through
which tangible personal property is manufactured, fabricated, mined, or refined. For purposes
of this clause, (i) manufacturing begins with the removal of raw materials from inventory
and ends when the last process prior to loading for shipment has been completed; (ii)
fabricating begins with the removal from storage or inventory of the property to be assembled,
processed, altered, or modified and ends with the creation or production of the new or
changed product; (iii) mining begins with the removal of overburden from the site of the
ores, minerals, stone, peat deposit, new text begin metals, gas, oil, new text end or surface materials and ends when the
last process before stockpiling is completed; and (iv) refining begins with the removal from
inventory or storage of a natural resource and ends with the conversion of the item to its
completed form.

(4) "Machinery" means mechanical, electronic, or electrical devices, including computers
and computer software, that are purchased or constructed to be used for the activities set
forth in paragraph (a), beginning with the removal of raw materials from inventory through
completion of the product, including packaging of the product.

(5) "Machinery and equipment used for pollution control" means machinery and
equipment used solely to eliminate, prevent, or reduce pollution resulting from an activity
described in paragraph (a).

(6) "Manufacturing" means an operation or series of operations where raw materials are
changed in form, composition, or condition by machinery and equipment and which results
in the production of a new article of tangible personal property. For purposes of this
subdivision, "manufacturing" includes the generation of electricity or steam to be sold at
retail.

(7) "Mining" means the extraction of minerals, ores, stone, deleted text begin or deleted text end peat new text begin , metals, gas, or oil.
"Gas and oil" have the meaning given to those terms in section 298.001, subdivisions 14
and 15 new text end .

(8) "Online data retrieval system" means a system whose cumulation of information is
equally available and accessible to all its customers.

(9) "Primarily" means machinery and equipment used 50 percent or more of the time in
an activity described in paragraph (a).

(10) "Refining" means the process of converting a natural resource to an intermediate
or finished product, including the treatment of water to be sold at retail.

(11) This subdivision does not apply to telecommunications equipment as provided in
subdivision 35a, and does not apply to wire, cable, or poles for telecommunications services.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
December 31, 2025.
new text end

Sec. 12.

Minnesota Statutes 2024, section 297A.71, subdivision 14, is amended to read:

Subd. 14.

Mineral production facilities.

Building materials, equipment, and supplies
used for the construction of the following mineral production facilities are exempt.

The mineral production facilities that qualify for this exemption are:

(1) a value added iron products plant, which may be either a new plant or a facility
incorporated into an existing plant that produces iron upgraded to a minimum of 75 percent
iron content or any iron alloy with a total minimum metallic content of 90 percent;

(2) a facility used for the manufacture of fluxed taconite pellets as defined in section
298.24;

(3) a new capital project that has a total cost of over $40,000,000 that is directly related
to production, cost, or quality at an existing taconite facility that does not qualify under
clause (1) or (2); and

(4) a new mine or minerals processing plant for any mineral new text begin , ore, metal, gas, or oil new text end subject
to the gross proceeds tax imposed under section 298.015.

The tax must be imposed and collected as if the rate under section 297A.62, subdivision
1, applied, and then refunded in the manner provided in section 297A.75.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
December 31, 2025.
new text end

Sec. 13.

Minnesota Statutes 2024, section 298.001, subdivision 3a, is amended to read:

Subd. 3a.

Producer.

"Producer" means a person engaged in the business of mining or
producing iron ore, taconite concentrate, deleted text begin or deleted text end direct reduced ore new text begin , other ore, minerals, metals,
gas, or oil new text end in this state.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2024.
new text end

Sec. 14.

Minnesota Statutes 2024, section 298.001, is amended by adding a subdivision
to read:

new text begin Subd. 10a. new text end

new text begin Producing. new text end

new text begin "Producing" means and is limited to producing:
new text end

new text begin (1) gas or oil products, the drilling, extracting, separating, or beneficiating of which are
subject to tax under section 298.015; and
new text end

new text begin (2) carried out by the entity, or affiliated entity, that drilled, extracted, separated, or
beneficiated the gas or oil products.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2024.
new text end

Sec. 15.

Minnesota Statutes 2024, section 298.001, is amended by adding a subdivision
to read:

new text begin Subd. 14. new text end

new text begin Gas. new text end

new text begin "Gas" means all gases, both hydrocarbon and nonhydrocarbon, that occur
naturally beneath the ground surface in Minnesota. Gas includes, but is not limited to, natural
gas, hydrogen, carbon dioxide, nitrogen, hydrogen sulfide, helium, methane and a mixture
of some or all of these gases.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2024.
new text end

Sec. 16.

Minnesota Statutes 2024, section 298.001, is amended by adding a subdivision
to read:

new text begin Subd. 15. new text end

new text begin Oil. new text end

new text begin "Oil" means all oils that occur naturally beneath the ground surface in
Minnesota. Oil includes, but is not limited to, petroleum, crude oil, condensate, casinghead
gasoline, or other mineral oils and a mixture of some or all of these oils.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2024.
new text end

Sec. 17.

Minnesota Statutes 2024, section 298.001, is amended by adding a subdivision
to read:

new text begin Subd. 16. new text end

new text begin Gas or oil production. new text end

new text begin "Gas or oil production," "the production of gas or oil,"
and "producing gas or oil" mean the action of taking gas or oil, in its natural state, out from
beneath the ground surface in Minnesota and includes drilling, extracting, separating or
beneficiating that gas or oil in Minnesota.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2024.
new text end

Sec. 18.

Minnesota Statutes 2024, section 298.01, subdivision 3, is amended to read:

Subd. 3.

Occupation tax; other ores new text begin ; gas and oil new text end .

Every person engaged in the business
of mining, refining, or producing ores, metals, or minerals new text begin , or producing gas or oil, new text end in this
state, new text begin when these resources are extracted in their natural state from beneath the ground
surface in Minnesota, new text end except iron ore or taconite concentrates, shall pay an occupation tax
to the state of Minnesota as provided in this subdivision. For purposes of this subdivision,
mining includes the application of hydrometallurgical processes. Hydrometallurgical
processes are processes that extract the ores, metals, or minerals, by use of aqueous solutions
that leach, concentrate, and recover the ore, metal, or mineral. The tax is determined in the
same manner as the tax imposed by section 290.02, except that sections 290.05, subdivision
1, clause (a), 290.17, subdivision 4, and 290.191, subdivision 2, do not apply, and the
occupation tax must be computed by applying to taxable income the rate of 2.45 percent.

The tax is in addition to all other taxes.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2024.
new text end

Sec. 19.

Minnesota Statutes 2024, section 298.01, subdivision 3a, is amended to read:

Subd. 3a.

Gross income.

(a) For purposes of determining a person's taxable income
under subdivision 3, gross income is determined by the amount of gross proceeds from
mining new text begin , refining, or producing ores, metals, or minerals or producing gas or oil new text end in deleted text begin this state deleted text end new text begin
Minnesota new text end under section 298.016 and includes any gain or loss recognized from the sale or
disposition of assets used in the business in this state. If more than one ore, mineral, deleted text begin or deleted text end
metal new text begin , gas, or oil new text end referred to in section 298.016 is mined deleted text begin and processed deleted text end new text begin or produced new text end at the
same mine new text begin , well, new text end and plant, a gross income for each ore, mineral, deleted text begin or deleted text end metal new text begin , gas, and oil new text end must
be determined separately. The gross incomes may be combined on one occupation tax return
to arrive at the gross income of all production.

(b) In applying section 290.191, subdivision 5, transfers of ores, metals, deleted text begin or deleted text end minerals new text begin ,
gas, or oil new text end that are subject to tax under this chapter are deemed to be sales in this state.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2024.
new text end

Sec. 20.

Minnesota Statutes 2024, section 298.01, subdivision 3b, is amended to read:

Subd. 3b.

Deductions.

(a) For purposes of determining taxable income under subdivision
3, the deductions from gross income include only those expenses necessary to convert raw
ores new text begin , metals, minerals, gas, or oil new text end to marketable quality. Such expenses include costs
associated with refinement but do not include expenses such as transportation, stockpiling,
marketing, or marine insurance that are incurred after marketable ores new text begin , metals, minerals,
gas, or oil new text end are produced, unless the expenses are included in gross income. The allowable
deductions from a mine new text begin , well, new text end or plant that mines and produces more than one new text begin ore, new text end mineral,
metal, deleted text begin or deleted text end energy resource new text begin , gas, or oil new text end must be determined separately for the purposes of
computing the deduction in section 290.0133, subdivision 9. These deductions may be
combined on one occupation tax return to arrive at the deduction from gross income for all
production.

(b) The provisions of sections 290.0133, subdivisions 7 and 9, and 290.0134, subdivisions
7 and 9, are not used to determine taxable income.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2024.
new text end

Sec. 21.

Minnesota Statutes 2024, section 298.01, subdivision 4a, is amended to read:

Subd. 4a.

Gross income.

(a) For purposes of determining a person's taxable income
under subdivision 4, gross income is determined by the mine value of the ore mined in
Minnesota and includes any gain or loss recognized from the sale or disposition of assets
used in the business in this state.

(b) Mine value is the value, or selling price, of iron ore or taconite concentrates, f.o.b.
mine. The mine value is calculated by multiplying the iron unit price for the period, as
determined by the commissioner, by the tons produced and the weighted average analysis.

(c) In applying section 290.191, subdivision 5, transfers of iron ore and taconite
concentrates are deemed to be sales in this state.

(d) If iron ore deleted text begin or deleted text end new text begin , new text end taconite and deleted text begin a deleted text end new text begin any other ore, new text end mineral, metal, deleted text begin or deleted text end energy resource new text begin , gas,
or oil new text end referred to in section 298.016 is mined deleted text begin and processed deleted text end new text begin or produced new text end at the same mine new text begin ,
well, new text end and plant, a gross income for each new text begin other ore, new text end mineral, metal, deleted text begin or deleted text end energy resource new text begin , gas,
or oil new text end must be determined separately from the mine value for the iron ore or taconite. The
gross income may be combined on one occupation tax return to arrive at the gross income
from all production.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2024.
new text end

Sec. 22.

Minnesota Statutes 2024, section 298.01, subdivision 4b, is amended to read:

Subd. 4b.

Deductions.

For purposes of determining taxable income under subdivision
4, the deductions from gross income include only those expenses necessary to convert raw
iron ore or taconite concentrates to marketable quality. Such expenses include costs associated
with beneficiation and refinement but do not include expenses such as transportation,
stockpiling, marketing, or marine insurance that are incurred after marketable iron ore or
taconite pellets are produced. The allowable deductions from a mine new text begin , well, new text end or plant that
mines and produces iron ore or taconite and one or more mineral deleted text begin or deleted text end new text begin , new text end metal new text begin , gas, or oil new text end referred
to in section 298.016 must be determined separately for the purposes of computing the
deduction in section 290.0133, subdivision 9. These deductions may be combined on one
occupation tax return to arrive at the deduction from gross income for all production.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2024.
new text end

Sec. 23.

Minnesota Statutes 2024, section 298.01, subdivision 5, is amended to read:

Subd. 5.

If declared unconstitutional.

If the taxes imposed in subdivisions 3 and 4 are
found unconstitutional by any court of last resort, then persons engaged in the business of
mining or producing iron ore or other ores new text begin , metals, minerals, gas, or oil new text end shall pay the
occupation taxes imposed in Minnesota Statutes 1986, chapter 298. new text begin For purposes of applying
Minnesota Statutes 1986, chapter 298, the term "other ores" as used in that chapter includes
ores other than iron ore as well as minerals, metals, gas, or oil.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2024.
new text end

Sec. 24.

Minnesota Statutes 2024, section 298.01, subdivision 6, is amended to read:

Subd. 6.

Deductions applicable to mining both taconite and other ores new text begin , gas, or oil new text end ;
ratio applied.

If a person is engaged in the business of mining or producing both iron ores,
taconite concentrates, or direct reduced ore, and other ores new text begin , minerals, metals, gas, or oil new text end
from the same mine or facility, that person must separately determine the mine value of (1)
the iron ore, taconite concentrates, and direct reduced ore, and (2) the amount of gross
proceeds from mining other ores new text begin , minerals, metals, gas, or oil new text end in Minnesota. The ratio of
mine value from iron ore, taconite concentrates, and direct reduced ore to gross proceeds
from mining other ores new text begin , minerals, metals, gas, or oil new text end must be applied to deductions common
to both processes to determine taxable income for tax paid pursuant to subdivisions 3 and
4.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2024.
new text end

Sec. 25.

Minnesota Statutes 2024, section 298.015, subdivision 1, is amended to read:

Subdivision 1.

Tax imposed.

new text begin (a) Except as provided in paragraph (b), new text end a person engaged
in the business of mining shall pay to the state of Minnesota for distribution as provided in
section 298.018 a gross proceeds tax equal to 0.4 percent of the gross proceeds from mining
in Minnesota. The tax applies to all ores, metals, deleted text begin and deleted text end minerals new text begin , gas, or oil new text end mined, extracted,
produced, or refined within the state of Minnesota new text begin , when these resources are extracted in
their natural state from beneath the ground surface in Minnesota, new text end except for sand, silica
sand, gravel, building stone, crushed rock, limestone, granite, dimension granite, dimension
stone, horticultural peat, clay, soil, iron ore, and taconite concentrates. The tax is in addition
to all other taxes provided for by law.

new text begin (b) The following tax rates apply to the gas products listed:
new text end

new text begin (1) ... percent of the gross proceeds for carbon dioxide products;
new text end

new text begin (2) ... percent of the gross proceeds for helium products; and
new text end

new text begin (3) ... percent of the gross proceeds for hydrogen products.
new text end

new text begin (c) A person engaged in the business of producing gas or oil in this state is not subject
to the minimum payment under subdivision 3.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2024.
new text end

Sec. 26.

Minnesota Statutes 2024, section 298.016, subdivision 1, is amended to read:

Subdivision 1.

Computation; arm's-length transactions.

When a metal deleted text begin or deleted text end new text begin , new text end mineral new text begin ,
gas, or oil new text end product is sold by the producer in an arm's-length transaction, the gross proceeds
are equal to the proceeds from the sale of the product. This subdivision applies to sales
realized on all metal deleted text begin or deleted text end new text begin , new text end mineral new text begin , gas, or oil new text end products produced from mining new text begin or production new text end ,
including reduction, beneficiation, or any treatment new text begin or process new text end used by a producer to obtain
a metal deleted text begin or deleted text end new text begin , new text end mineral new text begin , gas, or oil new text end product which is commercially marketable.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2024.
new text end

Sec. 27.

Minnesota Statutes 2024, section 298.016, subdivision 2, is amended to read:

Subd. 2.

Other transactions.

When a metal deleted text begin or deleted text end new text begin , new text end mineral new text begin , gas, or oil new text end product is used by
the producer or disposed of in a non-arm's-length transaction, the gross proceeds must be
determined using the alternative computation in subdivision 3. Transactions subject to this
subdivision include, but are not limited to, shipments to a wholly owned smelter, transactions
with associated or affiliated companies, and any other transactions which are not at arm's
length.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2024.
new text end

Sec. 28.

Minnesota Statutes 2024, section 298.016, subdivision 3, is amended to read:

Subd. 3.

Alternative computation.

(a) new text begin Except as provided in paragraphs (c) and (d),
new text end the commissioner of revenue shall determine the alternative computation of gross proceeds
using the following procedure:

(1) Metal and mineral prices shall be determined by using the average annual market
price as published in the Engineering and Mining Journal;

(2) For metals or mineral products with a monthly or weekly price quotation in the
Engineering and Mining Journal, but for which no average annual price has been published,
an arithmetic average of the monthly or weekly prices published in the Engineering and
Mining Journal shall be used; new text begin and
new text end

(3) If the price of a particular metal or mineral product is not published in the Engineering
and Mining Journal, another recognized published price, as established by the commissioner
of revenue will be used.

(b) The quantity of each particular metal or mineral product recovered and paid or
credited for by the smelter will be multiplied by the average annual market price as
determined in deleted text begin clause deleted text end new text begin paragraph new text end (a). Special smelter charges for particular metals will be
allowed as a deduction from this price. The resulting amount will be the gross proceeds for
calculating the tax in section 298.015.

new text begin (c) A recognized published price, as established by the commissioner of revenue, must
be used to determine the alternative computation of gross proceeds for gas or oil products.
new text end

new text begin (d) If a recognized published price is not currently available, the commissioner must
use either a recognized price published historically or an arm's length transaction price paid
by other parties for gas or oil products of like quantity to determine the greatest market
value of the gas or oil product. If the commissioner uses a historical published price, it must
be adjusted for inflation, as provided in section 270C.22, using the year in which the most
recent historical price is published as the statutory year. If the commissioner uses an arm's
length transaction price, the commissioner may adjust the arm's length transaction price to
account for differences in quality, recency, inflation, terms and conditions, and other relevant
circumstances under which the arm's length transaction price was paid in relation to the
non-arm's-length transaction price computed under this subdivision.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2024.
new text end

Sec. 29.

Minnesota Statutes 2024, section 298.016, subdivision 4, is amended to read:

Subd. 4.

Metal deleted text begin or deleted text end new text begin , new text end mineral new text begin , gas, or oil new text end products; definition.

For the purposes of this
section, "metal deleted text begin or deleted text end new text begin , new text end mineral new text begin , gas, or oil new text end products" means all those ores, metals, deleted text begin and deleted text end minerals new text begin ,
gases, or oils new text end subject to the tax provided in section 298.015.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2024.
new text end

Sec. 30.

Minnesota Statutes 2024, section 298.016, is amended by adding a subdivision
to read:

new text begin Subd. 4a. new text end

new text begin Gas or oil products; definition. new text end

new text begin For purposes of this section, "gas or oil
products" mean all gases and oils subject to the tax imposed in section 298.015.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2024.
new text end

Sec. 31.

Minnesota Statutes 2024, section 298.018, subdivision 1, is amended to read:

Subdivision 1.

Within taconite assistance area.

(a) new text begin Except as provided in subdivision
1b, new text end the proceeds of the tax paid under sections 298.015 and 298.016 on ores, metals, or
minerals mined or extracted within the taconite assistance area defined in section 273.1341,
shall be allocated as follows:

(1) except as provided under paragraph (b), five percent to the city or town within which
the new text begin ores, metals, new text end minerals new text begin , new text end or energy resources are mined or extracted, or within which the
concentrate was produced. If the mining and concentration, or different steps in either
process, are carried on in more than one taxing district, the commissioner shall apportion
equitably the proceeds among the cities and towns by attributing 50 percent of the proceeds
of the tax to the operation of mining or extraction, and the remainder to the new text begin production plant
or new text end concentrating plant and to the processes of new text begin production and new text end concentration, and with respect
to each thereof giving due consideration to the relative extent of the respective operations
performed in each taxing district;

(2) ten percent to the taconite municipal aid account to be distributed as provided in
section 298.282, subdivisions 1 and 2, on the dates provided under this section;

(3) ten percent to the school district within which the new text begin ores, metals, new text end minerals new text begin , new text end or energy
resources are mined or extracted, or within which the concentrate was produced. If the
mining new text begin , production, new text end and concentration, or different steps in deleted text begin either process deleted text end new text begin those processes new text end ,
are carried on in more than one school district, distribution among the school districts must
be based on the apportionment formula prescribed in clause (1);

(4) 20 percent to a group of school districts comprised of those school districts wherein
the new text begin ore, metal, new text end mineral new text begin , new text end or energy resource was mined or extracted or in which there is a
qualifying municipality as defined by section 273.134, paragraph (b), in direct proportion
to school district indexes as follows: for each school district, its pupil units determined
under section 126C.05 for the prior school year shall be multiplied by the ratio of the average
adjusted net tax capacity per pupil unit for school districts receiving aid under this clause
as calculated pursuant to chapters 122A, 126C, and 127A for the school year ending prior
to distribution to the adjusted net tax capacity per pupil unit of the district. Each district
shall receive that portion of the distribution which its index bears to the sum of the indices
for all school districts that receive the distributions;

(5) ten percent to the county within which the new text begin ores, metals, new text end minerals deleted text begin or deleted text end new text begin , new text end energy resources new text begin ,
oils, or gases new text end are mined or extracted, or within which the concentrate was produced. If the
mining new text begin , production, new text end and concentration, or different steps in deleted text begin either process deleted text end new text begin those processes new text end ,
are carried on in more than one county, distribution among the counties must be based on
the apportionment formula prescribed in clause (1), provided that any county receiving
distributions under this clause shall pay one percent of its proceeds to the Range Association
of Municipalities and Schools;

(6) five percent to St. Louis County acting as the counties' fiscal agent to be distributed
as provided in sections 273.134 to 273.136;

(7) 20 percent to the commissioner of Iron Range resources and rehabilitation for the
purposes of section 298.22;

(8) three percent to the Douglas J. Johnson economic protection trust fund;

(9) seven percent to the taconite environmental protection fund; and

(10) ten percent to the commissioner of Iron Range resources and rehabilitation for
capital improvements to Giants Ridge Recreation Area.

(b) If the deleted text begin materials deleted text end new text begin ores, metals, minerals, new text end or energy resources are mined, extracted, or
concentrated in School District No. 2711, Mesabi East, then the amount under paragraph
(a), clause (1), must instead be distributed pursuant to this paragraph. The cities of Aurora,
Babbitt, Ely, and Hoyt Lakes must each receive 20 percent of the amount. The city of
Biwabik and Embarrass Township must each receive ten percent of the amount.

(c) For the first five years that tax paid under section 298.015, subdivisions 1 and 2, is
distributed under this subdivision, ten percent of the total proceeds distributed in each year
must first be distributed pursuant to this paragraph. The remaining 90 percent of the total
proceeds distributed in each of those years must be distributed as outlined in paragraph (a).
Of the amount available under this paragraph, the cities of Aurora, Babbitt, Ely, and Hoyt
Lakes must each receive 20 percent. Of the amount available under this paragraph, the city
of Biwabik and Embarrass Township must each receive ten percent. This paragraph applies
only to tax paid by a person engaged in the business of mining within the area described in
section 273.1341, clauses (1) and (2).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2024.
new text end

Sec. 32.

Minnesota Statutes 2024, section 298.018, subdivision 1a, is amended to read:

Subd. 1a.

Distribution date.

The proceeds of the tax allocated under deleted text begin subdivision deleted text end new text begin
subdivisions new text end 1 new text begin and 2 new text end shall be distributed on December 15 each year. Any payment of proceeds
received after December 15 shall be distributed on the next gross proceeds tax distribution
date.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2024.
new text end

Sec. 33.

Minnesota Statutes 2024, section 298.018, is amended by adding a subdivision
to read:

new text begin Subd. 1b. new text end

new text begin Gas and oil distributions. new text end

new text begin The proceeds of the tax paid under sections 298.015
and 298.016 on gas or oil produced within the taconite assistance area defined in section
273.1341, must be allocated as follows: .....
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2024.
new text end

Sec. 34.

Minnesota Statutes 2024, section 298.018, subdivision 2, is amended to read:

Subd. 2.

Outside taconite assistance area.

new text begin (a) Except as provided in paragraph (b), new text end the
proceeds of the tax paid under sections 298.015 and 298.016 on ores, metals, or minerals
mined or extracted outside of the taconite assistance area defined in section 273.1341, shall
be deposited in the general fund.

new text begin (b) The proceeds of the tax paid under sections 298.015 and 298.016 on gas or oil
produced outside the taconite assistance area defined in section 273.1341, must be allocated
as follows: .....
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2024.
new text end

Sec. 35.

Minnesota Statutes 2024, section 298.17, is amended to read:

298.17 OCCUPATION TAXES TO BE APPORTIONED.

(a) All occupation taxes paid by persons, copartnerships, companies, joint stock
companies, corporations, and associations, however or for whatever purpose organized,
engaged in the business of mining or producing iron ore deleted text begin or deleted text end new text begin , new text end other ores new text begin , metals, minerals,
gases, or oils new text end , when collected shall be apportioned and distributed in accordance with the
Constitution of the state of Minnesota, article X, section 3, in the manner following: 90
percent shall be deposited in the state treasury and credited to the general fund of which
four-ninths shall be used for the support of elementary and secondary schools; and ten
percent of the proceeds of the tax imposed by this section shall be deposited in the state
treasury and credited to the general fund for the general support of the university.

(b) new text begin Except as provided in paragraph (e), new text end of the money apportioned to the general fund
by this section: (1) there is annually appropriated and credited to the mining environmental
and regulatory account in the special revenue fund an amount equal to that which would
have been generated by a 2-1/2 cent tax imposed by section 298.24 on each taxable ton
produced in the preceding calendar year. Money in the mining environmental and regulatory
account is appropriated annually to the commissioner of natural resources to fund agency
staff to work on environmental issues and provide regulatory services for ferrous and
nonferrous mining new text begin and production new text end operations in this state. Payment to the mining
environmental and regulatory account shall be made by July 1 annually. The commissioner
of natural resources shall execute an interagency agreement with the Pollution Control
Agency to assist with the provision of environmental regulatory services such as monitoring
and permitting required for ferrous and nonferrous mining new text begin and production new text end operations; (2)
there is annually appropriated and credited to the Iron Range resources and rehabilitation
account in the special revenue fund an amount equal to that which would have been generated
by a 1.5 cent tax imposed by section 298.24 on each taxable ton produced in the preceding
calendar year, to be expended for the purposes of section 298.22; and (3) there is annually
appropriated and credited to the Iron Range resources and rehabilitation account in the
special revenue fund for transfer to the Iron Range schools and community development
account under section 298.28, subdivision 7a, an amount equal to that which would have
been generated by a six cent tax imposed by section 298.24 on each taxable ton produced
in the preceding calendar year. Payment to the Iron Range resources and rehabilitation
account shall be made by May 15 annually.

(c) The money appropriated pursuant to paragraph (b), clause (2), shall be used (i) to
provide environmental development grants to local governments located within any county
in region 3 as defined in governor's executive order number 60, issued on June 12, 1970,
which does not contain a municipality qualifying pursuant to section 273.134, paragraph
(b), or (ii) to provide economic development loans or grants to businesses located within
any such county, provided that the county board or an advisory group appointed by the
county board to provide recommendations on economic development shall make
recommendations to the commissioner of Iron Range resources and rehabilitation regarding
the loans. Payment to the Iron Range resources and rehabilitation account shall be made by
May 15 annually.

(d) Of the money allocated to Koochiching County, one-third must be paid to the
Koochiching County Economic Development Commission.

new text begin (e) Of the money apportioned to the general fund under this section, the proceeds of the
tax paid under section 298.01, subdivision 3, on gas or oil produced must be allocated as
follows: .....
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2024.
new text end

APPENDIX

Repealed Minnesota Statutes: 25-04622

93.513 PROHIBITION ON PRODUCTION OF GAS OR OIL WITHOUT PERMIT.

Subd. 2.

Moratorium.

Until rules are adopted under section 93.514, the commissioner may not grant a permit for the production of gas or oil unless the legislature approves a temporary permit framework that allows issuance of temporary permits.