1.1                          A bill for an act 
  1.2             relating to taxes; sales and use; exempting certain 
  1.3             energy efficient products; amending Minnesota Statutes 
  1.4             2000, sections 297A.67, by adding subdivisions; 
  1.5             297A.68, subdivision 19, and by adding a subdivision; 
  1.6             and 297B.03. 
  1.7   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.8      Section 1.  Minnesota Statutes 2000, section 297A.67, is 
  1.9   amended by adding a subdivision to read: 
  1.10     Subd. 26.  [ENERGY EFFICIENT PRODUCTS.] (a) The following 
  1.11  products are exempt if they have an energy star label: 
  1.12     (1) any door or window that qualifies for the energy star 
  1.13  label for the northern climate; 
  1.14     (2) a residential lighting fixture or a compact fluorescent 
  1.15  bulb; 
  1.16     (3) insulation; 
  1.17     (4) heating and cooling equipment such as a geothermal heat 
  1.18  pump, air conditioner, furnace, or boiler primarily designed for 
  1.19  residential use; 
  1.20     (5) a home electronic audio or visual device such as a 
  1.21  television, stereo, or video player, specifically designed for 
  1.22  residential use; 
  1.23     (6) a refrigerator, dishwasher, or clothes washer 
  1.24  specifically designed for residential use; and 
  1.25     (7) electronic office equipment for business or personal 
  1.26  use, such as a computer, facsimile machine, printer, copier, 
  2.1   scanner, or other similar devices. 
  2.2      (b) The following products are exempt if they have an 
  2.3   energyguide label that indicates that the product meets or 
  2.4   exceeds the standards listed below: 
  2.5      (1) an electric heat pump hot water heater with an energy 
  2.6   factor of at least 1.7; 
  2.7      (2) a natural gas water heater with an energy factor of at 
  2.8   least 0.65; 
  2.9      (3) a natural gas heat pump that has a coefficient of 
  2.10  performance of at least 1.25 for heating and at least 0.70 for 
  2.11  cooling; 
  2.12     (4) an electric heat pump that has a coefficient of 
  2.13  performance of at least 7.5 for heating and at least 13.5 for 
  2.14  cooling. 
  2.15     (c) For purposes of this subdivision, "energy star label" 
  2.16  means the label granted to certain products that meet United 
  2.17  States Environmental Protection Agency and United States 
  2.18  Department of Energy criteria for energy efficiency.  For 
  2.19  purposes of this subdivision, "energyguide label" means the 
  2.20  label that the United State Federal Trade Commissioner requires 
  2.21  manufacturers to apply to certain appliances under United States 
  2.22  Code, title 16, part 305. 
  2.23     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
  2.24  purchases made after June 30, 2001, and before January 1, 2007. 
  2.25     Sec. 2.  Minnesota Statutes 2000, section 297A.67, is 
  2.26  amended by adding a subdivision to read: 
  2.27     Subd. 27.  [COGENERATION DEVICE.] Small energy production 
  2.28  devices used in a cogeneration application are exempt if: 
  2.29     (1) both electricity and heat generated by the device is 
  2.30  used; 
  2.31     (2) the device has an electricity-only generation 
  2.32  efficiency of greater than 35 percent; and 
  2.33     (3) the device has a generating nameplate capacity of 
  2.34  between two and 40 kilowatts. 
  2.35     For purposes of this subdivision, "small energy production 
  2.36  device" means either a fuel cell that generates electricity and 
  3.1   heat using an electrochemical process or a microturbine that 
  3.2   generates electricity and heat through burning natural gas. 
  3.3      <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
  3.4   purchases made after June 30, 2001, and before January 1, 2007. 
  3.5      Sec. 3.  Minnesota Statutes 2000, section 297A.68, 
  3.6   subdivision 19, is amended to read: 
  3.7      Subd. 19.  [PETROLEUM PRODUCTS.] The following petroleum 
  3.8   products are exempt: 
  3.9      (1) products upon which a tax has been imposed and paid 
  3.10  under chapter 296A, and for which no refund has been or will be 
  3.11  allowed because the buyer used the fuel for nonhighway use; 
  3.12     (2) products that are used in the improvement of 
  3.13  agricultural land by constructing, maintaining, and repairing 
  3.14  drainage ditches, tile drainage systems, grass waterways, water 
  3.15  impoundment, and other erosion control structures; 
  3.16     (3) products purchased by a transit system receiving 
  3.17  financial assistance under section 174.24 or 473.384; 
  3.18     (4) products used in a passenger snowmobile, as defined in 
  3.19  section 296A.01, subdivision 39, for off-highway business use as 
  3.20  part of the operations of a resort as provided under section 
  3.21  296A.16, subdivision 2, clause (2); or 
  3.22     (5) products purchased by a state or a political 
  3.23  subdivision of a state for use in motor vehicles exempt from 
  3.24  registration under section 168.012, subdivision 1, paragraph 
  3.25  (b); or 
  3.26     (6) products with a sulphur content of less than 15 parts 
  3.27  per million, for use in any motorized vehicle. 
  3.28     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
  3.29  purchases made after June 30, 2001, and before January 1, 2007. 
  3.30     Sec. 4.  Minnesota Statutes 2000, section 297A.68, is 
  3.31  amended by adding a subdivision to read: 
  3.32     Subd. 35.  [ALTERNATIVE FUEL.] Alternative fuels for use in 
  3.33  any motorized vehicle are exempt.  For purposes of this 
  3.34  subdivision, "alternative fuel" means a fuel that the United 
  3.35  States Department of Energy recognizes and classifies as an 
  3.36  alternative fuel, including, but not limited to: 
  4.1      (1) alcohol fuels where the fuel mixture consists of at 
  4.2   least 70 percent by volume of an alcohol product such as 
  4.3   methanol or denatured alcohol; 
  4.4      (2) natural gas, whether compressed or liquefied; 
  4.5      (3) liquefied petroleum gas; 
  4.6      (4) hydrogen; 
  4.7      (5) coal-derived liquid fuels; 
  4.8      (6) fuels derived from biological materials; and 
  4.9      (7) electricity, including solar power. 
  4.10     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
  4.11  purchases made after June 30, 2001, and before January 1, 2007. 
  4.12     Sec. 5.  Minnesota Statutes 2000, section 297B.03, is 
  4.13  amended to read: 
  4.14     297B.03 [EXEMPTIONS.] 
  4.15     There is specifically exempted from the provisions of this 
  4.16  chapter and from computation of the amount of tax imposed by it 
  4.17  the following:  
  4.18     (1) purchase or use, including use under a lease purchase 
  4.19  agreement or installment sales contract made pursuant to section 
  4.20  465.71, of any motor vehicle by the United States and its 
  4.21  agencies and instrumentalities and by any person described in 
  4.22  and subject to the conditions provided in section 297A.25, 
  4.23  subdivision 18; 
  4.24     (2) purchase or use of any motor vehicle by any person who 
  4.25  was a resident of another state at the time of the purchase and 
  4.26  who subsequently becomes a resident of Minnesota, provided the 
  4.27  purchase occurred more than 60 days prior to the date such 
  4.28  person began residing in the state of Minnesota; 
  4.29     (3) purchase or use of any motor vehicle by any person 
  4.30  making a valid election to be taxed under the provisions of 
  4.31  section 297A.211; 
  4.32     (4) purchase or use of any motor vehicle previously 
  4.33  registered in the state of Minnesota when such transfer 
  4.34  constitutes a transfer within the meaning of section 118, 331, 
  4.35  332, 336, 337, 338, 351, 355, 368, 721, 731, 1031, 1033, or 
  4.36  1563(a) of the Internal Revenue Code of 1986, as amended through 
  5.1   December 31, 1999; 
  5.2      (5) purchase or use of any vehicle owned by a resident of 
  5.3   another state and leased to a Minnesota based private or for 
  5.4   hire carrier for regular use in the transportation of persons or 
  5.5   property in interstate commerce provided the vehicle is titled 
  5.6   in the state of the owner or secured party, and that state does 
  5.7   not impose a sales tax or sales tax on motor vehicles used in 
  5.8   interstate commerce; 
  5.9      (6) purchase or use of a motor vehicle by a private 
  5.10  nonprofit or public educational institution for use as an 
  5.11  instructional aid in automotive training programs operated by 
  5.12  the institution.  "Automotive training programs" includes motor 
  5.13  vehicle body and mechanical repair courses but does not include 
  5.14  driver education programs; 
  5.15     (7) purchase of a motor vehicle for use as an ambulance by 
  5.16  an ambulance service licensed under section 144E.10; 
  5.17     (8) purchase of a motor vehicle by or for a public library, 
  5.18  as defined in section 134.001, subdivision 2, as a bookmobile or 
  5.19  library delivery vehicle; 
  5.20     (9) purchase of a ready-mixed concrete truck; 
  5.21     (10) purchase or use of a motor vehicle by a town for use 
  5.22  exclusively for road maintenance, including snowplows and dump 
  5.23  trucks, but not including automobiles, vans, or pickup trucks; 
  5.24     (11) purchase or use of a motor vehicle by a corporation, 
  5.25  society, association, foundation, or institution organized and 
  5.26  operated exclusively for charitable, religious, or educational 
  5.27  purposes, but only if the vehicle is: 
  5.28     (i) a truck, as defined in section 168.011, a bus, as 
  5.29  defined in section 168.011, or a passenger automobile, as 
  5.30  defined in section 168.011, if the automobile is designed and 
  5.31  used for carrying more than nine persons including the driver; 
  5.32  and 
  5.33     (ii) intended to be used primarily to transport tangible 
  5.34  personal property or individuals, other than employees, to whom 
  5.35  the organization provides service in performing its charitable, 
  5.36  religious, or educational purpose.; 
  6.1      (12) a purchase or use of a motor vehicle with a fuel 
  6.2   efficiency greater than 45 miles per gallon in highway use, and 
  6.3   greater than 35 miles per gallon in city use, as certified by 
  6.4   the United States Environmental Protection Agency; 
  6.5      (13) a purchase or use of a motor vehicle that draws its 
  6.6   propulsion energy either: 
  6.7      (i) solely from an alternative fuel source; or 
  6.8      (ii) from a rechargeable energy storage system and either 
  6.9   unleaded gasoline, diesel fuel, or an alternative fuel or a 
  6.10  mixture of two or more of these fuels. 
  6.11     For purposes of this clause, "alternative fuel source" 
  6.12  means an alternative fuel as defined in section 297A.68, 
  6.13  subdivision 35. 
  6.14     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
  6.15  purchases made after June 30, 2001, and before January 1, 2007. 
  6.16     Sec. 6.  [REPORT.] 
  6.17     By December 1, 2005, the commissioner of commerce, in 
  6.18  consultation with the commissioner of revenue, shall report to 
  6.19  the legislative committees over energy and efficiency and tax 
  6.20  issues, the impact and effectiveness of the exemptions 
  6.21  authorized in sections 1 to 5.  This report shall include an 
  6.22  estimate of the revenue loss to the state as well as an estimate 
  6.23  on changes in energy consumption.  The commissioner shall 
  6.24  include in the report legislative recommendations as to whether 
  6.25  and how to reform or extend these exemptions.