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SF 2753

as introduced - 93rd Legislature (2023 - 2024) Posted on 10/25/2023 10:56am

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - as introduced

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A bill for an act
relating to transportation; establishing a refundable sustainable aviation fuel tax
credit and related sales tax exemption; amending Minnesota Statutes 2022, sections
239.761, by adding a subdivision; 296A.01, by adding a subdivision; 296A.09,
subdivision 6; 297A.68, subdivision 19; 297A.71, by adding a subdivision;
297A.75, subdivisions 1, 2; proposing coding for new law in Minnesota Statutes,
chapter 290.

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

Section 1.

Minnesota Statutes 2022, section 239.761, is amended by adding a subdivision
to read:


new text begin Subd. 10a. new text end

new text begin Sustainable aviation fuel. new text end

new text begin Sustainable aviation fuel, as defined under section
296A.01, subdivision 47a, must comply with either: (1) American Society for Testing and
Materials International Standard Specification D7566; or (2) the Fischer-Tropsch provisions
of American Society for Testing and Materials International Standard Specification D1655,
Annex A1.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 2.

new text begin [290.0687] SUSTAINABLE AVIATION FUEL CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Credit allowed; definitions. new text end

new text begin (a) A qualifying taxpayer is allowed a credit
against the tax imposed by this chapter equal to $1.50 for each gallon of sustainable aviation
fuel, up to $....... in a taxable year, that is:
new text end

new text begin (1) produced in Minnesota or blended with aviation gasoline or jet fuel in Minnesota;
and
new text end

new text begin (2) sold in Minnesota to a purchaser who certifies that the sustainable aviation fuel is
for use as fuel in an aircraft departing from an airport in Minnesota.
new text end

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

new text begin (1) "aircraft" has the meaning given in section 296A.01, subdivision 3;
new text end

new text begin (2) "aviation gasoline" has the meaning given in section 296A.01, subdivision 7;
new text end

new text begin (3) "jet fuel" has the meaning given in section 296A.01, subdivision 8;
new text end

new text begin (4) "qualifying taxpayer" means a taxpayer that is engaged in the business of:
new text end

new text begin (i) producing sustainable aviation fuel; or
new text end

new text begin (ii) blending sustainable aviation fuel with aviation gasoline or jet fuel; and
new text end

new text begin (5) "sustainable aviation fuel" has the meaning given in section 296A.01, subdivision
47a.
new text end

new text begin (c) A qualifying taxpayer may claim a credit for blending or producing sustainable
aviation fuel, but not both. If sustainable aviation fuel is blended with aviation gasoline or
jet fuel, the credit is allowed only for the portion of sustainable aviation fuel that is included
in the blended fuel.
new text end

new text begin Subd. 2. new text end

new text begin Credit refundable. new text end

new text begin If the amount of credit that an eligible taxpayer is allowed
under this section exceeds the eligible taxpayer's tax liability under this chapter, the
commissioner shall refund the excess to the eligible taxpayer.
new text end

new text begin Subd. 3. new text end

new text begin Partnerships; multiple owners. new text end

new text begin Credits granted to a partnership, a limited
liability company taxed as a partnership, an S corporation, or multiple owners of property
are passed through to the partners, members, shareholders, or owners, respectively, pro rata
to each partner, member, shareholder, or owner based on their share of the entity's assets
or as specially allocated in their organizational documents or any other executed agreement,
as of the last day of the taxable year.
new text end

new text begin Subd. 4. new text end

new text begin Application; manner of claiming. new text end

new text begin The commissioner, in consultation with
the commissioner of agriculture, shall prescribe the manner in which the credit may be
claimed.
new text end

new text begin Subd. 5. new text end

new text begin Appropriation. new text end

new text begin An amount sufficient to pay the refunds required by this section
is appropriated to the commissioner from the general fund.
new text end

new text begin Subd. 6. new text end

new text begin Expiration. new text end

new text begin This section expires January 1, 2035, for taxable years beginning
after December 31, 2034.
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, 2023, and before January 1, 2035.
new text end

Sec. 3.

Minnesota Statutes 2022, section 296A.01, is amended by adding a subdivision to
read:


new text begin Subd. 47a. new text end

new text begin Sustainable aviation fuel. new text end

new text begin "Sustainable aviation fuel" means liquid fuel that:
new text end

new text begin (1) meets the requirements of:
new text end

new text begin (i) the American Society for Testing and Materials International Standard Specification
D7566; or
new text end

new text begin (ii) the Fischer-Tropsch provisions of American Society for Testing and Materials
International Standard Specification D1655, Annex A1;
new text end

new text begin (2) is derived from biomass as defined in section 41A.15, subdivision 2e;
new text end

new text begin (3) is not derived from palm fatty acid distillates; and
new text end

new text begin (4) achieves at least a 50 percent life cycle greenhouse gas emissions reduction in
comparison with petroleum-based aviation gasoline, aviation turbine fuel, and jet fuel as
determined by a test that shows:
new text end

new text begin (i) that the fuel production pathway achieves at least a 50 percent life cycle greenhouse
gas emissions reduction in comparison with petroleum-based aviation gasoline, aviation
turbine fuel, and jet fuel utilizing the most recent version of Argonne National Laboratory's
GREET model that accounts for reduced emissions throughout the fuel production process,
including carbon reductions in feedstock production to fuel combustion and practices such
as carbon capture and storage, renewable energy use, biomass combustion for fuel, and
others; or
new text end

new text begin (ii) that the fuel production pathway achieves at least a 50 percent reduction of the
aggregate attributional core life cycle emissions and the positive induced land use change
values under the life cycle methodology for sustainable aviation fuels adopted by the
International Civil Aviation Organization with the agreement of the United States.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 4.

Minnesota Statutes 2022, section 296A.09, subdivision 6, is amended to read:


Subd. 6.

Exemptions.

new text begin (a) new text end The provisions of subdivisions 1 and 2 do not apply to aviation
gasoline or jet fuel purchased by an ambulance service licensed under chapter 144E.

new text begin (b) The provisions of subdivisions 1 and 2 do not apply to sustainable aviation fuel.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 5.

Minnesota Statutes 2022, section 297A.68, subdivision 19, is amended to read:


Subd. 19.

Petroleum products.

The following petroleum products are exempt:

(1) products upon which a tax has been imposed and paid under chapter 296A, and for
which no refund has been or will be allowed because the buyer used the fuel for nonhighway
use;

(2) products that are used in the improvement of agricultural land by constructing,
maintaining, and repairing drainage ditches, tile drainage systems, grass waterways, water
impoundment, and other erosion control structures;

(3) products purchased by a transit system receiving financial assistance under section
174.24, 256B.0625, subdivision 17, or 473.384;

(4) products purchased by an ambulance service licensed under chapter 144E;

(5) products used in a passenger snowmobile, as defined in section 296A.01, subdivision
39
, for off-highway business use as part of the operations of a resort as provided under
section 296A.16, subdivision 2, clause (2);

(6) products purchased by a state or a political subdivision of a state for use in motor
vehicles exempt from registration under section 168.012, subdivision 1, paragraph (b);

(7) products purchased by providers of transportation to recipients of medical assistance
home and community-based services waivers enrolled in day programs, including adult day
care, family adult day care, day treatment and habilitation, prevocational services, and
structured day services;

(8) products used in a motor vehicle used exclusively as a mobile medical unit for the
provision of medical or dental services by a federally qualified health center, as defined
under title 19 of the federal Social Security Act, as amended by section 4161 of the Omnibus
Budget Reconciliation Act of 1990; deleted text begin or
deleted text end

(9) special fuel used for one of the following purposes:

(i) to power a refrigeration unit mounted on a licensed motor vehicle, provided that the
unit has an engine separate from the one used to propel the vehicle and the fuel is used
exclusively for the unit;

(ii) to power an unlicensed motor vehicle that is used solely or primarily to move
semitrailers within a cargo yard, warehouse facility, or intermodal facility; or

(iii) to operate a power take-off unit or auxiliary engine in or on a licensed motor vehicle,
whether or not the unit or engine is fueled from the same or a different fuel tank as that
from which the motor vehicle is fueleddeleted text begin .deleted text end new text begin ; or
new text end

new text begin (10) sustainable aviation fuel, as defined under section 296A.01, subdivision 47a, for
sales and purchases made after June 30, 2024, and before July 1, 2034.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 6.

Minnesota Statutes 2022, section 297A.71, is amended by adding a subdivision to
read:


new text begin Subd. 54. new text end

new text begin Sustainable aviation fuel facilities. new text end

new text begin (a) Materials and supplies used or
consumed in and equipment incorporated into the construction, reconstruction, or
improvement of a facility located in Minnesota that produces or blends sustainable aviation
fuel, as defined under section 296A.01, subdivision 47a, is exempt.
new text end

new text begin (b) 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 end

new text begin (c) This subdivision expires July 1, 2034. The expiration does not affect refunds due for
sales and purchases made prior to July 1, 2034.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2024, and before July 1, 2034.
new text end

Sec. 7.

Minnesota Statutes 2022, section 297A.75, subdivision 1, is amended to read:


Subdivision 1.

Tax collected.

The tax on the gross receipts from the sale of the following
exempt items must be imposed and collected as if the sale were taxable and the rate under
section 297A.62, subdivision 1, applied. The exempt items include:

(1) building materials for an agricultural processing facility exempt under section
297A.71, subdivision 13;

(2) building materials for mineral production facilities exempt under section 297A.71,
subdivision 14
;

(3) building materials for correctional facilities under section 297A.71, subdivision 3;

(4) building materials used in a residence for veterans with a disability exempt under
section 297A.71, subdivision 11;

(5) elevators and building materials exempt under section 297A.71, subdivision 12;

(6) materials and supplies for qualified low-income housing under section 297A.71,
subdivision 23
;

(7) materials, supplies, and equipment for municipal electric utility facilities under
section 297A.71, subdivision 35;

(8) equipment and materials used for the generation, transmission, and distribution of
electrical energy and an aerial camera package exempt under section 297A.68, subdivision
37;

(9) commuter rail vehicle and repair parts under section 297A.70, subdivision 3, paragraph
(a), clause (10);

(10) materials, supplies, and equipment for construction or improvement of projects and
facilities under section 297A.71, subdivision 40;

(11) materials, supplies, and equipment for construction, improvement, or expansion of
a biopharmaceutical manufacturing facility exempt under section 297A.71, subdivision 45;

(12) enterprise information technology equipment and computer software for use in a
qualified data center exempt under section 297A.68, subdivision 42;

(13) materials, supplies, and equipment for qualifying capital projects under section
297A.71, subdivision 44, paragraph (a), clause (1), and paragraph (b);

(14) items purchased for use in providing critical access dental services exempt under
section 297A.70, subdivision 7, paragraph (c);

(15) items and services purchased under a business subsidy agreement for use or
consumption primarily in greater Minnesota exempt under section 297A.68, subdivision
44
;

(16) building materials, equipment, and supplies for constructing or replacing real
property exempt under section 297A.71, subdivisions 49; 50, paragraph (b); and 51;

(17) building materials, equipment, and supplies for qualifying capital projects under
section 297A.71, subdivision 52; deleted text begin and
deleted text end

(18) building materials, equipment, and supplies for constructing, remodeling, expanding,
or improving a fire station, police station, or related facilities exempt under section 297A.71,
subdivision 53deleted text begin .deleted text end new text begin ; and
new text end

new text begin (19) materials, supplies, and equipment used in the construction, reconstruction, or
improvement of a facility producing or blending sustainable aviation fuel exempt under
section 297A.71, subdivision 54.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2024.
new text end

Sec. 8.

Minnesota Statutes 2022, section 297A.75, subdivision 2, is amended to read:


Subd. 2.

Refund; eligible persons.

Upon application on forms prescribed by the
commissioner, a refund equal to the tax paid on the gross receipts of the exempt items must
be paid to the applicant. Only the following persons may apply for the refund:

(1) for subdivision 1, clauses (1), (2), deleted text begin anddeleted text end (14)new text begin , and (19)new text end , the applicant must be the
purchaser;

(2) for subdivision 1, clause (3), the applicant must be the governmental subdivision;

(3) for subdivision 1, clause (4), the applicant must be the recipient of the benefits
provided in United States Code, title 38, chapter 21;

(4) for subdivision 1, clause (5), the applicant must be the owner of the homestead
property;

(5) for subdivision 1, clause (6), the owner of the qualified low-income housing project;

(6) for subdivision 1, clause (7), the applicant must be a municipal electric utility or a
joint venture of municipal electric utilities;

(7) for subdivision 1, clauses (8), (11), (12), and (15), the owner of the qualifying
business;

(8) for subdivision 1, clauses (9), (10), (13), (17), and (18), the applicant must be the
governmental entity that owns or contracts for the project or facility; and

(9) for subdivision 1, clause (16), the applicant must be the owner or developer of the
building or project.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2024.
new text end