1.1                          A bill for an act 
  1.2             relating to agriculture; providing for a 
  1.3             second-generation ethanol development program; 
  1.4             providing grants for certain research and 
  1.5             demonstration projects; appropriating money; amending 
  1.6             Minnesota Statutes 2000, section 41A.09, subdivision 
  1.7             2a; proposing coding for new law in Minnesota 
  1.8             Statutes, chapter 41A.  
  1.9   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.10     Section 1.  Minnesota Statutes 2000, section 41A.09, 
  1.11  subdivision 2a, is amended to read: 
  1.12     Subd. 2a.  [DEFINITIONS.] For the purposes of this 
  1.13  section and section 41A.10, the terms defined in this 
  1.14  subdivision have the meanings given them. 
  1.15     (a) "Ethanol" means fermentation ethyl alcohol derived from 
  1.16  agricultural products, including potatoes, cereal, grains, 
  1.17  cheese whey, and sugar beets; forest products; or other 
  1.18  renewable resources, including residue and waste generated from 
  1.19  the production, processing, and marketing of agricultural 
  1.20  products, forest products, and other renewable resources, that: 
  1.21     (1) meets all of the specifications in ASTM specification D 
  1.22  4806-88; and 
  1.23     (2) is denatured as specified in Code of Federal 
  1.24  Regulations, title 27, parts 20 and 21. 
  1.25     (b) "Wet alcohol" means agriculturally derived fermentation 
  1.26  ethyl alcohol having a purity of at least 50 percent but less 
  1.27  than 99 percent. 
  2.1      (c) "Anhydrous alcohol" means fermentation ethyl alcohol 
  2.2   derived from agricultural products as described in paragraph 
  2.3   (a), but that does not meet ASTM specifications or is not 
  2.4   denatured and is shipped in bond for further processing. 
  2.5      (d) "Ethanol plant" means a plant at which ethanol, 
  2.6   anhydrous alcohol, or wet alcohol is produced. 
  2.7      Sec. 2.  [41A.10] [SECOND-GENERATION ETHANOL DEVELOPMENT 
  2.8   PROGRAM.] 
  2.9      Subdivision 1.  [DEVELOPMENT GOAL.] The goal of the 
  2.10  second-generation ethanol development program is to demonstrate 
  2.11  efficient utilization of nontraditional feedstocks for the 
  2.12  production of ethanol in the state in association with the 
  2.13  commercial-scale extraction of grain germ from whole grains. 
  2.14     Subd. 2.  [PREAPPROVAL BY COMMISSIONER.] To be eligible for 
  2.15  grants, loans, and producer payments under the second-generation 
  2.16  ethanol development program, a proposer must receive 
  2.17  preconstruction approval from the commissioner for a planned 
  2.18  second-generation ethanol plant and the associated germ 
  2.19  extraction facility.  The application for approval must be 
  2.20  submitted to the commissioner at least 90 days before 
  2.21  construction begins on the facilities.  The commissioner shall 
  2.22  deny or approve a properly completed application within 30 days 
  2.23  of receipt.  An approval, if granted, must include certification 
  2.24  by the commissioner of the maximum plant production for which 
  2.25  the ethanol producer credit may be paid, but not exceeding 
  2.26  15,000,000 gallons of ethanol per year.  An approval constitutes 
  2.27  commitment by the state to quarterly payments from the ethanol 
  2.28  producer payment program and, if stated, may also constitute 
  2.29  commitment to an ethanol production facility loan under section 
  2.30  41B.044, a grant for a grain germ extraction research project, 
  2.31  or both. 
  2.32     Subd. 3.  [PREFERENCES FOR ELIGIBILITY.] A producer may 
  2.33  provide information to the commissioner demonstrating that a 
  2.34  proposed ethanol plant and associated grain germ extraction 
  2.35  demonstration project will improve utilization of feedstocks not 
  2.36  commonly used in existing ethanol plants in the state.  In 
  3.1   evaluating a proposal, the commissioner shall give priority 
  3.2   consideration to plants meeting the following criteria: 
  3.3      (1) at least one of the second-generation plants is 
  3.4   engineered and designed to produce ethanol from wheat or barley; 
  3.5      (2) each plant is located in a geographic area where demand 
  3.6   exists for the by-products of ethanol production to be used as 
  3.7   livestock feed; and 
  3.8      (3) each plant must consume Minnesota-grown feedstocks. 
  3.9      Subd. 4.  [PRODUCER PAYMENTS.] (a) An ethanol producer 
  3.10  certified for producer payments under subdivision 2 may apply to 
  3.11  the commissioner for cash payments for ethanol production within 
  3.12  30 days after the end of each calendar quarter.  The claim must 
  3.13  cover ethanol production during the preceding three months. 
  3.14     (b) The commissioner shall make payments by 45 days after 
  3.15  the close of each calendar quarter.  The total quarterly payment 
  3.16  to a producer under this section may not exceed $750,000. 
  3.17     (c) An ethanol producer is eligible for producer payments 
  3.18  under this section for production during 40 consecutive calendar 
  3.19  quarters beginning with the quarter in which production began at 
  3.20  the ethanol plant. 
  3.21     Subd. 5.  [GRAIN GERM EXTRACTION RESEARCH AND DEMONSTRATION 
  3.22  GRANTS.] The commissioner may provide a grant, in an amount up 
  3.23  to $250,000, for a research and demonstration project associated 
  3.24  with a second-generation ethanol plant that advances 
  3.25  commercial-scale extraction of the germ component of grains 
  3.26  including corn, wheat, and barley. 
  3.27     Sec. 3.  [APPROPRIATION; GRAIN GERM EXTRACTION 
  3.28  DEMONSTRATION GRANTS.] 
  3.29     $250,000 is appropriated from the general fund to the 
  3.30  commissioner of agriculture for a research and development 
  3.31  project grant as provided under Minnesota Statutes, section 
  3.32  41A.10, subdivision 5.  If the commissioner determines that a 
  3.33  grantee, after making a good-faith attempt, has been unable to 
  3.34  scale up grain germ extraction technology to commercial 
  3.35  capacity, the grantee may, nevertheless, remain eligible for 
  3.36  ethanol producer payments under Minnesota Statutes, section 
  4.1   41A.10, subdivision 4.  This is a one-time appropriation and 
  4.2   remains available until expended. 
  4.3      Sec. 4.  [APPROPRIATION; ETHANOL PRODUCTION FACILITY LOAN.] 
  4.4      $1,500,000 is appropriated from the general fund to the 
  4.5   commissioner of agriculture for deposit in the ethanol 
  4.6   development fund for up to three additional loans under the 
  4.7   ethanol production facility loan program of Minnesota Statutes, 
  4.8   section 41B.044.  Payments of principal and interest on these 
  4.9   loans must be deposited in the value-added agricultural product 
  4.10  revolving fund under Minnesota Statutes, section 41B.046, 
  4.11  subdivision 3.  This is a one-time appropriation and remains 
  4.12  available until expended. 
  4.13     Sec. 5.  [APPROPRIATION; SECOND-GENERATION ETHANOL 
  4.14  DEVELOPMENT PRODUCER PAYMENTS.] 
  4.15     $....... is appropriated from the general fund to the 
  4.16  commissioner of agriculture for the biennium ending June 30, 
  4.17  2003, for second-generation ethanol development producer 
  4.18  payments under section 1.