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Key: (1) language to be deleted (2) new language

CHAPTER 37--H.F.No. 2123
An act
relating to state government; appropriating money for environment,
natural resources, and energy; authorizing sale of gift cards and certificates;
establishing composting competitive grant program; modifying regulation of
storm water discharges; modifying waste management reporting requirements;
requiring nonresident all-terrain vehicle state trail pass; modifying horse trail
and state park pass requirements; extending certain land sale requirements;
prohibiting certain sales of outdoor recreation system lands; providing for
exchange of riparian land; requiring disclosure of certain chemicals in children's
products by manufacturers; requiring plastic yard waste bags to be compostable
and establishing labeling standards; modifying feedlot permit and grant
provisions; authorizing uses of the Hennepin County solid and hazardous
waste fund; modifying greenhouse gas emissions provisions and requiring a
registry; establishing, modifying, and authorizing fees and surcharges; providing
for disposition of certain fees; modifying and establishing assessments for
certain regulatory expenses; modifying prior appropriations; prohibiting certain
reorganizations; providing for fish consumption advisories in different languages;
limiting use of certain funds; requiring studies and reports; appropriating
money to Department of Commerce and Public Utilities Commission to finance
activities related to commerce and energy; providing for green enterprise
assistance; modifying provisions related to insurance audits, insurers and
insurance products, certain financial institutions, regulated activities related to
certain mortgage transactions and professionals, and debt management and debt
settlement services; providing penalties and remedies;amending Minnesota
Statutes 2008, sections 45.011, subdivision 1; 45.027, subdivision 1; 46.04,
subdivision 1; 46.05; 46.131, subdivision 2; 47.58, subdivision 1; 47.60,
subdivisions 1, 3, 6; 48.21; 58.05, subdivision 3; 58.06, subdivision 2; 58.126;
58.13, subdivision 1; 60A.124; 60A.14, subdivision 1; 60B.03, subdivision
15; 60L.02, subdivision 3; 61B.19, subdivision 4; 61B.28, subdivisions 4, 8;
67A.01; 67A.06; 67A.07; 67A.14, subdivisions 1, 7; 67A.18, subdivision
1; 84.0835, subdivision 3; 84.415, subdivision 5, by adding a subdivision;
84.63; 84.631; 84.632; 84.922, subdivision 1a; 84D.15, subdivision 2; 85.015,
subdivision 1b; 85.053, subdivision 10; 85.46, subdivisions 3, 4, 7; 92.685;
93.481, subdivisions 1, 3, 5, 7; 94.342, subdivision 3; 97A.075, subdivision 1;
103G.271, subdivision 6; 103G.301, subdivisions 2, 3; 115.03, subdivision 5c;
115.073; 115.56, subdivision 4; 115.77, subdivision 1; 115A.1314, subdivision 2;
115A.557, subdivision 1; 115A.931; 116.0711; 116.41, subdivision 2; 116C.834,
subdivision 1; 216B.62, subdivisions 3, 4, 5, by adding a subdivision; 216H.10,
subdivision 7; 216H.11; 325E.311, subdivision 6; 332A.02, subdivisions 5, 8,
9, 10, 13, by adding subdivisions; 332A.04, subdivision 6; 332A.08; 332A.10;
332A.11, subdivision 2; 332A.14; 332A.16; Laws 2005, chapter 156, article 2,
section 45, as amended; Laws 2007, chapter 57, article 1, section 4, subdivision
2; Laws 2008, chapter 363, article 5, section 4, subdivision 7; proposing coding
for new law in Minnesota Statutes, chapters 60A; 61A; 67A; 84; 86A; 93; 115A;
116; 116J; 216H; 325E; 383B; proposing coding for new law as Minnesota
Statutes, chapter 332B; repealing Minnesota Statutes 2008, sections 60A.129;
61B.19, subdivision 6; 67A.14, subdivision 5; 67A.17; 67A.19; Laws 2008,
chapter 363, article 5, section 30; Minnesota Rules, parts 2675.2180; 2675.7100;
2675.7110; 2675.7120; 2675.7130; 2675.7140.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

ARTICLE 1
ENVIRONMENT AND NATURAL RESOURCES FINANCE


Section 1. SUMMARY OF APPROPRIATIONS.
    The amounts shown in this section summarize direct appropriations, by fund, made
in this article.

2010
2011
Total

General
$
112,820,000
$
111,945,000
$
224,765,000


State Government Special
Revenue
48,000
48,000
96,000

Environmental
69,064,000
69,188,000
138,252,000

Natural Resources
82,010,000
80,910,000
162,920,000

Game and Fish
94,312,000
93,912,000
188,224,000

Remediation
11,186,000
11,186,000
22,372,000

Permanent School
200,000
200,000
400,000

Total
$
369,640,000
$
367,389,000
$
737,029,000


Sec. 2. ENVIRONMENT AND NATURAL RESOURCES APPROPRIATIONS.
    The sums shown in the columns marked "Appropriations" are appropriated to the
agencies and for the purposes specified in this article. The appropriations are from the
general fund, or another named fund, and are available for the fiscal years indicated
for each purpose. The figures "2010" and "2011" used in this article mean that the
appropriations listed under them are available for the fiscal year ending June 30, 2010, or
June 30, 2011, respectively. "The first year" is fiscal year 2010. "The second year" is fiscal
year 2011. "The biennium" is fiscal years 2010 and 2011. Appropriations for the fiscal
year ending June 30, 2009, are effective the day following final enactment.

APPROPRIATIONS

Available for the Year

Ending June 30

2010
2011


Sec. 3. POLLUTION CONTROL AGENCY

Subdivision 1.Total Appropriation
$
90,969,000
$
90,493,000

Appropriations by Fund

2010
2011

General
10,771,000
10,171,000


State Government
Special Revenue
48,000
48,000

Environmental
69,064,000
69,188,000

Remediation
11,086,000
11,086,000
The amounts that may be spent for each
purpose are specified in the following
subdivisions.
The commissioner shall require the chief
financial officer or other financial staff to
display the agency's budget on the agency's
Web site in a manner that will allow citizens
to understand more easily the value they are
getting for their money. The agency must
have an air permit and regulatory account,
water permit and regulatory account, and
solid waste permit and regulatory account to
track revenues and expenses.
By October 1, 2010 and 2011, the
commissioner shall submit a report to the
chairs of the legislative committees with
primary jurisdiction over the environment
and natural resources policy and finance
that includes the number of environmental
assessment worksheets completed in the
previous fiscal year, the total number of
staff hours spent on those environmental
assessment worksheets, and the average and
median number of hours spent per completed
environmental assessment worksheet.
Fee rules adopted by the agency during fiscal
year 2010 are effective retroactively on July
1, 2009.
A recipient of a grant funded by an
appropriation under this section shall display
on its Web site detailed information on
the expenditure of the grant funds, and
measurable outcomes as a result of the
expenditure of funds, and submit this
information to the agency by June 30 each
year. A recipient without an active Web site
shall report to the agency by June 30 each
year detailed information on the expenditure
of the grant funds, and measurable outcomes
as a result of the expenditure of funds. The
commissioner shall display the information
received by recipients under this paragraph
on the agency's Web site.

Subd. 2.Water
33,867,000
33,267,000

Appropriations by Fund

General
8,148,000
7,548,000


State Government
Special Revenue
48,000
48,000

Environmental
25,671,000
25,671,000
$2,348,000 the first year and $2,348,000
the second year are for the clean water
partnership program. Priority shall be
given to projects preventing impairments
and degradation of lakes, rivers, streams,
and groundwater according to Minnesota
Statutes, section 114D.20, subdivision 2,
clause (4). Funds from this appropriation
may not be used to purchase or use pesticides
suspected by current science of being
endocrine disruptors. To the extent possible,
with money from this appropriation, a
person must plant vegetation or sow seed
only of ecotypes native to Minnesota, and
preferably of the local ecotype, using a high
diversity of species originating from as
close to the restoration site as possible, and
protect existing native prairies from genetic
contamination. Any balance remaining in the
first year does not cancel and is available for
the second year.
$2,164,000 the first year and $2,164,000 the
second year must be distributed as grants to
delegated counties to administer the county
feedlot program under new Minnesota
Statutes, section 116.0711, subdivisions 2
and 3. Any money remaining after the first
year is available for the second year.
$310,000 the first year and $310,000 the
second year are for community technical
assistance and education, including grants
and technical assistance to communities for
local and basinwide water quality protection.
$100,000 the first year is for grants to
local units of government to implement
cost-effective projects to control runoff,
prevent erosion, and provide ditch
stabilization, in order to protect water quality
in lakes, rivers, and streams and to protect
groundwater from degradation. This is a
onetime appropriation.
$350,000 the first year and $350,000 the
second year are for challenge grants to
counties for subsurface sewage treatment
system (SSTS) inventories that will
determine the number of systems that are
failing or that pose an imminent health threat
and are located on riparian land or a lake
or near wetlands or other sensitive waters.
Counties must provide a nonstate match of
at least 50 percent that may be in cash or in
kind. The commissioner shall, by county,
report: the number of systems evaluated, the
number of systems determined to be failing
or that pose an imminent health threat located
on riparian land or a lake or near wetlands or
other sensitive waters, the number replaced
or soon to be replaced, and the gallons of
sewage that are prevented from threatening
waters. The commissioner shall develop
recommendations and a plan for directly
or indirectly inspecting and providing an
inventory for all subsurface sewage treatment
systems and submit a report to the chairs of
the legislative committees having primary
jurisdiction over environment and natural
resources policy and finance no later than
September 15, 2010. Direct inspection
methods shall include field verification of
each SSTS on riparian land or a lake or
near wetlands or other sensitive waters to
determine the owner, location, and which
systems are failing or are an imminent
health threat. Indirect inspection methods
may include census-type data collection to
determine the owner and location of each
SSTS in the remaining portion of each
county. An SSTS with a valid certificate of
compliance may be considered inventoried
without further work. This is a onetime
appropriation.
$375,000 the first year and $375,000 the
second year are for subsurface sewage
treatment system (SSTS) administration and
grants. Of this amount, $80,000 each year
is for assistance to counties through grants
for SSTS program administration. Any
unexpended balance in the first year does not
cancel but is available in the second year.
$740,000 the first year and $740,000 the
second year are from the environmental
fund to address the need for continued
increased activity in the areas of new
technology review, technical assistance
for local governments, and enforcement
under Minnesota Statutes, sections 115.55
to 115.58, and to complete the requirements
of Laws 2003, chapter 128, article 1, section
165. Of this amount, $48,000 each year is for
administration of individual septic tank fees,
as provided in this article.
$1,250,000 the first year and $1,250,000
the second year are for assessment and
monitoring of lakes, rivers, and streams.
$100,000 the first year and $100,000 the
second year are for a grant to the Red River
Watershed Management Board to enhance
and expand existing river watch activities in
the Red River of the North and shall enhance
student understanding of the causes of
flooding, flood prevention, and the impacts
of flood waters on land and water resources.
The Red River Watershed Management
Board shall provide a report that includes
formal evaluation results from the river
watch program to the commissioners of
education and the Pollution Control Agency
and to the legislative committees with
jurisdiction over the environment and natural
resources policy and finance and K-12 policy
and finance by February 15, 2011. This is a
onetime appropriation.
$7,540,000 the first year and $7,540,000
the second year are from the environmental
fund for completion of 20 percent of the
needed statewide assessments of surface
water quality and trends. * (The preceding
text beginning "$7,540,000 the first year"
was indicated as vetoed by the governor.)
$500,000 the first year is to develop minimal
impact design standards for urban storm
water runoff. This is a onetime appropriation
and is available until June 30, 2011. The
commissioner shall report to the chairs and
ranking minority members of the legislative
committees and divisions having primary
jurisdiction over environment and natural
resources policy and finance no later than
January 12, 2011, regarding the expenditure
of this appropriation.
By October 1, 2009 and 2010, the
commissioner shall report to the chairs
of the legislative committees having
primary jurisdiction over environment and
natural resources policy and finance on the
effectiveness of enforcement actions in the
previous fiscal year in preventing water
pollution.
The commissioner shall continue the
rulemaking process to better align water
permit fee revenue for fiscal years 2010,
2011, 2012, and 2013 with the cost of issuing
permits, including environmental review.
Notwithstanding Minnesota Statutes, section
16A.28, the appropriations encumbered on or
before June 30, 2011, as grants or contracts
for clean water partnership, SSTS's, surface
water and groundwater assessments, total
maximum daily loads, stormwater, and local
basinwide water quality protection in this
subdivision are available until June 30, 2013.

Subd. 3.Air
11,871,000
12,131,000

Appropriations by Fund

Environmental
11,871,000
12,131,000
Up to $150,000 the first year and $150,000
the second year may be transferred from the
environmental fund to the small business
environmental improvement loan account
established in Minnesota Statutes, section
116.993.
$200,000 the first year and $200,000 the
second year are from the environmental fund
for a monitoring program under Minnesota
Statutes, section 116.454.
$125,000 the first year and $125,000 the
second year are from the environmental fund
for monitoring ambient air for hazardous
pollutants in the metropolitan area.
An agency report on the level of fine
particulate matter in Minnesota's air must
compare measured levels with a 24-hour
PM 2.5 standard of 13 to 14 micrograms
per cubic meter and an annual PM 2.5
standard of 30 to 35 micrograms per cubic
meter, as recommended by the Particulate
Matter Review Panel of the Environmental
Protection Agency's Clean Air Scientific
Advisory Committee in its June 2005 report,
EPA's Review of the National Ambient Air
Quality Standards for Particulate Matter
(Second Draft PM Staff Paper, January
2005).
$700,000 the first year and $700,000 the
second year are from the environmental
fund for an air emissions database, including
monitoring greenhouse gas emissions.
The commissioner shall continue the
rulemaking process to better align air quality
fee revenue for fiscal years 2010, 2011, 2012,
and 2013 with the cost of issuing permits,
including environmental review.

Subd. 4.Land
18,467,000
18,467,000

Appropriations by Fund

General
465,000
465,000

Environmental
6,916,000
6,916,000

Remediation
11,086,000
11,086,000
All money for environmental response,
compensation, and compliance in the
remediation fund not otherwise appropriated
is appropriated to the commissioners of the
Pollution Control Agency and agriculture
for purposes of Minnesota Statutes, section
115B.20, subdivision 2, clauses (1), (2),
(3), (6), and (7). At the beginning of each
fiscal year, the two commissioners shall
jointly submit an annual spending plan to
the commissioner of finance that maximizes
the utilization of resources and appropriately
allocates the money between the two
departments. This appropriation is available
until June 20, 2011.
$3,616,000 the first year and $3,616,000 the
second year are from the petroleum tank fund
to be transferred to the remediation fund for
purposes of the leaking underground storage
tank program to protect the land.
$252,000 the first year and $252,000 the
second year are from the remediation fund to
be transferred to the Department of Health for
private water supply monitoring and health
assessment costs in areas contaminated
by unpermitted mixed municipal solid
waste disposal facilities and drinking water
advisories and public information activities
for areas contaminated by hazardous releases.
$500,000 each year is for environmental
health tracking and biomonitoring of a
representative sample of the population
including indigenous people and people of
color. Of this amount, $450,000 each year is
for transfer to the Department of Health.


Subd. 5.Environmental Assistance and
Cross-Media
25,420,000
25,284,000

Appropriations by Fund

General
814,000
814,000

Environmental
24,606,000
24,470,000
$14,250,000 each year is from the
environmental fund for SCORE block grants
to counties.
$250,000 each year is from the environmental
fund to administer the composting
grant program established under new
Minnesota Statutes, section 115A.559. The
appropriation is added to the agency base
and available until June 30, 2011.
By January 15, 2012, the commissioner shall
report to the legislative committees with
jurisdiction over environment and natural
resources policy on:
(1) the mixed municipal solid waste diversion
rates accomplished by the grant program
under new Minnesota Statutes, section
115A.559;
(2) participants in the grant program and the
programs developed with grant funds; and
(3) the potential for new permanent programs
based on results of projects funded with
grants issued under new Minnesota Statutes,
section 115A.559.
$225,000 the first year and $89,000 the
second year are from the environmental
fund for duties related to harmful chemicals
in products under new Minnesota Statutes,
sections 116.9401 to 116.9407. Of this
amount, $133,000 the first year and $57,000
the second year are for transfer to the
Department of Health.
$119,000 the first year and $119,000 the
second year are from the environmental
fund for environmental assistance grants
or loans under Minnesota Statutes, section
115A.0716. Any unencumbered grant and
loan balances in the first year do not cancel
but are available for grants and loans in the
second year.
All money deposited in the environmental
fund for the metropolitan solid waste
landfill fee in accordance with Minnesota
Statutes, section 473.843, and not otherwise
appropriated, is appropriated for the purposes
of Minnesota Statutes, section 473.844.
Notwithstanding Minnesota Statutes, section
16A.28, the appropriations encumbered on
or before June 30, 2011, as contracts or
grants for surface water and groundwater
assessments; environmental assistance
awarded under Minnesota Statutes, section
115A.0716; technical and research assistance
under Minnesota Statutes, section 115A.152;
technical assistance under Minnesota
Statutes, section 115A.52; and pollution
prevention assistance under Minnesota
Statutes, section 115D.04, are available until
June 30, 2013.
Before the governor makes budget
recommendations to the legislature in 2011,
the commissioner must report on revenues
received and expenditures made under
Minnesota Statutes, section 115A.1314,
subdivision 2, during fiscal years 2010
and 2011 to determine if fees collected
are covering the costs of the program and
request that the governor recommend a direct
appropriation for the purposes of that section.

Subd. 6.Administrative Support
1,344,000
1,344,000
The commissioner shall transfer $40,000,000
from the environmental fund to the
remediation fund for the purposes of the
remediation fund under Minnesota Statutes,
section 116.155, subdivision 2.


Sec. 4. NATURAL RESOURCES

Subdivision 1.Total Appropriation
$
245,313,000
$
243,813,000

Appropriations by Fund

2010
2011

General
74,411,000
74,411,000

Natural Resources
76,290,000
75,190,000

Game and Fish
94,312,000
93,912,000

Remediation
100,000
100,000

Permanent School
200,000
200,000
The amounts that may be spent for each
purpose are specified in the following
subdivisions.
To the extent possible, a person conducting
restoration with money appropriated in this
section must plant vegetation or sow seed
only of ecotypes native to Minnesota, and
preferably of the local ecotype, using a high
diversity of species originating from as
close to the restoration site as possible, and
protect existing native prairies from genetic
contamination.
A recipient of a grant funded by an
appropriation under this section shall display
on its Web site detailed information on
the expenditure of the grant funds, and
measurable outcomes as a result of the
expenditure of funds, and submit this
information to the department by June 30
each year. A recipient without an active
Web site shall report to the department by
June 30 each year detailed information on
the expenditure of the grant funds, and
measurable outcomes as a result of the
expenditure of funds. The commissioner
shall display the information received by
recipients under this paragraph on the
department's Web site.
The commissioner shall require the chief
financial officer or other financial staff
to display the department's budget on the
department's Web site in a manner that will
allow citizens to easily understand the value
they are getting for their money.


Subd. 2.Land and Mineral Resources
Management
10,398,000
10,398,000

Appropriations by Fund

General
3,351,000
3,351,000

Natural Resources
5,461,000
5,461,000

Game and Fish
1,386,000
1,386,000

Permanent School
200,000
200,000
$1,202,000 the first year and $1,202,000
the second year are from the mining
administration account in the natural
resources fund to cover the costs associated
with issuing mining permits.
$612,000 each year is from the dedicated
receipts account in the natural resources fund
to cover the costs associated with issuing
licenses for land and water crossings and
road easements.
$351,000 the first year and $351,000 the
second year are for iron ore cooperative
research. Of this amount, $200,000 each year
is from the minerals management account
in the natural resources fund. $175,500 the
first year and $175,500 the second year are
available only as matched by $1 of nonstate
money for each $1 of state money. The
match may be cash or in-kind.
$86,000 the first year and $86,000 the
second year are for minerals cooperative
environmental research, of which $43,000
the first year and $43,000 the second year are
available only as matched by $1 of nonstate
money for each $1 of state money. The
match may be cash or in-kind.
$2,696,000 the first year and $2,696,000
the second year are from the minerals
management account in the natural resources
fund for use as provided in Minnesota
Statutes, section 93.2236, paragraph (c),
for mineral resource management, projects
to enhance future mineral income, and
projects to promote new mineral resource
opportunities.
$200,000 the first year and $200,000 the
second year are from the state forest suspense
account in the permanent school fund to
accelerate land exchanges, land sales, and
commercial leasing of school trust lands and
to identify, evaluate, and lease construction
aggregate located on school trust lands. This
appropriation is to be used for securing
maximum long-term economic return
from the school trust lands consistent with
fiduciary responsibilities and sound natural
resources conservation and management
principles.

Subd. 3.Water Resources Management
11,732,000
11,732,000

Appropriations by Fund

General
11,452,000
11,452,000

Natural Resources
280,000
280,000
By January 15, 2010, the commissioner
shall submit a report evaluating and
recommending options to provide for the
long-term protection of the state's surface
water and groundwater resources and
the funding of programs to provide this
protection.
$275,000 the first year and $275,000 the
second year are for grants for up to 50
percent of the cost of implementation of
the Red River mediation agreement. The
commissioner shall submit a report to the
chairs of the legislative committees having
primary jurisdiction over environment and
natural resources policy and finance on the
accomplishments achieved with the grants
by January 15, 2012.
$60,000 the first year and $60,000 the
second year are for a grant to the Mississippi
Headwaters Board for up to 50 percent of
the cost of implementing the comprehensive
plan for the upper Mississippi within areas
under the board's jurisdiction.
$5,000 the first year and $5,000 the second
year are for payment to the Leech Lake Band
of Chippewa Indians to implement the band's
portion of the comprehensive plan for the
upper Mississippi.
$125,000 the first year and $125,000 the
second year are for the construction of ring
dikes under Minnesota Statutes, section
103F.161. The ring dikes may be publicly
or privately owned. If the appropriation in
either year is insufficient, the appropriation
in the other year is available for it.
By October 1, 2009, the commissioner shall
develop a plan for the development of an
adequate groundwater level monitoring
network of wells in the 11-county
metropolitan area. The commissioner,
working with the Metropolitan Council,
the Department of Homeland Security, and
the commissioner of the Pollution Control
Agency, shall design the network so that
the wells can be used to identify threats to
groundwater quality and institute practices to
protect the groundwater from degradation.
The network must be sufficient to ensure
that water use in the metropolitan area
does not harm ecosystems, degrade water
quality, or compromise the ability of future
generations to meet their own needs. The
plan should include recommendations on
the necessary payment rates for users of the
system expressed in cents per gallon for well
drilling, operation, and maintenance.

Subd. 4.Forest Management
39,609,000
38,259,000

Appropriations by Fund

General
25,952,000
25,952,000

Natural Resources
12,193,000
11,093,000

Game and Fish
1,464,000
1,214,000
$2,000,000 each year is to maintain forest
management operations. This is a onetime
appropriation.
$1,200,000 the first year and $950,000
the second year are from the heritage
enhancement account in the game and fish
fund to maintain and expand the ecological
classification system program on state forest
lands and prevent the introduction and spread
of invasive species on state lands. This is a
onetime appropriation.
$7,217,000 the first year and $7,217,000
the second year are for prevention,
presuppression, and suppression costs of
emergency firefighting and other costs
incurred under Minnesota Statutes, section
88.12. If the appropriation for either
year is insufficient to cover all costs of
presuppression and suppression, the amount
necessary to pay for these costs during the
biennium is appropriated from the general
fund.
By January 15 of each year, the commissioner
of natural resources shall submit a report to
the chairs and ranking minority members
of the house and senate committees
and divisions having jurisdiction over
environment and natural resources finance,
identifying all firefighting costs incurred
and reimbursements received in the prior
fiscal year. These appropriations may
not be transferred. Any reimbursement
of firefighting expenditures made to the
commissioner from any source other than
federal mobilizations shall be deposited into
the general fund.
$12,193,000 the first year and $11,093,000
the second year are from the forest
management investment account in the
natural resources fund for only the purposes
specified in Minnesota Statutes, section
89.039, subdivision 2.
$780,000 the first year and $780,000 the
second year are for the Forest Resources
Council for implementation of the
Sustainable Forest Resources Act.

Subd. 5.Parks and Trails Management
67,372,000
67,372,000

Appropriations by Fund

General
21,857,000
21,857,000

Natural Resources
43,321,000
43,321,000

Game and Fish
2,194,000
2,194,000
$1,175,000 the first year and $1,175,000 the
second year are from the water recreation
account in the natural resources fund for
enhancing public water access facilities.
Of this amount, $100,000 is a onetime
appropriation to provide downloadable
GPS coordinates and river gauge data
interpretation. The base appropriation is
$1,075,000.
The appropriation in Laws 2003, chapter
128, article 1, section 5, subdivision 6, from
the water recreation account in the natural
resources fund for a cooperative project with
the United States Army Corps of Engineers
to develop the Mississippi Whitewater Park
is available until June 30, 2011. The project
must be designed to prevent the spread of
aquatic invasive species.
$4,371,000 the first year and $4,371,000 the
second year are from the natural resources
fund for state park and recreation area
operations. Of this amount, $375,000 each
year is for coordinated activities with Explore
Minnesota Tourism. This appropriation is
from the revenue deposited in the natural
resources fund under Minnesota Statutes,
section 297A.94, paragraph (e), clause (2).
$8,424,000 the first year and $8,424,000
the second year are from the snowmobile
trails and enforcement account in the
natural resources fund for the snowmobile
grants-in-aid program. This additional
money may be used for new grant-in-aid
trails. Any unencumbered balance does not
cancel at the end of the first year and is
available for the second year.
$400,000 the first year and $400,000 the
second year are from the snowmobile trails
and enforcement account in the natural
resources fund for operation and maintenance
of state trails and increased oversight and
training for the grant-in-aid program. This is
a onetime appropriation.
$1,360,000 the first year and $1,360,000
the second year are from the natural
resources fund for the off-highway vehicle
grants-in-aid program. Of this amount,
$1,110,000 each year is from the all-terrain
vehicle account; $150,000 each year is from
the off-highway motorcycle account; and
$100,000 each year is from the off-road
vehicle account. Any unencumbered balance
does not cancel at the end of the first year
and is available for the second year.
$760,000 the first year and $760,000 the
second year are from the natural resources
fund for state trail operations. This
appropriation is from the revenue deposited
in the natural resources fund under Minnesota
Statutes, section 297A.94, paragraph (e),
clause (2).

Subd. 6.Fish and Wildlife Management
67,574,000
67,424,000

Appropriations by Fund

General
1,340,000
1,340,000

Natural Resources
1,976,000
1,976,000

Game and Fish
64,258,000
64,108,000
$100,000 the first year and $100,000 the
second year are from the nongame wildlife
account in the natural resources fund for gray
wolf research.
$120,000 the first year and $120,000 the
second year from the game and fish fund are
for gray wolf management.
$285,000 the first year and $285,000 the
second year are from the walleye stamp
account in the game and fish fund for the
purposes specified under Minnesota Statutes,
section 97A.075, subdivision 6. Of this
amount, $25,000 must be spent in the first
year to provide signage to each independent
licensed dealer for display and promotion of
the walleye stamp.
$600,000 the first year and $600,000 the
second year are to accelerate wildlife health
programs. This is a onetime appropriation.
$1,860,000 the first year and $1,860,000 the
second year are from the wildlife acquisition
surcharge account for only the purposes
specified in Minnesota Statutes, section
97A.071, subdivision 2a. This appropriation
is available until spent.
$8,167,000 the first year and $8,167,000
the second year are from the heritage
enhancement account in the game and
fish fund only for activities specified in
Minnesota Statutes, section 297A.94,
paragraph (e), clause (1). Of this amount, at
least 20 percent must be used to purchase
or restore land, of which over half must
be used for restoration. Notwithstanding
Minnesota Statutes, section 297A.94, five
percent of this appropriation may be used for
expanding hunter and angler recruitment and
retention. This appropriation may be used to
leverage other funds and to provide fish and
wildlife technical assistance for shallow lake
management and restoration and stream and
lake shoreland and habitat improvement and
maintenance on private lands.
Notwithstanding Minnesota Statutes, section
84.943, $13,000 the first year and $13,000
the second year from the critical habitat
private sector matching account may be used
to publicize the critical habitat license plate
match program.
$830,000 the first year and $830,000 the
second year are from the trout and salmon
management account for only the purposes
specified in Minnesota Statutes, section
97A.075, subdivision 3.
$1,553,000 the first year and $1,553,000 the
second year are from the deer management
account for only the purposes specified
in Minnesota Statutes, section 97A.075,
subdivision 1, paragraph (b).
$890,000 the first year and $890,000 the
second year are from the deer and bear
management account for only the purposes
specified in Minnesota Statutes, section
97A.075, subdivision 1, paragraph (c).
$700,000 the first year and $700,000 the
second year are from the waterfowl habitat
improvement account for only the purposes
specified in Minnesota Statutes, section
97A.075, subdivision 2.
$925,000 the first year and $925,000 the
second year are from the pheasant habitat
improvement account for only the purposes
specified in Minnesota Statutes, section
97A.075, subdivision 4.
$192,000 the first year and $192,000 the
second year are from the wild turkey
management account for only the purposes
specified in Minnesota Statutes, section
97A.075, subdivision 5. Of this amount,
$8,000 the first year and $8,000 the second
year are transferred from the game and fish
fund to the wild turkey management account.
$535,000 the first year and $535,000 the
second year are for preserving, restoring, and
enhancing grassland/wetland complexes on
public or private lands.
Notwithstanding Minnesota Statutes, section
16A.28, the appropriations encumbered
under contract on or before June 30, 2011, for
aquatic restoration grants and wildlife habitat
grants are available until June 30, 2012.

Subd. 7.Ecological Services
14,175,000
14,175,000

Appropriations by Fund

General
6,230,000
6,230,000

Natural Resources
3,994,000
3,994,000

Game and Fish
3,951,000
3,951,000
$1,223,000 the first year and $1,223,000 the
second year are from the nongame wildlife
management account in the natural resources
fund for the purpose of nongame wildlife
management. Notwithstanding Minnesota
Statutes, section 290.431, $100,000 the first
year and $100,000 the second year may
be used for nongame wildlife information,
education, and promotion.
$1,636,000 the first year and $1,636,000
the second year are from the heritage
enhancement account in the game and
fish fund for only the purposes specified
in Minnesota Statutes, section 297A.94,
paragraph (e), clause (1).
$2,142,000 the first year and $2,142,000 the
second year are from the invasive species
account, and $2,090,000 the first year
and $2,090,000 the second year are from
the general fund for management, public
awareness, assessment and monitoring
research, law enforcement, and water access
inspection to prevent the spread of invasive
species; management of invasive plants in
public waters; and management of terrestrial
invasive species on state-administered lands.
Funds from this appropriation may not be
used to purchase or use pesticides suspected
by current science of being endocrine
disruptors.
The commissioner shall report on the
projected outcomes and goals for protecting
species in all ecological provinces and the
quantity and quality of groundwater and
surface water of the state, including but not
limited to, protecting rare and endangered
species, native prairies, and wetlands, from
merging ecological services and waters
duties to the senate and house natural
resources policy and finance committees and
divisions. The commissioner shall not merge
ecological services and waters duties prior to
presenting the report to the committees and
divisions. Any merger must include a variant
of the word "ecology" in the title of the new
division.

Subd. 8.Enforcement
31,490,000
31,490,000

Appropriations by Fund

General
2,889,000
2,889,000

Natural Resources
8,531,000
8,531,000

Game and Fish
19,970,000
19,970,000

Remediation
100,000
100,000
$1,082,000 the first year and $1,082,000 the
second year are from the water recreation
account in the natural resources fund for
grants to counties for boat and water safety.
$315,000 the first year and $315,000 the
second year are from the snowmobile
trails and enforcement account in the
natural resources fund for grants to local
law enforcement agencies for snowmobile
enforcement activities.
$1,164,000 the first year and $1,164,000
the second year are from the heritage
enhancement account in the game and
fish fund for only the purposes specified
in Minnesota Statutes, section 297A.94,
paragraph (e), clause (1).
$510,000 the first year and $510,000
the second year are from the natural
resources fund for grants to county law
enforcement agencies for off-highway
vehicle enforcement and public education
activities based on off-highway vehicle use
in the county. Of this amount, $498,000 each
year is from the all-terrain vehicle account;
$11,000 each year is from the off-highway
motorcycle account; and $1,000 each year
is from the off-road vehicle account. The
county enforcement agencies may use
money received under this appropriation
to make grants to other local enforcement
agencies within the county that have a high
concentration of off-highway vehicle use. Of
this appropriation, $25,000 each year is for
administration of these grants.
$250,000 the first year and $250,000 the
second year are from the all-terrain vehicle
account for grants to qualifying organizations
to assist in safety and environmental
education and monitoring trails on public
lands under Minnesota Statutes, section
84.9011. Grants issued under this paragraph:
(1) must be issued through a formal
agreement with the organization; and (2)
must not be used as a substitute for traditional
spending by the organization. By December
15 each year, an organization receiving a
grant under this paragraph shall report to the
commissioner with details on expenditures
and outcomes from the grant. By January
15, 2011, the commissioner shall report
on the expenditures and outcomes of the
grants to the chairs and ranking minority
members of the natural resources policy
and finance committees and divisions. Of
this appropriation, $25,000 each year is for
administration of these grants.
The commissioner must publicize
opportunities for conservation officer
employment and recruit, when possible,
conservation officer candidates from the
biological sciences departments at colleges
and universities.

Subd. 9.Operations Support
2,963,000
2,963,000

Appropriations by Fund

General
1,340,000
1,340,000

Natural Resources
534,000
534,000

Game and Fish
1,089,000
1,089,000
The commissioner may redirect the general
fund reduction of $800,000 in fiscal year
2010 and $800,000 in fiscal year 2011, to
other subdivisions of this section. No grants
may be reduced. The commissioner shall
report by October 1, 2011, to the chairs of
the legislative committees having primary
jurisdiction over environment and natural
resources policy and finance regarding any
redirection and what department outcomes
were affected by the redirection.
$320,000 the first year and $320,000 the
second year are from the natural resources
fund for grants to be divided equally between
the city of St. Paul for the Como Zoo
and Conservatory and the city of Duluth
for the Duluth Zoo. This appropriation
is from the revenue deposited to the fund
under Minnesota Statutes, section 297A.94,
paragraph (e), clause (5).



Sec. 5. BOARD OF WATER AND SOIL
RESOURCES
$
15,618,000
$
15,343,000
$3,900,000 the first year and $3,900,000 the
second year are for natural resources block
grants to local governments. The board may
reduce the amount of the natural resources
block grant to a county by an amount equal to
any reduction in the county's general services
allocation to a soil and water conservation
district from the county's previous year
allocation when the board determines that
the reduction was disproportionate. Grants
must be matched with a combination of local
cash or in-kind contributions. The base
grant portion related to water planning must
be matched by an amount as specified by
Minnesota Statutes, section 103B.3369.
$3,500,000 the first year and $3,500,000
the second year are for grants requested
by soil and water conservation districts for
general purposes, nonpoint engineering,
and implementation of the reinvest in
Minnesota conservation reserve program.
Upon approval of the board, expenditures
may be made from these appropriations for
supplies and services benefiting soil and
water conservation districts. Any district
requesting a grant under this paragraph shall
maintain a Web page that publishes, at a
minimum, its annual plan, annual report,
annual audit, annual budget, including
membership dues, and meeting notices and
minutes.
$500,000 the first year and $500,000 the
second year are for feedlot water quality
grants for feedlots under 300 animal units
where there are impaired waters.
$2,000,000 the first year and $2,000,000
the second year are for grants to soil and
water conservation districts for cost-sharing
contracts for erosion control, water quality
management, of which at least $900,000
each year is for establishing and maintaining
riparian vegetation buffers of restored native
prairie and restored prairie.
$100,000 the first year and $100,000
the second year are available for county
cooperative weed management programs and
to restore native plants in selected invasive
species management sites by providing local
native seeds and plants to landowners for
implementation.
Notwithstanding Minnesota Statutes, section
103C.501, the board may shift cost-share
funds in this section and may adjust the
technical and administrative assistance
portion of the grant funds to leverage
federal or other nonstate funds or to address
high-priority needs identified in local water
management plans.
$500,000 the first year and $500,000 the
second year are for implementation and
enforcement of the Wetland Conservation
Act. The board must make available
information about final enforcement actions
on the board's Web site.
$60,000 each year is for staff to monitor and
enforce wetland replacement, wetland bank
sites, and the Wetland Conservation Act. The
board must include in its biennial report to
the legislature information on all state and
local units of government, including special
purpose districts and impacts on wetlands
in the state. This information must be made
available on the board's Web site.
$100,000 each year is for transfer to the
commissioner of natural resources for
enforcement of wetland violations.
$100,000 each year is to make grants to local
units of government within the 11-county
metropolitan area to improve response to
major wetland violations.
$100,000 each year is for cost-share grants
to local governments for public drainage
records modernization.
$212,000 each year is to provide assistance
to local drainage management officials and
for the costs of the Drainage Work Group.
$90,000 the first year and $90,000 the second
year are for a grant to the Red River Basin
Commission for water quality and floodplain
management, including administration of
programs. The commission shall submit
a report to the chairs of the legislative
committees having primary jurisdiction
over environment and natural resources
policy and finance on the accomplishments
achieved with this appropriation by January
15, 2012. If the appropriation in either year
is insufficient, the appropriation in the other
year is available for it.
$90,000 each year is to the Minnesota River
Basin Joint Powers Board, also known as
the Minnesota River Board, for operating
expenses to measure and report the results of
projects in the 12 major watersheds within
the Minnesota River basin.
$130,000 each year is for grants to Area
II, Minnesota River Basin Projects,
for floodplain management, including
administration of programs.
Notwithstanding Minnesota Statutes, section
103C.501, a balance in the board's cost-share
program is available for $150,000 each year
for evaluating and reporting on performance,
financial, and activity information of local
water management entities as provided for in
Minnesota Statutes, section 103B.102.
The appropriations for grants in this
section are available until expended. If an
appropriation for grants in either year is
insufficient, the appropriation in the other
year is available for it.
To the extent possible, any person conducting
a restoration with money appropriated in
this section must plant vegetation or sow
seed only of ecotypes native to Minnesota,
and preferably of the local ecotype, using a
high diversity of species originating from as
close to the restoration site as possible, and
protect existing native prairies from genetic
contamination.
A recipient of a grant funded by an
appropriation under this section shall display
on its Web site detailed information on
the expenditure of the grant funds, and
measurable outcomes as a result of the
expenditure of funds, and submit this
information to the board by June 30 each
year. A recipient without an active Web site
shall report to the board by June 30 each year
detailed information on the expenditure of
the grant funds, and measurable outcomes
as a result of the expenditure of funds. The
board shall display the information received
by recipients under this paragraph on the
board's Web site.
The board shall require the chief financial
officer or other financial staff to display the
board's budget on the board's Web site in a
manner that will allow citizens to understand
more easily the value they are getting for
their money.


Sec. 6. METROPOLITAN COUNCIL
$
8,880,000
$
8,880,000

Appropriations by Fund

2010
2011

General
3,810,000
3,810,000

Natural Resources
5,070,000
5,070,000
$3,810,000 the first year and $3,810,000
the second year are for metropolitan area
regional parks operation and maintenance
according to Minnesota Statutes, section
473.351.
$5,070,000 the first year and $5,070,000 the
second year are from the natural resources
fund for metropolitan area regional parks
and trails maintenance and operations. This
appropriation is from the revenue deposited
in the natural resources fund under Minnesota
Statutes, section 297A.94, paragraph (e),
clause (3).



Sec. 7. MINNESOTA CONSERVATION
CORPS
$
945,000
$
945,000

Appropriations by Fund

2010
2011

General
455,000
455,000

Natural Resources
490,000
490,000
The Minnesota Conservation Corps may
receive money appropriated from the
natural resources fund under this section
only as provided in an agreement with the
commissioner of natural resources.


Sec. 8. ZOOLOGICAL BOARD
$
6,728,000
$
6,728,000

Appropriations by Fund

2010
2011

General
6,568,000
6,568,000

Natural Resources
160,000
160,000
$160,000 the first year and $160,000 the
second year are from the natural resources
fund from the revenue deposited under
Minnesota Statutes, section 297A.94,
paragraph (e), clause (5).



Sec. 9. SCIENCE MUSEUM OF
MINNESOTA
$
1,187,000
$
1,187,000

    Sec. 10. Minnesota Statutes 2008, section 84.0835, subdivision 3, is amended to read:
    Subd. 3. Citation authority. Employees designated by the commissioner under
subdivision 1 may issue citations, as specifically authorized under this subdivision, for
violations of:
(1) sections 85.052, subdivision 3 (payment of camping fees in state parks),
85.45, subdivision 1 (cross-country ski pass), and 85.46 (horse trail pass), and 84.9275
(nonresident all-terrain vehicle state trail pass);
(2) rules relating to hours and days of operation, restricted areas, noise, fireworks,
environmental protection, fires and refuse, pets, picnicking, camping and dispersed
camping, nonmotorized uses, construction of unauthorized permanent trails, mooring of
boats, fish cleaning, swimming, storage and abandonment of personal property, structures
and stands, animal trespass, state park individual and group motor vehicle permits,
licensed motor vehicles, designated roads, and snowmobile operation off trails;
(3) rules relating to off-highway vehicle registration, display of registration numbers,
required equipment, operation restrictions, off-trail use for hunting and trapping, and
operation in lakes, rivers, and streams;
(4) rules relating to off-highway vehicle and snowmobile operation causing damage
or in closed areas within the Richard J. Dorer Memorial Hardwood State Forest;
(5) rules relating to parking, snow removal, and damage on state forest roads; and
(6) rules relating to controlled hunting zones on major wildlife management units.
EFFECTIVE DATE.This section is effective January 1, 2010.

    Sec. 11. [84.0854] GIFT CARD AND CERTIFICATE SALES; RECEIPTS;
TRANSFERS; APPROPRIATION.
    Subdivision 1. Sales authorized; gift cards and certificates. The commissioner
may sell gift cards and certificates that can be used to purchase licenses, permits, products,
or services sold by the commissioner. Gift cards and certificates are valid until they
are redeemed. The commissioner may advertise the availability of this program and
items offered for sale under this section. The commissioner may make the purchase and
redemption of gift cards available electronically.
    Subd. 2. Receipts; disposition. Proceeds of gift card and certificate sales shall be
deposited in an account in the special revenue fund. When gift cards or certificates are
redeemed, funds shall be transferred to the appropriate account or fund based on the
license, permit, product, or service purchased. Money in the gift card and certificate
account shall accrue interest, which shall be credited to the account. Interest on funds in
the account is appropriated to the commissioner to help cover the cost of administering
the gift card and certificate program. Money from gift cards and certificates sold but
unredeemed after three years shall be transferred to the various accounts and funds
receiving revenue from purchases of licenses, permits, products, or services purchased
with gift card or certificate redemptions in the last two fiscal years. Unredeemed funds
shall be distributed based on the dollar value of cards redeemed for the various licenses,
permits, products, or services on a pro rata basis.
    Subd. 3. Exemption from rulemaking. This section is not subject to the
rulemaking provisions of chapter 14 and section 14.386 does not apply.

    Sec. 12. Minnesota Statutes 2008, section 84.415, subdivision 5, is amended to read:
    Subd. 5. Fee Fees; disposition. (a) In the event the construction of such lines
causes damage to timber or other property of the state on or along the same, the license
or permit shall also provide for payment to the commissioner of finance of the amount
thereof of the damages as may be determined by the commissioner.
(b) The application fee specified in Minnesota Rules is credited to the general fund.
All money received under such licenses or permits (c) The utility crossing fees
specified in Minnesota Rules shall be credited to the fund to which other income or
proceeds of sale from such the land would be credited, if provision therefor be made as
provided by law, otherwise to the general fund.
(d) Money received from licenses and permits issued under this section for use of
the beds of navigable waters shall be credited to the permanent school fund.
(e) Money received under subdivision 6 must be credited to the land management
account in the natural resources fund and is appropriated to the commissioner of natural
resources to cover the costs incurred for issuing and monitoring utility licenses.

    Sec. 13. Minnesota Statutes 2008, section 84.415, is amended by adding a subdivision
to read:
    Subd. 6. Supplemental application fee and monitoring fee. (a) In addition to the
application fee and utility crossing fees specified in Minnesota Rules, the commissioner of
natural resources shall assess the applicant for a utility license the following fees:
(1) a supplemental application fee of $1,500 for a public water crossing license and
a supplemental application fee of $4,500 for a public lands crossing license, to cover
reasonable costs for reviewing the application and preparing the license; and
(2) a monitoring fee to cover the projected reasonable costs for monitoring the
construction of the utility line and preparing special terms and conditions of the license
to ensure proper construction. The commissioner must give the applicant an estimate of
the monitoring fee before the applicant submits the fee.
(b) The applicant shall pay fees under this subdivision to the commissioner of
natural resources. The commissioner shall not issue the license until the applicant has
paid all fees in full.
(c) Upon completion of construction of the improvement for which the license
or permit was issued, the commissioner shall refund the unobligated balance from the
monitoring fee revenue. The commissioner shall not return the application fees, even
if the application is withdrawn or denied.

    Sec. 14. Minnesota Statutes 2008, section 84.63, is amended to read:
84.63 CONVEYANCE OF INTERESTS IN LANDS TO STATE AND
FEDERAL GOVERNMENTS.
(a) Notwithstanding any existing law to the contrary, the commissioner of natural
resources is hereby authorized on behalf of the state to convey to the United States
or to the state of Minnesota or any of its subdivisions, upon state-owned lands under
the administration of the commissioner of natural resources, permanent or temporary
easements for specified periods or otherwise for trails, highways, roads including
limitation of right of access from the lands to adjacent highways and roads, flowage for
development of fish and game resources, stream protection, flood control, and necessary
appurtenances thereto, such conveyances to be made upon such terms and conditions
including provision for reversion in the event of non-user as the commissioner of natural
resources may determine.
(b) In addition to the fee for the market value of the easement, the commissioner of
natural resources shall assess the applicant the following fees:
(1) an application fee of $2,000 to cover reasonable costs for reviewing the
application and preparing the easement; and
(2) a monitoring fee to cover the projected reasonable costs for monitoring the
construction of the improvement for which the easement was conveyed and preparing
special terms and conditions for the easement. The commissioner must give the applicant
an estimate of the monitoring fee before the applicant submits the fee.
(c) The applicant shall pay these fees to the commissioner of natural resources.
The commissioner shall not issue the easement until the applicant has paid in full the
application fee, the monitoring fee, and the market value payment for the easement.
(d) Upon completion of construction of the improvement for which the easement
was conveyed, the commissioner shall refund the unobligated balance from the monitoring
fee revenue. The commissioner shall not return the application fee, even if the application
is withdrawn or denied.
(e) Money received under paragraph (b) must be deposited in the land management
account in the natural resources fund and is appropriated to the commissioner of natural
resources to cover the reasonable costs incurred for issuing and monitoring easements.

    Sec. 15. Minnesota Statutes 2008, section 84.631, is amended to read:
84.631 ROAD EASEMENTS ACROSS STATE LANDS.
(a) Except as provided in section 85.015, subdivision 1b, the commissioner, on
behalf of the state, may convey a road easement across state land under the commissioner's
jurisdiction other than school trust land, to a private person requesting an easement for
access to property owned by the person only if the following requirements are met: (1)
there are no reasonable alternatives to obtain access to the property; and (2) the exercise
of the easement will not cause significant adverse environmental or natural resource
management impacts.
(b) The commissioner shall:
(1) require the applicant to pay the market value of the easement;
(2) provide that the easement reverts to the state in the event of nonuse; and
(3) impose other terms and conditions of use as necessary and appropriate under
the circumstances.
(c) An applicant shall submit a an application fee of up to $2,000 with each
application for a road easement across state land. The commissioner must give the
applicant an estimate of the costs of the road easement before the applicant submits the
fee. The application fee is nonrefundable, even if the application is withdrawn or denied.
(d) In addition to the payment for the market value of the easement and the
application fee, the commissioner of natural resources shall assess the applicant a
monitoring fee to cover the projected reasonable costs for monitoring the construction of
the road and preparing special terms and conditions for the easement. The commissioner
must give the applicant an estimate of the monitoring fee before the applicant submits
the fee. The applicant shall pay the application and monitoring fees to the commissioner
of natural resources. The commissioner shall not issue the easement until the applicant
has paid in full the application fee, the monitoring fee, and the market value payment for
the easement.
(e) Upon completion of construction of the road, the commissioner shall refund the
unobligated balance from the monitoring fee revenue.
(f) Fees collected under paragraph paragraphs (c) and (d) must be deposited in
credited to the land management account in the natural resources fund and are appropriated
to the commissioner of natural resources to cover the reasonable costs incurred under
this section.

    Sec. 16. Minnesota Statutes 2008, section 84.632, is amended to read:
84.632 CONVEYANCE OF UNNEEDED STATE EASEMENTS.
(a) Notwithstanding section 92.45, the commissioner of natural resources may,
in the name of the state, release all or part of an easement acquired by the state upon
application of a landowner whose property is burdened with the easement if the easement
is not needed for state purposes.
(b) All or part of an easement may be released by payment of consideration of not
less than $500, to be determined by the commissioner the market value of the easement.
The release must be in a form approved by the attorney general.
(c) Money received for release of the easement under paragraph (b) must be credited
to the account from which money was expended for purchase of the easement. If there is
no specific account, the money must be credited to the land acquisition account established
in section 94.165.
(d) In addition to payment under paragraph (b), the commissioner of natural
resources shall assess a landowner who applies for a release under this section an
application fee of $2,000 for reviewing the application and preparing the release of
easement. The applicant shall pay the application fee to the commissioner of natural
resources. The commissioner shall not issue the release of easement until the applicant
has paid the application fee in full. The commissioner shall not return the application fee,
even if the application is withdrawn or denied.
(e) Money received under paragraph (d) must be credited to the land management
account in the natural resources fund and is appropriated to the commissioner of natural
resources to cover the reasonable costs incurred under this section.

    Sec. 17. Minnesota Statutes 2008, section 84.922, subdivision 1a, is amended to read:
    Subd. 1a. Exemptions. All-terrain vehicles exempt from registration are:
    (1) vehicles owned and used by the United States, the state, another state, or a
political subdivision;
    (2) vehicles registered in another state or country that have not been in this state for
more than 30 consecutive days;
(3) vehicles that:
(i) are owned by a resident of another state or country that does not require
registration of all-terrain vehicles;
(ii) have not been in this state for more than 30 consecutive days; and
(iii) are operated on state and grant-in-aid trails by a nonresident possessing a
nonresident all-terrain vehicle state trail pass;
    (3) (4) vehicles used exclusively in organized track racing events; and
    (4) (5) vehicles that are 25 years old or older and were originally produced as a
separate identifiable make by a manufacturer.
EFFECTIVE DATE.This section is effective January 1, 2010.

    Sec. 18. [84.9275] NONRESIDENT ALL-TERRAIN VEHICLE STATE TRAIL
PASS.
    Subdivision 1. Pass required; fee. (a) A nonresident may not operate an all-terrain
vehicle on a state or grant-in-aid all-terrain vehicle trail unless the operator carries a valid
nonresident all-terrain vehicle state trail pass in immediate possession. The pass must
be available for inspection by a peace officer, a conservation officer, or an employee
designated under section 84.0835.
(b) The commissioner of natural resources shall issue a pass upon application and
payment of a $20 fee. The pass is valid from January 1 through December 31. Fees
collected under this section, except for the issuing fee for licensing agents, shall be
deposited in the state treasury and credited to the all-terrain vehicle account in the natural
resources fund and, except for the electronic licensing system commission established by
the commissioner under section 84.027, subdivision 15, must be used for grants-in-aid to
counties and municipalities for all-terrain vehicle organizations to construct and maintain
all-terrain vehicle trails and use areas.
    (c) A nonresident all-terrain vehicle state trail pass is not required for:
    (1) an all-terrain vehicle that is owned and used by the United States, another state,
or a political subdivision thereof that is exempt from registration under section 84.922,
subdivision 1a; or
    (2) a person operating an all-terrain vehicle only on the portion of a trail that is
owned by the person or the person's spouse, child, or parent.
    Subd. 2. License agents. The commissioner may appoint agents to issue and sell
nonresident all-terrain vehicle state trail passes. The commissioner may revoke the
appointment of an agent at any time. The commissioner may adopt additional rules as
provided in section 97A.485, subdivision 11. An agent shall observe all rules adopted
by the commissioner for accounting and handling of passes pursuant to section 97A.485,
subdivision 11
. An agent shall promptly deposit and remit all money received from the
sale of the passes, exclusive of the issuing fee, to the commissioner.
    Subd. 3. Issuance of passes. The commissioner and agents shall issue and sell
nonresident all-terrain vehicle state trail passes. The commissioner shall also make the
passes available through the electronic licensing system established under section 84.027,
subdivision 15.
    Subd. 4. Agent's fee. In addition to the fee for a pass, an issuing fee of $1 per pass
shall be charged. The issuing fee may be retained by the seller of the pass. Issuing fees for
passes issued by the commissioner shall be deposited in the all-terrain vehicle account in
the natural resources fund and retained for the operation of the electronic licensing system.
    Subd. 5. Duplicate passes. The commissioner and agents shall issue a duplicate
pass to persons whose pass is lost or destroyed using the process established under section
97A.405, subdivision 3, and rules adopted thereunder. The fee for a duplicate nonresident
all-terrain vehicle state trail pass is $2, with an issuing fee of 50 cents.
EFFECTIVE DATE.This section is effective January 1, 2010.

    Sec. 19. Minnesota Statutes 2008, section 84D.15, subdivision 2, is amended to read:
    Subd. 2. Receipts. Money received from surcharges on watercraft licenses under
section 86B.415, subdivision 7, and civil penalties under section 84D.13 shall be deposited
in the invasive species account. Each year, the commissioner of finance shall transfer from
the game and fish fund to the invasive species account, the annual surcharge collected on
nonresident fishing licenses under section 97A.475, subdivision 7, paragraph (b). In fiscal
years 2010 and 2011, the commissioner of finance shall transfer $725,000 from the water
recreation account under section 86B.706 to the invasive species account.

    Sec. 20. Minnesota Statutes 2008, section 85.015, subdivision 1b, is amended to read:
    Subd. 1b. Easements for ingress and egress. (a) Notwithstanding section 16A.695,
except as provided in paragraph (b), when a trail is established under this section, a
private property owner who has a preexisting right of ingress and egress over the trail
right-of-way is granted, without charge, a permanent easement for ingress and egress
purposes only. The easement is limited to the preexisting crossing and reverts to the state
upon abandonment. Nothing in this subdivision is intended to diminish or alter any written
or recorded easement that existed before the state acquired the land for the trail.
(b) The commissioner of natural resources shall assess the applicant an application
fee of $2,000 for reviewing the application and preparing the easement. The applicant
shall pay the application fee to the commissioner of natural resources. The commissioner
shall not issue the easement until the applicant has paid the application fee in full. The
commissioner shall not return the application fee, even if the application is withdrawn
or denied.
(c) Money received under paragraph (b) must be credited to the land management
account in the natural resources fund and is appropriated to the commissioner of natural
resources to cover the reasonable costs incurred under this section.

    Sec. 21. Minnesota Statutes 2008, section 85.053, subdivision 10, is amended to read:
    Subd. 10. Free entrance; totally and permanently disabled veterans. The
commissioner shall issue an annual park permit for no charge for to any veteran with a
total and permanent service-connected disability, as determined by the United States
Department of Veterans Affairs, who presents each year a copy of their determination
letter to a park attendant or commissioner's designee. For the purposes of this section,
"veteran" with a total and permanent service-connected disability" means a resident who
has a total and permanent service-connected disability as adjudicated by the United States
Veterans Administration or by the retirement board of one of the several branches of the
armed forces has the meaning given in section 197.447.
EFFECTIVE DATE.This section is effective July 1, 2009, for state park permits
issued on or after that date.

    Sec. 22. Minnesota Statutes 2008, section 85.46, subdivision 3, is amended to read:
    Subd. 3. Issuance. The commissioner of natural resources and agents shall issue
and sell horse trail passes. The pass shall include the applicant's signature and other
information deemed necessary by the commissioner. To be valid, a daily or annual pass
must be signed by the person riding, leading, or driving the horse, and a commercial
annual pass must be signed by the owner of the commercial trail riding facility.
EFFECTIVE DATE.This section is effective January 1, 2010.

    Sec. 23. Minnesota Statutes 2008, section 85.46, subdivision 4, is amended to read:
    Subd. 4. Pass fees. (a) The fee for an annual horse trail pass is $20 for an individual
16 years of age and over. The fee shall be collected at the time the pass is purchased.
Annual passes are valid for one year beginning January 1 and ending December 31.
(b) The fee for a daily horse trail pass is $4 for an individual 16 years of age and
over. The fee shall be collected at the time the pass is purchased. The daily pass is valid
only for the date designated on the pass form.
(c) The fee for a commercial annual horse trail pass is $200 and includes issuance
of 15 passes. Additional or individual commercial annual horse trail passes may be
purchased by the commercial trail riding facility owner at a fee of $20 each. Commercial
annual horse trail passes are valid for one year beginning January 1 and ending December
31 and may be affixed to the horse tack, saddle, or person. Commercial annual horse trail
passes are not transferable to another commercial trail riding facility. For the purposes of
this section, a "commercial trail riding facility" is an operation where horses are used for
riding instruction or other equestrian activities for hire or use by others.
EFFECTIVE DATE.This section is effective January 1, 2010.

    Sec. 24. Minnesota Statutes 2008, section 85.46, subdivision 7, is amended to read:
    Subd. 7. Duplicate horse trail passes. The commissioner of natural resources and
agents shall issue a duplicate pass to a person or commercial trail riding facility owner
whose pass is lost or destroyed using the process established under section 97A.405,
subdivision 3, and rules adopted thereunder. The fee for a duplicate horse trail pass is $2,
with an issuing fee of 50 cents.
EFFECTIVE DATE.This section is effective January 1, 2010.

    Sec. 25. [86A.055] PROHIBITION ON SALES OF OUTDOOR RECREATION
SYSTEM LANDS FOR CERTAIN PURPOSES.
Notwithstanding Laws 2005, chapter 156, article 2, section 45, as amended by Laws
2007, chapter 148, article 2, section 73, or other law to the contrary, a state agency shall
not sell land that, on or after the effective date of this section, is classified as a unit of the
outdoor recreation system under section 86A.05, for the purpose of anticipated savings
to the general fund.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 26. Minnesota Statutes 2008, section 92.685, is amended to read:
92.685 LAND MANAGEMENT ACCOUNT.
The land management account is created in the natural resources fund. Money
credited to the account is appropriated annually to the commissioner of natural resources
for the Lands and Minerals Division to administer the utility easement program under
section 84.415, the easement program under section 84.63, the road easement program
under section 84.631, the easement release program under section 84.632, and the trail
easement program under section 85.015, subdivision 1b.

    Sec. 27. Minnesota Statutes 2008, section 93.481, subdivision 1, is amended to read:
    Subdivision 1. Prohibition against mining without permit; application for
permit. Except as provided in this subdivision, after June 30, 1975, no person shall
engage in or carry out a mining operation for metallic minerals within the state unless the
person has first obtained a permit to mine from the commissioner. Any person engaging
in or carrying out a mining operation as of the effective date of the rules promulgated
adopted under section 93.47 shall apply for a permit to mine within 180 days after the
effective date of such rules. Any such existing mining operation may continue during the
pendency of the application for the permit to mine. The person applying for a permit shall
apply on forms prescribed by the commissioner and shall submit such information as the
commissioner may require, including but not limited to the following:
(a) (1) a proposed plan for the reclamation or restoration, or both, of any mining
area affected by mining operations to be conducted on and after the date on which permits
are required for mining under this section;
(b) (2) a certificate issued by an insurance company authorized to do business in
the United States that the applicant has a public liability insurance policy in force for
the mining operation 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 mining operation or any reclamation or restoration
operations connected with the mining operation;
(3) an application fee of:
(i) $25,000 for a permit to mine for a taconite mining operation;
(ii) $50,000 for a permit to mine for a nonferrous metallic minerals operation;
(iii) $10,000 for a permit to mine for a scram mining operation; or
(iv) $5,000 for a permit to mine for a peat operation;
(c) (4) a bond which may be required pursuant to section 93.49; and
(d) (5) a copy of the applicant's advertisement of the ownership, location, and
boundaries of the proposed mining area and reclamation or restoration operations, which
advertisement shall 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, except that if
the application is for a permit to conduct lean ore stockpile removal the advertisement
need be published only once.

    Sec. 28. Minnesota Statutes 2008, section 93.481, subdivision 3, is amended to read:
    Subd. 3. Term of permit; amendment. A permit issued by the commissioner
pursuant to this section shall be granted for the term determined necessary by the
commissioner for the completion of the proposed mining operation, including reclamation
or restoration. 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 (3), for an application for the applicable permit to mine. If the commissioner
determines that the proposed amendment constitutes a substantial change to the permit,
the person applying for the amendment shall publish notice in the same manner as for a
new permit, and a hearing shall be held if written objections are received in the same
manner as for a new permit. An amendment may be granted by the commissioner if the
commissioner determines that lawful requirements have been met.

    Sec. 29. Minnesota Statutes 2008, section 93.481, subdivision 5, is amended to read:
    Subd. 5. Assignment. 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 (3), for an application
for the applicable permit to mine.

    Sec. 30. Minnesota Statutes 2008, section 93.481, subdivision 7, is amended to read:
    Subd. 7. Mining administration account. The mining administration account is
established as an account in the natural resources fund. Ferrous mining administrative
Fees charged to owners, operators, or managers of mines under this section and section
93.482 shall be credited to the account and may be appropriated to the commissioner
to cover the costs of providing and monitoring permits to mine ferrous metals under
this section. Earnings accruing from investment of the account remain with the account
until appropriated.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 31. [93.482] RECLAMATION FEES.
    Subdivision 1. Annual permit to mine fee. (a) The commissioner shall charge
every person holding a permit to mine an annual permit fee. The fee is payable to the
commissioner by June 30 of each year, beginning in 2009.
(b) The annual permit to mine fee for a taconite mining operation is $60,000 if the
operation had production within the calendar year immediately preceding the year in
which payment is due and $30,000 if there was no production within the immediately
preceding calendar year.
(c) The annual permit to mine fee for a nonferrous metallic minerals mining
operation is $75,000 if the operation had production within the calendar year immediately
preceding the year in which payment is due and $37,500 if there was no production within
the immediately preceding calendar year.
(d) The annual permit to mine fee for a scram mining operation is $5,000 if the
operation had production within the calendar year immediately preceding the year in
which payment is due and $2,500 if there was no production within the immediately
preceding calendar year.
(e) The annual permit to mine fee for a peat mining operation is $1,000 if the
operation had production within the calendar year immediately preceding the year in
which payment is due and $500 if there was no production within the immediately
preceding calendar year.
    Subd. 2. Supplemental application fee for taconite and nonferrous metallic
minerals mining operation. (a) In addition to the application fee specified in section
93.481, the commissioner shall assess a person submitting an application for a permit to
mine for a taconite or a nonferrous metallic minerals mining operation the reasonable
costs for reviewing the application and preparing the permit to mine. For nonferrous
metallic minerals mining, the commissioner shall assess reasonable costs for monitoring
construction of the mining facilities.
(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 93.481 must be subtracted from the estimate of costs to determine the
supplemental application fee.
(c) The applicant and the commissioner shall enter into a written agreement to cover
the estimated costs to be incurred by the commissioner.
(d) The commissioner shall not issue the permit to mine until the applicant has paid
all fees in full. Upon completion of construction of a nonferrous metallic minerals facility,
the commissioner shall refund the unobligated balance of the monitoring fee revenue.
    Subd. 3. Reclamation fee on taconite iron ore produced. (a) For the purposes
of this subdivision:
(1) "fee owner" means a person having any right, title, or interest in any minerals
or mineral rights in this state from which taconite iron ore is mined. Fee owner does not
include the United States, the state, or the University of Minnesota;
(2) "taconite iron ore" means a ferruginous chert or ferruginous slate in the form of
compact siliceous rock, in which the iron oxide is so finely disseminated that substantially
all of the iron bearing particles of merchantable grade are smaller than 20 mesh; and
(3) "ton" means a gross ton of 2,240 pounds.
(b) A fee owner is subject to a reclamation fee of $.0075 per ton of taconite iron ore
mined from the minerals or mineral rights owned by the fee owner.
(c) The fee owner shall make payment to the commissioner no later than January
20 of each calendar year for ore removed during the previous calendar year. The fee
owner is liable for the payment of the reclamation fee. The fee owner may enter into an
agreement with the mining operator to make the payment on their behalf from royalties
due and owing or other financial terms.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 32. Minnesota Statutes 2008, section 94.342, subdivision 3, is amended to read:
    Subd. 3. Additional restrictions on riparian land. (a) Land bordering on or
adjacent to any meandered or other public waters and withdrawn from sale by law is
riparian land. Riparian land may not be given in exchange unless:
(1) expressly authorized by the legislature or unless;
(2) through the same exchange the state acquires land on the same or other public
waters in the same general vicinity affording at least equal opportunity for access to the
waters and other riparian use by the public;
(3) Class A land is being exchanged for Class A land; or
provided, that any (4) the exchange with is an agency of the United States or any
agency thereof may be made free from this limitation upon condition that and the state
land given in exchange bordering on public waters shall be subject to reservations by
the state for public travel along the shores as provided by section 92.45, unless waived
as provided in this subdivision paragraph (b), and that there shall be reserved by the
state such additional rights of public use upon suitable portions of such state land as
the commissioner of natural resources, with the approval of the Land Exchange Board,
may deem necessary or desirable for camping, hunting, fishing, access to the water, and
other public uses.
In regard to (b) For Class B or riparian land that is contained within that portion
of the Superior National Forest that is designated as the Boundary Waters Canoe Area
Wilderness, the condition that state land given in exchange bordering on public waters
must be subject to the public travel reservations provided in section 92.45, may be waived
by the Land Exchange Board upon the recommendation of the commissioner of natural
resources and, if the land is Class B land, the additional recommendation of the county
board in which the land is located.

    Sec. 33. Minnesota Statutes 2008, section 97A.075, subdivision 1, is amended to read:
    Subdivision 1. Deer, bear, and lifetime licenses. (a) For purposes of this
subdivision, "deer license" means a license issued under section 97A.475, subdivisions 2,
clauses
(5), (6), (7), (11), (13), (15), (16), and (17), and 3, clauses (2), (3), (4), (9), (11),
(12), and (13), and licenses issued under section 97B.301, subdivision 4.
    (b) $2 from each annual deer license and $2 annually from the lifetime fish and
wildlife trust fund, established in section 97A.4742, for each license issued under section
97A.473, subdivision 4, shall be credited to the deer management account and shall be
used for deer habitat improvement or deer management programs.
    (c) $1 from each annual deer license and each bear license and $1 annually from
the lifetime fish and wildlife trust fund, established in section 97A.4742, for each license
issued under section 97A.473, subdivision 4, shall be credited to the deer and bear
management account and shall be used for deer and bear management programs, including
a computerized licensing system.
    (d) Fifty cents from each deer license is credited to the emergency deer feeding
and wild cervidae health management account and is appropriated for emergency deer
feeding and wild cervidae health management. Money appropriated for emergency
deer feeding and wild cervidae health management is available until expended. When
the unencumbered balance in the appropriation for emergency deer feeding and wild
cervidae health management at the end of a fiscal year exceeds $2,500,000 for the first
time, $750,000 is canceled to the unappropriated balance of the game and fish fund.
The commissioner must inform the legislative chairs of the natural resources finance
committees every two years on how the money for emergency deer feeding and wild
cervidae health management has been spent.
    Thereafter, When the unencumbered balance in the appropriation for emergency
deer feeding and wild cervidae health management exceeds $2,500,000 at the end of a
fiscal year, the unencumbered balance in excess of $2,500,000 is canceled and available
for deer and bear management programs and computerized licensing.

    Sec. 34. Minnesota Statutes 2008, section 103G.271, subdivision 6, is amended to read:
    Subd. 6. Water use permit processing fee. (a) Except as described in paragraphs
(b) to (f), a water use permit processing fee must be prescribed by the commissioner in
accordance with the schedule of fees in this subdivision for each water use permit in force
at any time during the year. The schedule is as follows, with the stated fee in each clause
applied to the total amount appropriated:
    (1) $140 for amounts not exceeding 50,000,000 gallons per year;
    (2) $3.50 per 1,000,000 gallons for amounts greater than 50,000,000 gallons but less
than 100,000,000 gallons per year;
    (3) $4 per 1,000,000 gallons for amounts greater than 100,000,000 gallons but less
than 150,000,000 gallons per year;
    (4) $4.50 per 1,000,000 gallons for amounts greater than 150,000,000 gallons but
less than 200,000,000 gallons per year;
    (5) $5 per 1,000,000 gallons for amounts greater than 200,000,000 gallons but less
than 250,000,000 gallons per year;
    (6) $5.50 per 1,000,000 gallons for amounts greater than 250,000,000 gallons but
less than 300,000,000 gallons per year;
    (7) $6 per 1,000,000 gallons for amounts greater than 300,000,000 gallons but less
than 350,000,000 gallons per year;
    (8) $6.50 per 1,000,000 gallons for amounts greater than 350,000,000 gallons but
less than 400,000,000 gallons per year;
    (9) $7 per 1,000,000 gallons for amounts greater than 400,000,000 gallons but less
than 450,000,000 gallons per year;
    (10) $7.50 per 1,000,000 gallons for amounts greater than 450,000,000 gallons but
less than 500,000,000 gallons per year; and
    (11) $8 per 1,000,000 gallons for amounts greater than 500,000,000 gallons per year.
    (b) For once-through cooling systems, a water use processing fee must be prescribed
by the commissioner in accordance with the following schedule of fees for each water use
permit in force at any time during the year:
    (1) for nonprofit corporations and school districts, $200 per 1,000,000 gallons; and
    (2) for all other users, $420 per 1,000,000 gallons.
    (c) The fee is payable based on the amount of water appropriated during the year
and, except as provided in paragraph (f), the minimum fee is $100.
    (d) For water use processing fees other than once-through cooling systems:
    (1) the fee for a city of the first class may not exceed $250,000 per year;
    (2) the fee for other entities for any permitted use may not exceed:
    (i) $50,000 $60,000 per year for an entity holding three or fewer permits;
    (ii) $75,000 $90,000 per year for an entity holding four or five permits;
    (iii) $250,000 $300,000 per year for an entity holding more than five permits;
    (3) the fee for agricultural irrigation may not exceed $750 per year;
    (4) the fee for a municipality that furnishes electric service and cogenerates steam
for home heating may not exceed $10,000 for its permit for water use related to the
cogeneration of electricity and steam; and
    (5) no fee is required for a project involving the appropriation of surface water to
prevent flood damage or to remove flood waters during a period of flooding, as determined
by the commissioner.
    (e) Failure to pay the fee is sufficient cause for revoking a permit. A penalty of two
percent per month calculated from the original due date must be imposed on the unpaid
balance of fees remaining 30 days after the sending of a second notice of fees due. A fee
may not be imposed on an agency, as defined in section 16B.01, subdivision 2, or federal
governmental agency holding a water appropriation permit.
    (f) The minimum water use processing fee for a permit issued for irrigation of
agricultural land is $20 for years in which:
    (1) there is no appropriation of water under the permit; or
    (2) the permit is suspended for more than seven consecutive days between May 1
and October 1.
    (g) A surcharge of $20 $30 per million gallons in addition to the fee prescribed in
paragraph (a) shall be applied to the volume of water used in each of the months of June,
July, and August that exceeds the volume of water used in January for municipal water
use, irrigation of golf courses, and landscape irrigation. The surcharge for municipalities
with more than one permit shall be determined based on the total appropriations from all
permits that supply a common distribution system.

    Sec. 35. Minnesota Statutes 2008, section 103G.301, subdivision 2, is amended to read:
    Subd. 2. Permit application fees. (a) A permit application fee to defray the costs of
receiving, recording, and processing the application must be paid for a permit authorized
under this chapter and for each request to amend or transfer an existing permit. Fees
established under this subdivision, unless specified in paragraph (c), shall be compliant
with section 16A.1285.
    (b) The fee for a project appropriating Proposed projects that require water in excess
of 100 million gallons per year must be assessed fees to recover the reasonable costs
of preparing and processing the permit, including costs incurred to evaluate the project
and the costs incurred for environmental review. Fees collected under this paragraph
must be credited to an account in the natural resources fund and are appropriated to the
commissioner for fiscal years 2008 and 2009.
    (c) The fee to apply for a permit to appropriate water, other than a permit subject
to the in addition to any fee under paragraph (b); a permit to construct or repair a dam
that is subject to dam safety inspection; or a state general permit or to apply for the state
water bank program is $150. The application fee for a permit to work in public waters or
to divert waters for mining must be at least $150, but not more than $1,000, according to a
schedule of fees adopted under section 16A.1285.

    Sec. 36. Minnesota Statutes 2008, section 103G.301, subdivision 3, is amended to read:
    Subd. 3. Field inspection fees. (a) In addition to the application fee, the
commissioner may charge a field inspection fee for:
(1) projects requiring a mandatory environmental assessment under chapter 116D;
(2) projects undertaken without a required permit or application; and
(3) projects undertaken in excess of limitations established in an issued permit.
(b) The fee must be at least $100 but not more than actual inspection costs.
(c) The fee is to cover actual costs related to a permit applied for under this chapter
or for a project undertaken without proper authorization.
(d) The commissioner shall establish a schedule of field inspection fees under section
16A.1285. The schedule must include actual costs related to field inspection, including
investigations of the area affected by the proposed activity, analysis of the proposed
activity, consultant services, and subsequent monitoring, if any, of the activity authorized
by the permit. Fees collected under this subdivision must be credited to an account in the
natural resources fund and are appropriated to the commissioner.

    Sec. 37. Minnesota Statutes 2008, section 115.03, subdivision 5c, is amended to read:
    Subd. 5c. Regulation of storm water discharges. (a) The agency may issue a
general permit to any category or subcategory of point source storm water discharges
that it deems administratively reasonable and efficient without making any findings
under agency rules. Nothing in this subdivision precludes the agency from requiring an
individual permit for a point source storm water discharge if the agency finds that it is
appropriate under applicable legal or regulatory standards.
(b) Pursuant to this paragraph, the legislature authorizes the agency to adopt and
enforce rules regulating point source storm water discharges. No further legislative
approval is required under any other legal or statutory provision whether enacted before or
after May 29, 2003.
(c) The agency shall develop performance standards, design standards, or other
tools to enable and promote the implementation of low-impact development and other
storm water management techniques. For the purposes of this section, "low-impact
development" means an approach to storm water management that mimics a site's natural
hydrology as the landscape is developed. Using the low-impact development approach,
storm water is managed on-site and the rate and volume of predevelopment storm water
reaching receiving waters is unchanged. The calculation of predevelopment hydrology is
based on native soil and vegetation.

    Sec. 38. Minnesota Statutes 2008, section 115.073, is amended to read:
115.073 ENFORCEMENT FUNDING.
Except as provided in section 115C.05, all money recovered by the state under this
chapter and chapters 115A and 116, including civil penalties and money paid under an
agreement, stipulation, or settlement, excluding money paid for past due fees or taxes,
up to the amount appropriated for implementation of Laws 1991, chapter 347, must be
deposited in the state treasury and credited to the environmental fund.

    Sec. 39. Minnesota Statutes 2008, section 115.56, subdivision 4, is amended to read:
    Subd. 4. License fee. (a) Until the agency adopts a final rule establishing fees for
licenses under subdivision 2, the fee for a license required under subdivision 2 is $100
$200 per year and the annual license fee for a business with multiple licenses shall not
exceed $400.
(b) Revenue from the any fees charged by the agency for licenses under subdivision
2 must be credited to the environmental fund and is exempt from section 16A.1285.

    Sec. 40. Minnesota Statutes 2008, section 115.77, subdivision 1, is amended to read:
    Subdivision 1. Fees established. The following fees are established for the
purposes indicated: agency shall collect fees in amounts necessary, but no greater than the
amounts necessary, to cover the reasonable costs of reviewing applications and issuing
certifications.
(1) application for examination, $32;
(2) issuance of certificate, $23;
(3) reexamination resulting from failure to pass an examination, $32;
(4) renewal of certificate, $23;
(5) replacement certificate, $10; and
(6) reinstatement or reciprocity certificate, $40.

    Sec. 41. Minnesota Statutes 2008, section 115A.1314, subdivision 2, is amended to
read:
    Subd. 2. Creation of account; appropriations. (a) The electronic waste account
is established in the environmental fund. The commissioner of revenue must deposit
receipts from the fee established in subdivision 1 in the account. Any interest earned on
the account must be credited to the account. Money from other sources may be credited to
the account. Beginning in the second program year and continuing each program year
thereafter, as of the last day of each program year, the commissioner of revenue shall
determine the total amount of the variable fees that were collected. By July 15, 2009, and
each July 15 thereafter, the commissioner of the Pollution Control Agency shall inform
the commissioner of revenue of the amount necessary to operate the program in the new
program year. To the extent that the total fees collected by the commissioner of revenue
in connection with this section exceed the amount the commissioner of the Pollution
Control Agency determines necessary to operate the program for the new program
year, the commissioner of revenue shall refund on a pro rata basis, to all manufacturers
who paid any fees for the previous program year, the amount of fees collected by the
commissioner of revenue in excess of the amount necessary to operate the program for the
new program year. No individual refund is required of amounts of $100 or less for a fiscal
year. Manufacturers who report collections less than 50 percent of their obligation for the
previous program year are not eligible for a refund. Amounts not refunded pursuant to this
paragraph shall remain in the account. The commissioner of revenue shall issue refunds
by August 10. In lieu of issuing a refund, the commissioner of revenue may grant credit
against a manufacturer's variable fee due by September 1.
    (b) Until June 30, 2009 2011, money in the account is annually appropriated to the
Pollution Control Agency:
    (1) for the purpose of implementing sections 115A.1312 to 115A.1330, including
transfer to the commissioner of revenue to carry out the department's duties under
section 115A.1320, subdivision 2, and transfer to the commissioner of administration for
responsibilities under section 115A.1324; and
    (2) to the commissioner of the Pollution Control Agency to be distributed on a
competitive basis through contracts with counties outside the 11-county metropolitan
area, as defined in paragraph (c), and with private entities that collect for recycling
covered electronic devices in counties outside the 11-county metropolitan area, where the
collection and recycling is consistent with the respective county's solid waste plan, for
the purpose of carrying out the activities under sections 115A.1312 to 115A.1330. In
awarding competitive grants under this clause, the commissioner must give preference to
counties and private entities that are working cooperatively with manufacturers to help
them meet their recycling obligations under section 115A.1318, subdivision 1.
    (c) The 11-county metropolitan area consists of the counties of Anoka, Carver,
Chisago, Dakota, Hennepin, Isanti, Ramsey, Scott, Sherburne, Washington, and Wright.

    Sec. 42. Minnesota Statutes 2008, section 115A.557, subdivision 1, is amended to read:
    Subdivision 1. Distribution; formula. Any funds appropriated to the commissioner
for the purpose of distribution to counties under this section must be distributed each fiscal
year by the commissioner based on population, except a county may not receive less than
$55,000 in a fiscal year. If the amount available for distribution under this section is less
or more than the amount available in fiscal year 2001, the minimum county payment under
this section is reduced or increased proportionately. For purposes of this subdivision,
"population" has the definition given in section 477A.011, subdivision 3. A county that
participates in a multicounty district that manages solid waste and that has responsibility
for recycling programs as authorized in section 115A.552, must pass through to the
districts funds received by the county in excess of the minimum county payment under
this section in proportion to the population of the county served by that district.

    Sec. 43. [115A.559] COMPOSTING COMPETITIVE GRANT PROGRAM.
    Subdivision 1. Grant program established. The commissioner shall make
competitive grants to political subdivisions to increase composting, reduce the amount of
organic wastes entering disposal facilities, and reduce the costs associated with hauling
waste by locating the composting site as close as possible to the site where the waste is
generated. To achieve the purpose of the grant program, the commissioner shall actively
recruit potential applicants beyond traditional solid waste professionals and organizations,
such as soil and water conservation districts and schools. Each grant must include an
educational component on the methods and benefits of composting.
    Subd. 2. Application. (a) The commissioner must develop forms and procedures
for soliciting and reviewing applications for grants under this section.
(b) The determination of whether to make a grant under this section is within the
discretion of the commissioner, subject to subdivision 4. The commissioner's decisions
are not subject to judicial review, except for abuse of discretion.
    Subd. 3. Priorities; eligible projects. (a) If applications for grants exceed the
available appropriations, grants must be made for projects that, in the commissioner's
judgment, provide the highest return in public benefits.
(b) To be eligible to receive a grant, a project must:
(1) be locally administered;
(2) have measurable outcomes; and
(3) include at least one of the following elements:
(i) the development of erosion control methods that use compost;
(ii) activities to encourage on-site composting by homeowners; or
(iii) activities to encourage composting by schools or public institutions.
    Subd. 4. Cancellation of grant. If a grant is awarded under this section and
funds are not encumbered for the grant within four years after the award date, the grant
must be canceled.

    Sec. 44. Minnesota Statutes 2008, section 115A.931, is amended to read:
115A.931 YARD WASTE PROHIBITION.
(a) Except as authorized by the agency, in the metropolitan area after January 1,
1990, and outside the metropolitan area after January 1, 1992, a person may not place
yard waste:
(1) in mixed municipal solid waste;
(2) in a disposal facility; or
(3) in a resource recovery facility except for the purposes of reuse, composting, or
cocomposting.
    (b) [Renumbered 115A.03, subd 38]
(c) On or after January 1, 2010, a person may not place yard waste or
source-separated compostable materials generated in a metropolitan county in a plastic bag
delivered to a transfer station or compost facility unless the bag meets all the specifications
in ASTM Standard Specification for Compostable Plastics (D6400). For purposes of this
paragraph, "metropolitan county" has the meaning given in section 473.121, subdivision
4, and "ASTM" has the meaning given in section 296A.01, subdivision 6.
(d) A person who immediately empties a plastic bag containing yard waste or
source-separated compostable materials delivered to a transfer station or compost facility
and removes the plastic bag from the transfer station or compost facility is exempt from
paragraph (c).
(e) Residents of a city of the first class that currently contracts for the collection of
yard waste are exempt from paragraph (c) until January 1, 2013, if, by that date, the
city implements a citywide source-separated compostable materials collection program
using durable carts.

    Sec. 45. Minnesota Statutes 2008, section 116.0711, is amended to read:
116.0711 FEEDLOT PERMIT CONDITIONS PERMITS; CONDITIONS;
COUNTY GRANTS.
    Subdivision 1. Conditions. (a) The agency shall not require feedlot permittees to
maintain records as to rainfall or snowfall as a condition of a general feedlot permit if the
owner directs the commissioner or agent of the commissioner to appropriate data on
precipitation maintained by a government agency or educational institution.
(b) A feedlot permittee shall give notice to the agency when the permittee proposes
to transfer ownership or control of the feedlot to a new party. The commissioner shall
not unreasonably withhold or unreasonably delay approval of any transfer request. This
request shall be handled in accordance with sections 116.07 and 15.992.
(c) The Environmental Quality Board shall review and recommend modifications
to environmental review rules related to phased actions and animal agriculture facilities.
The Environmental Quality Board shall report recommendations to the chairs of the
committees of the senate and house of representatives with jurisdiction over agriculture
and the environment by January 15, 2002.
(d) If the owner of an animal feedlot requests an extension for an application for a
national pollutant discharge elimination permit or state disposal system permit by June 1,
2001, then the agency shall grant an extension for the application to September 1, 2001.
(e) (c) An animal feedlot in shoreland that has been unused may resume operation
after obtaining a permit from the agency or county, regardless of the number of years that
the feedlot was unused.
    Subd. 2. County feedlot program grants; three-part formula. (a) Money
appropriated to the commissioner to make grants to delegated counties to administer
the county feedlot program must be distributed according to the three-part formula in
paragraphs (b) to (d).
    (b) Number of feedlots in the county: 60 percent of the total appropriation must be
distributed according to the number of feedlots that are required to be registered in the
county. Grants awarded under this paragraph must be matched with a combination of local
cash and in-kind contributions.
    (c) Minimum program requirements: 25 percent of the total appropriation must be
distributed based on the county (1) conducting an annual number of inspections at feedlots
that is equal to or greater than seven percent of the total number of registered feedlots that
are required to be registered in the county; and (2) meeting noninspection minimum
program requirements as identified in the county feedlot workplan form. Counties that do
not meet the inspection requirement must not receive 50 percent of the eligible funding
under this paragraph. Counties must receive funding for noninspection requirements under
this paragraph according to a scoring system checklist administered by the commissioner.
The commissioner, in consultation with the Minnesota Association of County Feedlot
Officers executive team, shall make a final decision regarding any appeal by a county
regarding the terms and conditions of this paragraph.
    (d) Performance credits: 15 percent of the total appropriation must be distributed
according to work that has been done by the counties during the fiscal year. The amount
must be determined by the number of performance credits a county accumulates during
the year based on a performance credit matrix jointly agreed upon by the commissioner
in consultation with the Minnesota Association of County Feedlot Officers executive
team. To receive an award under this paragraph, the county must meet the requirements
of paragraph (c), clause (1), and achieve 90 percent of the requirements according to
paragraph (c), clause (2), of the formula. The rate of reimbursement per performance
credit item must not exceed $200.
    Subd. 3. Minimum grant; prorated grant; transfers. Delegated counties are
eligible for a minimum grant of $7,500. To receive the full $7,500 amount, a county must
meet the requirements under subdivision 2, paragraph (c). Nondelegated counties that
apply for delegation shall receive a grant prorated according to the number of full quarters
remaining in the program year from the date of commissioner approval of the delegation.
Awards to any newly delegated counties must be made out of the appropriation reserved
under subdivision 2, paragraph (d). The commissioner, in consultation with the Minnesota
Association of County Feedlot Officers executive team, may decide to use money reserved
under subdivision 2, paragraph (d), in an amount not to exceed five percent of the total
annual appropriation for initiatives to enhance existing delegated county feedlot programs,
information and education, or technical assistance efforts to reduce feedlot-related
pollution hazards. Any amount remaining after distribution under subdivision 2,
paragraphs (b) and (c), must be transferred for purposes of subdivision 2, paragraph (d).

    Sec. 46. Minnesota Statutes 2008, section 116.41, subdivision 2, is amended to read:
    Subd. 2. Training and certification programs. The agency shall develop standards
of competence for persons operating and inspecting various classes of disposal facilities.
The agency shall conduct training programs for persons operating facilities for the
disposal of waste and for inspectors of such facilities, and may shall charge such fees as
are necessary to cover the actual costs of the training programs. All fees received shall be
paid into the state treasury and credited to the Pollution Control Agency training account
and are appropriated to the agency to pay expenses relating to the training of disposal
facility personnel.
The agency shall require operators and inspectors of such facilities to obtain from
the agency a certificate of competence. The agency shall conduct examinations to test the
competence of applicants for certification, and shall require that certificates be renewed at
reasonable intervals. The agency may charge such fees as are necessary to cover the actual
costs of receiving and processing applications, conducting examinations, and issuing
and renewing certificates. Certificates shall not be required for a private individual for
land-spreading and associated interim and temporary storage of sewage sludge on property
owned or farmed by that individual.

    Sec. 47. [116.9401] DEFINITIONS.
(a) For the purposes of sections 116.9401 to 116.9407, the following terms have
the meanings given them.
(b) "Agency" means the Pollution Control Agency.
(c) "Alternative" means a substitute process, product, material, chemical, strategy,
or combination of these that is technically feasible and serves a functionally equivalent
purpose to a chemical in a children's product.
(d) "Chemical" means a substance with a distinct molecular composition or a group
of structurally related substances and includes the breakdown products of the substance or
substances that form through decomposition, degradation, or metabolism.
(e) "Chemical of high concern" means a chemical identified on the basis of credible
scientific evidence by a state, federal, or international agency as being known or suspected
with a high degree of probability to:
(1) harm the normal development of a fetus or child or cause other developmental
toxicity;
(2) cause cancer, genetic damage, or reproductive harm;
(3) disrupt the endocrine or hormone system;
(4) damage the nervous system, immune system, or organs, or cause other systemic
toxicity;
(5) be persistent, bioaccumulative, and toxic; or
(6) be very persistent and very bioaccumulative.
(f) "Child" means a person under 12 years of age.
(g) "Children's product" means a consumer product intended for use by children,
such as baby products, toys, car seats, personal care products, and clothing.
(h) "Commissioner" means the commissioner of the Pollution Control Agency.
(i) "Department" means the Department of Health.
(j) "Distributor" means a person who sells consumer products to retail establishments
on a wholesale basis.
(k) "Green chemistry" means an approach to designing and manufacturing products
that minimizes the use and generation of toxic substances.
(l) "Manufacturer" means any person who manufactures a final consumer product
sold at retail or whose brand name is affixed to the consumer product. In the case of a
consumer product imported into the United States, manufacturer includes the importer
or domestic distributor of the consumer product if the person who manufactured or
assembled the consumer product or whose brand name is affixed to the consumer product
does not have a presence in the United States.
(m) "Priority chemical" means a chemical identified by the Department of Health as
a chemical of high concern that meets the criteria in section 116.9403.
(n) "Safer alternative" means an alternative whose potential to harm human health is
less than that of the use of a priority chemical that it could replace.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 48. [116.9402] IDENTIFICATION OF CHEMICALS OF HIGH CONCERN.
(a) By July 1, 2010, the department shall, after consultation with the agency,
generate a list of chemicals of high concern.
(b) The department must periodically review and revise the list of chemicals of high
concern at least every three years. The department may add chemicals to the list if the
chemical meets one or more of the criteria in section 116.9401, paragraph (e).
(c) The department shall consider chemicals listed as a suspected carcinogen,
reproductive or developmental toxicant, or as being persistent, bioaccumulative, and
toxic, or very persistent and very bioaccumulative by a state, federal, or international
agency. These agencies may include, but are not limited to, the California Environmental
Protection Agency, the Washington Department of Ecology, the United States Department
of Health, the United States Environmental Protection Agency, the United Nation's World
Health Organization, and European Parliament Annex XIV concerning the Registration,
Evaluation, Authorisation, and Restriction of Chemicals.
(d) The department may consider chemicals listed by another state as harmful to
human health or the environment for possible inclusion in the list of chemicals of high
concern.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 49. [116.9403] IDENTIFICATION OF PRIORITY CHEMICALS.
(a) The department, after consultation with the agency, may designate a chemical of
high concern as a priority chemical if the department finds that the chemical:
(1) has been identified as a high-production volume chemical by the United States
Environmental Protection Agency; and
(2) meets any of the following criteria:
(i) the chemical has been found through biomonitoring to be present in human blood,
including umbilical cord blood, breast milk, urine, or other bodily tissues or fluids;
(ii) the chemical has been found through sampling and analysis to be present in
household dust, indoor air, drinking water, or elsewhere in the home environment; or
(iii) the chemical has been found through monitoring to be present in fish, wildlife,
or the natural environment.
(b) By February 1, 2011, the department shall publish a list of priority chemicals in
the State Register and on the department's Internet Web site and shall update the published
list whenever a new priority chemical is designated.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 50. [116.9405] APPLICABILITY.
The requirements of sections 116.9401 to 116.9407 do not apply to:
(1) chemicals in used children's products;
(2) priority chemicals used in the manufacturing process, but that are not present
in the final product;
(3) priority chemicals used in agricultural production;
(4) motor vehicles as defined in chapter 168 or watercraft as defined in chapter
86B or their component parts, except that the use of priority chemicals in detachable
car seats is not exempt;
(5) priority chemicals generated solely as combustion by-products or that are present
in combustible fuels;
(6) retailers;
(7) pharmaceutical products or biologics;
(8) a medical device as defined in the federal Food, Drug, and Cosmetic Act, United
States Code, title 21, section 321(h);
(9) food and food or beverage packaging, except a container containing baby food
or infant formula;
(10) consumer electronics products and electronic components, including but not
limited to personal computers; audio and video equipment; calculators; digital displays;
wireless phones; cameras; game consoles; printers; and handheld electronic and electrical
devices used to access interactive software or their associated peripherals; or products that
comply with the provisions of directive 2002/95/EC of the European Union, adopted by
the European Parliament and Council of the European Union now or hereafter in effect; or
    (11) outdoor sport equipment, including snowmobiles as defined in section 84.81,
subdivision 3; all-terrain vehicles as defined in section 84.92, subdivision 8; personal
watercraft as defined in section 86B.005, subdivision 14a; watercraft as defined in section
86B.005, subdivision 18; and off-highway motorcycles, as defined in section 84.787,
subdivision 7, and all attachments and repair parts for all of this equipment.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 51. [116.9406] DONATIONS TO THE STATE.
The commissioner may accept donations, grants, and other funds to carry out the
purposes of sections 116.9401 to 116.9407. All donations, grants, and other funds must
be accepted without preconditions regarding the outcomes of the regulatory oversight
processes set forth in sections 116.9401 to 116.9407.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 52. [116.9407] PARTICIPATION IN INTERSTATE CHEMICALS
CLEARINGHOUSE.
The state may cooperate with other states in an interstate chemicals clearinghouse
regarding chemicals in consumer products, including the classification of priority
chemicals in commerce; organizing and managing available data on chemicals, including
information on uses, hazards, risks, and environmental and health concerns; and producing
and evaluating information on safer alternatives to specific uses of priority chemicals.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 53. Minnesota Statutes 2008, section 116C.834, subdivision 1, is amended to read:
    Subdivision 1. Costs. All costs incurred by the state to carry out its responsibilities
under the compact and under sections 116C.833 to 116C.843 shall be paid by generators
of low-level radioactive waste in this state through fees assessed by the Pollution Control
Agency. Fees may be reasonably assessed on the basis of volume or degree of hazard of
the waste produced by a generator. Costs for which fees may be assessed include, but
are not limited to:
(1) the state contribution required to join the compact;
(2) the expenses of the commission member and state agency costs incurred to
support the work of the Interstate Commission; and
(3) regulatory costs.
The fees are exempt from section 16A.1285.

    Sec. 54. [216H.021] GREENHOUSE GAS EMISSIONS REPORTING.
    Subdivision 1. Commissioner to establish reporting system and maintain
inventory. In order to measure the progress in meeting the goals of section 216H.02,
subdivision 1, and to provide information to develop strategies to achieve those goals, the
commissioner of the Pollution Control Agency shall establish a system for reporting and
maintaining an inventory of greenhouse gas emissions. The commissioner must consult
with the chief information officer of the Office of Enterprise Technology about system
design and operation. Greenhouse gas emissions include those emissions described in
section 216H.01, subdivision 2.
    Subd. 2. Reporting system design. (a) The commissioner shall, to the extent
practicable, design the system to coordinate with other regional or federal greenhouse gas
emissions-reporting and inventory systems. The coordination may, without limitation,
include the use of similar forms and reports, the sharing of information, and the use of
common facilities, systems, and databases.
(b) The reporting system need not include all sources of emissions nor all amounts
of emissions but, at its outset, must include:
(1) all stationary sources and other facilities required to obtain a permit under Title
V of the federal Clean Air Act, United States Code, title 42, section 7401 et. seq.; and
(2) facilities whose annual carbon dioxide equivalent emissions, as defined in
section 216H.10, subdivision 3, exceed a threshold set by the commissioner at between
10,000 tons and 25,000 tons. The reporting threshold set by the commissioner must
be consistent with the goal of accurately tracking progress in attaining greenhouse
gas emissions-reduction goals and the need for emissions data to assist in developing
greenhouse gas emissions-reduction strategies.
(c) In designing the greenhouse gas emissions reporting system, the commissioner
shall consider requiring the reporting of greenhouse gas emissions from transportation
fuels and greenhouse gas emissions from natural gas combustion that are not included
in reporting from stationary sources. In determining whether to include reporting of
these emissions, the commissioner must consider both the goal of accurately tracking
progress in attaining greenhouse gas emissions-reduction goals and the need for emissions
data to assist in developing greenhouse gas emissions-reduction strategies recommended
by the Minnesota Climate Change Advisory Group. If the commissioner decides that
transportation fuels and portions of natural gas combustion should not be included in
the initial emissions reporting system, the commissioner must report to the chairs and
ranking minority members of the senate and house of representatives committees with
primary jurisdiction over energy and environmental policy the reasons for that decision
and suggestions for steps that should be taken to allow their inclusion in the emissions
reporting system in the future.
(d) A facility reporting greenhouse gas emissions under this section must maintain
the data used to create the reports for a minimum of five years.
    Subd. 3. Rules. The commissioner of the Pollution Control Agency may adopt rules
for the purposes of this section.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 55. Minnesota Statutes 2008, section 216H.10, subdivision 7, is amended to read:
    Subd. 7. High-GWP greenhouse gas. "High-GWP greenhouse gas" means
hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride, nitrous trifluoride, and any
other gas the agency determines by rule to have a high global warming potential.

    Sec. 56. Minnesota Statutes 2008, section 216H.11, is amended to read:
216H.11 HIGH-GWP GREENHOUSE GAS REPORTING.
    Subdivision 1. Gas manufacturers. Beginning By October 1, 2008, and each year
thereafter, a manufacturer of a high-GWP greenhouse gas must report to the agency the
total amount of each high-GWP greenhouse gas sold to a purchaser in this state during
the previous year.
    Subd. 2. Purchases. Beginning By October 1, 2008, and each year thereafter,
a person in this state who purchases 500 10,000 metric tons or more carbon dioxide
equivalent of a high-GWP greenhouse gas for use or retail sale in this state must report
to the agency, on a form prescribed by the commissioner, the total amount of each
high-GWP greenhouse gas purchased for use or retail sale in this state during the previous
year and the purpose for which the gas was used. The commissioner may adopt rules
under chapter 14 to establish a different reporting threshold or to adopt specific reporting
requirements for commercial or industrial facilities that purchase high-GWP gases for use
or retail sale in this state.
    Subd. 3. Acceptance of federal filing. With the approval of the commissioner, this
section may be satisfied by filing with the commissioner a copy of a greenhouse gas
emissions report filed with a federal agency or a regional or national greenhouse gas
registry, provided that the entity with which the report is filed requires the emissions
data to be verified.

    Sec. 57. [325E.046] STANDARDS FOR LABELING PLASTIC BAGS.
    Subdivision 1. "Biodegradable" label. A manufacturer, distributor, or wholesaler
may not offer for sale in this state a plastic bag labeled "biodegradable," "degradable,"
or any form of those terms, or in any way imply that the bag will chemically decompose
into innocuous elements in a reasonably short period of time in a landfill, composting, or
other terrestrial environment unless a scientifically based standard for biodegradability is
developed and the bags are certified as meeting the standard.
    Subd. 2. "Compostable" label. A manufacturer, distributor, or wholesaler may not
offer for sale in this state a plastic bag labeled "compostable" unless, at the time of sale,
the bag meets the ASTM Standard Specification for Compostable Plastics (D6400). Each
bag must be labeled to reflect that it meets the standard. For purposes of this subdivision,
"ASTM" has the meaning given in section 296A.01, subdivision 6.
    Subd. 3. Enforcement; civil penalty; injunctive relief. (a) A manufacturer,
distributor, or wholesaler who violates subdivision 1 or 2 is subject to a civil penalty of
$100 for each prepackaged saleable unit offered for sale up to a maximum of $5,000
and may be enjoined from those violations.
(b) The attorney general may bring an action in the name of the state in a court of
competent jurisdiction for recovery of civil penalties or for injunctive relief as provided in
this subdivision. The attorney general may accept an assurance of discontinuance of acts
in violation of subdivision 1 or 2 in the manner provided in section 8.31, subdivision 2b.
EFFECTIVE DATE.This section is effective January 1, 2010.

    Sec. 58. [383B.236] WASTE MANAGEMENT BY HENNEPIN COUNTY.
The Hennepin County Board of Commissioners may utilize money received from
the sale of energy and recovered materials and placed in the county solid and hazardous
waste fund under section 473.811, subdivision 9, for program expenses of the Department
of Environmental Services, or the department or office succeeding to the functions of the
Department of Environmental Services. This authority shall be in addition to the authority
given in section 473.811, subdivision 9.

    Sec. 59. Laws 2005, chapter 156, article 2, section 45, as amended by Laws 2007,
chapter 148, article 2, section 73, is amended to read:
    Sec. 45. SALE OF STATE LAND.
    Subdivision 1. State land sales. The commissioner of administration shall
coordinate with the head of each department or agency having control of state-owned land
to identify and sell at least $6,440,000 of state-owned land. Sales should be completed
according to law and as provided in this section as soon as practicable but no later than
June 30, 2009 2011. Notwithstanding Minnesota Statutes, sections 16B.281 and 16B.282,
94.09 and 94.10, or any other law to the contrary, the commissioner may offer land
for public sale by only providing notice of lands or an offer of sale of lands to state
departments or agencies, the University of Minnesota, cities, counties, towns, school
districts, or other public entities.
    Subd. 2. Anticipated savings. Notwithstanding Minnesota Statutes, section
94.16, subdivision 3, or other law to the contrary, the amount of the proceeds from the
sale of land under this section that exceeds the actual expenses of selling the land must
be deposited in the general fund, except as otherwise provided by the commissioner of
finance. Notwithstanding Minnesota Statutes, section 94.11 or 16B.283, the commissioner
of finance may establish the timing of payments for land purchased under this section. If
the total of all money deposited into the general fund from the proceeds of the sale of land
under this section is anticipated to be less than $6,440,000, the governor must allocate the
amount of the difference as reductions to general fund operating expenditures for other
executive agencies for the biennium ending June 30, 2009 2011.
    Subd. 3. Sale of state lands revolving loan fund. $290,000 is appropriated from
the general fund in fiscal year 2006 to the commissioner of administration for purposes
of paying the actual expenses of selling state-owned lands to achieve the anticipated
savings required in this section. From the gross proceeds of land sales under this section,
the commissioner of administration must cancel the amount of the appropriation in this
subdivision to the general fund by June 30, 2009 2011.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 60. Laws 2007, chapter 57, article 1, section 4, subdivision 2, is amended to read:


Subd. 2.Land and Mineral Resources
Management
11,747,000
11,272,000

Appropriations by Fund

General
6,633,000
6,230,000

Natural Resources
3,551,000
3,447,000

Game and Fish
1,363,000
1,395,000

Permanent School
200,000
200,000
$475,000 the first year and $475,000 the
second year are for iron ore cooperative
research. Of this amount, $200,000 each year
is from the minerals management account in
the natural resources fund and $275,000 each
year is from the general fund. $237,500 the
first year and $237,500 the second year are
available only as matched by $1 of nonstate
money for each $1 of state money. The
match may be cash or in-kind.
$86,000 the first year and $86,000 the
second year are for minerals cooperative
environmental research, of which $43,000
the first year and $43,000 the second year are
available only as matched by $1 of nonstate
money for each $1 of state money. The
match may be cash or in-kind.
$2,800,000 the first year and $2,696,000
the second year are from the minerals
management account in the natural resources
fund for use as provided in Minnesota
Statutes, section 93.2236, paragraph (c).
$200,000 the first year and $200,000 the
second year are from the state forest suspense
account in the permanent school fund to
accelerate land exchanges, land sales, and
commercial leasing of school trust lands and
to identify, evaluate, and lease construction
aggregate located on school trust lands. This
appropriation is to be used for securing
maximum long-term economic return
from the school trust lands consistent with
fiduciary responsibilities and sound natural
resources conservation and management
principles.
$15,000 the first year is for a report
by February 1, 2008, to the house and
senate committees with jurisdiction over
environment and natural resources on
proposed minimum legal and conservation
standards that could be applied to
conservation easements acquired with public
money.
$1,201,000 the first year and $701,000 the
second year are to support the land records
management system. Of this amount,
$326,000 the first year and $326,000 the
second year are from the game and fish fund
and $375,000 the first year and $375,000 the
second year are from the natural resources
fund. The unexpended balances are available
until June 30, 2011. The commissioner
must report to the legislative chairs on
environmental finance on the outcomes of
the land records management support.
$500,000 the first year and $500,000 the
second year are for land asset management.
This is a onetime appropriation.

    Sec. 61. Laws 2008, chapter 363, article 5, section 4, subdivision 7, is amended to read:

Subd. 7.Fish and Wildlife Management
123,000
119,000

Appropriations by Fund

General
-0-
(427,000)

Game and Fish
123,000
546,000
$329,000 in 2009 is a reduction for fish and
wildlife management.
$46,000 in 2009 is a reduction in the
appropriation for the Minnesota Shooting
Sports Education Center.
$52,000 in 2009 is a reduction for licensing.
$123,000 in 2008 and $246,000 in 2009 are
from the game and fish fund to implement
fish virus surveillance, prepare infrastructure
to handle possible outbreaks, and implement
control procedures for highest risk waters
and fish production operations. This is a
onetime appropriation.
Notwithstanding Minnesota Statutes, section
297A.94, paragraph (e), $300,000 in 2009
is from the second year appropriation in
Laws 2007, chapter 57, article 1, section 4,
subdivision 7, from the heritage enhancement
account in the game and fish fund to study,
predesign, and design a shooting sports
facilities at the Vermillion Highlands Wildlife
Management Area authorized by Laws 2007,
chapter 57, article 1, section 168 facility in
the seven-county metropolitan area. This is
available onetime only and is available until
expended.
$300,000 in 2009 is appropriated from the
game and fish fund for only activities that
improve, enhance, or protect fish and wildlife
resources. This is a onetime appropriation.

    Sec. 62. SCORE REPORTING.
    Subdivision 1. 2010 requirement. The requirements for the report specified in
Minnesota Statutes, section 115A.557, subdivision 3, paragraph (b), clause (2), that is due
April 1, 2010, shall be abbreviated in scope. The information collected shall be sufficient
for the commissioner of the Pollution Control Agency to determine that counties have
complied with the requirements of this subdivision.
    Subd. 2. Recommendations; report. The commissioner of the Pollution Control
Agency, in consultation with the Association of Minnesota Counties, the Solid Waste
Administrators Association, the Solid Waste Management Coordinating Board, and other
interested parties shall make recommendations to amend the reporting requirements under
Minnesota Statutes, section 115A.557, subdivision 3, in ways that reduce the resources
counties employ to collect the data reported, while ensuring that estimation methods used
to report data are consistent across counties and that the data reported are accurate and
useful as a guide to solid waste management policy makers. The commissioner shall also
make recommendations regarding the feasibility and desirability of multicounty reporting
of the data. The commissioner's recommendations must be presented in a report submitted
to the chairs and ranking minority members of the senate and house of representatives
committees and divisions with primary jurisdiction over solid waste policy and finance
no later than January 15, 2010.

    Sec. 63. PRIORITY CHEMICAL REPORTS.
(a) By January 15, 2010, the commissioner of health, in consultation with the
Pollution Control Agency, shall report to the chairs and ranking minority members
of the senate and house of representatives committees with primary jurisdiction over
environment and natural resources policy, commerce, and public health regarding the
progress on implementing new Minnesota Statutes, sections 116.9401 to 116.9407, and
information on the progress of federal, international, and other states in identifying,
prioritizing, evaluating, regulating, and reducing the use of chemicals of high concern
and priority chemicals in children's products and in determining the availability of safer
alternatives for specific applications and promoting the use of those safer alternatives.
(b) By December 15, 2010, the commissioner of the Pollution Control Agency
shall report to the chairs and ranking minority members of the senate and house of
representatives committees with primary jurisdiction over environment and natural
resources policy, commerce, and public health assessing mechanisms used by other states,
the federal government, and other countries to reduce and phase out the use of priority
chemicals in children's products and promote the use of safer alternatives. The report shall
include potential funding mechanisms to implement this process. The report must include
recommendations to promote and provide incentives for product design that use principles
of green chemistry and life-cycle analysis. In developing the report, the agency may
consult with stakeholders, including representatives of state agencies, manufacturers of
children's products, chemical manufacturers, public health experts, independent scientists,
and public interest groups. The report must include information on any stakeholder
process consulted with or used in developing the report.
(c) By January 15, 2010, the agency shall provide an interim report about the
progress in developing the report required under paragraph (b), including information
on the status of any stakeholder process.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 64. REORGANIZATION PROHIBITION; ENVIRONMENTAL QUALITY
BOARD.
Notwithstanding Minnesota Statutes, section 16B.37, unless expressly provided by
law, the commissioner of administration shall not reorganize the Environmental Quality
Board within another agency, prior to July 1, 2011.

    Sec. 65. ENVIRONMENTAL REVIEW STREAMLINING REPORT.
By February 15, 2010, the commissioner of the Pollution Control Agency, in
consultation with staff from the Environmental Quality Board, shall submit a report
to the environment and natural resources policy and finance committees of the house
and senate on options to streamline the environmental review process under Minnesota
Statutes, chapter 116D. In preparing the report, the commissioner shall consult with state
agencies, local government units, and business, agriculture, and environmental advocacy
organizations with an interest in the environmental review process. The report shall
include options that will reduce the time required to complete environmental review and
the cost of the process to responsible governmental units and project proposers while
maintaining or improving air, land, and water quality standards.

    Sec. 66. COMPENSATION OF GOVERNOR'S STAFF.
For fiscal years 2010 and 2011, the Department of Natural Resources, the Pollution
Control Agency, and the Board of Water and Soil Resources may not use funds
appropriated in this article or funds from any statutory or open appropriation to pay
directly or indirectly for the compensation costs of staff in the office of the governor.

    Sec. 67. [97A.043] FISH CONSUMPTION ADVISORIES.
    The commissioner of natural resources, in cooperation with the commissioner of
health, shall ensure that fish consumption advisories are displayed in at least four different
languages, one of which must be English, to fairly represent the population of the state.

    Sec. 68. CARBON SEQUESTRATION FORESTRY REPORT.
The Minnesota Forest Resources Council shall review the Minnesota Climate
Change Advisory Group's recommendation to increase carbon sequestration in forests by
planting 1,000,000 acres of trees and shall submit a report to the chairs of the house of
representatives and senate committees with jurisdiction over energy and energy finance,
environment and natural resources, and environment and natural resources finance; the
governor; and the commissioner of natural resources by January 15, 2010. The report
shall, at a minimum, include recommendations on implementation and analysis of the
number and ownership of acres available for tree planting, the types of native species best
suited for planting, the availability of planting stock, and potential costs.

    Sec. 69. REPEALER.
Laws 2008, chapter 363, article 5, section 30, is repealed.

ARTICLE 2
ENERGY FINANCE


Section 1. SUMMARY OF APPROPRIATIONS.
    The amounts shown in this section summarize direct appropriations, by fund, made
in this article.

2010
2011
Total

General
$
27,291,000
$
27,041,000
$
54,332,000

Petroleum Tank Cleanup
1,084,000
1,084,000
2,168,000

Workers' Compensation
751,000
751,000
1,502,000


Telecommunications Access
Minnesota
600,000
600,000
1,200,000

Special Revenue
1,350,000
625,000
1,975,000

Total
$
31,076,000
$
30,101,000
$
61,177,000


Sec. 2. ENERGY FINANCE APPROPRIATIONS.
    The sums shown in the columns marked "Appropriations" are appropriated to the
agencies and for the purposes specified in this article. The appropriations are from the
general fund, or another named fund, and are available for the fiscal years indicated
for each purpose. The figures "2010" and "2011" used in this article mean that the
appropriations listed under them are available for the fiscal year ending June 30, 2010, or
June 30, 2011, respectively. "The first year" is fiscal year 2010. "The second year" is fiscal
year 2011. "The biennium" is fiscal years 2010 and 2011. Appropriations for the fiscal
year ending June 30, 2009, are effective the day following final enactment.

APPROPRIATIONS

Available for the Year

Ending June 30

2010
2011


Sec. 3. DEPARTMENT OF COMMERCE

Subdivision 1.Total Appropriation
$
25,643,000
$
24,668,000

Appropriations by Fund

2010
2011

General
21,858,000
21,608,000

Petroleum Cleanup
1,084,000
1,084,000


Workers'
Compensation
751,000
751,000

Special Revenue
1,350,000
625,000


Telecommunications
Access Minnesota
600,000
600,000
The amounts that may be spent for each
purpose are specified in the following
subdivisions.

Subd. 2.Financial Institutions
6,638,000
6,638,000
$1,000 each year is for consumer small loan
regulation modifications in article 7. This
appropriation is added to the department's
base.


Subd. 3.Petroleum Tank Release Cleanup
Board
1,084,000
1,084,000
This appropriation is from the petroleum
tank release cleanup fund. The base funding
for this program ends June 30, 2012.

Subd. 4.Administrative Services
4,300,000
4,300,000

Subd. 5.Telecommunications
1,010,000
1,010,000

Subd. 6.Market Assurance
7,421,000
7,421,000

Appropriations by Fund

General
6,670,000
6,670,000


Workers'
Compensation
751,000
751,000

Subd. 7.Office of Energy Security
4,590,000
3,615,000

Appropriations by Fund

General
3,240,000
2,990,000

Special Revenue
1,350,000
625,000
$250,000 the first year is for E-85 grants
under Laws 2007, chapter 57, article 2,
section 3, subdivision 6. Grants for on-site
blending pumps must include up to 75
percent of the total cost of the project, up to
a maximum of $15,000 per pump. This is a
onetime appropriation.
The utility subject to Minnesota Statutes,
section 116C.779, shall transfer $1,350,000
in fiscal year 2010 and $625,000 in fiscal
year 2011 only to the Department of
Commerce on a schedule determined by the
commissioner of commerce. These funds
must be deposited in the special revenue fund
and are appropriated to the commissioner
for grants to promote renewable energy
projects and community energy outreach and
assistance. Of the amounts identified:
(1) $300,000 the first year is for a grant
to the Board of Regents of the University
of Minnesota for the Natural Resources
and Research Institute at the University of
Minnesota, Duluth, to develop statewide
heat flow maps in order to determine
the geothermal potential of the state of
Minnesota;
(2) $625,000 each year is for continued
funding of community energy technical
assistance and outreach on renewable
energy and energy efficiency, as described
in Minnesota Statutes, section 216C.385.
Of this amount, $125,000 each year is for
technical assistance in the metropolitan area;
(3) $25,000 the first year is for a grant to
a nonprofit organization with experience
in creating innovative partnerships through
collaborative action with diverse interests,
including businesses, government agencies,
environmental organizations, and others,
to manage a stakeholder process on green
jobs that would integrate the work of the
state Green Jobs Task Force and the mayors'
initiative on green manufacturing; and
(4) $400,000 the first year is to provide
financial rebates for new solar electricity
projects.


Subd. 8.Telecommunications Access
Minnesota
600,000
600,000
$300,000 the first year and $300,000
the second year are for transfer to the
commissioner of human services to
supplement the ongoing operational expenses
of the Minnesota Commission Serving
Deaf and Hard-of-Hearing People. This
appropriation is from the telecommunication
access Minnesota fund, and is added to
the commission's base. This appropriation
consolidates, and is not in addition to,
appropriation language from Laws 2006,
chapter 282, article 11, section 4, and
Laws 2007, chapter 57, article 2, section 3,
subdivision 7.
$300,000 each year is from the
telecommunications access fund to the
commissioner of commerce for a grant to
the Legislative Coordinating Commission
for a pilot program to provide captioning
of live streaming of legislative sessions
on the commission's Web site and a grant
to the Commission of Deaf, DeafBlind,
and Hard-of-Hearing Minnesotans to
provide information on their Web site in
American Sign Language and to provide
technical assistance to state agencies. The
commissioner of commerce may allocate
a portion of this money to the Office
of Technology to coordinate technology
accessibility and usability.

Subd. 9.Transfers
By July 31, 2009, the commissioner of
finance shall transfer $500,000 from the
unexpended balance in the auto theft
prevention account to the general fund.


Sec. 4. PUBLIC UTILITIES COMMISSION
$
5,433,000
$
5,433,000

    Sec. 5. Minnesota Statutes 2008, section 45.027, subdivision 1, is amended to read:
    Subdivision 1. General powers. In connection with the duties and responsibilities
entrusted to the commissioner, and Laws 1993, chapter 361, section 2, the commissioner
of commerce may:
(1) make public or private investigations within or without this state as the
commissioner considers necessary to determine whether any person has violated or is
about to violate any law, rule, or order related to the duties and responsibilities entrusted
to the commissioner;
(2) require or permit any person to file a statement in writing, under oath or otherwise
as the commissioner determines, as to all the facts and circumstances concerning the
matter being investigated;
(3) hold hearings, upon reasonable notice, in respect to any matter arising out of the
duties and responsibilities entrusted to the commissioner;
(4) conduct investigations and hold hearings for the purpose of compiling
information related to the duties and responsibilities entrusted to the commissioner;
(5) examine the books, accounts, records, and files of every licensee, and of every
person who is engaged in any activity regulated; the commissioner or a designated
representative shall have free access during normal business hours to the offices and
places of business of the person, and to all books, accounts, papers, records, files, safes,
and vaults maintained in the place of business;
(6) publish information which is contained in any order issued by the commissioner;
and
(7) require any person subject to duties and responsibilities entrusted to the
commissioner, to report all sales or transactions that are regulated. The reports must
be made within ten days after the commissioner has ordered the report. The report is
accessible only to the respondent and other governmental agencies unless otherwise
ordered by a court of competent jurisdiction.; and
(8) assess a licensee the necessary expenses of the investigation performed by the
department when an investigation is made by order of the commissioner. The cost of the
investigation shall be determined by the commissioner and is based on the salary cost
of investigators or assistants and at an average rate per day or fraction thereof so as to
provide for the total cost of the investigations. All money collected must be deposited into
the general fund. A natural person licensed under chapter 60K or 82 shall not be charged
costs of an investigation if the investigation results in no finding of a violation.

    Sec. 6. Minnesota Statutes 2008, section 60A.14, subdivision 1, is amended to read:
    Subdivision 1. Fees other than examination fees. In addition to the fees and
charges provided for examinations, the following fees must be paid to the commissioner
for deposit in the general fund:
(a) by township mutual fire insurance companies;
(1) for filing certificate of incorporation $25 and amendments thereto, $10;
(2) for filing annual statements, $15;
(3) for each annual certificate of authority, $15;
(4) for filing bylaws $25 and amendments thereto, $10;
(b) by other domestic and foreign companies including fraternals and reciprocal
exchanges;
(1) for filing an application for an initial certification of authority to be admitted
to transact business in this state, $1,500;
(2) for filing certified copy of certificate of articles of incorporation, $100;
(3) for filing annual statement, $225;
(4) for filing certified copy of amendment to certificate or articles of incorporation,
$100;
(5) for filing bylaws, $75 or amendments thereto, $75;
(6) for each company's certificate of authority, $575, annually;
(c) the following general fees apply:
(1) for each certificate, including certified copy of certificate of authority, renewal,
valuation of life policies, corporate condition or qualification, $25;
(2) for each copy of paper on file in the commissioner's office 50 cents per page,
and $2.50 for certifying the same;
(3) for license to procure insurance in unadmitted foreign companies, $575;
(4) for valuing the policies of life insurance companies, one cent per $1,000 of
insurance so valued, provided that the fee shall not exceed $13,000 per year for any
company. The commissioner may, in lieu of a valuation of the policies of any foreign life
insurance company admitted, or applying for admission, to do business in this state, accept
a certificate of valuation from the company's own actuary or from the commissioner of
insurance of the state or territory in which the company is domiciled;
(5) for receiving and filing certificates of policies by the company's actuary, or by
the commissioner of insurance of any other state or territory, $50;
(6) for each appointment of an agent filed with the commissioner, $10;
(7) for filing forms, rates, and compliance certifications under section 60A.315, $90
$140 per filing, or $75 $125 per filing when submitted via electronic filing system. Filing
fees may be paid on a quarterly basis in response to an invoice. Billing and payment may
be made electronically;
(8) for annual renewal of surplus lines insurer license, $300.
The commissioner shall adopt rules to define filings that are subject to a fee.

    Sec. 7. [116J.438] MINNESOTA GREEN ENTERPRISE ASSISTANCE.
(a) The commissioner of employment and economic development, in consultation
with the commissioner of commerce, shall lead a multiagency project to advise,
promote, market, and coordinate state agency collaboration on green enterprise and
green economy projects, as defined in section 116J.437. The multiagency project must
include the commissioners of employment and economic development, natural resources,
agriculture, transportation, and commerce, and the Pollution Control Agency. The
project must involve collaboration with the chairs and ranking minority members of
legislative committees overseeing energy policy and energy finance, state agencies,
local governments, representatives from business and agriculture, and other interested
stakeholders. The objective of the project is to utilize existing state resources to expedite
the delivery of grants, licenses, permits, and other state authorizations and approvals for
green economy projects. The commissioner shall appoint a lead person to coordinate
green enterprise assistance activities.
(b) The commissioner of employment and economic development shall seek out and
may select persons from the business community to assist the commissioner in project
activities.
(c) The commissioner may accept gifts, contributions, and in-kind services for the
purposes of this section, under the authority provided in section 116J.035, subdivision
1. Any funds received must be placed in a special revenue account for the purposes of
this section.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 8. Minnesota Statutes 2008, section 216B.62, subdivision 3, is amended to read:
    Subd. 3. Assessing all public utilities. The department and commission shall
quarterly, at least 30 days before the start of each quarter, estimate the total of their
expenditures in the performance of their duties relating to (1) public utilities under section
216A.085, sections 216A.085 and 216B.01 to 216B.67, other than amounts chargeable
to public utilities under subdivision 2 or, 6, and (2) alternative energy engineering
activity under section 216C.261 or 7. The remainder, except the amount assessed
against cooperatives and municipalities for alternative energy engineering activity under
subdivision 5, shall be assessed by the commission and department to the several public
utilities in proportion to their respective gross operating revenues from retail sales of gas
or electric service within the state during the last calendar year. The assessment shall be
paid into the state treasury within 30 days after the bill has been transmitted via mail,
personal delivery, or electronic service to the several public utilities, which shall constitute
notice of the assessment and demand of payment thereof. The total amount which may
be assessed to the public utilities, under authority of this subdivision, shall not exceed
one-sixth of one percent of the total gross operating revenues of the public utilities
during the calendar year from retail sales of gas or electric service within the state. The
assessment for the third quarter of each fiscal year shall be adjusted to compensate for the
amount by which actual expenditures by the commission and department for the preceding
fiscal year were more or less than the estimated expenditures previously assessed.

    Sec. 9. Minnesota Statutes 2008, section 216B.62, subdivision 4, is amended to read:
    Subd. 4. Objections. Within 30 days after the date of the transmittal of any bill as
provided by subdivisions subdivision 2 and, 3, or 7, the public utility against which the bill
has been rendered may file with the commission objections setting out the grounds upon
which it is claimed the bill is excessive, erroneous, unlawful or invalid. The commission
shall within 60 days hold a hearing and issue an order in accordance with its findings. The
order shall be appealable in the same manner as other final orders of the commission.

    Sec. 10. Minnesota Statutes 2008, section 216B.62, subdivision 5, is amended to read:
    Subd. 5. Assessing cooperatives and municipals. The commission and department
may charge cooperative electric associations, generation and transmission cooperative
electric associations, municipal power agencies, and municipal electric utilities their
proportionate share of the expenses incurred in the review and disposition of resource
plans, adjudication of service area disputes, proceedings under section 216B.1691,
216B.2425, or 216B.243, and the costs incurred in the adjudication of complaints over
service standards, practices, and rates. Cooperative electric associations electing to
become subject to rate regulation by the commission pursuant to section 216B.026,
subdivision 4
, are also subject to this section. Neither a cooperative electric association
nor a municipal electric utility is liable for costs and expenses in a calendar year in excess
of the limitation on costs that may be assessed against public utilities under subdivision
2. A cooperative electric association, generation and transmission cooperative electric
association, municipal power agency, or municipal electric utility may object to and appeal
bills of the commission and department as provided in subdivision 4.
The department shall assess cooperatives and municipalities for the costs of
alternative energy engineering activities under section 216C.261. Each cooperative and
municipality shall be assessed in proportion that its gross operating revenues for the sale
of gas and electric service within the state for the last calendar year bears to the total of
those revenues for all public utilities, cooperatives, and municipalities.

    Sec. 11. Minnesota Statutes 2008, section 216B.62, is amended by adding a subdivision
to read:
    Subd. 7. Assessing all utilities. The department shall assess public utilities,
cooperative electric associations, and municipal utilities for the costs of activities under
chapter 216C. The department shall not assess for costs of grants, loans, or other aids or
for costs that can be recovered through other assessment authority. Each public utility,
cooperative, and municipal utility shall be assessed in the proportion that its gross
operating revenue for the sale of gas and electric service within the state for the last
calendar year bears to the total of those revenues for all public utilities, cooperatives,
and municipalities.

    Sec. 12. BULK INSTALLATION OF SOLAR PHOTOVOLTAIC PANELS ON
SCHOOL BUILDINGS; FEASIBILITY STUDY AND REPORT.
The director of the Office of Energy Security, in consultation with the commissioner
of education, schools, school districts, and solar industry experts, must study the economic
and technical feasibility of bulk installation of solar photovoltaic panels on school
buildings in this state. The study must use a power-purchase agreement model in which
a private company would pay for, install, and own the solar photovoltaic panels. No
later than January 15, 2010, the director of the Office of Energy Security must report
the results of the feasibility study, including whether the proposed model would reduce
carbon emissions and result in savings to school districts, to the chairs and ranking
minority members of the house of representatives and senate committees with jurisdiction
over energy policy and finance.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 13. APPROPRIATIONS; CANCELLATIONS.
(a) The remaining balance of the fiscal year 2009 special revenue fund appropriation
for the Green Jobs Task Force under Laws 2008, chapter 363, article 6, section 3,
subdivision 4, is transferred and appropriated to the commissioner of employment and
economic development for the purposes of green enterprise assistance under Minnesota
Statutes, section 116J.438. This appropriation is available until spent.
(b) The unencumbered balance of the fiscal year 2008 appropriation to the
commissioner of commerce for the rural and energy development revolving loan
fund under Laws 2007, chapter 57, article 2, section 3, subdivision 6, is canceled and
reappropriated as follows:
(1) $1,500,000 is for a grant to the Board of Trustees of the Minnesota State Colleges
and Universities for the International Renewable Energy Technology Institute (IRETI) to
be located at Minnesota State University, Mankato, as a public and private partnership to
support applied research in renewable energy and energy efficiency to aid in the transfer of
technology from Sweden to Minnesota and to support technology commercialization from
companies located in Minnesota and throughout the world; and
(2) the remaining balance is for a grant to the Board of Regents of the University of
Minnesota for the initiative for renewable energy and the environment to fund start up
costs related to a national solar testing and certification laboratory to test, rate, and certify
the performance of equipment and devices that utilize solar energy for heating and cooling
air and water and for generating electricity.
This appropriation is available until expended.
EFFECTIVE DATE.This section is effective the day following final enactment.

ARTICLE 3
DEPARTMENT OF COMMERCE; OTHER REGULATORY PROVISIONS

    Section 1. Minnesota Statutes 2008, section 47.58, subdivision 1, is amended to read:
    Subdivision 1. Definitions. For the purposes of this section, the terms defined in this
subdivision have the meanings given them.
(a) "Reverse mortgage loan" means a loan:
(1) Made to a borrower wherein the committed principal amount is paid to the
borrower in equal or unequal installments over a period of months or years, interest is
assessed, and authorized closing costs are incurred as specified in the loan agreement;
(2) Which is secured by a mortgage on residential property owned solely by the
borrower; and
(3) Which is due when the committed principal amount has been fully paid to the
borrower, or upon sale of the property securing the loan, or upon the death of the last
surviving borrower, or upon the borrower terminating use of the property as principal
residence so as to disqualify the property from the homestead credit given in chapter 290A.
(b) "Lender" means any bank subject to chapter 48, credit union subject to chapter
52, savings bank organized and operated pursuant to chapter 50, savings association
subject to chapter 51A, any residential mortgage originator subject to chapter 58, or any
insurance company as defined in section 60A.02, subdivision 4. "Lender" also includes
any federally chartered bank supervised by the comptroller of the currency or federally
chartered savings association supervised by the Federal Home Loan Bank Board or
federally chartered credit union supervised by the National Credit Union Administration,
to the extent permitted by federal law.
(c) "Borrower" includes any natural person holding an interest in severalty or as joint
tenant or tenant-in-common in the property securing a reverse mortgage loan.
(d) "Outstanding loan balance" means the current net amount of money owed by the
borrower to the lender whether or not that sum is suspended pursuant to the terms of the
reverse mortgage loan agreement or is immediately due and payable. The outstanding
loan balance is calculated by adding the current totals of the items described in clauses (1)
to (5) and subtracting the current totals of the item described in clause (6):
(1) The sum of all payments made by the lender which are necessary to clear the
property securing the loan of any outstanding mortgage encumbrance or mechanics or
material supplier's lien.
(2) The total disbursements made by the lender to date pursuant to the loan
agreement as formulated in accordance with subdivision 3.
(3) All taxes, assessments, insurance premiums and other similar charges paid to
date by the lender pursuant to subdivision 6, which charges were not reimbursed by the
borrower within 60 days.
(4) All actual closing costs which the borrower has deferred, if a deferral provision
is contained in the loan agreement as authorized by subdivision 7.
(5) The total accrued interest to date, as authorized by subdivision 5.
(6) All payments made by the borrower pursuant to subdivision 4.
(e) "Actual closing costs" mean reasonable charges or sums ordinarily paid at the
time of closing for the following, whether or not retained by the lender:
(1) Any insurance premiums on policies covering the mortgaged property including
but not limited to premiums for title insurance, fire and extended coverage insurance, flood
insurance, and private mortgage insurance.
(2) Abstracting, title examination and search, and examination of public records
related to the mortgaged property.
(3) The preparation and recording of any or all documents required by law or custom
for closing a reverse mortgage loan agreement.
(4) Appraisal and survey of real property securing a reverse mortgage loan.
(5) A single service charge, which service charge shall include any consideration,
not otherwise specified in this section as an "actual closing cost," paid by the borrower to
the lender for or in relation to the acquisition, making, refinancing or modification of a
reverse mortgage loan, and shall also include any consideration received by the lender
for making a commitment for a reverse mortgage loan, whether or not an actual loan
follows the commitment. The service charge shall not exceed one percent of the bona fide
committed principal amount of the reverse mortgage loan.
(6) Charges and fees necessary for or related to the transfer of real property securing
a reverse mortgage loan or the closing of a reverse mortgage loan agreement paid by the
borrower and received by any party other than the lender.

    Sec. 2. Minnesota Statutes 2008, section 47.60, subdivision 1, is amended to read:
    Subdivision 1. Definitions. For purposes of this section, the terms defined have
the meanings given them:
(a) "Consumer small loan" is a loan transaction in which cash is advanced to a
borrower for the borrower's own personal, family, or household purpose. A consumer
small loan is a short-term, unsecured loan to be repaid in a single installment. The cash
advance of a consumer small loan is equal to or less than $350. A consumer small loan
includes an indebtedness evidenced by but not limited to a promissory note or agreement
to defer the presentation of a personal check for a fee.
(b) "Consumer small loan lender" is a financial institution as defined in section
47.59 or a person business entity registered with the commissioner and engaged in the
business of making consumer small loans.

    Sec. 3. Minnesota Statutes 2008, section 47.60, subdivision 3, is amended to read:
    Subd. 3. Filing. Before a person business entity other than a financial institution
as defined by section 47.59 engages in the business of making consumer small loans to
Minnesota residents, the person business entity shall file with the commissioner as a
consumer small loan lender. The filing must be on a form prescribed by the commissioner
together with a fee of $250 for each place of business and contain the following
information in addition to the information required by the commissioner:
(1) evidence that the filer has available for the operation of the business at the
location specified, liquid assets of at least $50,000; and
(2) a biographical statement on the principal person responsible for the operation
and management of the business to be certified.
Revocation of the filing and the right to engage in the business of a consumer small
loan lender is the same as in the case of a regulated lender license in section 56.09.
For purposes of this subdivision, "business entity" includes one that does not have a
physical location in Minnesota that makes a consumer small loan electronically via the
Internet.

    Sec. 4. Minnesota Statutes 2008, section 47.60, subdivision 6, is amended to read:
    Subd. 6. Penalties for violation. A person business entity or the person's entity's
members, officers, directors, agents, and employees who violate or participate in the
violation of any of the provisions of this section may be liable in the same manner as in
section 56.19.

    Sec. 5. Minnesota Statutes 2008, section 48.21, is amended to read:
48.21 REAL ESTATE; RESTRICTIONS ON HOLDING.
    Subdivision 1. Specific restrictions. (a) A bank may purchase, carry as an asset,
and convey real estate only:
(1) as provided for in section 47.10;
(2) if acquired through foreclosure of a mortgage given to it in good faith as security
for loans made by or money due to it;
(3) if conveyed to it in satisfaction of debts previously contracted in good faith in
the course of its dealings;
(4) if acquired by sale on execution or judgment of a court in its favor; or
(5) if reasonably necessary to mitigate or avoid loss on a loan or investment
theretofore made.
(b) Real estate acquired under paragraph (a), clauses (2) to (5), shall be carried as an
asset only in accordance with rules the commissioner prescribes. The maximum period for
holding other real estate as an asset shall be five years, provided that upon application to
the commissioner, the commissioner may approve the possession of such real estate by a
bank for a period longer than five years, but not to exceed an additional five years, if:
(1) the bank has made a good faith attempt to dispose of the real estate within the
initial five-year period; or
(2) disposal within the initial five-year period would be detrimental to the bank.
    Subd. 2. Real estate holdings not bank liabilities. Real estate owned by a bank as
a result of actions authorized in clauses (2) to (5) of subdivision 1, paragraph (a), clauses
(2) to (5), and subsequently sold to any buyer on a contract for deed may not be considered
creating a liability to a bank for purposes of section 48.24.
    Subd. 3. Real estate holdings not sold; authority to write off. Notwithstanding
any rules of the commissioner to the contrary, if real estate owned by a bank pursuant to
clauses (2) to (5) of subdivision 1, paragraph (a), clauses (2) to (5), is not sold or otherwise
disposed of within the maximum period established by rule by the commissioner, the
bank may write off any remaining balance at a rate not less than one-fifth of that balance
each subsequent calendar year.

    Sec. 6. Minnesota Statutes 2008, section 58.05, subdivision 3, is amended to read:
    Subd. 3. Certificate of exemption. A person must obtain a certificate of exemption
from the commissioner to qualify as an exempt person under section 58.04, subdivision 1,
paragraph (c), a financial institution under clause (2), or by order of the commissioner
under clause (6); or under section 58.04, subdivision 2, paragraph (b), as a financial
institution under clause (3) (4), or by order of the commissioner under clause (7) (8).

    Sec. 7. Minnesota Statutes 2008, section 58.06, subdivision 2, is amended to read:
    Subd. 2. Application contents. (a) The application must contain the name and
complete business address or addresses of the license applicant. The license applicant
must be a partnership, limited liability partnership, association, limited liability company,
corporation, or other form of business organization, and the application must contain the
names and complete business addresses of each partner, member, director, and principal
officer. The application must also include a description of the activities of the license
applicant, in the detail and for the periods the commissioner may require.
    (b) An A residential mortgage originator applicant must submit one of the following:
    (1) evidence which shows, to the commissioner's satisfaction, that either the federal
Department of Housing and Urban Development or the Federal National Mortgage
Association has approved the residential mortgage originator applicant as a mortgagee;
    (2) a surety bond or irrevocable letter of credit in the amount of not less than
$50,000 in a form approved by the commissioner, issued by an insurance company or bank
authorized to do so in this state. The bond or irrevocable letter of credit must be available
for the recovery of expenses, fines, and fees levied by the commissioner under this chapter
and for losses incurred by borrowers. The bond or letter of credit must be submitted with
the license application, and evidence of continued coverage must be submitted with each
renewal. Any change in the bond or letter of credit must be submitted for approval by the
commissioner within ten days of its execution; or
    (3) a copy of the residential mortgage originator applicant's most recent audited
financial statement, including balance sheet, statement of income or loss, statements of
changes in shareholder equity, and statement of changes in financial position. Financial
statements must be as of a date within 12 months of the date of application.
    (c) The application must also include all of the following:
    (1) an affirmation under oath that the applicant:
    (i) is in compliance with the requirements of section 58.125;
    (ii) will maintain a perpetual roster of individuals employed as residential mortgage
originators, including employees and independent contractors, which includes the date
dates that mandatory testing, initial education was, and continuing education were
completed. In addition, the roster must be made available to the commissioner on demand,
within three business days of the commissioner's request;
    (iii) will advise the commissioner of any material changes to the information
submitted in the most recent application within ten days of the change;
    (iv) will advise the commissioner in writing immediately of any bankruptcy petitions
filed against or by the applicant or licensee;
    (v) will maintain at all times either a net worth, net of intangibles, of at least
$250,000 or a surety bond or irrevocable letter of credit in the amount of at least $50,000;
    (vi) complies with federal and state tax laws; and
    (vii) complies with sections 345.31 to 345.60, the Minnesota unclaimed property
law;
    (2) information as to the mortgage lending, servicing, or brokering experience of the
applicant and persons in control of the applicant;
    (3) information as to criminal convictions, excluding traffic violations, of persons in
control of the license applicant;
    (4) whether a court of competent jurisdiction has found that the applicant or persons
in control of the applicant have engaged in conduct evidencing gross negligence, fraud,
misrepresentation, or deceit in performing an act for which a license is required under
this chapter;
    (5) whether the applicant or persons in control of the applicant have been the subject
of: an order of suspension or revocation, cease and desist order, or injunctive order, or
order barring involvement in an industry or profession issued by this or another state or
federal regulatory agency or by the Secretary of Housing and Urban Development within
the ten-year period immediately preceding submission of the application; and
    (6) other information required by the commissioner.

    Sec. 8. Minnesota Statutes 2008, section 58.126, is amended to read:
58.126 EDUCATION AND TESTING REQUIREMENT.
    (a) No individual shall engage in residential mortgage origination or make residential
mortgage loans, whether as an employee or independent contractor, before the completion
of 15 20 hours of educational training which has been approved by the commissioner, and
covering state and federal laws concerning residential mortgage lending.
(b) In addition to the initial education requirements in paragraph (a), each individual
must also complete eight hours of continuing education annually. The education must
include:
(1) three hours of federal law and regulations;
(2) two hours of ethics, which must include fraud, consumer protection, and fair
lending; and
(3) two hours of standards governing nontraditional mortgage lending.
(c) The commissioner may by rule establish testing requirements for individuals
subject to the requirements of paragraphs (a) and (b). An individual must satisfy the
testing requirements established by the commissioner before engaging in residential
mortgage loan origination or making residential mortgage loans.
EFFECTIVE DATE.This section is effective September 1, 2009, and applies to
license applications and renewals made on or after that date.

    Sec. 9. Minnesota Statutes 2008, section 58.13, subdivision 1, is amended to read:
    Subdivision 1. Generally. (a) No person acting as a residential mortgage originator
or servicer, including a person required to be licensed under this chapter, and no person
exempt from the licensing requirements of this chapter under section 58.04, except as
otherwise provided in paragraph (b), shall:
    (1) fail to maintain a trust account to hold trust funds received in connection with a
residential mortgage loan;
    (2) fail to deposit all trust funds into a trust account within three business days of
receipt; commingle trust funds with funds belonging to the licensee or exempt person; or
use trust account funds for any purpose other than that for which they are received;
    (3) unreasonably delay the processing of a residential mortgage loan application,
or the closing of a residential mortgage loan. For purposes of this clause, evidence of
unreasonable delay includes but is not limited to those factors identified in section 47.206,
subdivision 7
, clause (d);
    (4) fail to disburse funds according to its contractual or statutory obligations;
    (5) fail to perform in conformance with its written agreements with borrowers,
investors, other licensees, or exempt persons;
    (6) charge a fee for a product or service where the product or service is not actually
provided, or misrepresent the amount charged by or paid to a third party for a product
or service;
    (7) fail to comply with sections 345.31 to 345.60, the Minnesota unclaimed property
law;
    (8) violate any provision of any other applicable state or federal law regulating
residential mortgage loans including, without limitation, sections 47.20 to 47.208, and
47.58;
    (9) make or cause to be made, directly or indirectly, any false, deceptive, or
misleading statement or representation in connection with a residential loan transaction
including, without limitation, a false, deceptive, or misleading statement or representation
regarding the borrower's ability to qualify for any mortgage product;
    (10) conduct residential mortgage loan business under any name other than that
under which the license or certificate of exemption was issued;
    (11) compensate, whether directly or indirectly, coerce or intimidate an appraiser for
the purpose of influencing the independent judgment of the appraiser with respect to the
value of real estate that is to be covered by a residential mortgage or is being offered as
security according to an application for a residential mortgage loan;
    (12) issue any document indicating conditional qualification or conditional approval
for a residential mortgage loan, unless the document also clearly indicates that final
qualification or approval is not guaranteed, and may be subject to additional review;
    (13) make or assist in making any residential mortgage loan with the intent that the
loan will not be repaid and that the residential mortgage originator will obtain title to
the property through foreclosure;
    (14) provide or offer to provide for a borrower, any brokering or lending services
under an arrangement with a person other than a licensee or exempt person, provided that
a person may rely upon a written representation by the residential mortgage originator that
it is in compliance with the licensing requirements of this chapter;
    (15) claim to represent a licensee or exempt person, unless the person is an employee
of the licensee or exempt person or unless the person has entered into a written agency
agreement with the licensee or exempt person;
    (16) fail to comply with the record keeping and notification requirements identified
in section 58.14 or fail to abide by the affirmations made on the application for licensure;
    (17) represent that the licensee or exempt person is acting as the borrower's agent
after providing the nonagency disclosure required by section 58.15, unless the disclosure
is retracted and the licensee or exempt person complies with all of the requirements of
section 58.16;
    (18) make, provide, or arrange for a residential mortgage loan that is of a lower
investment grade if the borrower's credit score or, if the originator does not utilize credit
scoring or if a credit score is unavailable, then comparable underwriting data, indicates
that the borrower may qualify for a residential mortgage loan, available from or through
the originator, that is of a higher investment grade, unless the borrower is informed that
the borrower may qualify for a higher investment grade loan with a lower interest rate
and/or lower discount points, and consents in writing to receipt of the lower investment
grade loan;
    For purposes of this section, "investment grade" refers to a system of categorizing
residential mortgage loans in which the loans are: (i) commonly referred to as "prime" or
"subprime"; (ii) commonly designated by an alphabetical character with "A" being the
highest investment grade; and (iii) are distinguished by interest rate or discount points
or both charged to the borrower, which vary according to the degree of perceived risk
of default based on factors such as the borrower's credit, including credit score and
credit patterns, income and employment history, debt ratio, loan-to-value ratio, and prior
bankruptcy or foreclosure;
    (19) make, publish, disseminate, circulate, place before the public, or cause to be
made, directly or indirectly, any advertisement or marketing materials of any type, or any
statement or representation relating to the business of residential mortgage loans that is
false, deceptive, or misleading;
    (20) advertise loan types or terms that are not available from or through the licensee
or exempt person on the date advertised, or on the date specified in the advertisement.
For purposes of this clause, advertisement includes, but is not limited to, a list of sample
mortgage terms, including interest rates, discount points, and closing costs provided by
licensees or exempt persons to a print or electronic medium that presents the information
to the public;
    (21) use or employ phrases, pictures, return addresses, geographic designations, or
other means that create the impression, directly or indirectly, that a licensee or other
person is a governmental agency, or is associated with, sponsored by, or in any manner
connected to, related to, or endorsed by a governmental agency, if that is not the case;
    (22) violate section 82.49, relating to table funding;
(23) make, provide, or arrange for a residential mortgage loan all or a portion
of the proceeds of which are used to fully or partially pay off a "special mortgage"
unless the borrower has obtained a written certification from an authorized independent
loan counselor that the borrower has received counseling on the advisability of the
loan transaction. For purposes of this section, "special mortgage" means a residential
mortgage loan originated, subsidized, or guaranteed by or through a state, tribal, or
local government, or nonprofit organization, that bears one or more of the following
nonstandard payment terms which substantially benefit the borrower: (i) payments vary
with income; (ii) payments of principal or interest are not required or can be deferred under
specified conditions; (iii) principal or interest is forgivable under specified conditions;
or (iv) where no interest or an annual interest rate of two percent or less is charged in
connection with the loan. For purposes of this section, "authorized independent loan
counselor" means a nonprofit, third-party individual or organization providing homebuyer
education programs, foreclosure prevention services, mortgage loan counseling, or credit
counseling certified by the United States Department of Housing and Urban Development,
the Minnesota Home Ownership Center, the Minnesota Mortgage Foreclosure Prevention
Association, AARP, or NeighborWorks America;
    (24) make, provide, or arrange for a residential mortgage loan without verifying
the borrower's reasonable ability to pay the scheduled payments of the following, as
applicable: principal; interest; real estate taxes; homeowner's insurance, assessments,
and mortgage insurance premiums. For loans in which the interest rate may vary, the
reasonable ability to pay shall be determined based on a fully indexed rate and a repayment
schedule which achieves full amortization over the life of the loan. For all residential
mortgage loans, the borrower's income and financial resources must be verified by tax
returns, payroll receipts, bank records, or other similarly reliable documents.
    Nothing in this section shall be construed to limit a mortgage originator's or exempt
person's ability to rely on criteria other than the borrower's income and financial resources
to establish the borrower's reasonable ability to repay the residential mortgage loan,
including criteria established by the United States Department of Veterans Affairs or the
United States Department of Housing and Urban Development for interest rate reduction
refinancing loans or streamline loans, or criteria authorized or promulgated by the
Federal National Mortgage Association or Federal Home Loan Mortgage Corporation;
however, such other criteria must be verified through reasonably reliable methods and
documentation. The mortgage originator's analysis of the borrower's reasonable ability
to repay may include, but is not limited to, consideration of the following items, if
verified: (1) the borrower's current and expected income; (2) current and expected cash
flow; (3) net worth and other financial resources other than the consumer's equity in the
dwelling that secures the loan; (4) current financial obligations; (5) property taxes and
insurance; (6) assessments on the property; (7) employment status; (8) credit history; (9)
debt-to-income ratio; (10) credit scores; (11) tax returns; (12) pension statements; and
(13) employment payment records, provided that no mortgage originator shall disregard
facts and circumstances that indicate that the financial or other information submitted by
the consumer is inaccurate or incomplete. A statement by the borrower to the residential
mortgage originator or exempt person of the borrower's income and resources or sole
reliance on any single item listed above is not sufficient to establish the existence of the
income or resources when verifying the reasonable ability to pay.
    (25) engage in "churning." As used in this section, "churning" means knowingly or
intentionally making, providing, or arranging for a residential mortgage loan when the
new residential mortgage loan does not provide a reasonable, tangible net benefit to the
borrower considering all of the circumstances including the terms of both the new and
refinanced loans, the cost of the new loan, and the borrower's circumstances;
    (26) the first time a residential mortgage originator orally informs a borrower of the
anticipated or actual periodic payment amount for a first-lien residential mortgage loan
which does not include an amount for payment of property taxes and hazard insurance,
the residential mortgage originator must inform the borrower that an additional amount
will be due for taxes and insurance and, if known, disclose to the borrower the amount of
the anticipated or actual periodic payments for property taxes and hazard insurance. This
same oral disclosure must be made each time the residential mortgage originator orally
informs the borrower of a different anticipated or actual periodic payment amount change
from the amount previously disclosed. A residential mortgage originator need not make
this disclosure concerning a refinancing loan if the residential mortgage originator knows
that the borrower's existing loan that is anticipated to be refinanced does not have an
escrow account; or
    (27) make, provide, or arrange for a residential mortgage loan, other than a reverse
mortgage pursuant to United States Code, title 15, chapter 41, if the borrower's compliance
with any repayment option offered pursuant to the terms of the loan will result in negative
amortization during any six-month period.
    (b) Paragraph (a), clauses (24) through (27), do not apply to a state or federally
chartered bank, savings bank, or credit union, an institution chartered by Congress under
the Farm Credit Act, or to a person making, providing, or arranging a residential mortgage
loan originated or purchased by a state agency or a tribal or local unit of government. This
paragraph supersedes any inconsistent provision of this chapter.

    Sec. 10. Minnesota Statutes 2008, section 60A.124, is amended to read:
60A.124 INDEPENDENT AUDIT.
The audit report of the independent certified public accountant that performs the
audit of an insurer's annual statement as required under section 60A.129 60A.1291,
subdivision 3 2
, paragraph (a), should contain a statement as to whether anything, in
connection with their audit, came to their attention that caused them to believe that the
insurer failed to adopt and consistently apply the valuation procedure as required by
sections 60A.122 and 60A.123.

    Sec. 11. [60A.1291] ANNUAL AUDIT.
    Subdivision 1. Definitions. The definitions in this subdivision apply to this section.
(a) "Accountant" and "independent public accountant" mean an independent certified
public accountant or accounting firm in good standing with the American Institute of
Certified Public Accountants and in all states in which the accountant or firm is licensed
or is required to be licensed to practice. For Canadian and British companies, the term
means a Canadian-chartered or British-chartered accountant.
(b) "Audit committee" means a committee or equivalent body established by the
board of directors of an entity for the purpose of overseeing the accounting and financial
reporting processes of an insurer or group of insurers, and audits of financial statements of
the insurer or group of insurers. The audit committee of any entity that controls a group of
insurers may be deemed to be the audit committee for one or more of these controlled
insurers solely for the purposes of this section at the election of the controlling person
under subdivision 15, paragraph (e). If an audit committee is not designated by the insurer,
the insurer's entire board of directors constitutes the audit committee.
(c) "Indemnification" means an agreement of indemnity or a release from liability
where the intent or effect is to shift or limit in any manner the potential liability of the
person or firm for failure to adhere to applicable auditing or professional standards,
whether or not resulting in part from knowing of other misrepresentations made by the
insurer or its representatives.
(d) "Independent board member" has the same meaning as described in subdivision
15, paragraph (c).
(e) "Internal control over financial reporting" means a process effected by an entity's
board of directors, management, and other personnel designed to provide reasonable
assurance regarding the reliability of the financial statements, for example, those items
specified in subdivision 4, paragraphs (a), clauses (2) to (6), (b), and (c), and includes
those policies and procedures that:
(1) pertain to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of assets;
(2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of the financial statements, for example, those items specified in subdivision 4,
paragraphs (a), clauses (2) to (6), (b), and (c), and that receipts and expenditures are being
made only in accordance with authorizations of management and directors; and
(3) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of assets that could have a material effect on
the financial statements, for example, those items specified in subdivision 4, paragraphs
(a), clauses (2) to (6), (b), and (c).
(f) "SEC" means the United States Securities and Exchange Commission.
(g) "Section 404" means Section 404 of the Sarbanes-Oxley Act of 2002 and the
SEC's rules and regulations promulgated under it.
(h) "Section 404 report" means management's report on "internal control over
financial reporting" as defined by the SEC and the related attestation report of the
independent certified public accountant as described in paragraph (a).
(i) "SOX compliant entity" means an entity that either is required to be
compliant with, or voluntarily is compliant with, all of the following provisions of the
Sarbanes-Oxley Act of 2002: (i) the preapproval requirements of Section 201 (section
10A(i) of the Securities Exchange Act of 1934); (ii) the audit committee independence
requirements of Section 301 (section 10A(m)(3) of the Securities Exchange Act of 1934);
and (iii) the internal control over financial reporting requirements of Section 404 (Item
308 of SEC Regulation S-K).
    Subd. 2. Filing requirements. Every insurance company doing business in this
state, including fraternal benefit societies, reciprocal exchanges, service plan corporations
licensed pursuant to chapter 62C, and legal service plans licensed pursuant to chapter
62G, unless exempted by the commissioner pursuant to subdivision 9, paragraph (a), or by
subdivision 18, shall have an annual audit of the financial activities of the most recently
completed calendar year performed by an independent certified public accountant, and
shall file the report of this audit with the commissioner on or before June 1 for the
immediately preceding year ending December 31. The commissioner may require an
insurer to file an audited financial report earlier than June 1 with 90 days' advance notice
to the insurer.
Extensions of the June 1 filing date may be granted by the commissioner for 30-day
periods upon a showing by the insurer and its independent certified public accountant of
the reasons for requesting the extension and a determination by the commissioner of good
cause for the extension.
The request for extension must be submitted in writing not less than ten days before
the due date in sufficient detail to permit the commissioner to make an informed decision
with respect to the requested extension.
If an extension is granted in accordance with this subdivision, a similar extension of
30 days is granted to the filing of management's report of internal control over financial
reporting.
Every insurer required to file an annual audited financial report pursuant to this
subdivision shall designate a group of individuals as constituting its audit committee. The
audit committee of an entity that controls an insurer may be deemed to be the insurer's
audit committee for purposes of this subdivision at the election of the controlling person.
    Subd. 3. Exemptions. Foreign and alien insurers filing audited financial reports
in another state under the other state's requirements of audited financial reports which
have been found by the commissioner to be substantially similar to these requirements
are exempt from this section if a copy of the audited financial report, communication of
internal control related matters noted in an audit, accountant's letter of qualifications, and
report on significant deficiencies in internal controls, which are filed with the other state,
are filed with the commissioner in accordance with the filing dates specified in subdivision
2 (Canadian insurers may submit accountants' reports as filed with the Canadian Dominion
Department of Insurance); and a copy of any notification of adverse financial condition
report filed with the other state is filed with the commissioner within the time specified
in subdivision 11. Foreign or alien insurers required to file management's report of
internal control over financial reporting in another state are exempt from filing the report
in this state provided the other state has substantially similar reporting requirements and
the report is filed with the commissioner of the other state within the time specified.
This subdivision does not prohibit or in any way limit the commissioner from ordering,
conducting, and performing examinations of insurers under the authority of this chapter.
    Subd. 4. Contents of annual audit; financial report. (a) The annual audited
financial report must report, in conformity with statutory accounting practices required
or permitted by the commissioner of insurance of the state of domicile, the financial
position of the insurer as of the end of the most recent calendar year and the results of
its operations, cash flows, and changes in capital and surplus for the year ended. The
annual audited financial report must include:
(1) a report of an independent certified public accountant;
(2) a balance sheet reporting admitted assets, liabilities, capital, and surplus;
(3) a statement of operations;
(4) a statement of cash flows;
(5) a statement of changes in capital and surplus; and
(6) notes to the financial statements.
(b) The notes required under paragraph (a) are those required by the appropriate
National Association of Insurance Commissioners (NAIC) annual statement instructions
and National Association of Insurance Commissioners Accounting Practices and
Procedures Manual and include reconciliation of differences, if any, between the audited
statutory financial statements and the annual statement filed under section 60A.13,
subdivision 1, with a written description of the nature of these differences.
(c) The financial statements included in the audited financial report must be prepared
in a form and using language and groupings substantially the same as the relevant sections
of the annual statement of the insurer filed with the commissioner. The financial statement
must be comparative, presenting the amounts as of December 31 of the current year and
the amounts as of the immediately preceding December 31. In the first year in which
an insurer is required to file an audited financial report, the comparative data may be
omitted. The amounts may be rounded to the nearest $1,000, and all immaterial amounts
may be combined.
    Subd. 5. Designation of independent certified public accountant. Each insurer
required by this section to file an annual audited financial report must notify the
commissioner in writing of the name and address of the independent certified public
accountant or accounting firm retained to conduct the annual audit within 60 days after
becoming subject to the annual audit requirement. The insurer shall obtain from the
accountant a letter which states that the accountant is aware of the provisions that relate
to accounting and financial matters in the insurance laws and the rules of the insurance
regulatory authority of the state of domicile. The letter shall affirm that the accountant will
express an opinion on the financial statements in terms of their conformity to the statutory
accounting practices prescribed or otherwise permitted by that insurance regulatory
authority, specifying the exceptions believed to be appropriate. A copy of the accountant's
letter shall be filed with the commissioner.
    Subd. 6. Report of disagreements. If an accountant who was the accountant for
the immediately preceding filed audited financial report is dismissed or resigns, the
insurer shall notify the commissioner of this event within five business days. Within
ten business days of this notification, the insurer shall also furnish the commissioner
with a separate letter stating whether in the 24 months preceding this event there were
any disagreements with the former accountant on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which, if not
resolved to the satisfaction of the former accountant, would have caused that person to
make reference to the subject matter of the disagreement in connection with the opinion
on the financial statements. The disagreements required to be reported in response to this
subdivision include both those resolved to the former accountant's satisfaction and those
not resolved to the former accountant's satisfaction. Disagreements contemplated by this
subdivision are those disagreements between personnel of the insurer responsible for
presentation of its financial statements and personnel of the accounting firm responsible
for rendering its report. The insurer shall also in writing request the former accountant
to furnish a letter addressed to the insurer stating whether the accountant agrees with
the statements contained in the insurer's letter and, if not, stating the reasons for any
disagreement. The insurer shall furnish this responsive letter from the former accountant
to the commissioner together with its own.
    Subd. 7. Qualifications of independent certified public accountant. (a) The
commissioner shall not recognize any person or firm as a qualified independent certified
public accountant that is not in good standing with the American Institute of Certified
Public Accountants and in all states in which the accountant is licensed or is required
to be licensed to practice, or for a Canadian or British company, that is not a chartered
accountant, or that has either directly or indirectly entered into an agreement of indemnity
or release from liability (collectively referred to as an indemnification agreement) with
respect to the audit of the insurer. Except as otherwise provided, an independent certified
public accountant must be recognized as qualified as long as the person conforms to the
standards of the person's profession, as contained in the Code of Professional Conduct
of the American Institute of Certified Public Accountants and the Code of Professional
Conduct of the Minnesota Board of Public Accountancy or similar code and the person is
properly licensed in good standing with all required state boards of accountancy.
(b) The lead or coordinating audit partner, having primary responsibility for the
audit, may not act in that capacity for more than five consecutive years. The person shall
be disqualified from acting in that or a similar capacity for the same company or its
insurance subsidiaries or affiliates for a period of five consecutive years. An insurer may
make application to the commissioner for relief from this rotation requirement on the
basis of unusual circumstances. This application must be made at least 30 days before
the end of the calendar year. The commissioner may consider the following factors in
determining if the relief should be granted:
(1) number of partners, expertise of the partners, or the number of insurance clients
in the currently registered firm;
(2) premium volume of the insurer; or
(3) number of jurisdictions in which the insurer transacts business.
The insurer shall file, with its annual statement filing, the approval for relief from this
paragraph with the states that it is licensed in or doing business in and with the NAIC. If
the nondomestic state accepts electronic filing with the NAIC, the insurer shall file the
approval in an electronic format acceptable to the NAIC.
(c) The commissioner shall not recognize as a qualified independent certified public
accountant, nor accept an annual audited financial report, prepared in whole or in part by
an accountant who provides to an insurer, contemporaneously with the audit, the following
nonaudit services:
(1) bookkeeping or other services related to the accounting records or financial
statements of the insurer;
(2) financial information systems design and implementation;
(3) appraisal or valuation services, fairness opinions, or contribution in-kind reports;
(4) actuarially oriented advisory services involving the determination of amounts
recorded in the financial statements. The accountant may assist an insurer in understanding
the methods, assumptions, and inputs used in the determination of amounts recorded in the
financial statement only if it is reasonable to conclude that the services provided will not
be subject to audit procedures during an audit of the insurer's financial statements. An
accountant's actuary may also issue an actuarial opinion or certification on an insurer's
reserves if the following conditions have been met:
(i) neither the accountant nor the accountant's actuary has performed any
management functions or made any management decisions;
(ii) the insurer has competent personnel, or engages a third-party actuary, to estimate
the loss reserves for which management takes responsibility; and
(iii) the accountant's actuary tests the reasonableness of the reserves after the
insurer's management has determined the amount of the loss reserves;
(5) internal audit outsourcing services;
(6) management functions or human resources;
(7) broker or dealer, investment adviser, or investment banking services;
(8) legal services or expert services unrelated to the audit; and
(9) any other services that the commissioner determines, by rule, are impermissible.
(d) The commissioner shall not recognize as a qualified independent certified public
accountant, nor accept any audited financial report, prepared in whole or in part by any
natural person who has been convicted of fraud, bribery, a violation of the Racketeer
Influenced and Corrupt Organizations Act, United States Code, title 18, sections 1961 to
1968, or any dishonest conduct or practices under federal or state law, has been found to
have violated the insurance laws of this state with respect to any previous reports submitted
under this section, or has demonstrated a pattern or practice of failing to detect or disclose
material information in previous reports filed under the provisions of this section.
(e) The commissioner, after notice and hearing under chapter 14, may find that
the accountant is not qualified for purposes of expressing an opinion on the financial
statements in the annual audited financial report. The commissioner may require the
insurer to replace the accountant with another whose relationship with the insurer is
qualified within the meaning of this section.
    Subd. 8. Exemptions to qualifications of certified public accountant. (a) Insurers
having direct written and assumed premiums of less than $100,000,000 in any calendar
year may request an exemption from subdivision 7, paragraph (c). The insurer shall
file with the commissioner a written statement discussing the reasons why the insurer
should be exempt from these provisions. If the commissioner finds, upon review of this
statement, that compliance with this section would constitute a financial or organizational
hardship upon the insurer, an exemption may be granted.
(b) A qualified independent certified public accountant who performs the audit
may engage in other nonaudit services, including tax services, that are not described in
subdivision 7, paragraph (c), only if the activity is approved in advance by the audit
committee, in accordance with paragraph (c).
(c) All auditing services and nonaudit services provided to an insurer by the qualified
independent certified public accountant of the insurer must be preapproved by the audit
committee. The preapproval requirement is waived with respect to nonaudit services if
the insurer is a SOX compliant entity or a direct or indirect wholly owned subsidiary of a
SOX compliant entity or:
(1) the aggregate amount of all such nonaudit services provided to the insurer
constitutes not more than five percent of the total amount of fees paid by the insurer to
its qualified independent certified public accountant during the fiscal year in which the
nonaudit services are provided;
(2) the services were not recognized by the insurer at the time of the engagement to
be nonaudit services; and
(3) the services are promptly brought to the attention of the audit committee and
approved before the completion of the audit by the audit committee or by one or more
members of the audit committee who are the members of the board of directors to whom
authority to grant such approvals has been delegated by the audit committee.
(d) The audit committee may delegate to one or more designated members of the
audit committee the authority to grant the preapprovals required by paragraph (c). The
decisions of any member to whom this authority is delegated must be presented to the full
audit committee at each of its scheduled meetings.
(e) The commissioner shall not recognize an independent certified public accountant
as qualified for a particular insurer if a member of the board, president, chief executive
officer, controller, chief financial officer, chief accounting officer, or any person serving in
an equivalent position for that insurer, was employed by the independent certified public
accountant and participated in the audit of that insurer during the one-year period preceding
the date that the most current statutory opinion is due. This paragraph applies only to
partners and senior managers involved in the audit. An insurer may make application to
the commissioner for relief from this paragraph on the basis of unusual circumstances.
(f) The insurer shall file, with its annual statement filing, the approval for relief with
the states that it is licensed in or doing business in and the NAIC. If the nondomestic state
accepts electronic filing with the NAIC, the insurer shall file the approval in an electronic
format acceptable to the NAIC.
    Subd. 9. Consolidated or combined audits. (a) The commissioner may allow
an insurer to file consolidated or combined audited financial statements required by
subdivision 2, in lieu of separate annual audited financial statements, where it can be
demonstrated that an insurer is part of a group of insurance companies that has a pooling
or 100 percent reinsurance agreement which substantially affects the solvency and
integrity of the reserves of the insurer and the insurer cedes all of its direct and assumed
business to the pool. An affiliated insurance company not meeting these requirements may
be included in the consolidated or combined audited financial statements, if the company's
total admitted assets are less than five percent of the consolidated group's total admitted
assets. If these circumstances exist, then the company may file a written application to
file consolidated or combined audited financial statements. This application must be for
a specified period.
(b) Upon written application by a domestic insurer, the commissioner may
authorize the domestic insurer to include additional affiliated insurance companies in the
consolidated or combined audited financial statements. A foreign insurer must obtain the
prior written authorization of the commissioner of its state of domicile in order to submit
an application for authority to file consolidated or combined audited financial statements.
This application must be for a specified period.
(c) A consolidated annual audit filing must include a columnar consolidated or
combining worksheet. Amounts shown on the audited consolidated or combined financial
statement must be shown on the worksheet. Amounts for each insurer must be stated
separately. Noninsurance operations may be shown on the worksheet on a combined or
individual basis. Explanations of consolidating or eliminating entries must be shown on
the worksheet. A reconciliation of any differences between the amounts shown in the
individual insurer columns of the worksheet and comparable amounts shown on the annual
statement of the insurers must be included on the worksheet.
    Subd. 10. Scope of audit and report of independent certified public accountant.
Financial statements furnished pursuant to subdivision 4 must be examined by an
independent certified public accountant. The audit of the insurer's financial statements
must be conducted in accordance with generally accepted auditing standards. In
accordance with AICPA Statement on Auditing Standards (SAS) No. 109, Understanding
the Entity and its Environment and Assessing the Risks of Material Misstatement, or its
replacement, the independent certified public accountant should obtain an understanding
of internal control sufficient to plan the audit. To the extent required by SAS No. 109,
for those insurers required to file a management's report of internal control over financial
reporting pursuant to subdivision 17, the independent certified public accountant should
consider (as that term is defined in SAS No. 102, Defining Professional Requirements in
Statements on Auditing Standards or its replacement) the most recently available report in
planning and performing the audit of the statutory financial statements. Consideration
should be given to other procedures illustrated in the Financial Condition Examiners
Handbook promulgated by the National Association of Insurance Commissioners as the
independent certified public accountant deems necessary.
    Subd. 11. Notification of adverse financial condition. The insurer required to
furnish the annual audited financial report shall require the independent certified public
accountant to provide written notice within five business days to the board of directors of
the insurer or its audit committee of any determination by that independent certified public
accountant that the insurer has materially misstated its financial condition as reported to
the commissioner as of the balance sheet date currently under audit or that the insurer does
not meet the minimum capital and surplus requirement of sections 60A.07, 66A.32, and
66A.33 as of that date. An insurer required to file an annual audited financial report who
received a notification of adverse financial condition from the accountant shall file a
copy of the notification with the commissioner within five business days of the receipt
of the notification. The insurer shall provide the independent certified public accountant
making the notification with evidence of the report being furnished to the commissioner.
If the independent certified public accountant fails to receive the evidence within the
required five-day period, the independent certified public accountant shall furnish to the
commissioner a copy of the notification to the board of directors or its audit committee
within the next five business days. No independent certified public accountant is liable in
any manner to any person for any statement made in connection with this subdivision if
the statement is made in good faith in compliance with this subdivision. If the accountant
becomes aware of facts which might have affected the audited financial report after
the date it was filed, the accountant shall take the action prescribed by AU section
561, Subsequent Discovery of Facts Existing at the Date of the Auditor's Report of the
Professional Standards issued by the American Institute of Certified Public Accountants,
or its replacement.
    Subd. 12. Communication of internal control related matters noted in an
audit. In addition to the annual audited financial report, each insurer shall furnish the
commissioner with a written communication as to any unremediated material weaknesses
in its internal control over financial reporting noted during the audit. The communication
must be prepared by the accountant within 60 days after the filing of the annual audited
financial report, and must contain a description of any unremediated material weakness, as
the term material weakness is defined by SAS No. 115, Communicating Internal Control
Related Matters Identified in an Audit, or its replacement, as of December 31 immediately
preceding so as to coincide with the audited financial report discussed in subdivision 2 in
the insurer's internal control over financial reporting noted by the accountant during the
course of their audit of the financial statements. If no unremediated material weaknesses
were noted, the communication should so state.
The insurer is required to provide a description of remedial actions taken or
proposed to correct unremediated material weaknesses, if the actions are not described in
the accountant's communication.
    Subd. 13. Accountant's letter of qualification. The accountant shall furnish the
insurer in connection with, and for inclusion in, the filing of the annual audited financial
report, a letter stating that the accountant is independent with respect to the insurer and
conforms to the standards of the accountant's profession as contained in the Code of
Professional Conduct of the American Institute of Certified Public Accountants and the
Code of Professional Conduct of the Minnesota Board of Accountancy or similar code;
the background and experience in general, and the experience in audits of insurers of the
staff assigned to the engagement and whether each is an independent certified public
accountant; that the accountant understands that the annual audited financial report and the
opinion on it will be filed in compliance with this statute and that the commissioner will
be relying on this information in the monitoring and regulation of the financial position of
insurers; that the accountant consents to the requirements of subdivision 14 and that the
accountant consents and agrees to make available for review by the commissioner, or the
commissioner's designee or appointed agent, the work papers, as defined in subdivision
14; a representation that the accountant is properly licensed in good standing by the
appropriate state licensing authorities and is a member in good standing in the American
Institute of Certified Public Accountants; and a representation that the accountant complies
with subdivision 7. Nothing in this section prohibits the accountant from utilizing staff
the accountant deems appropriate where use is consistent with the standards prescribed
by generally accepted auditing standards.
    Subd. 14. Availability and maintenance of independent certified public
accountants' work papers. Work papers are the records kept by the independent certified
public accountant of the procedures followed, tests performed, information obtained, and
conclusions reached pertinent to the independent certified public accountant's audit of the
financial statements of an insurer. Work papers may include audit planning documents,
work programs, analyses, memoranda, letters of confirmation and representation,
management letters, abstracts of company documents, and schedules or commentaries
prepared or obtained by the independent certified public accountant in the course of the
audit of the financial statements of an insurer and that support the accountant's opinion.
Every insurer required to file an audited financial report shall require the accountant,
through the insurer, to make available for review by the examiners the work papers
prepared in the conduct of the audit and any communications related to the audit between
the accountant and the insurer. The work papers must be made available at the offices of
the insurer, at the offices of the commissioner, or at any other reasonable place designated
by the commissioner. The insurer shall require that the accountant retain the audit work
papers and communications until the commissioner has filed a report on examination
covering the period of the audit but no longer than seven years after the period reported
upon, provided retention of the working papers beyond the seven years is not required by
other professional or regulatory requirements. In the conduct of the periodic review by
the examiners, it must be agreed that photocopies of pertinent audit work papers may be
made and retained by the commissioner. These copies shall be part of the commissioner's
work papers and must be given the same confidentiality as other examination work papers
generated by the commissioner.
    Subd. 15. Requirements for audit committee. (a) The audit committee must
be directly responsible for the appointment, compensation, and oversight of the work
of any accountant including resolution of disagreements between management and the
accountant regarding financial reporting for the purpose of preparing or issuing the audited
financial report or related work pursuant to this section. Each accountant shall report
directly to the audit committee.
(b) Each member of the audit committee must be a member of the board of directors
of the insurer or a member of the board of directors of an entity elected pursuant to
paragraph (e) and subdivision 1, paragraph (b).
(c) In order to be considered independent for purposes of this section, a member of
the audit committee may not, other than in his or her capacity as a member of the audit
committee, the board of directors, or any other board committee, accept any consulting,
advisory, or other compensatory fee from the entity or be an affiliated person of the entity
or any subsidiary of the entity. However, if law requires board participation by otherwise
nonindependent members, that law shall prevail and such members may participate in the
audit committee and be designated as independent for audit committee purposes, unless
they are an officer or employee of the insurer or one of its affiliates.
(d) If a member of the audit committee ceases to be independent for reasons outside
the member's reasonable control, that person, with notice by the responsible entity to the
state, may remain an audit committee member of the responsible entity until the earlier of
the next annual meeting of the responsible entity or one year from the occurrence of the
event that caused the member to be no longer independent.
(e) To exercise the election of the controlling person to designate the audit committee
for purposes of this section, the ultimate controlling person shall provide written notice to
the commissioners of the affected insurers. Notification must be made timely before the
issuance of the statutory audit report and include a description of the basis for the election.
The election can be changed through notice to the commissioner by the insurer, which
shall include a description of the basis for the change. The election remains in effect for
perpetuity, until rescinded.
(f) The audit committee shall require the accountant that performs for an insurer any
audit required by this section to timely report to the audit committee in accordance with
the requirements of SAS No. 114, The Auditor's Communication with Those Charged
with Governance, or its replacement, including:
(1) all significant accounting policies and material permitted practices;
(2) all material alternative treatments of financial information within statutory
accounting principles that have been discussed with management officials of the insurer,
ramifications of the use of the alternative disclosures and treatments, and the treatment
preferred by the accountant; and
(3) other material written communications between the accountant and the
management of the insurer, such as any management letter or schedule of unadjusted
differences.
(g) If an insurer is a member of an insurance holding company system, the reports
required by paragraph (f) may be provided to the audit committee on an aggregate basis
for insurers in the holding company system, provided that any substantial differences
among insurers in the system are identified to the audit committee.
(h) The proportion of independent audit committee members shall meet or exceed
the following criteria:
(1) for companies with prior calendar year direct written and assumed premiums $0
to $300,000,000, no minimum requirements;
(2) for companies with prior calendar year direct written and assumed premiums
over $300,000,000 to $500,000,000, majority of members must be independent; and
(3) for companies with prior calendar year direct written and assumed premiums
over $500,000,000, 75 percent or more must be independent.
(i) An insurer with direct written and assumed premium, excluding premiums
reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, less
than $500,000,000 may make application to the commissioner for a waiver from the
requirements of this subdivision based upon hardship. The insurer shall file, with its
annual statement filing, the approval for relief from this subdivision with the states that
it is licensed in or doing business in and the NAIC. If the nondomestic state accepts
electronic filing with the NAIC, the insurer shall file the approval in an electronic format
acceptable to the NAIC.
This subdivision does not apply to foreign or alien insurers licensed in this state or
an insurer that is a SOX compliant entity or a direct or indirect wholly-owned subsidiary
of a SOX compliant entity.
    Subd. 16. Conduct of insurer in connection with the preparation of required
reports and documents. (a) No director or officer of an insurer shall, directly or indirectly:
(1) make or cause to be made a materially false or misleading statement to an
accountant in connection with any audit, review, or communication required under this
section; or
(2) omit to state, or cause another person to omit to state, any material fact necessary
in order to make statements made, in light of the circumstances under which the statements
were made, not misleading to an accountant in connection with any audit, review, or
communication required under this section.
(b) No officer or director of an insurer, or any other person acting under the direction
thereof, shall directly or indirectly take any action to coerce, manipulate, mislead, or
fraudulently influence any accountant engaged in the performance of an audit pursuant to
this section if that person knew or should have known that the action, if successful, could
result in rendering the insurer's financial statements materially misleading.
(c) For purposes of paragraph (b), actions that, "if successful, could result in
rendering the insurer's financial statements materially misleading" include, but are not
limited to, actions taken at any time with respect to the professional engagement period to
coerce, manipulate, mislead, or fraudulently influence an accountant:
(1) to issue or reissue a report on an insurer's financial statements that is not
warranted in the circumstances due to material violations of statutory accounting
principles prescribed by the commissioner, generally accepted auditing standards, or
other professional or regulatory standards;
(2) not to perform audit, review, or other procedures required by generally accepted
auditing standards or other professional standards;
(3) not to withdraw an issued report; or
(4) not to communicate matters to an insurer's audit committee.
    Subd. 17. Management's report of internal control over financial reporting.
(a) Every insurer required to file an audited financial report pursuant to this section that
has annual direct written and assumed premiums, excluding premiums reinsured with the
Federal Crop Insurance Corporation and Federal Flood Program, of $500,000,000 or
more, shall prepare a report of the insurer's or group of insurers' internal control over
financial reporting, as these terms are defined in subdivision 1. The report must be filed
with the commissioner along with the communication of internal control related matters
noted in an audit described under subdivision 12. Management's report of internal control
over financial reporting shall be as of December 31 immediately preceding.
(b) Notwithstanding the premium threshold in paragraph (a), the commissioner may
require an insurer to file management's report of internal control over financial reporting
if the insurer is in any RBC level event, or meets any one or more of the standards of
an insurer deemed to be in hazardous financial condition pursuant to sections 60G.20
to 60G.22.
(c) An insurer or a group of insurers that is:
(1) directly subject to Section 404;
(2) part of a holding company system whose parent is directly subject to Section 404;
(3) not directly subject to Section 404 but is a SOX compliant entity; or
(4) a member of a holding company system whose parent is not directly subject to
Section 404 but is a SOX compliant entity;
may file its or its parent's Section 404 report and an addendum in satisfaction of this
requirement provided that those internal controls of the insurer or group of insurers
having a material impact on the preparation of the insurer's or group of insurers' audited
statutory financial statements, consisting of those items included in subdivision 4,
paragraphs (a), clauses (2) to (6), (b), and (c), were included in the scope of the Section
404 report. The addendum shall be a positive statement by management that there are
no material processes with respect to the preparation of the insurer's or group of insurers'
audited statutory financial statements, consisting of those items included in subdivision 4,
paragraphs (a), clauses (2) to (6), (b), and (c), excluded from the Section 404 report. If
there are internal controls of the insurer or group of insurers that have a material impact on
the preparation of the insurer's or group of insurers' audited statutory financial statements
and those internal controls were not included in the scope of the Section 404 report, the
insurer or group of insurers may either file (i) a report under this subdivision, or (ii) the
Section 404 report and a report under this subdivision for those internal controls that have
a material impact on the preparation of the insurer's or group of insurers' audited statutory
financial statements not covered by the Section 404 report.
(d) Management's report of internal control over financial reporting shall include:
(1) a statement that management is responsible for establishing and maintaining
adequate internal control over financial reporting;
(2) a statement that management has established internal control over financial
reporting and an assertion, to the best of management's knowledge and belief, after diligent
inquiry, as to whether its internal control over financial reporting is effective to provide
reasonable assurance regarding the reliability of financial statements in accordance with
statutory accounting principles;
(3) a statement that briefly describes the approach or processes by which
management evaluated the effectiveness of its internal control over financial reporting;
(4) a statement that briefly describes the scope of work that is included and whether
any internal controls were excluded;
(5) disclosure of any unremediated material weaknesses in the internal control over
financial reporting identified by management as of December 31 immediately preceding.
Management is not permitted to conclude that the internal control over financial reporting
is effective to provide reasonable assurance regarding the reliability of financial statements
in accordance with statutory accounting principles if there is one or more unremediated
material weaknesses in its internal control over financial reporting;
(6) a statement regarding the inherent limitations of internal control systems; and
(7) signatures of the chief executive officer and the chief financial officer or
equivalent position or title.
(e) Management shall document and make available upon financial condition
examination the basis upon which its assertions, required in paragraph (d), are made.
Management may base its assertions, in part, upon its review, monitoring, and testing of
internal controls undertaken in the normal course of its activities.
(1) Management has discretion as to the nature of the internal control framework
used, and the nature and extent of documentation, in order to make its assertion in a
cost-effective manner and, as such, may include assembly of or reference to existing
documentation.
(2) Management's report on internal control over financial reporting, required by
paragraph (a), and any documentation provided in support of the report during the course
of a financial condition examination, must be kept confidential by the Department of
Commerce.
    Subd. 18. Exemptions. (a) Upon written application of any insurer, the
commissioner may grant an exemption from compliance with the provisions of this
section. In order to receive an exemption, an insurer must demonstrate to the satisfaction
of the commissioner that compliance would constitute a financial or organizational
hardship upon the insurer. An exemption may be granted at any time and from time
to time for specified periods. Within ten days from the denial of an insurer's written
request for an exemption, the insurer may request in writing a hearing on its application
for an exemption. This hearing must be held in accordance with chapter 14. Upon written
application of any insurer, the commissioner may permit an insurer to file annual audited
financial reports on some basis other than a calendar year basis for a specified period. An
exemption may not be granted until the insurer presents an alternative method satisfying
the purposes of this section. Within ten days from a denial of a written request for an
exemption, the insurer may request in writing a hearing on its application. The hearing
must be held in accordance with chapter 14.
(b) This section applies to all insurers, unless otherwise indicated, required to file
an annual audit by subdivision 2, except insurers having less than $1,000,000 of direct
written premiums in this state in any calendar year and fewer than 1,000 policyholders
or certificate holders of directly written policies nationwide at the end of the calendar
year, are exempt from this section for that year, unless the commissioner makes a
specific finding that compliance is necessary for the commissioner to carry out statutory
responsibilities, except that insurers having assumed premiums from reinsurance contracts
or treaties of $1,000,000 or more are not exempt.
    Subd. 19. Canadian and British companies. (a) In the case of Canadian and
British insurers, the annual audited financial report means the annual statement of total
business on the form filed by these companies with their domiciliary supervision authority
and duly audited by an independent chartered accountant.
(b) For these insurers the letter required in subdivision 5 shall state that the
accountant is aware of the requirements relating to the annual audited statement filed
with the commissioner under subdivision 2, and shall affirm that the opinion expressed
is in conformity with those requirements.
    Subd. 20. Commercial mortgage loan valuation procedures. A report of the
independent certified public accountant that performs the audit of an insurer's annual
statement as required under subdivision 2, shall be filed and contain a statement as to
whether anything in connection with the audit came to the accountant's attention that
caused the accountant to believe that the insurer failed to adopt and consistently apply the
valuation procedures as required by sections 60A.122 and 60A.123.
    Subd. 21. Examinations. (a) The commissioner or a designated representative shall
determine the nature, scope, and frequency of examinations under this section conducted
by examiners under section 60A.031. These examinations may cover all aspects of the
insurer's assets, condition, affairs, and operations and may include and be supplemented
by audit procedures performed by independent certified public accountants. Scheduling
of examinations will take into account all relevant matters with respect to the insurer's
condition, including results of the National Association of Insurance Commissioners,
Insurance Regulatory Information Systems, changes in management, results of market
conduct examinations, and audited financial reports. The type of examinations performed
by examiners under this section must be compliance examinations, targeted examinations,
and comprehensive examinations.
(b) Compliance examinations will consist of a review of the accountant's workpapers
defined under this section and a general review of the insurer's corporate affairs and
insurance operations to determine compliance with the Minnesota insurance laws and
the rules of the Department of Commerce. The examiners may perform alternative or
additional examination procedures to supplement those performed by the accountant
when the examiners determine that the procedures are necessary to verify the financial
condition of the insurer.
(c) Targeted examinations may cover limited areas of the insurer's operations as
the commissioner may deem appropriate.
(d) Comprehensive examinations will be performed when the report of the
accountant as provided for in subdivision 7, paragraph (b), the notification required by
subdivision 7, paragraph (c), the results of compliance or targeted examinations, or other
circumstances indicate in the judgment of the commissioner or a designated representative
that a complete examination of the condition and affairs of the insurer is necessary.
(e) Upon completion of each targeted, compliance, or comprehensive examination,
the examiner appointed by the commissioner shall make a full and true report on the
results of the examination. Each report shall include a general description of the audit
procedures performed by the examiners and the procedures of the accountant that
the examiners may have utilized to supplement their examination procedures and the
procedures that were performed by the registered independent certified public accountant
if included as a supplement to the examination.
    Subd. 22. Penalties. An annual statement, report, or document related to the
business of insurance must not be filed with the commissioner or issued to the public if it
is signed by anyone who is represented in the instrument as an "accountant," unless the
person is qualified as defined by this section. A violation of this subdivision is a violation
of section 72A.19 and punishable in accordance with section 72A.25.
EFFECTIVE DATE.(a) Domestic insurers retaining a certified public accountant
on the effective date of this section who qualify as independent shall comply with this
section for the year ending December 31, 2010, and each year thereafter unless the
commissioner permits otherwise.
(b) Domestic insurers not retaining a certified public accountant on the effective
date of this section who qualifies as independent shall meet the following schedule for
compliance unless the commissioner permits otherwise.
(1) As of December 31, 2010, file with the commissioner an audited financial report.
(2) For the year ending December 31, 2010, and each year thereafter, such insurers
shall file with the commissioner all reports and communication required by this section.
(c) Foreign insurers shall comply with this section for the year ending December 31,
2010, and each year thereafter, unless the commissioner permits otherwise.
(d) The requirements of subdivision 7, paragraph (b), are in effect for audits of the
year beginning January 1, 2010, and thereafter.
(e) The requirements of subdivision 15 are in effect January 1, 2010. An insurer or
group of insurers that is not required to have independent audit committee members or
only a majority of independent audit committee members, as opposed to a supermajority,
because the total written and assumed premium is below the threshold and subsequently
becomes subject to one of the independence requirements due to changes in premium has
one year following the year the threshold is exceeded, but not earlier than January 1,
2010, to comply with the independence requirements. Likewise, an insurer that becomes
subject to one of the independence requirements as a result of a business combination
has one calendar year following the date of acquisition or combination to comply with
the independence requirements.
(f) An insurer or group of insurers that is not required to file a report because the total
written premium is below the threshold and subsequently becomes subject to the reporting
requirements has two years following the year the threshold is exceeded, but not earlier
than December 31, 2010, to file a report. Likewise, an insurer acquired in a business
combination has two calendar years following the date of acquisition or combination to
comply with the reporting requirements.
(g) The requirements and provisions contained in this section are effective January
1, 2010, and thereafter.

    Sec. 12. Minnesota Statutes 2008, section 60B.03, subdivision 15, is amended to read:
    Subd. 15. Insolvency. "Insolvency" means:
(a) For an insurer organized under sections 67A.01 to 67A.26, the inability to pay
any uncontested debt as it becomes due or any other loss within 30 days after the due date
specified in the first assessment notice issued pursuant to section 67A.17.
(b) For any other insurer, that it is unable to pay its debts or meet its obligations
as they mature or that its assets do not exceed its liabilities plus the greater of (1) any
capital and surplus required by law to be constantly maintained, or (2) its authorized and
issued capital stock. For purposes of this subdivision, "assets" includes one-half of the
maximum total assessment liability of the policyholders of the insurer, and "liabilities"
includes reserves required by law. For policies issued on the basis of unlimited assessment
liability, the maximum total liability, for purposes of determining solvency only, shall be
deemed to be that amount that could be obtained if there were 100 percent collection of an
assessment at the rate of ten mills per dollar of insurance written by it and in force.

    Sec. 13. Minnesota Statutes 2008, section 60L.02, subdivision 3, is amended to read:
    Subd. 3. Additional requirements. (a) In order to be eligible to be governed by
sections 60L.01 to 60L.15, the insurer must meet the requirements specified under this
subdivision.
(b) The insurer shall:
(1) have been in continuous operation for a minimum of five years; and
(2) maintain a minimum claims-paying, financial strength, or equivalent rating from
at least one nationally recognized statistical rating organization in one of the organization's
three highest rating categories for the time period during which sections 60L.01 to 60L.15
apply to the insurer. For purposes of this subdivision, the rating must be based on a
review of the insurer by the nationally recognized statistical rating organization with the
cooperation of the insurer; must not depend on a guarantee or other credit enhancement
from another entity; and must not be modified or otherwise qualified to show dependence
of the rating on the performance or a contractual obligation of, or the insurer's affiliation
with, another insurer.
(c) The insurer or an affiliate, as defined in section 60D.15, subdivision 2, of the
insurer shall employ at least one individual as a professional investment manager for
the insurer's investments whom the board of directors or trustees of the insurer finds
is qualified on the basis of experience, education or training, competence, personal
integrity, and who conducts professional investment management activities in accordance
with the Code of Ethics and Standards of Professional Conduct of the Association for
Investment Management and Research. For purposes of complying with this paragraph,
an employee of an affiliate may only be used if they are responsible for managing the
insurer's investments.
(d) The board of directors of the insurer must annually adopt a resolution finding
that the insurer or an affiliate, as defined in section 60D.15, subdivision 2, of the insurer
has employed a professional investment manager for the insurer's investments with
sufficient expertise and has sufficient other resources to implement and monitor the
insurer's investment policies and strategies.
(e) In the report required under section 60A.129 60A.1291, subdivision 3 12,
paragraph (l), the insurer's independent auditor shall not have identified any significant
deficiencies in the insurer's internal control structure related to investments during any of
the five years immediately preceding the date on which sections 60L.01 to 60L.15 begin to
apply to the insurer, and as long as sections 60L.01 to 60L.15 apply to the insurer.

    Sec. 14. [61A.258] PRENEED INSURANCE PRODUCTS; MINIMUM
MORTALITY STANDARDS FOR RESERVES AND NONFORFEITURE VALUES.
    Subdivision 1. Definitions. For the purposes of this section, the following terms
have the meanings given them:
(1) "2001 CSO Mortality Table (2001 CSO)" means that mortality table, consisting
of separate rates of mortality for male and female lives, developed by the American
Academy of Actuaries CSO Task Force from the Valuation Basic Mortality Table
developed by the Society of Actuaries Individual Life Insurance Valuation Mortality
Task Force, and adopted by the National Association of Insurance Commissioners
(NAIC) in December 2002. The 2001 CSO Mortality Table (2001 CSO) is included in
the Proceedings of the NAIC (2nd Quarter 2002). Unless the context indicates otherwise,
the "2001 CSO Mortality Table (2001 CSO)" includes both the ultimate form of that
table and the select and ultimate form of that table and includes both the smoker and
nonsmoker mortality tables and the composite mortality tables. It also includes both the
age-nearest-birthday and age-last-birthday bases of the mortality tables;
(2) "Ultimate 1980 CSO" means the Commissioners' 1980 Standard Ordinary Life
Valuation Mortality Tables (1980 CSO) without ten-year selection factors, incorporated
into the 1980 amendments to the NAIC Standard Valuation Law approved in December
1983; and
(3) "preneed insurance" is any life insurance policy or certificate that is issued
in combination with, in support of, with an assignment to, or as a guarantee for a
prearrangement agreement for goods and services to be provided at the time of and
immediately following the death of the insured. Goods and services may include, but
are not limited to embalming, cremation, body preparation, viewing or visitation, coffin
or urn, memorial stone, and transportation of the deceased. The status of the policy or
contract as preneed insurance is determined at the time of issue in accordance with the
policy form filing.
    Subd. 2. Minimum valuation mortality standards. For preneed insurance
contracts, the minimum mortality standard for determining reserve liabilities and
nonforfeiture values for both male and female insureds shall be the Ultimate 1980 CSO.
    Subd. 3. Minimum valuation interest rate standards. (a) The interest rates used
in determining the minimum standard for valuation of preneed insurance shall be the
calendar year statutory valuation interest rates as defined in section 61A.25.
(b) The interest rates used in determining the minimum standard for nonforfeiture
values for preneed insurance shall be the calendar year statutory nonforfeiture interest
rates as defined in section 61A.24.
    Subd. 4. Minimum valuation method standards. (a) The method used in
determining the standard for the minimum valuation of reserves of preneed insurance shall
be the method defined in section 61A.25.
(b) The method used in determining the standard for the minimum nonforfeiture
values for preneed insurance shall be the method defined in section 61A.24.
EFFECTIVE DATE; TRANSITION RULES.(a) This section is effective January
1, 2009, and applies to preneed insurance policies and certificates issued on or after that
date.
(b) For preneed insurance policies issued on or after the effective date of this
section and before January 1, 2012, the 2001 CSO may be used as the minimum standard
for reserves and minimum standard for nonforfeiture benefits for both male and female
insureds.
(c) If an insurer elects to use the 2001 CSO as a minimum standard for any policy
issued on or after the effective date of this section and before January 1, 2012, the insurer
shall provide, as a part of the actuarial opinion memorandum submitted in support of
the company's asset adequacy testing, an annual written notification to the domiciliary
commissioner. The notification shall include:
(1) a complete list of all preneed policy forms that use the 2001 CSO as a minimum
standard;
(2) a certification signed by the appointed actuary stating that the reserve
methodology employed by the company in determining reserves for the preneed policies
issued after the effective date and using the 2001 CSO as a minimum standard, develops
adequate reserves (For the purposes of this certification, the preneed insurance policies
using the 2001 CSO as a minimum standard cannot be aggregated with any other
policies.); and
(3) supporting information regarding the adequacy of reserves for preneed insurance
policies issued after the effective date of this section and using the 2001 CSO as a
minimum standard for reserves.
(d) Preneed insurance policies issued on or after January 1, 2012, must use the
Ultimate 1980 CSO in the calculation of minimum nonforfeiture values and minimum
reserves.

    Sec. 15. Minnesota Statutes 2008, section 61B.19, subdivision 4, is amended to read:
    Subd. 4. Limitation of benefits. The benefits for which the association may become
liable shall in no event exceed the lesser of:
(1) the contractual obligations for which the insurer is liable or would have been
liable if it were not an impaired or insolvent insurer; or
(2) subject to the limitation in clause (5), with respect to any one life, regardless of
the number of policies or contracts:
(i) $300,000 $500,000 in life insurance death benefits, but not more than $100,000
$130,000 in net cash surrender and net cash withdrawal values for life insurance;
(ii) $300,000 $500,000 in health insurance benefits, including any net cash surrender
and net cash withdrawal values;
(iii) $100,000 $250,000 in annuity net cash surrender and net cash withdrawal values;
(iv) $300,000 $410,000 in present value of annuity benefits for structured settlement
annuities or for annuities in regard to which periodic annuity benefits, for a period of not
less than the annuitant's lifetime or for a period certain of not less than ten years, have
begun to be paid, on or before the date of impairment or insolvency; or
(3) subject to the limitations in clauses (5) and (6), with respect to each individual
resident participating in a retirement plan, except a defined benefit plan, established under
section 401, 403(b), or 457 of the Internal Revenue Code of 1986, as amended through
December 31, 1992, covered by an unallocated annuity contract, or the beneficiaries
of each such individual if deceased, in the aggregate, $100,000 $250,000 in net cash
surrender and net cash withdrawal values;
(4) where no coverage limit has been specified for a covered policy or benefit, the
coverage limit shall be $300,000 $500,000 in present value;
(5) in no event shall the association be liable to expend more than $300,000
$500,000 in the aggregate with respect to any one life under clause (2), items (i), (ii), (iii),
(iv), and clause (4), and any one individual under clause (3);
(6) in no event shall the association be liable to expend more than $7,500,000
$10,000,000 with respect to all unallocated annuities of a retirement plan, except a defined
benefit plan, established under section 401, 403(b), or 457 of the Internal Revenue Code
of 1986, as amended through December 31, 1992. If total claims from a plan exceed
$7,500,000 $10,000,000, the $7,500,000 $10,000,000 shall be prorated among the
claimants;
(7) for purposes of applying clause (2)(ii) and clause (5), with respect only to
health insurance benefits, the term "any one life" applies to each individual covered by a
health insurance policy;
(8) where covered contractual obligations are equal to or less than the limits stated in
this subdivision, the association will pay the difference between the covered contractual
obligations and the amount credited by the estate of the insolvent or impaired insurer, if
that amount has been determined or, if it has not, the covered contractual limit, subject
to the association's right of subrogation;
(9) where covered contractual obligations exceed the limits stated in this subdivision,
the amount payable by the association will be determined as though the covered
contractual obligations were equal to those limits. In making the determination, the estate
shall be deemed to have credited the covered person the same amount as the estate would
credit a covered person with contractual obligations equal to those limits; or
(10) the following illustrates how the principles stated in clauses (8) and (9) apply.
The example illustrated concerns hypothetical claims subject to the limit stated in clause
(2)(iii). The principles stated in clauses (8) and (9), and illustrated in this clause, apply
to claims subject to any limits stated in this subdivision.
CONTRACTUAL OBLIGATIONS OF:

$50,000


Estate
Guaranty
Association


0% recovery
from estate
$ 0
$ 50,000


25% recovery
from estate
$ 12,500
$ 37,500


50% recovery
from estate
$ 25,000
$ 25,000


75% recovery
from estate
$ 37,500
$ 12,500

$100,000


Estate
Guaranty
Association


0% recovery
from estate
$ 0
$ 100,000


25% recovery
from estate
$ 25,000
$ 75,000


50% recovery
from estate
$ 50,000
$ 50,000


75% recovery
from estate
$ 75,000
$ 25,000

$200,000


Estate
Guaranty
Association


0% recovery
from estate
$ 0
$ 100,000


25% recovery
from estate
$ 50,000
$ 75,000


50% recovery
from estate
$ 100,000
$ 50,000


75% recovery
from estate
$ 150,000
$ 25,000
For purposes of this subdivision, the commissioner shall determine the discount rate
to be used in determining the present value of annuity benefits.
EFFECTIVE DATE.This section is effective the day following final enactment
and applies to member insurers who are first determined to be impaired or insolvent on or
after that date. Member insurers who are subject to an order of impairment in effect on the
effective date but are not declared insolvent until after the effective date shall continue to
be governed by the law in effect prior to the effective date.

    Sec. 16. Minnesota Statutes 2008, section 61B.28, subdivision 4, is amended to read:
    Subd. 4. Prohibited sales practice. No person, including an insurer, agent, or
affiliate of an insurer, shall make, publish, disseminate, circulate, or place before the
public, or cause directly or indirectly, to be made, published, disseminated, circulated,
or placed before the public, in any newspaper, magazine, or other publication, or in the
form of a notice, circular, pamphlet, letter, or poster, or over any radio station or television
station, or in any other way, an advertisement, announcement, or statement, written or
oral, which uses the existence of the Minnesota Life and Health Insurance Guaranty
Association for the purpose of sales, solicitation, or inducement to purchase any form of
insurance covered by sections 61B.18 to 61B.32. The notice required by subdivision 8
is not a violation of this subdivision nor is it a violation of this subdivision to explain
verbally to an applicant or potential applicant the coverage provided by the Minnesota
Life and Health Insurance Guaranty Association at any time during the application process
or thereafter. This subdivision does not apply to the Minnesota Life and Health Insurance
Guaranty Association or an entity that does not sell or solicit insurance. A person violating
this section is guilty of a misdemeanor.

    Sec. 17. Minnesota Statutes 2008, section 61B.28, subdivision 8, is amended to read:
    Subd. 8. Form. The form of notice referred to in subdivision 7, paragraph (a),
is as follows:
"....................
....................
....................
(insert name, current address, and
telephone number of insurer)
NOTICE CONCERNING POLICYHOLDER RIGHTS IN AN
INSOLVENCY UNDER THE MINNESOTA LIFE AND HEALTH
INSURANCE GUARANTY ASSOCIATION LAW
If the insurer that issued your life, annuity, or health insurance policy becomes
impaired or insolvent, you are entitled to compensation for your policy from the assets of
that insurer. The amount you recover will depend on the financial condition of the insurer.
In addition, residents of Minnesota who purchase life insurance, annuities, or health
insurance from insurance companies authorized to do business in Minnesota are protected,
SUBJECT TO LIMITS AND EXCLUSIONS, in the event the insurer becomes financially
impaired or insolvent. This protection is provided by the Minnesota Life and Health
Insurance Guaranty Association.
Minnesota Life and Health Insurance Guaranty Association
(insert current
address and telephone number)
The maximum amount the guaranty association will pay for all policies issued on
one life by the same insurer is limited to $300,000 $500,000. Subject to this $300,000
$500,000 limit, the guaranty association will pay up to $300,000 $500,000 in life
insurance death benefits, $100,000 $130,000 in net cash surrender and net cash withdrawal
values for life insurance, $300,000 $500,000 in health insurance benefits, including any
net cash surrender and net cash withdrawal values, $100,000 $250,000 in annuity net
cash surrender and net cash withdrawal values, $300,000 $410,000 in present value of
annuity benefits for annuities which are part of a structured settlement or for annuities
in regard to which periodic annuity benefits, for a period of not less than the annuitant's
lifetime or for a period certain of not less than ten years, have begun to be paid on or
before the date of impairment or insolvency, or if no coverage limit has been specified
for a covered policy or benefit, the coverage limit shall be $300,000 $500,000 in present
value. Unallocated annuity contracts issued to retirement plans, other than defined benefit
plans, established under section 401, 403(b), or 457 of the Internal Revenue Code of
1986, as amended through December 31, 1992, are covered up to $100,000 $250,000 in
net cash surrender and net cash withdrawal values, for Minnesota residents covered by
the plan provided, however, that the association shall not be responsible for more than
$7,500,000 $10,000,000 in claims from all Minnesota residents covered by the plan. If
total claims exceed $7,500,000 $10,000,000, the $7,500,000 $10,000,000 shall be prorated
among all claimants. These are the maximum claim amounts. Coverage by the guaranty
association is also subject to other substantial limitations and exclusions and requires
continued residency in Minnesota. If your claim exceeds the guaranty association's limits,
you may still recover a part or all of that amount from the proceeds of the liquidation of
the insolvent insurer, if any exist. Funds to pay claims may not be immediately available.
The guaranty association assesses insurers licensed to sell life and health insurance in
Minnesota after the insolvency occurs. Claims are paid from this assessment.
THE COVERAGE PROVIDED BY THE GUARANTY ASSOCIATION IS NOT
A SUBSTITUTE FOR USING CARE IN SELECTING INSURANCE COMPANIES
THAT ARE WELL MANAGED AND FINANCIALLY STABLE. IN SELECTING AN
INSURANCE COMPANY OR POLICY, YOU SHOULD NOT RELY ON COVERAGE
BY THE GUARANTY ASSOCIATION.
THIS NOTICE IS REQUIRED BY MINNESOTA STATE LAW TO ADVISE
POLICYHOLDERS OF LIFE, ANNUITY, OR HEALTH INSURANCE POLICIES
OF THEIR RIGHTS IN THE EVENT THEIR INSURANCE CARRIER BECOMES
FINANCIALLY INSOLVENT. THIS NOTICE IN NO WAY IMPLIES THAT THE
COMPANY CURRENTLY HAS ANY TYPE OF FINANCIAL PROBLEMS. ALL LIFE,
ANNUITY, AND HEALTH INSURANCE POLICIES ARE REQUIRED TO PROVIDE
THIS NOTICE."
Additional language may be added to the notice if approved by the commissioner
prior to its use in the form. This section does not apply to fraternal benefit societies
regulated under chapter 64B.

    Sec. 18. Minnesota Statutes 2008, section 67A.01, is amended to read:
67A.01 NUMBER OF MEMBERS REQUIRED, PROPERTY AND
TERRITORY.
    Subdivision 1. Number of members. (a) It shall be lawful for any number of
persons, not less than 25, residing in adjoining townships counties in this state, who shall
collectively own property worth at least $50,000, to form themselves into a corporation
for mutual insurance against loss or damage by the perils listed in section 67A.13.
(b) Except as otherwise provided in this section, the company shall operate in no
more than 150 adjoining townships in the aggregate at the same time. The company may,
if approval has been granted by the commissioner, operate in more than 150 adjoining
townships in the aggregate at the same time, subject to a maximum of 300 townships.
If the company confines its operations to one county it may transact business in that
county by so providing in its certificate of incorporation. In case of merger of two or
more companies having contiguous territories, the surviving company in the merger may
transact business in the entire territory of the merged companies, but the territory of the
surviving company in the merger must not be larger than 300 townships.
    Subd. 2. Authorized territory. (a) A township mutual fire insurance company may
be authorized to write business in up to nine adjoining counties in the aggregate at the
same time. If policyholder surplus is at least $500,000 as reported in the company's last
annual financial statement filed with the commissioner, the company may, if approval has
been granted by the commissioner, be authorized to write business in ten or more counties
in the aggregate at the same time, subject to a maximum of 20 adjoining counties, in
accordance with the following schedule:


Number of
Counties
Surplus
Requirement

10
$500,000

11
600,000

12
700,000

13
800,000

14
900,000

15
1,000,000

16
1,100,000

17
1,200,000

18
1,300,000

19
1,400,000

20
1,500,000
(b) In the case of a merger of two or more companies having contiguous territories,
the surviving company in the merger may transact business in the entire territory of the
merged companies; however, the territory of the surviving company in the merger may not
be larger than 20 counties.
(c) A township mutual fire insurance company may write new and renewal insurance
on property in cities within the company's authorized territory having a population less
than 25,000. A township mutual may continue to write new and renewal insurance once
the population increases to 25,000 or greater provided that amended and restated articles
are filed with the commissioner along with a certification that such city's population has
increased to 25,000 or greater.
(d) A township mutual fire insurance company may write new and renewal insurance
on property in cities within the company's authorized territory with a population of 25,000
or greater, but less than 150,000, if approval has been granted by the commissioner.
No township mutual fire insurance company shall insure any property in cities with a
population of 150,000 or greater.
(e) If a township mutual fire insurance company provides evidence to the
commissioner that the company had insurance in force on December 31, 2007, in a city
within the company's authorized territory with a population of 25,000 or greater, but less
than 150,000, the company may write new and renewal insurance on property in that city
provided that the company files amended and restated articles by July 31, 2010, naming
that city.

    Sec. 19. Minnesota Statutes 2008, section 67A.06, is amended to read:
67A.06 POWERS OF CORPORATION.
Every corporation formed under the provisions of sections 67A.01 to 67A.26,
shall have power:
(1) to have succession by its corporate name for the time stated in its certificate of
incorporation;
(2) to sue and be sued in any court;
(3) to have and use a common seal and alter the same at pleasure;
(4) to acquire, by purchase or otherwise, and to hold, enjoy, improve, lease,
encumber, and convey all real and personal property necessary for the purpose of its
organization, subject to such limitations as may be imposed by law or by its articles of
incorporation;
(5) to elect or appoint in such manner as it may determine all necessary or proper
officers, agents, boards, and committees, fix their compensation, and define their powers
and duties;
(6) to make and amend consistently with law bylaws providing for the management
of its property and the regulation and government of its affairs;
(7) to wind up and liquidate its business in the manner provided by chapter 60B; and
(8) to indemnify certain persons against expenses and liabilities as provided in
section 302A.521. In applying section 302A.521 for this purpose, the term "members"
shall be substituted for the terms "shareholders" and "stockholders."; and
(9) to eliminate or limit a director's personal liability to the company or its members
for monetary damages for breach of fiduciary duty as a director. A company shall not
eliminate or limit the liability of a director:
(i) for breach of loyalty to the company or its members;
(ii) for acts or omissions made in bad faith or with intentional misconduct or
knowing violation of law;
(iii) for transactions from which the director derived an improper personal benefit; or
(iv) for acts or omissions occurring before the date that the provisions in the articles
eliminating or limiting liability become effective.

    Sec. 20. Minnesota Statutes 2008, section 67A.07, is amended to read:
67A.07 PRINCIPAL OFFICE.
The principal office of a township mutual fire insurance company shall be located in
a township or in a city in a township county in which the company is authorized to do
business.

    Sec. 21. Minnesota Statutes 2008, section 67A.14, subdivision 1, is amended to read:
    Subdivision 1. Kinds of property; property outside authorized territory. (a)
Township mutual fire insurance companies may insure qualified property. Qualified
property means dwellings, household goods, appurtenant structures, farm buildings, farm
personal property, churches, church personal property, county fair buildings, community
and township meeting halls and their usual contents.
(b) Township mutual fire insurance companies may extend coverage to include
an insured's secondary property if the township mutual fire insurance company covers
qualified property belonging to the insured. Secondary property means any real or
personal property that is not considered qualified property for a township mutual fire
insurance company to cover under this chapter. The maximum amount of coverage that a
township mutual fire insurance company may write for secondary property is 25 percent of
the total limit of liability of the policy issued to an insured covering the qualified property.
(c) A township mutual fire insurance company may insure any real or personal
property, including qualified or secondary property, subject to the limitations in
subdivision 1, paragraph (b), located outside the limits of the territory in which the
company is authorized by its certificate or articles of incorporation to transact business, if
the company is already covering qualified property belonging to the insured, inside the
limits of the company's territory.
(d) A township mutual fire insurance company may insure property temporarily
outside of the authorized territory of the township mutual fire insurance company.

    Sec. 22. Minnesota Statutes 2008, section 67A.14, subdivision 7, is amended to read:
    Subd. 7. Amount of insurable risk. No township mutual fire insurance company
shall insure or reinsure a single risk or hazard in a larger sum than the greater of $3,000, or
one tenth of its net assets plus two tenths of a mill of its insurance in force; provided that
no portion of any such risk or hazard which shall have been reinsured, as authorized by
the laws of this state, shall be included in determining the limitation of risk prescribed
by this subdivision.

    Sec. 23. [67A.175] SURPLUS REQUIREMENTS.
    Subdivision 1. Minimum. Township mutual fire insurance companies shall maintain
a minimum policyholders' surplus of $300,000 at all times.
    Subd. 2. Corrective action plan; filing. A township mutual fire insurance company
that falls below the $300,000 minimum surplus requirement must file a corrective action
plan with the commissioner. The plan shall state how the company will correct its surplus
deficiency. The plan must be submitted within 45 days of the company falling below the
minimum surplus level.
    Subd. 3. Corrective action plan; commissioner's notification. Within 30 days
after the submission by a township mutual fire insurance company of a corrective action
plan, the commissioner shall notify the insurer whether the plan may be implemented or
is, in the judgment of the commissioner, unsatisfactory. If the commissioner determines
the plan is unsatisfactory, the notification to the company must set forth the reasons for the
determination, and may set forth proposed revisions that will render the plan satisfactory
in the judgment of the commissioner. Upon notification from the commissioner, the
insurer shall prepare a revised corrective action plan that may incorporate by reference
any revisions proposed by the commissioner, and shall submit the revised plan to the
commissioner within 45 days.

    Sec. 24. Minnesota Statutes 2008, section 67A.18, subdivision 1, is amended to read:
    Subdivision 1. By member. Any member may terminate membership in the
company by giving written notice or returning the member's policy to the secretary and
paying the withdrawing member's share of all existing claims.

    Sec. 25. REPEALER.
    Subdivision 1. Annual audits. Minnesota Statutes 2008, section 60A.129, is
repealed.
    Subd. 2. Township mutual insured properties, joint or partial risks, and
assessments. Minnesota Statutes 2008, sections 67A.14, subdivision 5; 67A.17; and
67A.19, are repealed.
    Subd. 3. Banking procedures; real estate tax records. Minnesota Rules, part
2675.2180, is repealed.
    Subd. 4. Debt prorating companies. Minnesota Rules, parts 2675.7100;
2675.7110; 2675.7120; 2675.7130; and 2675.7140, are repealed.
    Subd. 5. Guaranty association; inflation indexing. Minnesota Statutes 2008,
section 61B.19, subdivision 6, is repealed.

ARTICLE 4
DEBT MANAGEMENT SERVICES

    Section 1. Minnesota Statutes 2008, section 45.011, subdivision 1, is amended to read:
    Subdivision 1. Scope. As used in chapters 45 to 83, 155A, 332, 332A, 332B,
345, and 359, and sections 325D.30 to 325D.42, 326B.802 to 326B.885, and 386.61 to
386.78, unless the context indicates otherwise, the terms defined in this section have
the meanings given them.

    Sec. 2. Minnesota Statutes 2008, section 46.04, subdivision 1, is amended to read:
    Subdivision 1. General. The commissioner of commerce, referred to in chapters 46
to 59A, and chapter 332A, and 332B as the commissioner, is vested with all the powers,
authority, and privileges which, prior to the enactment of Laws 1909, chapter 201, were
conferred by law upon the public examiner, and shall take over all duties in relation to
state banks, savings banks, trust companies, savings associations, and other financial
institutions within the state which, prior to the enactment of chapter 201, were imposed
upon the public examiner. The commissioner of commerce shall exercise a constant
supervision, either personally or through the examiners herein provided for, over the
books and affairs of all state banks, savings banks, trust companies, savings associations,
credit unions, industrial loan and thrift companies, and other financial institutions doing
business within this state; and shall, through examiners, examine each financial institution
at least once every 24 calendar months. In satisfying this examination requirement, the
commissioner may accept reports of examination prepared by a federal agency having
comparable supervisory powers and examination procedures. With the exception of
industrial loan and thrift companies which do not have deposit liabilities and licensed
regulated lenders, it shall be the principal purpose of these examinations to inspect and
verify the assets and liabilities of each and so far investigate the character and value of
the assets of each institution as to determine with reasonable certainty that the values are
correctly carried on its books. Assets and liabilities shall be verified in accordance with
methods of procedure which the commissioner may determine to be adequate to carry out
the intentions of this section. It shall be the further purpose of these examinations to
assess the adequacy of capital protection and the capacity of the institution to meet usual
and reasonably anticipated deposit withdrawals and other cash commitments without
resorting to excessive borrowing or sale of assets at a significant loss, and to investigate
each institution's compliance with applicable laws and rules. Based on the examination
findings, the commissioner shall make a determination as to whether the institution
is being operated in a safe and sound manner. None of the above provisions limits the
commissioner in making additional examinations as deemed necessary or advisable. The
commissioner shall investigate the methods of operation and conduct of these institutions
and their systems of accounting, to ascertain whether these methods and systems are
in accordance with law and sound banking principles. The commissioner may make
requirements as to records as deemed necessary to facilitate the carrying out of the
commissioner's duties and to properly protect the public interest. The commissioner may
examine, or cause to be examined by these examiners, on oath, any officer, director,
trustee, owner, agent, clerk, customer, or depositor of any financial institution touching
the affairs and business thereof, and may issue, or cause to be issued by the examiners,
subpoenas, and administer, or cause to be administered by the examiners, oaths. In
case of any refusal to obey any subpoena issued under the commissioner's direction,
the refusal may at once be reported to the district court of the district in which the bank
or other financial institution is located, and this court shall enforce obedience to these
subpoenas in the manner provided by law for enforcing obedience to subpoenas of the
court. In all matters relating to official duties, the commissioner of commerce has the
power possessed by courts of law to issue subpoenas and cause them to be served and
enforced, and all officers, directors, trustees, and employees of state banks, savings banks,
trust companies, savings associations, and other financial institutions within the state,
and all persons having dealings with or knowledge of the affairs or methods of these
institutions, shall afford reasonable facilities for these examinations, make returns and
reports to the commissioner of commerce as the commissioner may require; attend and
answer, under oath, the commissioner's lawful inquiries; produce and exhibit any books,
accounts, documents, and property as the commissioner may desire to inspect, and in all
things aid the commissioner in the performance of duties.

    Sec. 3. Minnesota Statutes 2008, section 46.05, is amended to read:
46.05 SUPERVISION OVER FINANCIAL INSTITUTIONS.
    Every state bank, savings bank, trust company, savings association, debt management
services provider, debt settlement services provider, and other financial institutions shall
be at all times under the supervision and subject to the control of the commissioner
of commerce. If, and whenever in the performance of duties, the commissioner finds
it necessary to make a special investigation of any financial institution under the
commissioner's supervision, and other than a complete examination, the commissioner
shall make a charge therefor to include only the necessary costs thereof. Such a fee shall
be payable to the commissioner on the commissioner's making a request for payment.

    Sec. 4. Minnesota Statutes 2008, section 46.131, subdivision 2, is amended to read:
    Subd. 2. Assessment authority. Each bank, trust company, savings bank, savings
association, regulated lender, industrial loan and thrift company, credit union, motor
vehicle sales finance company, debt management services provider, debt settlement
services provider, and insurance premium finance company organized under the laws of
this state or required to be administered by the commissioner of commerce shall pay
into the state treasury its proportionate share of the cost of maintaining the Department
of Commerce.

    Sec. 5. Minnesota Statutes 2008, section 325E.311, subdivision 6, is amended to read:
    Subd. 6. Telephone solicitation. "Telephone solicitation" means any voice
communication over a telephone line for the purpose of encouraging the purchase or
rental of, or investment in, property, goods, or services, whether the communication is
made by a live operator, through the use of an automatic dialing-announcing device as
defined in section 325E.26, subdivision 2, or by other means. Telephone solicitation
does not include communications:
    (1) to any residential subscriber with that subscriber's prior express invitation or
permission; or
    (2) by or on behalf of any person or entity with whom a residential subscriber has a
prior or current business or personal relationship.
Telephone solicitation also does not include communications if the caller is identified by a
caller identification service and the call is:
    (i) by or on behalf of an organization that is identified as a nonprofit organization
under state or federal law, unless the organization is a debt management services provider
defined in section 332A.02 or a debt settlement services provider defined in section
332B.02;
    (ii) by a person soliciting without the intent to complete, and who does not in
fact complete, the sales presentation during the call, but who will complete the sales
presentation at a later face-to-face meeting between the solicitor who makes the call
and the prospective purchaser; or
    (iii) by a political party as defined under section 200.02, subdivision 6.

    Sec. 6. Minnesota Statutes 2008, section 332A.02, is amended by adding a subdivision
to read:
    Subd. 2a. Advertise. "Advertise" means to solicit business through any means or
medium.

    Sec. 7. Minnesota Statutes 2008, section 332A.02, subdivision 5, is amended to read:
    Subd. 5. Controlling or affiliated party. "Controlling or affiliated party" means
any person or entity that controls or is controlled, directly or indirectly controlling,
controlled by, or is under common control with another person. Controlling or affiliated
party includes, but is not limited to, employees, officers, independent contractors,
corporations, partnerships, and limited liability corporations.

    Sec. 8. Minnesota Statutes 2008, section 332A.02, is amended by adding a subdivision
to read:
    Subd. 5a. Creditor. "Creditor" means any party:
(1) named by the debtor as a creditor in the debt management services plan or debt
management services agreement;
(2) that acquires or holds the debt; or
(3) to whom interactions with the debt management services is assigned in relation
to the debt listed in the debt management services plan or debt management services
agreement.

    Sec. 9. Minnesota Statutes 2008, section 332A.02, subdivision 8, is amended to read:
    Subd. 8. Debt management services provider. "Debt management services
provider" means any person offering or providing debt management services to a debtor
domiciled in this state, regardless of whether or not a fee is charged for the services and
regardless of whether the person maintains a physical presence in the state. This term
includes any person to whom debt management services are delegated, and does not
include services performed by the following when engaged in the regular course of their
respective businesses and professions:
    (1) attorneys at law, escrow agents, accountants, broker-dealers in securities;
    (2) state or national banks, credit unions, trust companies, savings associations,
title insurance companies, insurance companies, and all other lending institutions duly
authorized to transact business in Minnesota, provided no fee is charged for the service;
    (3) persons who, as employees on a regular salary or wage of an employer not
engaged in the business of debt management, perform credit services for their employer;
    (4) public officers acting in their official capacities and persons acting as a debt
management services provider pursuant to court order;
    (5) any person while performing services incidental to the dissolution, winding up,
or liquidation of a partnership, corporation, or other business enterprise;
    (6) the state, its political subdivisions, public agencies, and their employees;
    (7) credit unions and collection agencies, provided no fee is charged for the service
that the services are provided to a creditor;
    (8) "qualified organizations" designated as representative payees for purposes of the
Social Security and Supplemental Security Income Representative Payee System and the
federal Omnibus Budget Reconciliation Act of 1990, Public Law 101-508;
    (9) accelerated mortgage payment providers. "Accelerated mortgage payment
providers" are persons who, after satisfying the requirements of sections 332.30 to
332.303, receive funds to make mortgage payments to a lender or lenders, on behalf
of mortgagors, in order to exceed regularly scheduled minimum payment obligations
under the terms of the indebtedness. The term does not include: (i) persons or entities
described in clauses (1) to (8); (ii) mortgage lenders or servicers, industrial loan and
thrift companies, or regulated lenders under chapter 56; or (iii) persons authorized to
make loans under section 47.20, subdivision 1. For purposes of this clause and sections
332.30 to 332.303, "lender" means the original lender or that lender's assignee, whichever
is the current mortgage holder;
    (10) trustees, guardians, and conservators; and
    (11) debt settlement services providers.

    Sec. 10. Minnesota Statutes 2008, section 332A.02, subdivision 9, is amended to read:
    Subd. 9. Debt management services. "Debt management services" means the
provision of any one or more of the following services in connection with debt incurred
primarily for personal, family, or household services:
    (1) managing the financial affairs of an individual by distributing income or money
to the individual's creditors;
    (2) receiving funds for the purpose of distributing the funds among creditors in
payment or partial payment of obligations of a debtor; or
    (3) adjusting, prorating, pooling, or liquidating the indebtedness of a debtor whereby
a debt management services provider assists in managing the financial affairs of a debtor
by distributing periodic payments to the debtor's creditors from funds that the debt
management services provider receives from the debtor and where the primary purpose of
the services is to effect full repayment of debt incurred primarily for personal, family, or
household services.
Any person so engaged or holding out as so engaged is deemed to be engaged in the
provision of debt management services regardless of whether or not a fee is charged for
such services.

    Sec. 11. Minnesota Statutes 2008, section 332A.02, subdivision 10, is amended to read:
    Subd. 10. Debtor. "Debtor" means the person for whom the debt prorating service
is management services are performed.

    Sec. 12. Minnesota Statutes 2008, section 332A.02, subdivision 13, is amended to read:
    Subd. 13. Debt settlement services provider. "Debt settlement services provider"
means any person engaging in or holding out as engaging in the business of negotiating,
adjusting, or settling debt incurred primarily for personal, family, or household purposes
without holding or receiving the debtor's funds or personal property and without paying
the debtor's funds to, or distributing the debtor's property among, creditors has the
meaning given in section 332B.02, subdivision 11. The term shall not include persons
listed in subdivision 8, clauses (1) to (10).

    Sec. 13. Minnesota Statutes 2008, section 332A.04, subdivision 6, is amended to read:
    Subd. 6. Right of action on bond. If the registrant has failed to account to a debtor
or distribute to the debtor's creditors the amounts required by this chapter and, or has
failed to perform any of the services promised in the debt management services agreement
between the debtor and registrant, the registrant is in default. The debtor or the debtor's
legal representative or receiver, the commissioner, or the attorney general, shall have, in
addition to all other legal remedies, a right of action in the name of the debtor on the bond
or the security given under this section, for loss suffered by the debtor, not exceeding the
face amount of the bond or security, and without the necessity of joining the registrant
in the suit or action based on the default.

    Sec. 14. Minnesota Statutes 2008, section 332A.08, is amended to read:
332A.08 DENIAL OF REGISTRATION.
    The commissioner, with notice to the applicant by certified mail sent to the address
listed on the application, may deny an application for a registration upon finding that
the applicant:
    (1) has submitted an application required under section 332A.04 that contains
incorrect, misleading, incomplete, or materially untrue information. An application is
incomplete if it does not include all the information required in section 332A.04;
    (2) has failed to pay any fee or pay or maintain any bond required by this chapter,
or failed to comply with any order, decision, or finding of the commissioner made under
and within the authority of this chapter;
    (3) has violated any provision of this chapter or any rule or direction lawfully made
by the commissioner under and within the authority of this chapter;
    (4) or any controlling or affiliated party has ever been convicted of a crime or found
civilly liable for an offense involving moral turpitude, including forgery, embezzlement,
obtaining money under false pretenses, larceny, extortion, conspiracy to defraud, or any
other similar offense or violation, or any violation of a federal or state law or regulation
in connection with activities relating to the rendition of debt management services or
any consumer fraud, false advertising, deceptive trade practices, or similar consumer
protection law;
    (5) has had a registration or license previously revoked or suspended in this state or
any other state or the applicant or licensee has been permanently or temporarily enjoined
by any court of competent jurisdiction from engaging in or continuing any conduct or
practice involving any aspect of the debt management services provider business; or
any controlling or affiliated party has been an officer, director, manager, or shareholder
owning more than a ten percent interest in a debt management services provider whose
registration has previously been revoked or suspended in this state or any other state, or
who has been permanently or temporarily enjoined by any court of competent jurisdiction
from engaging in or continuing any conduct or practice involving any aspect of the debt
management services provider business;
    (6) has made any false statement or representation to the commissioner;
    (7) is insolvent;
    (8) refuses to fully comply with an investigation or examination of the debt
management services provider by the commissioner;
    (9) has improperly withheld, misappropriated, or converted any money or properties
received in the course of doing business;
    (10) has failed to have a trust account with an actual cash balance equal to or greater
than the sum of the escrow balances of each debtor's account;
    (11) has defaulted in making payments to creditors on behalf of debtors as required
by agreements between the provider and debtor; or
    (12) has used fraudulent, coercive, or dishonest practices, or demonstrated
incompetence, untrustworthiness, or financial irresponsibility in this state or elsewhere; or
(13) has been shown to have engaged in a pattern of failing to perform the services
promised.

    Sec. 15. Minnesota Statutes 2008, section 332A.10, is amended to read:
332A.10 WRITTEN DEBT MANAGEMENT SERVICES AGREEMENT.
    Subdivision 1. Written agreement required. (a) A debt management services
provider may not perform any debt management services or receive any money related
to a debt management services plan until the provider has obtained a debt management
services agreement that contains all terms of the agreement between the debt management
services provider and the debtor.
(b) A debt management services agreement must:
(1) be in writing, dated, and signed by the debt management services provider and
the debtor;
(2) conspicuously indicate whether or not the debt management services provider
is registered with the Minnesota Department of Commerce and include any registration
number; and
(3) be written in the debtor's primary language if the debt management services
provider advertised in that language.
(c) The registrant must furnish the debtor with a copy of the signed contract upon
execution.
    Subd. 2. Actions prior to written agreement. No person may provide debt
management services for a debtor or execute a debt management services agreement
unless the person first has:
    (1) provided the debtor individualized counseling and educational information
that, at a minimum, addresses managing household finances, managing credit and debt,
budgeting, and personal savings strategies;
    (2) prepared in writing and provided to the debtor, in a form that the debtor may
keep, an individualized financial analysis and a proposed debt management services
plan listing the debtor's known debts with specific recommendations regarding actions
the debtor should take to reduce or eliminate the amount of the debts, including written
disclosure that debt management services are not suitable for all debtors and that there are
other ways, including bankruptcy, to deal with indebtedness;
    (3) made a determination supported by an individualized financial analysis that the
debtor can reasonably meet the requirements of the proposed debt management services
plan and that there is a net tangible benefit to the debtor of entering into the proposed debt
management services plan; and
    (4) prepared, in a form the debtor may keep, a written list identifying all known
creditors of the debtor that the provider reasonably expects to participate in the plan
and the creditors, including secured creditors, that the provider reasonably expects not
to participate; and
(5) disclosed, in addition to the written disclosure on the agreement required under
subdivision 1, whether or not the debt management services provider is registered with the
Minnesota Department of Commerce and any registration number.
    Subd. 3. Required terms. (a) Each debt management services agreement must
contain the following terms, which must be disclosed prominently and clearly in bold print
on the front page of the agreement, segregated by bold lines from all other information on
the page:
    (1) the origination fee amount to be paid by the debtor and whether all or a portion
of the initial origination fee amount is refundable or nonrefundable;
    (2) the monthly fee amount or percentage to be paid by the debtor; and
    (3) the total amount of fees reasonably anticipated to be paid by the debtor over
the term of the agreement.
    (b) Each debt management services agreement must also contain the following:
    (1) a disclosure that if the amount of debt owed is increased by interest, late fees,
over the limit fees, and other amounts imposed by the creditors, the length of the debt
management services agreement will be extended and remain in force and that the total
dollar charges agreed upon may increase at the rate agreed upon in the original contract
agreement;
    (2) a prominent statement describing the terms upon which the debtor may cancel
the contract as set forth in section 332A.11;
    (3) a detailed description of all services to be performed by the debt management
services provider for the debtor;
    (4) the debt management services provider's refund policy; and
    (5) the debt management services provider's principal business address and the name
and address of its agent in this state authorized to receive service of process.
    Subd. 4. Prohibited terms. The following terms shall not be included in the debt
management services agreement:
    (1) a hold harmless clause;
    (2) a confession of judgment, or a power of attorney to confess judgment against the
debtor or appear as the debtor in any judicial proceeding;
    (3) a waiver of the right to a jury trial, if applicable, in any action brought by
or against a debtor;
    (4) an assignment of or an order for payment of wages or other compensation for
services;
    (5) a provision in which the debtor agrees not to assert any claim or defense arising
out of the debt management services agreement;
    (6) a waiver of any provision of this chapter or a release of any obligation required
to be performed on the part of the debt management services provider; or
    (7) a mandatory arbitration clause or a clause selecting a law other than the laws of
Minnesota under which the debt management services agreement or any other dispute
involving the provision of debt management services is governed or enforced.
    Subd. 5. New debt management services agreements; modification of existing
agreements. (a) Separate and additional debt management services agreements that
comply with this chapter may be entered into by the debt management services provider
and the debtor provided that no additional initial origination fee may be charged by the
debt management services provider.
    (b) Any modification of an existing debt management services agreement, including
any increase in the number or amount of debts included in the debt management service
services agreement, must be in writing and signed by both parties, except that the signature
of the debtor is not required if:
    (1) a creditor is added to or deleted from a debt management services agreement
at the request of the debtor or a debtor voluntarily increases the amount of a payment,
provided the debt management services provider must provide an updated payment
schedule to the debtor within seven days; or
    (2) the payment amount to a creditor in the agreement increases by $10 or less
and the total payment amount to all creditors increases a total of $20 or less as a result
of incorrect or incomplete information provided by the debtor regarding the amount of
debt owed a creditor, provided the debt management services provider must notify the
debtor of the increase within seven days.
    No fees, charges, or other consideration may be demanded from the debtor for
the modification, other than an increase in the amount of the monthly maintenance fee
established in the original debt management services agreement.

    Sec. 16. Minnesota Statutes 2008, section 332A.11, subdivision 2, is amended to read:
    Subd. 2. Notice of debtor's right to cancel. A debt management services
agreement must contain, on its face, in an easily readable typeface type immediately
adjacent to the space for signature by the debtor, the following notice: "Right To Cancel:
You have the right to cancel this contract at any time on ten days' written notice."

    Sec. 17. Minnesota Statutes 2008, section 332A.14, is amended to read:
332A.14 PROHIBITIONS.
    A registrant No debt management services provider shall not:
    (1) purchase from a creditor any obligation of a debtor;
    (2) use, threaten to use, seek to have used, or seek to have threatened the use of any
legal process, including but not limited to garnishment and repossession of personal
property, against any debtor while the debt management services agreement between the
registrant and the debtor remains executory;
    (3) advise, counsel, or encourage a debtor to stop paying a creditor until a debt
management services plan is in place, or imply, infer, encourage, or in any other way
indicate, that it is advisable to stop paying a creditor;
(4) sanction or condone the act by a debtor of ceasing payments or imply, infer,
or in any manner indicate that the act of ceasing payments is advisable or beneficial to
the debtor;
    (4) (5) require as a condition of performing debt management services the purchase
of any services, stock, insurance, commodity, or other property or any interest therein
either by the debtor or the registrant;
    (5) (6) compromise any debts unless the prior written or contractual approval of the
debtor has been obtained to such compromise and unless such compromise inures solely
to the benefit of the debtor;
    (6) (7) receive from any debtor as security or in payment of any fee a promissory
note or other promise to pay or any mortgage or other security, whether as to real or
personal property;
    (7) (8) lend money or provide credit to any debtor if any interest or fee is charged,
or directly or indirectly collect any fee for referring, advising, procuring, arranging, or
assisting a consumer in obtaining any extension of credit or other debtor service from a
lender or debt management services provider;
    (8) (9) structure a debt management services agreement that would result in negative
amortization of any debt in the plan;
    (9) (10) engage in any unfair, deceptive, or unconscionable act or practice in
connection with any service provided to any debtor;
    (10) (11) offer, pay, or give any material cash fee, gift, bonus, premium, reward, or
other compensation to any person for referring any prospective customer to the registrant
or for enrolling a debtor in a debt management services plan, or provide any other
incentives for employees or agents of the debt management services provider to induce
debtors to enter into a debt management services plan;
    (11) (12) receive any cash, fee, gift, bonus, premium, reward, or other compensation
from any person other than the debtor or a person on the debtor's behalf in connection
with activities as a registrant, provided that this paragraph does not apply to a registrant
which is a bona fide nonprofit corporation duly organized under chapter 317A or under
the similar laws of another state;
    (12) (13) enter into a contract with a debtor unless a thorough written budget analysis
indicates that the debtor can reasonably meet the requirements of the financial adjustment
plan and will be benefited by the plan;
    (13) (14) in any way charge or purport to charge or provide any debtor credit
insurance in conjunction with any contract or agreement involved in the debt management
services plan;
    (14) (15) operate or employ a person who is an employee or owner of a collection
agency or process-serving business; or
    (15) (16) solicit, demand, collect, require, or attempt to require payment of a sum
that the registrant states, discloses, or advertises to be a voluntary contribution to a debt
management services provider or designee from the debtor.

    Sec. 18. Minnesota Statutes 2008, section 332A.16, is amended to read:
332A.16 ADVERTISEMENT OF DEBT MANAGEMENT SERVICES PLANS.
    No debt management services provider may make false, deceptive, or misleading
statements or omissions about the rates, terms, or conditions of an actual or proposed
debt management services plan or its debt management services, or create the likelihood
of consumer confusion or misunderstanding regarding its services, including but not
limited to the following:
    (1) represent that the debt management services provider is a nonprofit,
not-for-profit, or has similar status or characteristics if some or all of the debt management
services will be provided by a for-profit company that is a controlling or affiliated party to
the debt management services provider; or
    (2) make any communication that gives the impression that the debt management
services provider is acting on behalf of a government agency.

    Sec. 19. [332B.02] DEFINITIONS.
    Subdivision 1. Scope. Unless a different meaning is clearly indicated by the context,
for the purposes of this chapter, the terms defined in this section have the meanings given
them.
    Subd. 2. Accreditation. "Accreditation" means certification as an accredited credit
counseling provider by the Council on Accreditation, the Bureau Veritas Certification
North America, Inc., or BSI Management Systems America, Inc.
    Subd. 3. Advertise. "Advertise" means to solicit business through any means or
medium.
    Subd. 4. Aggregate debt. "Aggregate debt" means the total of principal and interest
that is owed by the debtor to the creditors at the time of execution of the debt settlement
agreement.
    Subd. 5. Attorney general. "Attorney general" means the attorney general of the
state of Minnesota.
    Subd. 6. Commissioner. "Commissioner" means the commissioner of commerce.
    Subd. 7. Controlling or affiliated party. "Controlling or affiliated party" means
any person or entity that controls or is controlled, directly or indirectly, or is under
common control with another person. Controlling or affiliated party includes, but is not
limited to, employees, officers, independent contractors, corporations, partnerships, and
limited liability corporations.
    Subd. 8. Credit counseling. "Credit counseling" means the provision of counseling
and advice on managing household finances, including but not limited to, managing credit
and debt, budgeting, and personal savings.
    Subd. 9. Creditor. "Creditor" means any party:
(1) named by the debtor as a creditor in the debt settlement services plan or debt
settlement services agreement;
(2) that acquires or holds the debt; or
(3) to whom interactions with the debt settlement services is assigned in relation to
the debt listed in the debt settlement services plan or debt settlement services agreement.
    Subd. 10. Debt settlement services. "Debt settlement services" means any one or
more of the following activities:
(1) offering to provide advice, or offering to act or acting as an intermediary between
a debtor and one or more of the debtor's creditors, where the primary purpose of the
advice or action is to obtain a settlement for less than the full amount of debt, whether
in principal, interest, fees, or other charges, incurred primarily for personal, family, or
household purposes including, but not limited to, offering debt negotiation, debt reduction,
or debt relief services; or
(2) advising, encouraging, assisting, or counseling a debtor to accumulate funds in
an account for future payment of a reduced amount of debt to one or more of the debtor's
creditors.
Any person so engaged or holding out as so engaged is deemed to be engaged in
the provision of debt settlement services, regardless of whether or not a fee is charged for
such services.
    Subd. 11. Debt settlement services agreement. "Debt settlement services
agreement" means the written contract between the debt settlement services provider
and the debtor.
    Subd. 12. Debt settlement services plan. "Debt settlement services plan" means
the debtor's individualized package of debt settlement services set forth in the debt
settlement services agreement.
    Subd. 13. Debt settlement services provider. "Debt settlement services provider"
means any person offering or providing debt settlement services to a debtor domiciled
in this state, regardless of whether or not a fee is charged for the services and regardless
of whether the person maintains a physical presence in the state. The term includes
any person to whom debt settlement duties are delegated. The term shall not include
persons listed in section 332A.02, subdivision 8, clauses (1) to (10), or a debt management
services provider.
    Subd. 14. Lead generator. "Lead generator" means a person that, without providing
debt settlement services: (1) solicits debtors to engage in debt settlement through mail,
in person, or electronic Web site-based solicitation or any other means, (2) acts as an
intermediary or referral agent between a debtor and an entity actually providing debt
settlement services, or (3) obtains a debtor's personally identifiable information and
transmits that information to a debt settlement services provider.
    Subd. 15. Person. "Person" means an individual, firm, partnership, association,
or corporation.
    Subd. 16. Registrant. "Registrant" means any person registered by the
commissioner pursuant to this chapter and, where used in conjunction with an act or
omission required or prohibited by this chapter, shall mean any person performing debt
settlement services.

    Sec. 20. [332B.03] REQUIREMENT OF REGISTRATION.
On or after August 1, 2009, it is unlawful for any person, whether or not located
in this state, to operate as a debt settlement services provider or provide debt settlement
services including, but not limited to, offering, advertising, or executing or causing to be
executed any debt settlement services or debt settlement services agreement, except as
authorized by law, without first becoming registered as provided in this chapter. Debt
settlement services providers may continue to provide debt settlement services without
complying with this chapter to those debtors who entered into a contract to participate
in a debt settlement services plan prior to August 1, 2009, but may not enter into a debt
settlement services agreement with a debt on or after August 1, 2009, without complying
with this chapter.

    Sec. 21. [332B.04] REGISTRATION.
    Subdivision 1. Form. Application for registration to operate as a debt settlement
services provider in this state must be made in writing to the commissioner, under oath, in
the form prescribed by the commissioner, and must contain:
(1) the full name of each principal of the entity applying;
(2) the address, which must not be a post office box, and the telephone number and,
if applicable, the e-mail address, of the applicant;
(3) consent to the jurisdiction of the courts of this state;
(4) the name and address of the registered agent authorized to accept service of
process on behalf of the applicant or appointment of the commissioner as the applicant's
agent for purposes of accepting service of process;
(5) disclosure of:
(i) whether any controlling or affiliated party has ever been convicted of a crime
or found civilly liable for an offense involving moral turpitude, including forgery,
embezzlement, obtaining money under false pretenses, larceny, extortion, conspiracy to
defraud, or any other similar offense or violation, or any violation of a federal or state
law or regulation in connection with activities relating to the rendition of debt settlement
services or involving any consumer fraud, false advertising, deceptive trade practices, or
similar consumer protection law;
(ii) any judgments, private or public litigation, tax liens, written complaints,
administrative actions, or investigations by any government agency against the applicant
or any officer, director, manager, or shareholder owning more than five percent interest
in the applicant, unresolved or otherwise, filed or otherwise commenced within the
preceding ten years;
(iii) whether the applicant or any person employed by the applicant has had a record
of having defaulted in the payment of money collected for others, including the discharge
of debts through bankruptcy proceedings; and
(iv) whether the applicant's license or registration to provide debt settlement services
in any other state has ever been revoked or suspended;
(6) a copy of the applicant's standard debt settlement services agreement that the
applicant intends to execute with debtors;
(7) proof of accreditation, unless the applicant submits an affidavit attesting that the
applicant does not provide credit counseling services; and
(8) any other information and material as the commissioner may require.
The commissioner may, for good cause shown, temporarily waive any requirement
of this subdivision.
    Subd. 2. Term and scope of registration. A registration is effective until 11:59
p.m. on December 31 of the year for which the application for registration is filed or until
it is surrendered by the registrant or revoked or suspended by the commissioner. The
registration is limited solely to the business of providing debt settlement services.
    Subd. 3. Fees; bond. An applicant for registration as a debt settlement services
provider must comply with the requirements of section 332A.04, subdivisions 3, 4, and 5.
    Subd. 4. Right of action on bond. If the registrant has failed to account to a debtor,
or has failed to perform any of the services promised, the registrant is in default. The
debtor or the debtor's legal representative or receiver, the commissioner, or the attorney
general, shall have, in addition to all other legal remedies, a right of action in the name of
the debtor on the bond or the security given under this section, for loss suffered by the
debtor, not exceeding the face amount of the bond or security, and without the necessity of
joining the registrant in the suit or action based on the default.
    Subd. 5. Registrant list. The commissioner must maintain a list of registered debt
settlement services providers. The list must be made available to the public in written
form upon request and on the Department of Commerce Web site.
    Subd. 6. Renewal of registration. Each year, each registrant under the provisions
of this chapter must, not more than 60 nor less than 30 days before its registration is to
expire, apply to the commissioner for renewal of its registration on a form prescribed by
the commissioner. The application must be signed by the registrant under penalty of
perjury, contain current information on all matters required in the original application, and
be accompanied by a payment of $250. The registrant must maintain a continuous surety
bond that satisfies the requirements of section 332A.04, subdivision 4. The renewal is
effective for one year. The commissioner may, for good cause shown, temporarily waive
any requirement of this section.

    Sec. 22. [332B.05] DENIAL, SUSPENSION, REVOCATION, OR
NONRENEWAL OF REGISTRATION.
    Subdivision 1. Denial. The commissioner, with notice to the applicant by certified
mail sent to the address listed on the application, may deny an application for a registration
for any of the reasons specified under section 332A.08.
    Subd. 2. Suspension, revocation, or nonrenewal. The commissioner may suspend,
revoke, or refuse to renew any registration issued under this chapter, or may levy a civil
penalty under section 45.027, or any combination of actions, if the debt settlement services
provider or any controlling or affiliated person has committed any act or omission for
which the commissioner could have refused to issue an initial registration.
    Subd. 3. Procedure. Suspension, revocation, or nonrenewal must be upon notice
and under the conditions prescribed in section 332A.09, subdivision 1. Upon issuance of
an order suspending, revoking, or refusing to renew a registration, the commissioner:
(1) shall follow the procedure established in section 332A.09, subdivision 2; and
(2) may follow the procedure specified in section 332A.09, subdivision 3, concerning
the appointment of a receiver for funds of sanctioned registrants.

    Sec. 23. [332B.06] WRITTEN DEBT SETTLEMENT SERVICES AGREEMENT;
DISCLOSURES; TRUST ACCOUNT.
    Subdivision 1. Written agreement required. (a) A debt settlement services
provider may not perform, or impose any charges or receive any payment for, any debt
settlement services until the provider and the debtor have executed a debt settlement
services agreement that contains all terms of the agreement between the debt settlement
services provider and the debtor and complies with all the applicable requirements of
this chapter.
(b) A debt settlement services agreement must:
(1) be in writing, dated, and signed by the debt settlement services provider and
the debtor;
(2) conspicuously indicate whether or not the debt settlement services provider is
registered with the Minnesota Department of Commerce and include any registration
number; and
(3) be written in the debtor's primary language if the debt settlement services
provider advertises in that language.
(c) The registrant must furnish the debtor with a copy of the signed contract upon
execution.
    Subd. 2. Actions prior to executing a written agreement. No person may provide
debt settlement services for a debtor or execute a debt settlement services agreement
unless the person first has:
(1) informed the debtor, in writing, that debt settlement is not appropriate for all
debtors and that there are other ways to deal with debt, including using credit counseling
or debt management services, or filing bankruptcy;
(2) prepared in writing and provided to the debtor, in a form the debtor may keep,
an individualized financial analysis of the debtor's financial circumstances, including
income and liabilities, and made a determination supported by the individualized financial
analysis that:
(i) the debt settlement plan proposed for addressing the debt is suitable for the
individual debtor;
(ii) the debtor can reasonably meet the requirements of the proposed debt settlement
services plan; and
(iii) based on the totality of the circumstances, there is a net tangible benefit to the
debtor of entering into the proposed debt settlement services plan; and
(3) provided, on a document separate from any other document, the total amount and
an itemization of fees, including any origination fees, monthly fees, and settlement fees
reasonably anticipated to be paid by the debtor over the term of the agreement.
    Subd. 3. Determination concerning creditor participation. (a) Before executing a
debt settlement services agreement or providing any services, a debt settlement services
provider must make a determination, supported by sufficient bases, which creditors listed
by the debtor are reasonably likely, and which are not reasonably likely, to participate in
the debt settlement services plan set forth in the debt settlement services agreement.
(b) A debt settlement services provider has a defense against a claim that no
sufficient basis existed to make a determination that a creditor was likely to participate if
the debt settlement services provider can produce:
(1) written confirmation from the creditor that, at the time the determination was
made, the creditor and the debt settlement services provider were engaged in negotiations
to settle a debt for another debtor; or
(2) evidence that the provider and the creditor had entered into a settlement of a debt
within the six months prior to the date of the determination.
(c) The debt settlement services provider must notify the debtor as soon as
practicable after the provider has made a determination of the likelihood of participation
or nonparticipation of all the creditors listed for inclusion in the debt settlement services
agreement or debt settlement services plan. If not all creditors listed in the debt settlement
services agreement are reasonably likely to participate in the debt settlement services plan,
the debt settlement services provider must obtain the written authorization from the debtor
to proceed with the debt settlement services agreement without the likely participation of
all listed creditors.
    Subd. 4. Disclosures. (a) A person offering to provide or providing debt settlement
services must disclose both orally and in writing whether or not the person is registered
with the Minnesota Department of Commerce and any registration number.
(b) No person may provide debt settlement services unless the person first has
provided, both orally and in writing, on a single sheet of paper, separate from any other
document or writing, the following verbatim notice:
CAUTION
We CANNOT GUARANTEE that you will successfully reduce or eliminate your
debt.
If you stop paying your creditors, there is a strong likelihood some or all of the
following may happen:
• YOUR WAGES OR BANK ACCOUNT MAY STILL BE GARNISHED.
• YOU MAY STILL BE CONTACTED BY CREDITORS.
• YOU MAY STILL BE SUED BY CREDITORS for the money you owe.
• FEES, INTEREST, AND OTHER CHARGES WILL CONTINUE TO MOUNT
UP DURING THE (INSERT NUMBER) MONTHS THIS PLAN IS IN EFFECT.
Even if we do settle your debt, YOU MAY STILL HAVE TO PAY TAXES on
the amount forgiven.
Your credit rating may be adversely affected.
(c) The heading, "CAUTION," must be in bold, underlined, 28-point type, and the
remaining text must be in 14-point type, with a double space between each statement.
(d) The disclosures and notices required under this subdivision must be provided
in the debtor's primary language if the debt settlement services provider advertises in
that language.
    Subd. 5. Required terms. (a) Each debt settlement services agreement must contain
on the front page of the agreement, segregated by bold lines from all other information
on the page and disclosed prominently and clearly in bold print, the total amount and an
itemization of fees, including any origination fees, monthly fees, and settlement fees
reasonably anticipated to be paid by the debtor over the term of the agreement.
(b) Each debt settlement services agreement must also contain the following:
(1) a prominent statement describing the terms upon which the debtor may cancel
the contract as set forth in section 332B.07;
(2) a detailed description of all services to be performed by the debt settlement
services provider for the debtor;
(3) the debt settlement services provider's refund policy;
(4) the debt settlement services provider's principal business address, which must
not be a post office box, and the name and address of its agent in this state authorized to
receive service of process; and
(5) the name of each creditor the debtor has listed and the aggregate debt owed to
each creditor that will be the subject of settlement.
    Subd. 6. Prohibited terms. A debt settlement services agreement may not contain
any of the terms prohibited under section 332A.10, subdivision 4.
    Subd. 7. New debt settlement services agreements; modifications of existing
agreements. (a) Separate and additional debt settlement services agreements that comply
with this chapter may be entered into by the debt settlement services provider and the
debtor, provided that no additional origination fee may be charged by the debt settlement
services provider.
(b) Any modification of an existing debt settlement services agreement, including
any increase in the number or amount of debts included in the debt settlement services
agreement, must be in writing and signed by both parties. No fee may be charged to
modify an existing agreement.
    Subd. 8. Funds held in trust. Debtor funds may be held in trust for the purpose
of writing exchange checks for no longer than 42 days. If the registrant holds debtor
funds, the registrant must maintain a separate trust account, except that the registrant may
commingle debtor funds with the registrant's own funds, in the form of an imprest fund,
to the extent necessary to ensure maintenance of a minimum balance, if the financial
institution at which the trust account is held requires a minimum balance to avoid the
assessment of fees or penalties for failure to maintain a minimum balance.

    Sec. 24. [332B.07] RIGHT TO CANCEL.
    Subdivision 1. Debtor's right to cancel. (a) A debtor has the right to cancel a debt
settlement services agreement without cause at any time upon ten days' written notice
to the debt settlement services provider.
(b) In the event of cancellation, the debt settlement services provider must, within
ten days of the cancellation, notify the debtor's creditors with whom the debt settlement
services provider is or has been, under the terms of the debt settlement agreement, in
communication, of the cancellation and immediately refund all fees paid by the debtor to
the debt settlement services provider that exceed the fees allowed under section 332B.09.
(c) Upon cancellation, the debt settlement services provider must cease collection of
any monthly fees beginning in the month following cancellation.
    Subd. 2. Notice of debtor's right to cancel. A debt settlement services agreement
must contain, on its face, in an easily readable type immediately adjacent to the space for
signature by the debtor, the following notice: "Right to Cancel: You have the right to
cancel this contract at any time on ten days' written notice."
    Subd. 3. Automatic termination. Upon the payment of all listed or settled debts
and fees, the debt settlement services agreement must automatically terminate, and all
funds held by the debt settlement services provider that exceed the fees allowed under
section 332B.09 must be immediately returned to the debtor.
    Subd. 4. Debt settlement services provider's right to cancel. (a) A debt settlement
services provider may cancel a debt settlement services agreement with good cause upon
30 days' written notice to the debtor.
(b) Within ten days after the cancellation, the debt settlement services provider
must notify the debtor's creditors with whom the debt settlement services provider is or
has been, under the terms of the debt settlement services agreement, in communication,
of the cancellation.
(c) Upon cancellation, the debt settlement services provider must cease collection of
any monthly fees beginning in the month following cancellation.
(d) A debt settlement services provider is entitled to the full amount of the fees
provided for in the debt settlement services agreement if the provider can show that:
(1) the provider obtained a settlement offer from the creditor or creditors in
accordance with the debt settlement services agreement;
(2) the debtor rejected the settlement offer; or
(3) within the period contemplated in the debt settlement services agreement, the
debtor entered into a settlement agreement with the same creditor or creditors for an
amount equal to or lower than the settlement offer obtained by the provider.

    Sec. 25. [332B.08] BOOKS, RECORDS, AND INFORMATION.
    Subdivision 1. Records retention; annual report. Every registrant must keep, and
use in the registrant's business, such books, accounts, and records, including electronic
records, as will enable the commissioner to determine whether the registrant is complying
with this chapter and the rules, orders, and directives adopted by the commissioner under
this chapter. Every registrant must preserve such books, accounts, and records for at least
six years after making the final entry on any transaction recorded therein. Examinations
of the books, records, and method of operations conducted under the supervision of the
commissioner shall be done at the cost of the registrant. The cost must be assessed as
determined under section 46.131.
    Subd. 2. Annual report. On or before March 15 of each calendar year,
each registrant must file a report with the commissioner containing information the
commissioner may require about the preceding calendar year. The report must be in a
form the commissioner prescribes.
    Subd. 3. Statements to debtors. (a) Each registrant must:
(1) maintain and make available records and accounts that will enable each debtor to
ascertain the amounts paid to the creditors, if any. A statement showing amounts received
from the debtor, disbursements, if any, to each creditor, amounts that any creditor has
agreed to as payment in full for any debt owed the creditor by the debtor, fees deducted by
the registrant, and other information the commissioner may prescribe, must be furnished
by the registrant to the debtor at least monthly and, in addition, upon any cancellation or
termination of the contract;
(2) include in the statement furnished to debtors a list of all activities conducted
pursuant to the contract, including the nature of communications and progress of
negotiations with each creditor during the reporting period; and
(3) prepare and retain in the file of each debtor a written analysis of the debtor's
income and expenses to substantiate that the plan of payment is feasible and practicable.
(b) Each debtor must have reasonable access, without cost, by electronic or other
means, to information in the registrant's files applicable to the debtor. These statements,
records, and accounts must otherwise remain confidential, except for duly authorized
state and government officials, the commissioner, the attorney general, the debtor, and
the debtor's representative and designees.

    Sec. 26. [332B.09] FEES; WITHDRAWAL OF CREDITORS; NOTIFICATION
TO DEBTOR OF SETTLEMENT OFFER.
    Subdivision 1. Choice of fee structure. A debt settlement services provider may
calculate fees on a percentage of debt basis or on a percentage of savings basis. The fee
structure shall be clearly disclosed and explained in the debt settlement services agreement.
    Subd. 2. Fees as a percentage of debt. (a) The total amount of the fees claimed,
demanded, charged, collected, or received under this subdivision shall be calculated as
15 percent of the aggregate debt. A debt settlement services provider that calculates
fees as a percentage of debt may:
(1) charge an origination fee, which may be designated by the debt settlement
services provider as nonrefundable, of:
(i) $200 on aggregate debt of less than $20,000; or
(ii) $400 on aggregate debt of $20,000 or more;
(2) charge a monthly fee of:
(i) no greater than $50 per month on aggregate debt of less than $40,000; and
(ii) no greater than $60 per month on aggregate debt of $40,000 or more; and
(3) charge a settlement fee for the remainder of the allowable fees, which may be
demanded and collected no earlier than upon delivery to the debt settlement services
provider by a creditor of a bona fide written settlement offer consistent with the terms of
the debt settlement services agreement. A settlement fee may be assessed for each debt
settled, but the sum total of the origination fee, the monthly fee, and the settlement fee
may not exceed 15 percent of the aggregate debt.
(b) When a settlement offer is obtained by a debt settlement services provider from a
creditor, the collection of any monthly fees shall cease beginning the month following the
month in which the settlement offer was obtained by the debt settlement services provider.
(c) In no event may more than 40 percent of the total amount of fees allowable be
claimed, demanded, charged, collected, or received by a debt settlement services provider
any earlier than upon delivery to the debt settlement services provider by a creditor of
a bona fide written settlement offer consistent with the terms of the debt settlement
services agreement.
    Subd. 3. Fees as a percentage of savings. (a) The total amount of the fees claimed,
demanded, charged, collected, or received under this subdivision shall be calculated as 30
percent of the savings actually negotiated by the debt settlement services provider. The
savings shall be calculated as the difference between the aggregate debt that is stated
in the debt settlement services agreement at the time of its execution and total amount
that the debtor actually pays to settle all the debts stated in the debt settlement services
agreement, provided that only savings resulting from concessions actually negotiated by
the debt settlement services provider may be counted. A debt settlement services provider
that calculates fees as a percentage of debt may:
(1) charge an origination fee, which may be designated by the debt settlement
services provider as nonrefundable, of:
(i) $300 on aggregate debt of less than $20,000; or
(ii) $500 on aggregate debt of $20,000 or more;
(2) charge a monthly fee of:
(i) no greater than $65 on aggregate debt of less than $40,000; and
(ii) no greater than $75 on aggregate debt of $40,000 or more; and
(3) charge a settlement fee for the remainder of the allowable fees, which may be
demanded and collected no earlier than upon delivery to the debt settlement services
provider by a creditor of a bona fide, final written settlement offer consistent with the
terms of the debt settlement services agreement. A settlement fee may be assessed for each
debt settled, but the sum total of the origination fee, the monthly fee, and the settlement
fee may not exceed 30 percent of the savings, as calculated under paragraph (a).
(b) The collection of monthly fees shall cease under this subdivision when the
total of monthly fees and the origination fee equals 50 percent of the total fees allowable
under this subdivision. For the purposes of this subdivision, 50 percent of the total fees
allowable shall assume a settlement of 50 cents on the dollar.
(c) In no event may more than 50 percent of the total amount of fees allowable be
claimed, demanded, charged, collected, or received by a debt settlement services provider
any earlier than upon delivery to the debt settlement services provider by a creditor of a
bona fide, final written settlement offer consistent with the terms of the debt settlement
services agreement.
    Subd. 4. Fees exclusive. No fees, charges, assessments, or any other compensation
may be claimed, demanded, charged, collected, or received other than the fees allowed
under this section. Any fees collected in excess of those allowed under this section must
be immediately returned to the debtor.
    Subd. 5. Withdrawal of creditor. Whenever a creditor withdraws from a debt
settlement services plan, the debt settlement services provider must promptly notify the
debtor of the withdrawal, identify the creditor, and inform the debtor of the right to modify
the debt settlement services agreement, unless at least 50 percent of the listed creditors
withdraw, in which case the debt settlement services provider must notify the debtor of the
debtor's right to cancel. In no case may this notice be provided more than 15 days after the
debt settlement services provider learns of the creditor's decision to withdraw from a plan.
    Subd. 6. Timely notification of settlement offer. A debt settlement services
provider must make all reasonable efforts to notify the debtor within 24 hours of a
settlement offer made by a creditor.

    Sec. 27. [332B.10] PROHIBITIONS.
No debt settlement services provider shall:
(1) engage in any activity, act, or omission prohibited under section 332A.14;
(2) promise, guarantee, or directly or indirectly imply, infer, or in any manner
represent that any debt will be settled prior to the presentation to the debtor of an offer by
the creditors participating in the debt settlement plan to settle;
(3) misrepresent the timing of negotiations with creditors;
(4) imply, infer, or in any manner represent that:
(i) fees, interest, and other charges will not continue to accrue prior to the time
debts are settled;
(ii) wages or bank accounts are not subject to garnishment;
(iii) creditors will not continue to contact the debtor;
(iv) the debtor is not subject to legal action; and
(v) the debtor will not be subject to tax consequences for the portion of any debts
forgiven;
(5) execute a power of attorney or any other agreement, oral or written, express
or implied, that extinguishes or limits the debtor's right at any time to contract or
communicate with any creditor or the creditor's right at any time to communicate with
the debtor;
(6) exercise or attempt to exercise a power of attorney after an individual has
terminated an agreement;
(7) state, imply, infer, or, in any other manner, indicate that entering into a debt
settlement services agreement or settling debts will either have no effect on, or improve,
the debtor's credit, credit rating, and credit score;
(8) challenge a debt without the written consent of the debtor;
(9) make any false or misleading claim regarding a creditor's right to collect a debt;
(10) falsely represent that the debt settlement services provider can negotiate better
settlement terms with a creditor than the debtor alone can negotiate;
(11) provide or offer to provide legal advice or legal services unless the person
providing or offering to provide legal advice is licensed to practice law in the state;
(12) misrepresent that it is authorized or competent to furnish legal advice or
perform legal services; and
(13) settle a debt or lead an individual to believe that a payment to a creditor is in
settlement of a debt to the creditor unless, at the time of settlement, the individual receives
a certification from the creditor that the payment is in full settlement of the debt.

    Sec. 28. [332B.11] ADVERTISEMENT AND SOLICITATION OF DEBT
SETTLEMENT SERVICES.
    Subdivision 1. Advertisement. No debt settlement services provider or lead
generator may:
(1) make any false, deceptive, or misleading statements or omissions about the rates,
terms, or conditions of an actual or proposed debt settlement services plan, or create the
likelihood of consumer confusion or misunderstanding regarding its services;
(2) represent that the debt settlement services provider is a nonprofit, not-for-profit,
or has similar status or characteristics if some or all of the debt settlement services will
be provided by a for-profit company that is a controlling or affiliated party to the debt
settlement services provider;
(3) make any communication that gives the impression that the debt settlement
services provider is acting on behalf of a government agency; or
(4) represent, claim, imply, or infer that secured debts may be settled.
    Subd. 2. Solicitation by lead generators. (a) In all print, electronic, and nonprint
solicitations, including Web sites and radio or television advertising, a lead generator must
prominently make the following verbatim disclosure: "This company does not actually
provide any debt settlement, debt consolidation, or other credit counseling services. We
ONLY refer you to companies that want to provide some or all of those services."
(b) A lead generator may not, in any advertising or solicitation to debtors:
(1) represent that any service is guaranteed; or
(2) misrepresent the benefits of its services or debt settlement or consolidation in
comparison to credit counseling, debt management, or bankruptcy.

    Sec. 29. [332B.12] DEBT SETTLEMENT SERVICES AGREEMENT
RESCISSION.
Any debtor has the right to rescind any debt settlement services agreement with a
debt settlement services provider that commits a material violation of this chapter. On
rescission, all fees paid to the debt settlement services provider or any other person other
than creditors of the debtor must be returned to the debtor entering into the debt settlement
services agreement within ten days of rescission of the debt settlement services agreement.

    Sec. 30. [332B.13] ENFORCEMENT; REMEDIES.
    Subdivision 1. Violation as deceptive practice. A violation of any of the provisions
of this chapter is considered an unfair or deceptive trade practice under section 8.31,
subdivision 1. A private right of action under section 8.31 by an aggrieved debtor is in
the public interest.
    Subd. 2. Private right of action. (a) A debt settlement provider who fails to
comply with any of the provisions of this chapter, or a lead generator who violates section
332B.11, is liable under this section in an individual action for the sum of:
(1) actual, incidental, and consequential damages sustained by the debtor as a result
of the failure; and
(2) statutory damages of up to $5,000.
(b) A debt settlement provider who fails to comply with any of the provisions of
this chapter, or a lead generator who violates section 332B.11, is liable to the named
plaintiffs under this section in a class action for the amount that each named plaintiff
could recover under paragraph (a), clause (1), and to the other class members for such
amount as the court may allow.
(c) In determining the amount of statutory damages, the court shall consider, among
other relevant factors:
(1) the frequency, nature, and persistence of noncompliance;
(2) the extent to which the noncompliance was intentional; and
(3) in the case of a class action, the number of debtors adversely affected.
(d) A plaintiff or class successful in a legal or equitable action under this section is
entitled to the costs of the action, plus reasonable attorney fees.
    Subd. 3. Injunctive relief. (a) A debtor may sue a debt settlement services provider
for temporary or permanent injunctive or other appropriate equitable relief to prevent
violations of any provision of this chapter. A court must grant injunctive relief on a
showing that the debt settlement services provider has violated any provision of this
chapter, or in the case of a temporary injunction, on a showing that the debtor is likely to
prevail on allegations that the debt settlement services provider violated any provision
of this chapter.
(b) A debtor may sue a lead generator for temporary or permanent injunctive or other
appropriate equitable relief to prevent violations of section 332B.11. A court must grant
injunctive relief on a showing that the lead generator has violated section 332B.11, or in
the case of a temporary injunction, on a showing that the debtor is likely to prevail on
allegations that the lead generator violated section 332B.11.
    Subd. 4. Remedies cumulative. The remedies provided in this section are
cumulative and do not restrict any remedy that is otherwise available. The provisions
of this chapter are not exclusive and are in addition to any other requirements, rights,
remedies, and penalties provided by law.
    Subd. 5. Public enforcement. The attorney general shall enforce this chapter
under section 8.31.

    Sec. 31. [332B.14] INVESTIGATIONS.
At any reasonable time, the commissioner may examine the books and records of
every registrant and of any person engaged in the business of providing debt settlement
services. The commissioner, once during any calendar year, may require the submission
of an audit prepared by a certified public accountant of the books and records of each
registrant. If the registrant has, within one year previous to the commissioner's demand,
had an audit prepared for some other purpose, this audit may be submitted to satisfy the
requirement of this section. The commissioner may investigate any complaint concerning
violations of this chapter and may require the attendance and sworn testimony of witnesses
and the production of documents.
Presented to the governor May 4, 2009
Signed by the governor May 7, 2009, 10:05 p.m.

700 State Office Building, 100 Rev. Dr. Martin Luther King Jr. Blvd., St. Paul, MN 55155 ♦ Phone: (651) 296-2868 ♦ TTY: 1-800-627-3529 ♦ Fax: (651) 296-0569