1.1 	A bill for an act
1.2 	relating to economic development; encouraging job creation; providing an angel 
1.3 	investment credit and a Minnesota business investment company credit; making 
1.4 	changes to various income tax provisions; limiting the level of budgeted spending 
1.5 	to the amount collected in the prior biennium; providing for interlocutory appeal 
1.6 	on the question of class certification; modifying the limitation provisions 
1.7 	governing merchant actions; modifying certain private remedies; modifying 
1.8 	environmental permitting and review provisions; requiring reports; appropriating 
1.9 	money;amending Minnesota Statutes 2008, sections 8.31, subdivision 3a, by 
1.10 	adding a subdivision; 115.07; 116D.04, subdivision 2a; 290.06, subdivision 
1.11 	1; 290.068; 290.0921, subdivisions 1, 3; 541.05; Minnesota Statutes 2009 
1.12 	Supplement, sections 290.01, subdivisions 19b, 19d; 290.06, subdivision 2c; 
1.13 	290.091, subdivision 2; proposing coding for new law in Minnesota Statutes, 
1.14 	chapters 116J; 290; 297I; 540; 541.
1.15 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.16 	ARTICLE 1
1.17 	ANGEL INVESTMENT TAX CREDIT

1.18 	Section 1. [116J.8737] ANGEL INVESTMENT TAX CREDIT.
1.19 		Subdivision 1.Definitions. (a) For the purposes of this section, the following terms 
1.20 	have the meanings given.
1.21 	(b) "Qualified small business" means a business that satisfies all of the following 
1.22 	conditions:
1.23 	(1) the business has its headquarters in Minnesota;
1.24 	(2) at least 51 percent of the business's employees are employed in Minnesota, and 
1.25 	51 percent of the business's total payroll is paid or incurred in the state;
1.26 	(3) the business is engaged in, or is committed to engage in, innovation in Minnesota 
1.27 	in one of the following:
2.1 	(i) using proprietary technology to add value to a product, process, or service in a 
2.2 	qualified high-technology field;
2.3 	(ii) researching or developing a proprietary product, process, or service in a qualified 
2.4 	high-technology field;
2.5 	(iii) researching, developing, or producing a new proprietary technology for use in 
2.6 	the fields of tourism, forestry, mining, or transportation; or
2.7 	(iv) qualified green manufacturing;
2.8 	(4) other than the activities specifically listed in clause (3), the business is not 
2.9 	engaged in real estate development, insurance, banking, lending, lobbying, political 
2.10 	consulting, information technology consulting, wholesale or retail trade, leisure, 
2.11 	hospitality, transportation, construction, ethanol production from corn, or professional 
2.12 	services provided by attorneys, accountants, business consultants, physicians, or health 
2.13 	care consultants;
2.14 	(5) the business has fewer than 25 employees; 
2.15 	(6) if the business has five or more employees as measured on a full-time equivalent 
2.16 	basis, the business must pay its employees in excess of the first five annual wages at least 
2.17 	175 percent of the federal poverty guideline for the year for a family of four;
2.18 	(7) the business has not been in operation for more than ten consecutive years;
2.19 	(8) the business has not received more than $4,000,000 in qualifying investments 
2.20 	that have qualified for and received tax credits under this section;
2.21 	(9) the business is not a member of a unitary group that employs more than 100 
2.22 	employees; and
2.23 	(10) the business has not previously received private equity investments of more 
2.24 	than $2,000,000.
2.25 	(c) "Qualified high-technology field" includes, but is not limited to, aerospace, 
2.26 	agricultural processing, alternative energy, environmental engineering, food technology, 
2.27 	cellulosic ethanol, information technology, materials science technology, nanotechnology, 
2.28 	telecommunications, biotechnology, medical device products, pharmaceuticals, 
2.29 	diagnostics, biologicals, and veterinary science.
2.30 	(d) "Proprietary technology" means the technical innovations that are unique and 
2.31 	legally owned or licensed by a business and includes, without limitation, those innovations 
2.32 	that are patented, patent pending, a subject of trade secrets, or copyrighted.
2.33 	(e) "Qualified green manufacturing" means a business whose primary business 
2.34 	activity is production of products, processes, methods,  technologies, or services, excluding 
2.35 	consulting, intended to do one or more of the following:
3.1 	(1) increase the use of energy from renewable sources, as defined in section 
3.2 	216B.1691;
3.3 	(2) increase the energy efficiency of the electric utility-producing infrastructure 
3.4 	system or to increase energy conservation related to electricity or other utility use, as 
3.5 	provided in sections 216B.2401 and 216B.241;
3.6 	(3) monitor, protect, restore, and preserve the quality of surface waters; and
3.7 	(4) expand use of biofuels, including expanding the feasibility or reducing the cost 
3.8 	of producing biofuels or the types of equipment, machinery, and vehicles that can use 
3.9 	biofuels.
3.10 	(f) "Qualified taxpayer" means an accredited investor, within the meaning of 
3.11 	Regulation D of the Securities and Exchange Commission, Code of Federal Regulations, 
3.12 	title 17, section 230.501(a), who:
3.13 	(1) does not own, control, or hold power to vote 20 percent or more of the outstanding 
3.14 	securities of the qualified small business in which the eligible investment is proposed; or
3.15 	(2) does not receive more than 50 percent of the taxpayer's gross annual income from 
3.16 	the qualified small business in which the eligible investment is proposed.
3.17 	A member of the family of a taxpayer disqualified by this subdivision is not eligible 
3.18 	for a credit under this section.
3.19 	(g)(1) "Qualified angel investment network fund" means a pooled investment fund 
3.20 	that:
3.21 	(i) invests in qualified small businesses;
3.22 	(ii) is organized as a pass-through entity; and
3.23 	(iii) has at least three separate investors, all of whom are qualified taxpayers 
3.24 	as defined in paragraph (f), and that own no more than 50 percent of the outstanding 
3.25 	ownership interests in the fund; and
3.26 	(2) for purposes of determining the number of investors and the ownership interest 
3.27 	of an investor under this paragraph, the ownership interests of an investor include those of 
3.28 	the investor's family, and any corporation, limited liability company, partnership, or trust 
3.29 	in which the investor or the investor's family has a controlling equity interest or exercises 
3.30 	management control. Investments in the fund may consist of equity investments or notes 
3.31 	that pay interest or other fixed amounts, or any combination of both.
3.32 	(h) "Qualified investment" means either a cash investment of a minimum of:
3.33 	(1) $10,000 in a calendar year by a qualified taxpayer; or
3.34 	(2) $50,000 in a calendar year by a qualified angel investment network fund. 
3.35 	The qualified investment in a qualified small business must be in exchange 
3.36 	for common stock, a partnership or membership interest, preferred stock, debt with 
4.1 	mandatory conversion to equity, or an equivalent ownership interest as determined by 
4.2 	the commissioner.
4.3 	(i) "Family" means a family member within the meaning of the Internal Revenue 
4.4 	Code, section 267(c)(4).
4.5 		Subd. 2.Certification of small businesses. (a) Businesses may apply to the 
4.6 	commissioner for certification as a qualified small business. The application must be in the 
4.7 	form and be made under the procedures specified by the commissioner, accompanied by 
4.8 	an application fee of $150. The application for certification must be made available on the 
4.9 	department's Web site by August 1, 2010. Applications for subsequent years' certification 
4.10 	must be made available on the department's Web site by November 1 of the preceding 
4.11 	year. Application fees collected are appropriated to the commissioner to be used for 
4.12 	personnel and administrative expenses related to administering the program. 
4.13 	(b) A business seeking certification must submit an application for each taxable 
4.14 	year for which the business desires certification. If a qualified small business receives 
4.15 	a qualified investment for which tax credits are allocated, the business must annually 
4.16 	submit a certified small business report in the form required by the commissioner with 
4.17 	the required fee no later than February 1 for the two years subsequent to the last qualified 
4.18 	investment. Failure to file an annual report as required under this subdivision results in a 
4.19 	fine of $500 and revocation of certification.
4.20 	(c) The commissioner must maintain a list of businesses certified under this 
4.21 	subdivision and make the list accessible to the public on the department's Web site.
4.22 		Subd. 3.Certification of qualified taxpayers. (a) Taxpayers may apply to the 
4.23 	commissioner for certification as a qualified taxpayer. The application must be in the 
4.24 	form and be made under the procedures specified by the commissioner, accompanied by 
4.25 	an application fee of $350. The application for certification of qualified taxpayers must 
4.26 	be made available on the department's Web site by August 1, 2010. Applications for 
4.27 	subsequent years' certification must be made available on the department's Web site by 
4.28 	November 1 of the preceding year. Application fees are appropriated to the commissioner 
4.29 	for personnel and administrative expenses related to administering the program.
4.30 	(b) A qualified taxpayer seeking certification must submit an application for each 
4.31 	taxable year in which the qualified taxpayer seeks certification. If a qualified taxpayer 
4.32 	receives tax credits under this section, a qualified taxpayer must submit an angel investor 
4.33 	annual report in the form required by the commissioner with the required fee no later than 
4.34 	February 1 of each year for two years subsequent to the last allocation of tax credits. 
4.35 	Failure to file an angel investor annual report as required under this subdivision results 
4.36 	in the revocation of tax credits. Once a qualified taxpayer has filed the required annual 
5.1 	reports and accompanying fees for two subsequent years following allocation of tax 
5.2 	credits and complied with all other requirements for that allocation, the tax credits are 
5.3 	no longer subject to revocation.
5.4 		Subd. 4.Certification of qualified angel investment network funds. (a) 
5.5 	Angel investment network funds may apply to the commissioner of employment and 
5.6 	economic development for certification as a qualified angel investment network fund. 
5.7 	The application must be in the form and be made under the procedures specified by 
5.8 	the commissioner, accompanied by an application fee of $1,000. The application for 
5.9 	certification of qualified angel investor network funds must be made available on the 
5.10 	department's Web site by August 1, 2010. Applications for subsequent years' certification 
5.11 	must be made available by November 1 of the preceding year. Application fees collected 
5.12 	are appropriated to the commissioner to be used for personnel and administrative expenses 
5.13 	related to administering the program.
5.14 	(b) A qualified angel investment network fund seeking certification must submit an 
5.15 	application for each taxable year for which the angel investment network fund seeks 
5.16 	certification. If any member of a qualified angel investment network fund receives tax 
5.17 	credits under this section for qualified investments made by the fund, the qualified angel 
5.18 	investment network fund must annually submit an angel investor annual report in the 
5.19 	form required by the commissioner with the required fee no later than February 1 of 
5.20 	each year for two years subsequent to the last allocation of credits. Failure to file an 
5.21 	angel investor annual report as required under this subdivision results in revocation of 
5.22 	tax credits. Once a qualified angel investment network fund has filed the required annual 
5.23 	reports and accompanying fees for two subsequent years following allocation of tax 
5.24 	credits and complied with all other requirements for that allocation, the tax credits are 
5.25 	no longer subject to revocation. 
5.26 		Subd. 5.Credit allowed. (a) A qualified taxpayer or angel investor network fund is 
5.27 	allowed a credit for investment in a qualified small business in the amount determined 
5.28 	by the certification allocated by the commissioner against the tax imposed by chapter 
5.29 	290. The commissioner must not allocate more than $5,000,000 in credits to qualified 
5.30 	taxpayers or angel investment network funds in calendar year 2010, and not more than 
5.31 	$10,000,000 in credits in calendar year 2011 and each calendar year thereafter. Any 
5.32 	portion of a year's credits that is not allocated by the commissioner does not cancel and 
5.33 	may be carried forward to the subsequent year until all credits have been allocated. 
5.34 	Applications for tax investment credits must be made available on the department's 
5.35 	Web site by September 1, 2010, and the department must begin accepting applications 
6.1 	by September 1, 2010. Applications for subsequent years must be made available by 
6.2 	November 1 of the preceding year.
6.3 	(b) Tax investment credits must be allocated to qualified taxpayers or angel investor 
6.4 	network funds in the order that the tax credit request applications are filed with the 
6.5 	department. The investment specified in the application must be made within 60 days of 
6.6 	the allocation of the credits. If the investment is not made within 60 days, the credits are 
6.7 	deemed revoked. A qualified taxpayer or angel investor network fund that fails to invest 
6.8 	as specified in the application, within 60 days from allocation of the credits, must notify 
6.9 	the department of the failure to invest within five business days of the expiration of the 
6.10 	60-day investment period.
6.11 	(c) All tax credit request applications filed with the department on the same day must 
6.12 	be treated as having been filed contemporaneously. In the event that two or more qualified 
6.13 	taxpayers or angel investment network funds file tax credit request applications on the 
6.14 	same day, and the aggregate amount of credit allocation claims exceeds the aggregate limit 
6.15 	of credit under this section or the lesser amount of credits that remain unallocated on that 
6.16 	day, then the credits must be allocated among the qualified taxpayers or angel investment 
6.17 	network funds who filed on that day on a pro rata basis with respect to the amounts claimed. 
6.18 	The pro rata allocation for any one qualified taxpayer or angel investment network fund is 
6.19 	the product obtained by multiplying a fraction, the numerator of which is the amount of 
6.20 	the credit allocation claim filed on behalf of a qualified taxpayer and the denominator of 
6.21 	which is the total of all credit allocation claims filed on behalf of all applicants on that day, 
6.22 	by the amount of credits that remain unallocated on that day for the fiscal year.
6.23 	(d) The commissioner must notify the commissioner of revenue of every credit 
6.24 	allocated and every credit revoked under this section.
6.25 		Subd. 6.Annual reports. (a) By February 1 of each year for two years subsequent 
6.26 	to the last allocation of credits, qualified small businesses, qualified taxpayers, and 
6.27 	qualified angel investment network funds must submit an annual report and a filing fee of 
6.28 	$100. All report fees collected are appropriated to the commissioner for personnel and 
6.29 	administrative expense related to administering the program.
6.30 	(b) Qualified small businesses must certify to the department in the form required by 
6.31 	the commissioner that it satisfies the following requirements:
6.32 	(1) the business has its headquarters in Minnesota;
6.33 	(2) at least 51 percent of the business's employees are employed in Minnesota, and 
6.34 	51 percent of the business's total payroll is paid or incurred in the state;
6.35 	(3) that the business is engaged in, or is committed to engage in, innovation in 
6.36 	Minnesota as defined under subdivision 1; and
7.1 	(4) that the business meets the payroll requirements in subdivision 1, paragraph 
7.2 	(b), clause (6).
7.3 	(c) Qualified taxpayers must certify to the department in the form required by the 
7.4 	commissioner that the investor satisfies the following requirements:
7.5 	(1) the taxpayer continues to meet the requirements of subdivision 1, paragraph 
7.6 	(f); and
7.7 	(2) that the taxpayer continues to remain invested in the qualified small business as 
7.8 	required by section 290.0692, subdivision 3.
7.9 	(d) Qualified angel investment network funds must certify to the department in the 
7.10 	form required by the commissioner that the investor satisfies the following requirements:
7.11 	(1) the taxpayer continues to meet the requirements of subdivision 1, paragraph 
7.12 	(g); and
7.13 	(2) that the angel investment network fund continues to remain invested in the 
7.14 	qualified small business as required by section 290.0692, subdivision 3.
7.15 		Subd. 7.Rulemaking exception. The commissioner's actions in establishing 
7.16 	procedures and requirements and in making determinations and certifications to administer 
7.17 	this section are not a rule for purposes of chapter 14, are not subject to the Administrative 
7.18 	Procedure Act contained in chapter 14, and are not subject to section 14.386.
7.19 		Subd. 8.Report. Beginning in 2011, the commissioner must annually report by 
7.20 	March 15 to the chairs of the committees having jurisdiction over taxes and economic 
7.21 	development in the senate and the house of representatives on the tax credits issued under 
7.22 	this section. The report must include:
7.23 	(1) the number and amount of the credits issued;
7.24 	(2) the recipients of the credits;
7.25 	(3) the number and type of each business certified as a qualified small business;
7.26 	(4) to the extent determinable, the total amount of investment generated by these 
7.27 	credits; and
7.28 	(5) any other information relevant to evaluating the effect of these credits.

7.29 	EFFECTIVE DATE. This section is effective the day following final enactment.

7.30 	Sec. 2. [290.0692] ANGEL INVESTMENT CREDIT; CREDIT ALLOWED; 
7.31 	LIMITATIONS; HOLDING PERIOD; CARRYOVER.
7.32 		Subdivision 1.Credit allowed. A qualified taxpayer is allowed a credit against the 
7.33 	tax imposed under this chapter for investments made in the year in a qualified small 
7.34 	business as defined under section 116J.8737. The credit equals 25 percent of the qualified 
7.35 	taxpayer's investment in the business, but not to exceed the lesser of:
8.1 	(1) the liability for tax under this chapter, including the applicable alternative 
8.2 	minimum tax, but excluding the minimum fee under section 290.0922; and
8.3 	(2) the amount of the certificate provided to the qualified taxpayer under section 
8.4 	116J.8737.
8.5 		Subd. 2.Limitations. No taxpayer may receive more than $125,000 in credits 
8.6 	under this section in any one year.
8.7 		Subd. 3.Holding periods. The credit is allowed only for investments for which a 
8.8 	credit has been allocated by the commissioner of employment and economic development 
8.9 	under section 116J.8737. Any credit taken by a taxpayer must be repaid, and any unused 
8.10 	credits must be canceled, if the investment in the qualified small business is not held for at 
8.11 	least three years. The three-year holding period does not apply if:
8.12 	(1) the investment by the qualified taxpayer becomes worthless before the end 
8.13 	of the three-year period; 
8.14 	(2) 80 percent or more of the assets of the qualified small business is sold before 
8.15 	the end of the three-year period;
8.16 	(3) the qualified small business is sold before the end of the three-year period; or
8.17 	(4) the qualified small business's common stock begins trading on a public exchange 
8.18 	before the end of the three-year period.
8.19 		Subd. 4.Proportional credits. Each pass-through entity must provide each 
8.20 	investor a statement indicating the investor's share of the credit amount certified to the 
8.21 	pass-through entity based on its share of the pass-through entity's assets at the time of 
8.22 	the qualified investment.
8.23 		Subd. 5.Carryover. If the amount of the credit under this subdivision for any 
8.24 	taxable year exceeds the liability for tax, the excess is a credit carryover to each of the ten 
8.25 	succeeding taxable years. The entire amount of the excess unused credit for the taxable 
8.26 	year must be carried first to the earliest of the taxable years to which the credit may be 
8.27 	carried. The amount of the unused credit that may be added under this subdivision may 
8.28 	not exceed the taxpayer's liability for tax less the credit for the taxable year.
8.29 		Subd. 6.Transfer of credits. Any taxpayer who has not had liability under this 
8.30 	chapter for the immediate past three taxable years and does not have anticipated liability 
8.31 	for the current taxable year may transfer the entirety of the credit to any natural person of 
8.32 	net worth, as defined in the Code of Federal Regulations, title 17, section 230.501(a). No 
8.33 	person is entitled to a refund for the interest created under this subdivision. Only the full 
8.34 	credit for any one taxpayer may be transferred and the interest may be transferred only one 
8.35 	time. A credit acquired by transfer is subject to the limitations prescribed in this section. 
9.1 	Documentation of any credit acquired by transfer must be provided by the taxpayer in 
9.2 	the form required by the commissioner.
9.3 		Subd. 7.Audit powers. Notwithstanding the certification eligibility issued by the 
9.4 	commissioner of employment and economic development under section 116J.8737, the 
9.5 	commissioner may utilize any audit and examination powers under chapters 270C or 
9.6 	289A to the extent necessary to verify that the taxpayer is eligible for the credit and to 
9.7 	assess for the amount of any improperly claimed credit.

9.8 	EFFECTIVE DATE. This section is effective for investments made after July 
9.9 	1, 2010, for taxable years beginning after December 31, 2009, and only applies to 
9.10 	investments for which a credit has been allocated by the commissioner of employment and 
9.11 	economic development.

9.12 	ARTICLE 2
9.13 	MINNESOTA BUSINESS INVESTMENT COMPANY CREDIT

9.14 	Section 1. [116J.665] MINNESOTA BUSINESS INVESTMENT COMPANY 
9.15 	CREDIT.
9.16 		Subdivision 1.Definitions. (a) For purposes of this section, the following terms 
9.17 	have the meanings given.
9.18 	(b) "Affiliate" means:
9.19 	(1) any person who, directly or indirectly, beneficially owns, controls, or holds 
9.20 	power to vote 15 percent or more of the outstanding voting securities or other voting 
9.21 	ownership interest of a Minnesota business investment company or insurance company; or
9.22 	(2) any person, 15 percent or more of whose outstanding voting securities or other 
9.23 	voting ownership interests are directly or indirectly beneficially owned, controlled, or held 
9.24 	with power to vote by a Minnesota business investment company or insurance company.
9.25 	Notwithstanding this subdivision, an investment by a participating investor in a 
9.26 	Minnesota business investment company pursuant to an allocation of premium tax credits 
9.27 	under this section does not cause that Minnesota business investment company to become 
9.28 	an affiliate of that participating investor.
9.29 	(c) "Allocation date" means the date on which credits under section 297I.23 are 
9.30 	allocated to the participating investors of a Minnesota business investment company 
9.31 	under this section.
9.32 	(d) "Designated capital" means an amount of money that:
9.33 	(1) is invested by a participating investor in a Minnesota business investment 
9.34 	company; and
10.1 	(2) fully funds the purchase price of either or both participating investor's equity 
10.2 	interest in a Minnesota business investment company or a qualified debt instrument issued 
10.3 	by a Minnesota business investment company.
10.4 	(e) "Minnesota business investment company" means a partnership, corporation, 
10.5 	trust, or limited liability company, organized on a for-profit basis, that:
10.6 	(1) has its principal office located or is headquartered in Minnesota;
10.7 	(2) has as its primary business activity the investment of cash in qualified businesses; 
10.8 	and
10.9 	(3) is certified by the Department of Employment and Economic Development as 
10.10 	meeting the criteria in this section.
10.11 	(f) "Participating investor" means any insurance company as defined in section 
10.12 	60A.02, subdivision 4, excluding health maintenance organizations, that contributes 
10.13 	designated capital pursuant to this section.
10.14 	(g) "Person" means any natural person or entity, including, but not limited to, a 
10.15 	corporation, general or limited partnership, trust, or limited liability company.
10.16 	(h)(1) "Qualified business" means a business that is independently owned and 
10.17 	operated and meets all of the following requirements:
10.18 	(i) it is headquartered in Minnesota, its principal business operations are located in 
10.19 	this state, and at least 80 percent of its employees are located in Minnesota;
10.20 	(ii) it has no more than 100 employees;
10.21 	(iii) it is not engaged in:
10.22 	(A) professional services provided by accountants, doctors, or lawyers;
10.23 	(B) banking or lending;
10.24 	(C) real estate development;
10.25 	(D) insurance;
10.26 	(E) oil and gas exploration;
10.27 	(F) direct gambling activities;
10.28 	(G) retail sales; or
10.29 	(H) making loans to or investments in a Minnesota business investment company 
10.30 	or an affiliate; and
10.31 	(iv) it is not a franchise of and has no financial relationship with a Minnesota business 
10.32 	investment company or any affiliate of a Minnesota business investment company prior to 
10.33 	a Minnesota business investment company's first qualified investment in the business;
10.34 	(2) a business classified as a qualified business at the time of the first qualified 
10.35 	investment in the business remains classified as a qualified business and may receive 
10.36 	continuing qualified investments from any Minnesota business investment company. 
11.1 	Continuing investments constitute qualified investments even though the business may not 
11.2 	meet the definition of a qualified business at the time of the continuing investments.
11.3 	(i) "Qualified debt instrument" means a debt instrument issued by a Minnesota 
11.4 	business investment company which meets all of the following criteria:
11.5 	(1) it is issued at par value or a premium; and
11.6 	(2) it has an original maturity date of at least four years from the date of issuance, 
11.7 	and a repayment schedule which is not faster than a level principal amortization over 
11.8 	four years.
11.9 	(j) "Qualified distribution" means any distribution or payment made by a Minnesota 
11.10 	business investment company in connection with any of the following:
11.11 	(1) costs and expenses of forming, syndicating, and organizing the Minnesota 
11.12 	business investment company, including fees paid for professional services, and the costs 
11.13 	of financing and insuring the obligations of a Minnesota business investment company, 
11.14 	provided no payment is made to a participating investor;
11.15 	(2) an annual management fee not to exceed one percent of designated capital on 
11.16 	an annual basis to offset the costs and expenses of managing and operating a Minnesota 
11.17 	business investment company;
11.18 	(3) reasonable and necessary fees in accordance with industry custom for ongoing 
11.19 	professional services, including, but not limited to, legal and accounting services related 
11.20 	to the operation of a Minnesota business investment company, not including lobbying or 
11.21 	governmental relations;
11.22 	(4) any increase or projected increase in federal or state taxes, including penalties 
11.23 	and related interest of the equity owners of a Minnesota business investment company 
11.24 	resulting from the earnings or other tax liability of a Minnesota business investment 
11.25 	company to the extent that the increase is related to the ownership, management, or 
11.26 	operation of a Minnesota business investment company.
11.27 	(5) Payments of principal and interest to holders of qualified debt instruments issued 
11.28 	by a Minnesota business investment company may be made without restriction whatsoever.
11.29 	(k) "Qualified investment" means the investment of money by a Minnesota 
11.30 	business investment company in a qualified business for the purchase of any debt, 
11.31 	debt participation, equity, or hybrid security of any nature and description whatsoever, 
11.32 	including a debt instrument or security that has the characteristics of debt but that provides 
11.33 	for conversion into equity or equity participation instruments such as options or warrants. 
11.34 	Any repayment of a qualified investment prior to one year from the date of issuance shall 
11.35 	result in the amount of the qualified investment being reduced by 50 percent for purposes 
11.36 	of the cumulative investment requirement in subdivision 8, paragraph (d).
12.1 	(l) "State premium tax liability" means any liability incurred by an insurance 
12.2 	company under chapter 297I or in the case of a repeal or a rate reduction by the state of 
12.3 	the liability imposed by chapter 297I, any other tax liability imposed upon an insurance 
12.4 	company by the state, other than the tax imposed on taxpayers under section 290.05.
12.5 		Subd. 2.Certification. (a) The department must provide a standardized format for 
12.6 	applying for the business investment credit under section 297I.23, and for certification as a 
12.7 	Minnesota business investment company.
12.8 	(b) An applicant for certification as a Minnesota business investment company 
12.9 	is required to:
12.10 	(1) file an application with the department that includes, without limitation, a 
12.11 	statement that the applicant has read and understands the requirements of this chapter;
12.12 	(2) pay a nonrefundable application fee of $7,500 at the time of filing the application;
12.13 	(3) submit as part of its application an audited balance sheet that contains an 
12.14 	unqualified opinion of an independent certified public accountant issued not more than 35 
12.15 	days before the application date that states that the applicant has an equity capitalization 
12.16 	of $500,000 or more in the form of unencumbered cash, marketable securities, or other 
12.17 	liquid assets; and
12.18 	(4) have at least two principals or persons, at least one of which is primarily located 
12.19 	in Minnesota, employed or engaged to manage the funds who each have a minimum of 
12.20 	five years of money management experience in the venture capital or business industry.
12.21 	(c) The department may certify partnerships, corporations, trusts, or limited liability 
12.22 	companies, organized on a for-profit basis, which submit an application to be designated as 
12.23 	a Minnesota business investment company if the applicant is located, headquartered, and 
12.24 	licensed or registered to conduct business in Minnesota, has as its primary business activity 
12.25 	the investment of cash in qualified businesses, and meets the other criteria in this section. 
12.26 	(d) The department must review the organizational documents of each applicant 
12.27 	for certification and the business history of each applicant and determine whether the 
12.28 	applicant has satisfied the requirements of this section.
12.29 	(e) Within 45 days after the receipt of an application, the department must issue the 
12.30 	certification or refuse the certification and communicate in detail to the applicant the 
12.31 	grounds for refusal, including suggestions for the removal of such grounds.
12.32 	(f) The department must begin accepting applications to become a Minnesota 
12.33 	business investment company as defined under section 297I.23 by August 1, 2010.
12.34 	(g) All certification fees collected by the department under this chapter are 
12.35 	appropriated to the commissioner to be used for personnel and administrative expenses 
12.36 	related to administering the program.
13.1 		Subd. 3.Requirements. (a) A participating investor or affiliate of a participating 
13.2 	investor must not, directly or indirectly:
13.3 	(1) beneficially own, whether through rights, options, convertible interest, or 
13.4 	otherwise, 15 percent or more of the voting securities or other voting ownership interest of 
13.5 	a Minnesota business investment company;
13.6 	(2) manage a Minnesota business investment company; or
13.7 	(3) control the direction of investments for a Minnesota business investment 
13.8 	company.
13.9 	(b) A Minnesota business investment company may obtain one or more guaranties, 
13.10 	indemnities, bonds, insurance policies, or other payment undertakings for the benefit 
13.11 	of its participating investors from any entity, except that in no case can more than one 
13.12 	participating investor of a Minnesota business investment company on an aggregate 
13.13 	basis with all affiliates of the participating investor be entitled to provide the guaranties, 
13.14 	indemnities, bonds, insurance policies, or other payment undertakings in favor of the 
13.15 	participating investors of a Minnesota business investment company and its affiliates in 
13.16 	this state.
13.17 	(c) This subdivision does not preclude a participating investor or other party 
13.18 	from exercising its legal rights and remedies, including, without limitation, interim 
13.19 	management of a Minnesota business investment company, in the event that a Minnesota 
13.20 	business investment company is in default of its statutory obligations or its contractual 
13.21 	obligations to the participating investor or other party, or from monitoring a Minnesota 
13.22 	business investment company to ensure its compliance with this section or disallowing 
13.23 	any investments that have not been approved by the department.
13.24 	(d) The department may contract with an independent third party to review, 
13.25 	investigate, and certify that the applications comply with this section.
13.26 		Subd. 4.Aggregate limitations on investment tax credits; allocation. (a) 
13.27 	The aggregate amount of investment tax credits to be allocated to all participating 
13.28 	investors of Minnesota business investment companies under this section shall not exceed 
13.29 	$100,000,000. No Minnesota business investment company, on an aggregate basis with its 
13.30 	affiliates, may file credit allocation claims that exceed $100,000,000.
13.31 	(b) Credits must be allocated to participating investors in the order that the credit 
13.32 	allocation claims are filed with the department, provided that all credit allocation 
13.33 	claims filed with the department on the same day must be treated as having been filed 
13.34 	contemporaneously. Any credit allocation claims filed with the department prior to the 
13.35 	initial credit allocation claim filing date are deemed to have been filed on the initial credit 
13.36 	allocation claim filing date. The department must set the initial credit allocation claim 
14.1 	filing date not less than 120 days and not greater than 150 days after the department 
14.2 	begins accepting applications for certification.
14.3 	(c) In the event that two or more Minnesota business investment companies file 
14.4 	credit allocation claims with the department on behalf of their respective participating 
14.5 	investors on the same day, and the aggregate amount of credit allocation claims exceeds 
14.6 	the aggregate limit of investment tax credits under this section or the lesser amount of 
14.7 	credits that remain unallocated on that day, then the department must allocate the credits 
14.8 	among the participating investors who filed on that day on a pro rata basis with respect 
14.9 	to the amounts claimed. The pro rata allocation for any one participating investor is the 
14.10 	product obtained by multiplying a fraction, the numerator of which is the amount of the 
14.11 	credit allocation claim filed on behalf of a participating investor and the denominator of 
14.12 	which is the total of all credit allocation claims filed on behalf of all participating investors 
14.13 	on that day, by the aggregate limit of credits under this section or the lesser amount of 
14.14 	credits that remain unallocated on that day.
14.15 	(d) Within ten business days after the department receives a credit allocation claim 
14.16 	filed by a Minnesota business investment company on behalf of one or more of its 
14.17 	participating investors, the department must notify the Minnesota business investment 
14.18 	company of the amount of credits allocated to each of the participating investors of that 
14.19 	Minnesota business investment company. In the event a Minnesota business investment 
14.20 	company does not receive an investment of designated capital from each participating 
14.21 	investor required to earn the amount of credits allocated to the participating investor 
14.22 	within ten business days of the Minnesota business investment company's receipt of notice 
14.23 	of allocation, then it shall notify the department on or before the next business day, and 
14.24 	the credits allocated to the participating investor of the Minnesota business investment 
14.25 	company are forfeited. The department must then reallocate those forfeited credits among 
14.26 	the participating investors of the other Minnesota business investment companies on a pro 
14.27 	rata basis with respect to the credit allocation claims filed on behalf of the participating 
14.28 	investors. The commissioner is authorized, but not required, to levy a fine of not more than 
14.29 	$50,000 on any participating investor that does not invest the full amount of designated 
14.30 	capital required to fund the credits allocated to it by the department in accordance with the 
14.31 	credit allocation claim filed on its behalf.
14.32 	(e) No participating investor, on an aggregate basis with its affiliates, may file an 
14.33 	allocation claim for more than 25 percent of the maximum amount of investment tax 
14.34 	credits authorized under this subdivision, regardless of whether the claim is made in 
14.35 	connection with one or more Minnesota business investment companies.
15.1 		Subd. 5.Requirements for continuance of certification. (a) To maintain its 
15.2 	certification, a Minnesota business investment company must make qualified investments 
15.3 	as follows:
15.4 	(1) within two years after the allocation date, a Minnesota business investment 
15.5 	company must invest an amount equal to at least 35 percent of its designated capital in 
15.6 	qualified investments; and
15.7 	(2) within three years after the allocation date, a Minnesota business investment 
15.8 	company must invest an amount equal to at least 50 percent of its designated capital 
15.9 	in qualified investments.
15.10 	(b) Prior to making a proposed qualified investment in a specific business, a 
15.11 	Minnesota business investment company must request from the department a written 
15.12 	determination that the proposed investment qualifies as a qualified investment in a 
15.13 	qualified business. The department must notify a Minnesota business investment company 
15.14 	within ten business days from the receipt of a request of its determination and an 
15.15 	explanation thereof. If the department fails to notify the Minnesota business investment 
15.16 	company of its determination within the ten-business-day period, the proposed investment 
15.17 	is deemed a qualified investment in a qualified business. If the department determines that 
15.18 	the proposed investment does not meet the definition of a qualified investment or qualified 
15.19 	business, or both, the department may nevertheless consider the proposed investment a 
15.20 	qualified investment and, if necessary, the business a qualified business, if the department 
15.21 	determines that the proposed investment furthers state economic development.
15.22 	(c) All designated capital not invested in qualified investments by a Minnesota 
15.23 	business investment company shall be held or invested in such manner as the Minnesota 
15.24 	business investment company, in its discretion, deems appropriate. Designated capital 
15.25 	and proceeds of designated capital returned to a Minnesota business investment company 
15.26 	after being originally invested in qualified investments may be invested again in qualified 
15.27 	investments and the investment shall count toward the requirements of paragraph (a) with 
15.28 	respect to making investments of designated capital in qualified investments.
15.29 	(d) If, within four years after its allocation date, a Minnesota business investment 
15.30 	company has not invested at least 60 percent of its designated capital in qualified 
15.31 	investments, the Minnesota business investment company must not be permitted to pay 
15.32 	management fees.
15.33 	(e) If, within six years after its allocation date, a Minnesota business investment 
15.34 	company has not invested at least 100 percent of its designated capital in qualified 
15.35 	investments, the Minnesota business investment company must not be permitted to pay 
15.36 	management fees.
16.1 	(f) A Minnesota business investment company may not invest more than 15 percent 
16.2 	of its designated capital in any one qualified business without the specific approval 
16.3 	of the department.
16.4 	(g) For purposes of calculating the investment percentage thresholds of paragraph 
16.5 	(a), the cumulative amount of all qualified investments made by a Minnesota business 
16.6 	investment company from the allocation date must be considered.
16.7 		Subd. 6.Minnesota business investment company reporting requirements. (a) 
16.8 	Each Minnesota business investment company must report the following to the department 
16.9 	in the form designated by the commissioner:
16.10 	(1) as soon as practicable after the receipt of designated capital:
16.11 	(i) the name of each participating investor from which the designated capital was 
16.12 	received, including such participating investor's insurance tax identification number;
16.13 	(ii) the amount of each participating investor's investment of designated capital; and
16.14 	(iii) the date on which the designated capital was received;
16.15 	(2) on an annual basis, on or before January 31 of each year:
16.16 	(i) the amount of the Minnesota business investment company's designated capital 
16.17 	that remains to be invested in qualified investments at the end of the immediately 
16.18 	preceding taxable year;
16.19 	(ii) whether or not the Minnesota business investment company has invested more 
16.20 	than 15 percent of its total designated capital in any one business;
16.21 	(iii) all qualified investments that the Minnesota business investment company has 
16.22 	made in the previous taxable year, including the number of employees of each qualified 
16.23 	business in which it has made investments at the time of such investment, and as of 
16.24 	December 1 of the preceding taxable year; and
16.25 	(iv) for any qualified business where the Minnesota business investment company 
16.26 	no longer has an investment, the Minnesota business investment company must provide 
16.27 	employment figures for that company as of the last day before the investment was 
16.28 	terminated;
16.29 	(3) other information that the department may reasonably request that helps the 
16.30 	department ascertain the impact of the Minnesota business investment company program 
16.31 	both directly and indirectly on the economy of the state including, but not limited to, the 
16.32 	number of jobs created by qualified businesses that have received qualified investments;
16.33 	(4) within 90 days of the close of its fiscal year, annual audited financial statements 
16.34 	of the Minnesota business investment company, which must include the opinion of an 
16.35 	independent certified public accountant; and
17.1 	(5) an agreed upon procedures report or equivalent regarding the operations of the 
17.2 	Minnesota business investment company.
17.3 	(b) A Minnesota business investment company must pay to the department an 
17.4 	annual, nonrefundable certification fee of $5,000 on or before April 1, or $10,000 if later. 
17.5 	No annual certification fee is required if the payment date for the fee is within six months 
17.6 	of the date a Minnesota business investment company is first certified by the department.
17.7 	(c) Upon satisfying the requirements of subdivision 5, paragraph (a), clause (2), 
17.8 	a Minnesota business investment company must provide the notice to the department 
17.9 	and the department shall, within 60 days of receipt of the notice, either confirm that the 
17.10 	Minnesota business investment company has satisfied the requirements of subdivision 
17.11 	5, paragraph (a), clause (2), as of such date or provide notice of noncompliance and an 
17.12 	explanation of any existing deficiencies. If the department does not provide notification 
17.13 	within 60 days, the Minnesota business investment company is deemed to have met the 
17.14 	requirements of subdivision 5, paragraph (a), clause (2).
17.15 		Subd. 7.Distributions. (a) A Minnesota business investment company may 
17.16 	make qualified distributions at any time. In order for a Minnesota business investment 
17.17 	company to make a distribution other than a qualified distribution to its equity holders, 
17.18 	the cumulative amount of all qualified investments of the Minnesota business investment 
17.19 	company must equal or exceed 100 percent of its designated capital.
17.20 	(b) The state shall receive ten percent of the net profits on qualified investments. 
17.21 	For purposes of this paragraph, "net profits on qualified investments" means the amount 
17.22 	of money returned to the Minnesota business investment company in exchange for or 
17.23 	repayment of its qualified investments in qualified businesses in excess of the amount 
17.24 	invested by the Minnesota business investment company in qualified investments. The 
17.25 	net profits on qualified investments are the aggregate of all of the Minnesota business 
17.26 	investment company's qualified investments where gains on qualified investments are 
17.27 	netted against losses on qualified investments.
17.28 		Subd. 8.Decertification. (a) The department shall conduct an annual review of 
17.29 	each Minnesota business investment company to determine if a Minnesota business 
17.30 	investment company is abiding by the requirements of certification and to ensure that no 
17.31 	investment has been made in violation of this section. The cost of the annual review 
17.32 	must be paid by each Minnesota business investment company according to a reasonable 
17.33 	fee schedule adopted by the department.
17.34 	(b) Any material violation of this section, including any material misrepresentation 
17.35 	made to the department in connection with the application process, is grounds for 
17.36 	decertification of a Minnesota business investment company and the disallowance of 
18.1 	credits under section 297I.23, provided that in all instances the department shall provide 
18.2 	notice to the Minnesota business investment company of the grounds of the proposed 
18.3 	decertification and the opportunity to cure the violation before any decertification becomes 
18.4 	effective.
18.5 	(c) The department shall send written notice of decertification to the commissioner 
18.6 	of revenue and to the address of each participating investor whose tax credit is subject 
18.7 	to recapture or forfeiture, using the address shown on the last filing submitted to the 
18.8 	department.
18.9 	(d) Once a Minnesota business investment company has invested an amount 
18.10 	cumulatively equal to 100 percent of its designated capital in qualified investments, 
18.11 	provided that the Minnesota business investment company has met all other requirements 
18.12 	under this section as of such date, the Minnesota business investment company is no 
18.13 	longer subject to regulation by the department or the reporting requirements under 
18.14 	subdivision 6. Upon receiving certification by a Minnesota business investment company 
18.15 	that it has invested an amount equal to 100 percent of its designated capital, the department 
18.16 	shall notify a Minnesota business investment company within 60 days that it has or has not 
18.17 	met the requirements, with a reason for the determination if it has not. If the department 
18.18 	does not provide notification of deregulation within 60 days, the Minnesota business 
18.19 	investment company is deemed to have met the requirements and is deemed to no longer 
18.20 	be subject to regulation by the department.
18.21 		Subd. 9.Registration requirements. All investments by participating investors 
18.22 	for which tax credits are awarded under this section must be registered or specifically 
18.23 	exempt from registration.
18.24 		Subd. 10.Rulemaking. The commissioner's actions in establishing procedures and 
18.25 	requirements and in making determinations and certifications to administer this section are 
18.26 	not a rule for purposes of chapter 14, are not subject to the Administrative Procedure Act 
18.27 	contained in chapter 14, and are not subject to section 14.386.
18.28 		Subd. 11.Reports to governor and legislature. The department shall make an 
18.29 	annual report by March 15 of each year to the governor and the chairs and ranking 
18.30 	minority members of the legislative committees and divisions having jurisdiction over 
18.31 	taxes and economic development. The report must include:
18.32 	(1) the number of Minnesota business investment companies holding designated 
18.33 	capital;
18.34 	(2) the amount of designated capital invested in each Minnesota business investment 
18.35 	company;
19.1 	(3) the cumulative amount that each Minnesota business investment company has 
19.2 	invested as of January 1, 2011, and the cumulative total each year thereafter;
19.3 	(4) the cumulative amount of follow-on capital that the investments of each 
19.4 	Minnesota business investment company have created in terms of capital invested in 
19.5 	qualified businesses at the same time or subsequent to investments made by a Minnesota 
19.6 	business investment company in such businesses by sources other than Minnesota 
19.7 	business investment companies;
19.8 	(5) the total amount of investment tax credits applied under this section for each year;
19.9 	(6) the performance of each Minnesota business investment company with regard to 
19.10 	the requirements for continued certification;
19.11 	(7) the classification of the companies in which each Minnesota business investment 
19.12 	company has invested according to industrial sector and size of company;
19.13 	(8) the gross number of jobs created by investments made by each Minnesota 
19.14 	business investment company and the number of jobs retained;
19.15 	(9) the location of the companies in which each Minnesota business investment 
19.16 	company has invested;
19.17 	(10) those Minnesota business investment companies that have been decertified, 
19.18 	including the reasons for decertification; and
19.19 	(11) other related information as necessary to evaluate the effect of this section on 
19.20 	economic development.

19.21 	EFFECTIVE DATE. This section is effective the day following final enactment.

19.22 	Sec. 2. [297I.23] MINNESOTA BUSINESS INVESTMENT COMPANY CREDIT.
19.23 		Subdivision 1.Credit allowed. (a) A participating investor as defined under section 
19.24 	116J.665, subdivision 1, is allowed a credit against the tax imposed in this chapter equal to 
19.25 	80 percent of the participating investor's investment of designated capital in a Minnesota 
19.26 	business investment company. Beginning March 1, 2015, and ending with the tax return 
19.27 	due March 1, 2018, a participating investor may claim yearly an amount equal to 20 
19.28 	percent of the participating investor's investment of designated capital against the tax 
19.29 	liability under this chapter for the preceding calendar year.
19.30 	(b) The credit for any calendar year must not exceed the liability for tax. If the 
19.31 	amount of the credit determined under this section for any calendar year exceeds the 
19.32 	liability for tax, the excess is an investment tax credit carryover to each of the succeeding 
19.33 	calendar years and must be carried forward to each succeeding calendar year until the 
19.34 	entire carryforward has been credited against the participating investor's liability for tax 
20.1 	under this chapter. Credits may be used only on an annual premium tax return filed by 
20.2 	a participating investor.
20.3 	(c) A participating investor claiming a credit under this section is not required to pay 
20.4 	any additional retaliatory tax levied by Minnesota as a result of claiming the credit.
20.5 	(d) A participating investor is not required to reduce the amount of tax passed to the 
20.6 	insured pursuant to the state premium tax liability included by the participating investor 
20.7 	in connection with ratemaking for any insurance contract written in this state because of 
20.8 	a reduction in the participating investor's tax liability based on the tax credit allowed 
20.9 	under this section.
20.10 	(e) Decertification of a Minnesota business investment company under section 
20.11 	116J.665 may result in the disallowance and the recapture of the credit allowed under this 
20.12 	section. The amount disallowed and recaptured must be assessed as follows:
20.13 	(1) decertification of a Minnesota business investment company within two years 
20.14 	of the allocation date of tax credits and prior to meeting the requirements of section 
20.15 	116J.665, subdivision 5, paragraph (a), clause (1), shall result in the disallowance of all 
20.16 	of the credits allowed under this section;
20.17 	(2) decertification of a Minnesota business investment company after two years 
20.18 	of the allocation date of tax credits, but prior to meeting the requirements of section 
20.19 	116J.665, subdivision 5, paragraph (a), clause (1), results in the disallowance of one-half 
20.20 	of all the credits allowed under this section; and 
20.21 	(3) decertification of Minnesota business investment company that has already met 
20.22 	the requirements of section 116J.665, subdivision 5, paragraph (a), clause (1), does not 
20.23 	cause the disallowance of any credits allowed under this section nor the recapture of any 
20.24 	portion of the credits that was previously taken.
20.25 		Subd. 2.Transfers. A participating investor must not transfer, agree to transfer, 
20.26 	sell, or agree to sell the credit under this section until 180 days from the date on which 
20.27 	the participating investor invested designated capital. After 180 days from the date of 
20.28 	investment, a participating investor, or subsequent transferee, may transfer credits to 
20.29 	another person who is subject to tax and must notify the department in the form prescribed 
20.30 	by the commissioner within 30 days of the transfer. A person must not transfer a credit 
20.31 	more than once in a 12-month period. No person is entitled to a refund for the interest 
20.32 	created under this subdivision. A credit acquired by transfer is subject to the limitations 
20.33 	prescribed in this section. Any transfer or sale of the credits does not affect the time 
20.34 	schedule for claiming the credit. Any tax credits recaptured under this section remain the 
20.35 	liability of the participating investor that actually applied the credit towards its tax liability.
21.1 		Subd. 3.Repayment of tax benefits received. (a) Decertification of a Minnesota 
21.2 	business investment company or revocation of credits under section 116J.665, results 
21.3 	in the disallowance to certified investors of any credits for that calendar year or future 
21.4 	calendar years and the participating investor is required to repay any credits claimed for 
21.5 	the previous year. Repayment must be made within 60 days of the decertification or 
21.6 	the revocation of the certification.
21.7 	(b) The provisions of chapters 270C and 297I relating to audit, assessment, refund, 
21.8 	collection, and appeals are applicable to the credits claimed and repayment required under 
21.9 	this section. The commissioner may impose civil penalties as provided in section 297I.85, 
21.10 	and additional tax and penalties are subject to interest at the rate provided in section 
21.11 	270C.40, from the date payment was due.

21.12 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
21.13 	December 31, 2010.

21.14 	ARTICLE 3
21.15 	INDIVIDUAL INCOME AND CORPORATE FRANCHISE TAXES

21.16 	Section 1. Minnesota Statutes 2009 Supplement, section 290.01, subdivision 19b, 
21.17 	is amended to read:
21.18 		Subd. 19b.Subtractions from federal taxable income. For individuals, estates, 
21.19 	and trusts, there shall be subtracted from federal taxable income:
21.20 	(1) net interest income on obligations of any authority, commission, or 
21.21 	instrumentality of the United States to the extent includable in taxable income for federal 
21.22 	income tax purposes but exempt from state income tax under the laws of the United States;
21.23 	(2) if included in federal taxable income, the amount of any overpayment of income 
21.24 	tax to Minnesota or to any other state, for any previous taxable year, whether the amount 
21.25 	is received as a refund or as a credit to another taxable year's income tax liability;
21.26 	(3) the amount paid to others, less the amount used to claim the credit allowed under 
21.27 	section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten 
21.28 	to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and 
21.29 	transportation of each qualifying child in attending an elementary or secondary school 
21.30 	situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a 
21.31 	resident of this state may legally fulfill the state's compulsory attendance laws, which 
21.32 	is not operated for profit, and which adheres to the provisions of the Civil Rights Act 
21.33 	of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or 
21.34 	tuition as defined in section 290.0674, subdivision 1, clause (1). As used in this clause, 
22.1 	"textbooks" includes books and other instructional materials and equipment purchased 
22.2 	or leased for use in elementary and secondary schools in teaching only those subjects 
22.3 	legally and commonly taught in public elementary and secondary schools in this state. 
22.4 	Equipment expenses qualifying for deduction includes expenses as defined and limited in 
22.5 	section 290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional 
22.6 	books and materials used in the teaching of religious tenets, doctrines, or worship, the 
22.7 	purpose of which is to instill such tenets, doctrines, or worship, nor does it include books 
22.8 	or materials for, or transportation to, extracurricular activities including sporting events, 
22.9 	musical or dramatic events, speech activities, driver's education, or similar programs. No 
22.10 	deduction is permitted for any expense the taxpayer incurred in using the taxpayer's or 
22.11 	the qualifying child's vehicle to provide such transportation for a qualifying child. For 
22.12 	purposes of the subtraction provided by this clause, "qualifying child" has the meaning 
22.13 	given in section 32(c)(3) of the Internal Revenue Code;
22.14 	(4) income as provided under section 290.0802;
22.15 	(5) to the extent included in federal adjusted gross income, income realized on 
22.16 	disposition of property exempt from tax under section 290.491;
22.17 	(6) to the extent not deducted or not deductible pursuant to section 408(d)(8)(E) 
22.18 	of the Internal Revenue Code in determining federal taxable income by an individual 
22.19 	who does not itemize deductions for federal income tax purposes for the taxable year, an 
22.20 	amount equal to 50 percent of the excess of charitable contributions over $500 allowable 
22.21 	as a deduction for the taxable year under section 170(a) of the Internal Revenue Code and 
22.22 	under the provisions of Public Law 109-1;
22.23 	(7) for taxable years beginning before January 1, 2008, the amount of the federal 
22.24 	small ethanol producer credit allowed under section 40(a)(3) of the Internal Revenue Code 
22.25 	which is included in gross income under section 87 of the Internal Revenue Code;
22.26 	(8) for individuals who are allowed a federal foreign tax credit for taxes that do not 
22.27 	qualify for a credit under section 290.06, subdivision 22, an amount equal to the carryover 
22.28 	of subnational foreign taxes for the taxable year, but not to exceed the total subnational 
22.29 	foreign taxes reported in claiming the foreign tax credit. For purposes of this clause, 
22.30 	"federal foreign tax credit" means the credit allowed under section 27 of the Internal 
22.31 	Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed 
22.32 	under section 904(c) of the Internal Revenue Code minus national level foreign taxes to 
22.33 	the extent they exceed the federal foreign tax credit;
22.34 	(9) in each of the five tax years immediately following the tax year in which an 
22.35 	addition is required under subdivision 19a, clause (7), or 19c, clause (15), in the case 
22.36 	of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth 
23.1 	of the delayed depreciation. For purposes of this clause, "delayed depreciation" means 
23.2 	the amount of the addition made by the taxpayer under subdivision 19a, clause (7), or 
23.3 	subdivision 19c, clause (15), in the case of a shareholder of an S corporation, minus the 
23.4 	positive value of any net operating loss under section 172 of the Internal Revenue Code 
23.5 	generated for the tax year of the addition. The resulting delayed depreciation cannot be 
23.6 	less than zero;
23.7 	(10) job opportunity building zone income as provided under section 469.316;
23.8 	(11) to the extent included in federal taxable income, the amount of compensation 
23.9 	paid to members of the Minnesota National Guard or other reserve components of the 
23.10 	United States military for active service performed in Minnesota, excluding compensation 
23.11 	for services performed under the Active Guard Reserve (AGR) program. For purposes of 
23.12 	this clause, "active service" means (i) state active service as defined in section 190.05, 
23.13 	subdivision 5a, clause (1); (ii) federally funded state active service as defined in section 
23.14 	190.05, subdivision 5b; or (iii) federal active service as defined in section 190.05, 
23.15 	subdivision 5c, but "active service" excludes service performed in accordance with section 
23.16 	190.08, subdivision 3;
23.17 	(12) to the extent included in federal taxable income, the amount of compensation 
23.18 	paid to Minnesota residents who are members of the armed forces of the United States or 
23.19 	United Nations for active duty performed outside Minnesota under United States Code, 
23.20 	title 10, section 101(d); United States Code, title 32, section 101(12); or the authority of 
23.21 	the United Nations;
23.22 	(13) an amount, not to exceed $10,000, equal to qualified expenses related to a 
23.23 	qualified donor's donation, while living, of one or more of the qualified donor's organs 
23.24 	to another person for human organ transplantation. For purposes of this clause, "organ" 
23.25 	means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow; 
23.26 	"human organ transplantation" means the medical procedure by which transfer of a human 
23.27 	organ is made from the body of one person to the body of another person; "qualified 
23.28 	expenses" means unreimbursed expenses for both the individual and the qualified donor 
23.29 	for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses 
23.30 	may be subtracted under this clause only once; and "qualified donor" means the individual 
23.31 	or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An 
23.32 	individual may claim the subtraction in this clause for each instance of organ donation for 
23.33 	transplantation during the taxable year in which the qualified expenses occur;
23.34 	(14) in each of the five tax years immediately following the tax year in which an 
23.35 	addition is required under subdivision 19a, clause (8), or 19c, clause (16), in the case of a 
23.36 	shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the 
24.1 	addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause (16), in the 
24.2 	case of a shareholder of a corporation that is an S corporation, minus the positive value of 
24.3 	any net operating loss under section 172 of the Internal Revenue Code generated for the 
24.4 	tax year of the addition. If the net operating loss exceeds the addition for the tax year, a 
24.5 	subtraction is not allowed under this clause;
24.6 	(15) to the extent included in federal taxable income, compensation paid to a service 
24.7 	member as defined in United States Code, title 10, section 101(a)(5), for military service 
24.8 	as defined in the Servicemembers Civil Relief Act, Public Law 108-189, section 101(2);
24.9 	(16) international economic development zone income as provided under section 
24.10 	469.325;
24.11 	(17) to the extent included in federal taxable income, the amount of national service 
24.12 	educational awards received from the National Service Trust under United States Code, 
24.13 	title 42, sections 12601 to 12604, for service in an approved Americorps National Service 
24.14 	program; and
24.15 	(18) to the extent included in federal taxable income, discharge of indebtedness 
24.16 	income resulting from reacquisition of business indebtedness included in federal taxable 
24.17 	income under section 108(i) of the Internal Revenue Code. This subtraction applies only 
24.18 	to the extent that the income was included in net income in a prior year as a result of the 
24.19 	addition under section 290.01, subdivision 19a, clause (16).;
24.20 	(19) to the extent included in federal taxable income, the amount of gain on the sale 
24.21 	or exchange of small business stock. "Small business stock" means an equity interest, held 
24.22 	directly or indirectly, in a corporation or partnership when that interest is:
24.23 	(i) purchased for money or property, not including stock or payment for services;
24.24 	(ii) purchased after June 30, 2010;
24.25 	(iii) less than 100 percent in a corporation or less than 50 percent by vote or value in 
24.26 	a partnership; and
24.27 	(iv) in a corporation or partnership that:
24.28 	(A) is a single legal entity and not part of any unitary business of the taxpayer;
24.29 	(B) has fewer than 100 employees, or in the case of a corporation or partnership that 
24.30 	is part of a unitary business, the unitary business has fewer than 100 employees;
24.31 	(C) has not issued stock listed on the New York Stock Exchange, American Stock 
24.32 	Exchange, or National Association of Securities Dealers automated quotation system;
24.33 	(D) in the year of purchase, had more than 50 percent of its property and payroll, as 
24.34 	determined under section 290.191, within this state;
24.35 	(E) in the year of purchase, derived less than $25,000 in gross receipts from rents, 
24.36 	interest, dividends, and the sale of intangible investment assets;
25.1 	(F) is not in a trade or business involving the performance of services in the fields 
25.2 	of health, law, engineering, architecture, accounting, actuarial science, performing arts, 
25.3 	consulting, athletics, financial services, brokerage services, or any trade or business where 
25.4 	the principal asset of the trade or business is the reputation or skill of one or more of 
25.5 	its employees;
25.6 	(G) is not in a trade or business involving banking, insurance, financing, leasing, 
25.7 	investing, or similar business;
25.8 	(H) is not a regulated investment company, real estate investment trust, or real 
25.9 	estate mortgage investment conduit;
25.10 	(I) is not a cooperative; and
25.11 	(J) did not liquidate its assets in whole or in part for the purpose of fulfilling the 
25.12 	requirements of this clause.
25.13 	The small business stock must be held for more than five years to qualify for this 
25.14 	subtraction;
25.15 	(20) an amount not less than zero and not to exceed the applicable percent multiplied 
25.16 	by the distributive share of income or loss, as defined in sections 703(a) and 1366(a)(2) of 
25.17 	the Internal Revenue Code, combined from all partnerships or S corporations in which 
25.18 	the taxpayer materially participates, as defined in section 469(h) of the Internal Revenue 
25.19 	Code, and that have employees or tangible property located in this state. As used in this 
25.20 	clause, the "applicable percent" for taxable years beginning in 2011 is five percent; for 
25.21 	taxable years beginning in 2012 is ten percent; for taxable years beginning in 2013 is 15 
25.22 	percent; and for taxable years beginning after December 31, 2013, is 20 percent.

25.23 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
25.24 	December 31, 2010.

25.25 	Sec. 2. Minnesota Statutes 2009 Supplement, section 290.01, subdivision 19d, is 
25.26 	amended to read:
25.27 		Subd. 19d.Corporations; modifications decreasing federal taxable income. For 
25.28 	corporations, there shall be subtracted from federal taxable income after the increases 
25.29 	provided in subdivision 19c:
25.30 	(1) the amount of foreign dividend gross-up added to gross income for federal 
25.31 	income tax purposes under section 78 of the Internal Revenue Code;
25.32 	(2) the amount of salary expense not allowed for federal income tax purposes due to 
25.33 	claiming the work opportunity credit under section 51 of the Internal Revenue Code;
26.1 	(3) any dividend (not including any distribution in liquidation) paid within the 
26.2 	taxable year by a national or state bank to the United States, or to any instrumentality of 
26.3 	the United States exempt from federal income taxes, on the preferred stock of the bank 
26.4 	owned by the United States or the instrumentality;
26.5 	(4) amounts disallowed for intangible drilling costs due to differences between 
26.6 	this chapter and the Internal Revenue Code in taxable years beginning before January 
26.7 	1, 1987, as follows:
26.8 	(i) to the extent the disallowed costs are represented by physical property, an amount 
26.9 	equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09, 
26.10 	subdivision 7, subject to the modifications contained in subdivision 19e; and
26.11 	(ii) to the extent the disallowed costs are not represented by physical property, an 
26.12 	amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section 
26.13 	290.09, subdivision 8;
26.14 	(5) the deduction for capital losses pursuant to sections 1211 and 1212 of the 
26.15 	Internal Revenue Code, except that:
26.16 	(i) for capital losses incurred in taxable years beginning after December 31, 1986, 
26.17 	capital loss carrybacks shall not be allowed;
26.18 	(ii) for capital losses incurred in taxable years beginning after December 31, 1986, 
26.19 	a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be 
26.20 	allowed;
26.21 	(iii) for capital losses incurred in taxable years beginning before January 1, 1987, a 
26.22 	capital loss carryback to each of the three taxable years preceding the loss year, subject to 
26.23 	the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed; and
26.24 	(iv) for capital losses incurred in taxable years beginning before January 1, 1987, 
26.25 	a capital loss carryover to each of the five taxable years succeeding the loss year to the 
26.26 	extent such loss was not used in a prior taxable year and subject to the provisions of 
26.27 	Minnesota Statutes 1986, section 290.16, shall be allowed;
26.28 	(6) an amount for interest and expenses relating to income not taxable for federal 
26.29 	income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and 
26.30 	expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or 
26.31 	291 of the Internal Revenue Code in computing federal taxable income;
26.32 	(7) in the case of mines, oil and gas wells, other natural deposits, and timber for 
26.33 	which percentage depletion was disallowed pursuant to subdivision 19c, clause (9), a 
26.34 	reasonable allowance for depletion based on actual cost. In the case of leases the deduction 
26.35 	must be apportioned between the lessor and lessee in accordance with rules prescribed 
26.36 	by the commissioner. In the case of property held in trust, the allowable deduction must 
27.1 	be apportioned between the income beneficiaries and the trustee in accordance with the 
27.2 	pertinent provisions of the trust, or if there is no provision in the instrument, on the basis 
27.3 	of the trust's income allocable to each;
27.4 	(8) for certified pollution control facilities placed in service in a taxable year 
27.5 	beginning before December 31, 1986, and for which amortization deductions were elected 
27.6 	under section 169 of the Internal Revenue Code of 1954, as amended through December 
27.7 	31, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes 
27.8 	1986, section 290.09, subdivision 7;
27.9 	(9) amounts included in federal taxable income that are due to refunds of income, 
27.10 	excise, or franchise taxes based on net income or related minimum taxes paid by the 
27.11 	corporation to Minnesota, another state, a political subdivision of another state, the 
27.12 	District of Columbia, or a foreign country or possession of the United States to the extent 
27.13 	that the taxes were added to federal taxable income under section 290.01, subdivision 19c, 
27.14 	clause (1), in a prior taxable year;
27.15 	(10) 80 percent of royalties, fees, or other like income accrued or received from a 
27.16 	foreign operating corporation or a foreign corporation which is part of the same unitary 
27.17 	business as the receiving corporation, unless the income resulting from such payments or 
27.18 	accruals is income from sources within the United States as defined in subtitle A, chapter 
27.19 	1, subchapter N, part 1, of the Internal Revenue Code;
27.20 	(11) income or gains from the business of mining as defined in section 290.05, 
27.21 	subdivision 1, clause (a), that are not subject to Minnesota franchise tax;
27.22 	(12) the amount of disability access expenditures in the taxable year which are not 
27.23 	allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue Code;
27.24 	(13) the amount of qualified research expenses not allowed for federal income tax 
27.25 	purposes under section 280C(c) of the Internal Revenue Code, but only to the extent that 
27.26 	the amount exceeds the amount of the credit allowed under section 290.068;
27.27 	(14) the amount of salary expenses not allowed for federal income tax purposes due 
27.28 	to claiming the Indian employment credit under section 45A(a) of the Internal Revenue 
27.29 	Code;
27.30 	(15) for taxable years beginning before January 1, 2008, the amount of the federal 
27.31 	small ethanol producer credit allowed under section 40(a)(3) of the Internal Revenue Code 
27.32 	which is included in gross income under section 87 of the Internal Revenue Code;
27.33 	(16) for a corporation whose foreign sales corporation, as defined in section 922 
27.34 	of the Internal Revenue Code, constituted a foreign operating corporation during any 
27.35 	taxable year ending before January 1, 1995, and a return was filed by August 15, 1996, 
27.36 	claiming the deduction under section 290.21, subdivision 4, for income received from 
28.1 	the foreign operating corporation, an amount equal to 1.23 multiplied by the amount of 
28.2 	income excluded under section 114 of the Internal Revenue Code, provided the income is 
28.3 	not income of a foreign operating company;
28.4 	(17) any decrease in subpart F income, as defined in section 952(a) of the Internal 
28.5 	Revenue Code, for the taxable year when subpart F income is calculated without regard to 
28.6 	the provisions of Division C, title III, section 303(b) of Public Law 110-343;
28.7 	(18) in each of the five tax years immediately following the tax year in which an 
28.8 	addition is required under subdivision 19c, clause (15), an amount equal to one-fifth of 
28.9 	the delayed depreciation. For purposes of this clause, "delayed depreciation" means the 
28.10 	amount of the addition made by the taxpayer under subdivision 19c, clause (15). The 
28.11 	resulting delayed depreciation cannot be less than zero;
28.12 	(19) in each of the five tax years immediately following the tax year in which an 
28.13 	addition is required under subdivision 19c, clause (16), an amount equal to one-fifth of 
28.14 	the amount of the addition; and
28.15 	(20) to the extent included in federal taxable income, discharge of indebtedness 
28.16 	income resulting from reacquisition of business indebtedness included in federal taxable 
28.17 	income under section 108(i) of the Internal Revenue Code. This subtraction applies only 
28.18 	to the extent that the income was included in net income in a prior year as a result of the 
28.19 	addition under section 290.01, subdivision 19c, clause (25).
28.20 	(21) to the extent included in federal taxable income, the amount of gain on the 
28.21 	sale or exchange of small business stock assigned or apportioned to this state. "Small 
28.22 	business stock" means an equity interest, held directly or indirectly, in a corporation or 
28.23 	partnership when that interest is:
28.24 	(i) purchased for money or property, not including stock or payment for services;
28.25 	(ii) purchased after June 30, 2010;
28.26 	(iii) less than 100 percent in a corporation or less than 50 percent by vote or value in 
28.27 	a partnership; and
28.28 	(iv) in a corporation or partnership that:
28.29 	(A) is a single legal entity and not part of any unitary business of the taxpayer;
28.30 	(B) has fewer than 100 employees, or in the case of a corporation or partnership that 
28.31 	is part of a unitary business, the unitary business has fewer than 100 employees;
28.32 	(C) has not issued stock listed on the New York Stock Exchange, American Stock 
28.33 	Exchange, or National Association of Securities Dealers automated quotation system;
28.34 	(D) in the year of purchase, had more than 50 percent of its property and payroll, as 
28.35 	determined under section 290.191, within this state;
29.1 	(E) in the year of purchase, derived less than $25,000 in gross receipts from rents, 
29.2 	interest, dividends, and the sale of intangible investment assets;
29.3 	(F) is not in a trade or business involving the performance of services in the fields 
29.4 	of health, law, engineering, architecture, accounting, actuarial science, performing arts, 
29.5 	consulting, athletics, financial services, brokerage services, or any trade or business where 
29.6 	the principal asset of the trade or business is the reputation or skill of one or more of 
29.7 	its employees;
29.8 	(G) is not in a trade or business involving banking, insurance, financing, leasing, 
29.9 	investing, or similar business;
29.10 	(H) is not a regulated investment company, real estate investment trust, or real 
29.11 	estate mortgage investment conduit;
29.12 	(I) is not a cooperative; and
29.13 	(J) did not liquidate its assets in whole or in part for the purpose of fulfilling the 
29.14 	requirements of this clause.
29.15 	The small business stock must be held for more than five years to qualify for this 
29.16 	subtraction.

29.17 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
29.18 	December 31, 2010.

29.19 	Sec. 3. Minnesota Statutes 2008, section 290.06, subdivision 1, is amended to read:
29.20 		Subdivision 1.Computation, corporations. The franchise tax imposed upon 
29.21 	corporations shall be computed by applying to their taxable income the rate of 9.8 percent.:
29.22 	(1) 9.8 percent in taxable year 2010;
29.23 	(2) 9.3 percent in taxable year 2011;
29.24 	(3) 8.8 percent in taxable year 2012;
29.25 	(4) 8.3 percent in taxable year 2013; and
29.26 	(5) 7.8 percent in taxable years 2014 and thereafter.

29.27 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
29.28 	December 31, 2010.

29.29 	Sec. 4. Minnesota Statutes 2009 Supplement, section 290.06, subdivision 2c, is 
29.30 	amended to read:
29.31 		Subd. 2c.Schedules of rates for individuals, estates, and trusts. (a) The income 
29.32 	taxes imposed by this chapter upon married individuals filing joint returns and surviving 
30.1 	spouses as defined in section 2(a) of the Internal Revenue Code must be computed by 
30.2 	applying to their taxable net income the following schedule of rates:
30.3 	(1) On the first $25,680, 5.35 percent;
30.4 	(2) On all over $25,680, but not over $102,030, 7.05 percent;
30.5 	(3) On all over $102,030, 7.85 percent.
30.6 	Married individuals filing separate returns, estates, and trusts must compute their 
30.7 	income tax by applying the above rates to their taxable income, except that the income 
30.8 	brackets will be one-half of the above amounts.
30.9 	(b) The income taxes imposed by this chapter upon unmarried individuals must be 
30.10 	computed by applying to taxable net income the following schedule of rates:
30.11 	(1) On the first $17,570, 5.35 percent;
30.12 	(2) On all over $17,570, but not over $57,710, 7.05 percent;
30.13 	(3) On all over $57,710, 7.85 percent.
30.14 	(c) The income taxes imposed by this chapter upon unmarried individuals qualifying 
30.15 	as a head of household as defined in section 2(b) of the Internal Revenue Code must be 
30.16 	computed by applying to taxable net income the following schedule of rates:
30.17 	(1) On the first $21,630, 5.35 percent;
30.18 	(2) On all over $21,630, but not over $86,910, 7.05 percent;
30.19 	(3) On all over $86,910, 7.85 percent.
30.20 	(d) In lieu of a tax computed according to the rates set forth in this subdivision, the 
30.21 	tax of any individual taxpayer whose taxable net income for the taxable year is less than 
30.22 	an amount determined by the commissioner must be computed in accordance with tables 
30.23 	prepared and issued by the commissioner of revenue based on income brackets of not 
30.24 	more than $100. The amount of tax for each bracket shall be computed at the rates set 
30.25 	forth in this subdivision, provided that the commissioner may disregard a fractional part of 
30.26 	a dollar unless it amounts to 50 cents or more, in which case it may be increased to $1.
30.27 	(e) An individual who is not a Minnesota resident for the entire year must compute 
30.28 	the individual's Minnesota income tax as provided in this subdivision. After the 
30.29 	application of the nonrefundable credits provided in this chapter, the tax liability must 
30.30 	then be multiplied by a fraction in which:
30.31 	(1) the numerator is the individual's Minnesota source federal adjusted gross income 
30.32 	as defined in section 62 of the Internal Revenue Code and increased by the additions 
30.33 	required under section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12), 
30.34 	(13), (16), and (17), and reduced by the Minnesota assignable portion of the subtraction 
30.35 	for United States government interest under section 290.01, subdivision 19b, clause (1), 
30.36 	and the subtractions under section 290.01, subdivision 19b, clauses (9), (10), (14), (15), 
31.1 	(16), and (18) to (20), after applying the allocation and assignability provisions of section 
31.2 	290.081, clause (a), or 290.17; and
31.3 	(2) the denominator is the individual's federal adjusted gross income as defined in 
31.4 	section 62 of the Internal Revenue Code of 1986, increased by the amounts specified in 
31.5 	section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12), (13), (16), and 
31.6 	(17), and reduced by the amounts specified in section 290.01, subdivision 19b, clauses (1), 
31.7 	(9), (10), (14), (15), (16), and (18) to (20).

31.8 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
31.9 	December 31, 2010.

31.10 	Sec. 5. Minnesota Statutes 2008, section 290.068, is amended to read:
31.11 	290.068 CREDIT FOR INCREASING RESEARCH ACTIVITIES.
31.12 		Subdivision 1.Credit allowed. A corporation, other thanpartners in a partnership, 
31.13 	or shareholders in a corporation treated as an "S" corporation under section 290.9725, 
31.14 	is are allowed a credit against the portion of the franchise tax computed under section 
31.15 	290.06, subdivision 1, for the taxable year equal to:  
31.16 	(a) 5 percent of the first $2,000,000 of the excess (if any) of
31.17 	(1) the qualified research expenses for the taxable year, over
31.18 	(2) the base amount; and
31.19 	(b) 2.5 percent on all of such excess expenses over $2,000,000.
31.20 		Subd. 2.Definitions. For purposes of this section, the following terms have the 
31.21 	meanings given.
31.22 	(a) "Qualified research expenses" means (i) qualified research expenses and basic 
31.23 	research payments as defined in section 41(b) and (e) of the Internal Revenue Code, except 
31.24 	it does not include expenses incurred for qualified research or basic research conducted 
31.25 	outside the state of Minnesota pursuant to section 41(d) and (e) of the Internal Revenue 
31.26 	Code; and (ii) contributions to a nonprofit corporation established and operated pursuant 
31.27 	to the provisions of chapter 317A for the purpose of promoting the establishment and 
31.28 	expansion of business in this state, provided the contributions are invested by the nonprofit 
31.29 	corporation for the purpose of providing funds for small, technologically innovative 
31.30 	enterprises in Minnesota during the early stages of their development.
31.31 	(b) "Qualified research" means qualified research as defined in section 41(d) of the 
31.32 	Internal Revenue Code, except that the term does not include qualified research conducted 
31.33 	outside the state of Minnesota.
32.1 	(c) "Base amount" means base amount as defined in section 41(c) of the Internal 
32.2 	Revenue Code, except that the average annual gross receipts must be calculated using 
32.3 	Minnesota sales or receipts under section 290.191 and the definitions contained in clauses 
32.4 	(a) and (b) shall apply. If a taxpayer does not have records to substantiate the aggregate 
32.5 	qualified research expenses for the taxable years beginning after December 31, 1983, and 
32.6 	before January 1, 1989, to compute the base amount, and is not a start-up company to 
32.7 	which Internal Revenue Code, section 41(c)(3)(B) applies, the corporation is permitted to 
32.8 	use a fixed-base percentage of 16 percent.
32.9 		Subd. 3.Limitation; carryover. (a)(1) The credit for the a taxable year beginning 
32.10 	before January 1, 2012, shall not exceed the liability for tax. "Liability for tax" for 
32.11 	purposes of this section means the tax imposed under section 290.06, subdivision 1, for the 
32.12 	taxable year reduced by the sum of the nonrefundable credits allowed under this chapter.
32.13 	(2) In the case of a corporation which is a partner in a partnership, the credit allowed 
32.14 	for the taxable year shall not exceed the lesser of the amount determined under clause (1) 
32.15 	for the taxable year or an amount (separately computed with respect to the corporation's 
32.16 	interest in the trade or business or entity) equal to the amount of tax attributable to that 
32.17 	portion of taxable income which is allocable or apportionable to the corporation's interest 
32.18 	in the trade or business or entity.
32.19 	(b) If the amount of the credit determined under this section for any taxable year 
32.20 	exceeds the limitation under clause (a), the excess shall be a research credit carryover to 
32.21 	each of the 15 succeeding taxable years. The entire amount of the excess unused credit for 
32.22 	the taxable year shall be carried first to the earliest of the taxable years to which the credit 
32.23 	may be carried and then to each successive year to which the credit may be carried. The 
32.24 	amount of the unused credit which may be added under this clause shall not exceed the 
32.25 	taxpayer's liability for tax less the research credit for the taxable year.
32.26 		Subd. 4.Partnerships and S corporations. In the case of partnerships the credit 
32.27 	shall be allocated in the same manner provided by section 41(f)(2) of the Internal Revenue 
32.28 	Code.
32.29 	In the case of shareholders in S corporations the credit shall be allocated in the same 
32.30 	manner as provided by section 1366(a) of the Internal Revenue Code.
32.31 		Subd. 5.Adjustments; acquisitions and dispositions. If a taxpayer acquires or 
32.32 	disposes of the major portion of a trade or business or the major portion of a separate unit 
32.33 	of a trade or business in a transaction with another taxpayer, the taxpayer's qualified 
32.34 	research expenses and base amount are adjusted in the same manner provided by section 
32.35 	41(f)(3) of the Internal Revenue Code.
33.1 		Subd. 6.Credit to be refundable. If the amount of credit allowed in this section for 
33.2 	qualified research expenses incurred in taxable years beginning after December 31, 2011, 
33.3 	exceeds the taxpayer's tax liability under section 290.02 or 290.03, the commissioner 
33.4 	shall refund the excess amount. This credit must be used before any other credit allowed 
33.5 	under this chapter.
33.6 		Subd. 7.Appropriation. An amount sufficient to pay the refunds required by this 
33.7 	section is appropriated to the commissioner from the general fund.

33.8 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
33.9 	December 31, 2011.

33.10 	Sec. 6. Minnesota Statutes 2009 Supplement, section 290.091, subdivision 2, is 
33.11 	amended to read:
33.12 		Subd. 2.Definitions. For purposes of the tax imposed by this section, the following 
33.13 	terms have the meanings given:
33.14 	(a) "Alternative minimum taxable income" means the sum of the following for 
33.15 	the taxable year:
33.16 	(1) the taxpayer's federal alternative minimum taxable income as defined in section 
33.17 	55(b)(2) of the Internal Revenue Code;
33.18 	(2) the taxpayer's itemized deductions allowed in computing federal alternative 
33.19 	minimum taxable income, but excluding:
33.20 	(i) the charitable contribution deduction under section 170 of the Internal Revenue 
33.21 	Code;
33.22 	(ii) the medical expense deduction;
33.23 	(iii) the casualty, theft, and disaster loss deduction; and
33.24 	(iv) the impairment-related work expenses of a disabled person;
33.25 	(3) for depletion allowances computed under section 613A(c) of the Internal 
33.26 	Revenue Code, with respect to each property (as defined in section 614 of the Internal 
33.27 	Revenue Code), to the extent not included in federal alternative minimum taxable income, 
33.28 	the excess of the deduction for depletion allowable under section 611 of the Internal 
33.29 	Revenue Code for the taxable year over the adjusted basis of the property at the end of the 
33.30 	taxable year (determined without regard to the depletion deduction for the taxable year);
33.31 	(4) to the extent not included in federal alternative minimum taxable income, the 
33.32 	amount of the tax preference for intangible drilling cost under section 57(a)(2) of the 
33.33 	Internal Revenue Code determined without regard to subparagraph (E);
33.34 	(5) to the extent not included in federal alternative minimum taxable income, the 
33.35 	amount of interest income as provided by section 290.01, subdivision 19a, clause (1); and
34.1 	(6) the amount of addition required by section 290.01, subdivision 19a, clauses (7) 
34.2 	to (9), (12), (13), (16), and (17);
34.3 	less the sum of the amounts determined under the following:
34.4 	(1) interest income as defined in section 290.01, subdivision 19b, clause (1);
34.5 	(2) an overpayment of state income tax as provided by section 290.01, subdivision 
34.6 	19b, clause (2), to the extent included in federal alternative minimum taxable income;
34.7 	(3) the amount of investment interest paid or accrued within the taxable year on 
34.8 	indebtedness to the extent that the amount does not exceed net investment income, as 
34.9 	defined in section 163(d)(4) of the Internal Revenue Code. Interest does not include 
34.10 	amounts deducted in computing federal adjusted gross income; and
34.11 	(4) amounts subtracted from federal taxable income as provided by section 290.01, 
34.12 	subdivision 19b, clauses (6), (9) to (16), and (18) to (20).
34.13 	In the case of an estate or trust, alternative minimum taxable income must be 
34.14 	computed as provided in section 59(c) of the Internal Revenue Code.
34.15 	(b) "Investment interest" means investment interest as defined in section 163(d)(3) 
34.16 	of the Internal Revenue Code.
34.17 	(c) "Net minimum tax" means the minimum tax imposed by this section.
34.18 	(d) "Regular tax" means the tax that would be imposed under this chapter (without 
34.19 	regard to this section and section 290.032), reduced by the sum of the nonrefundable 
34.20 	credits allowed under this chapter.
34.21 	(e) "Tentative minimum tax" equals 6.4 percent of alternative minimum taxable 
34.22 	income after subtracting the exemption amount determined under subdivision 3.

34.23 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
34.24 	December 31, 2010.

34.25 	Sec. 7. Minnesota Statutes 2008, section 290.0921, subdivision 1, is amended to read:
34.26 		Subdivision 1.Tax imposed. In addition to the taxes computed under this chapter 
34.27 	without regard to this section, the franchise tax imposed on corporations includes a tax 
34.28 	equal to the excess, if any, for the taxable year of:
34.29 	(1)(i) 5.8 percent of Minnesota alternative minimum taxable income in taxable 
34.30 	year 2010; over
34.31 	(ii) 5.5 percent of Minnesota alternative minimum taxable income in taxable year 
34.32 	2011;
34.33 	(iii) 5.2 percent of Minnesota alternative minimum taxable income in taxable year 
34.34 	2012;
35.1 	(iv) 4.9 percent of Minnesota alternative minimum taxable income in taxable year 
35.2 	2013; and
35.3 	(v) 4.6 percent of Minnesota alternative minimum taxable income in taxable year 
35.4 	2014 and thereafter;
35.5 	over
35.6 	(2) the tax imposed under section 290.06, subdivision 1, for the taxable year without 
35.7 	regard to this section. 

35.8 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
35.9 	December 31, 2010.

35.10 	Sec. 8. Minnesota Statutes 2008, section 290.0921, subdivision 3, is amended to read:
35.11 		Subd. 3. Alternative minimum taxable income. "Alternative minimum taxable 
35.12 	income" is Minnesota net income as defined in section 290.01, subdivision 19, and 
35.13 	includes the adjustments and tax preference items in sections 56, 57, 58, and 59(d), (e), 
35.14 	(f), and (h) of the Internal Revenue Code. If a corporation files a separate company 
35.15 	Minnesota tax return, the minimum tax must be computed on a separate company basis. 
35.16 	If a corporation is part of a tax group filing a unitary return, the minimum tax must be 
35.17 	computed on a unitary basis. The following adjustments must be made. 
35.18 	(1) For purposes of the depreciation adjustments under section 56(a)(1) and 
35.19 	56(g)(4)(A) of the Internal Revenue Code, the basis for depreciable property placed in 
35.20 	service in a taxable year beginning before January 1, 1990, is the adjusted basis for federal 
35.21 	income tax purposes, including any modification made in a taxable year under section 
35.22 	290.01, subdivision 19e, or Minnesota Statutes 1986, section 290.09, subdivision 7, 
35.23 	paragraph (c). 
35.24 	For taxable years beginning after December 31, 2000, the amount of any remaining 
35.25 	modification made under section 290.01, subdivision 19e, or Minnesota Statutes 1986, 
35.26 	section 290.09, subdivision 7, paragraph (c), not previously deducted is a depreciation 
35.27 	allowance in the first taxable year after December 31, 2000. 
35.28 	(2) The portion of the depreciation deduction allowed for federal income tax 
35.29 	purposes under section 168(k) of the Internal Revenue Code that is required as an 
35.30 	addition under section 290.01, subdivision 19c, clause (15), is disallowed in determining 
35.31 	alternative minimum taxable income. 
35.32 	(3) The subtraction for depreciation allowed under section 290.01, subdivision 19d, 
35.33 	clause (18), is allowed as a depreciation deduction in determining alternative minimum 
35.34 	taxable income. 
36.1 	(4) The alternative tax net operating loss deduction under sections 56(a)(4) and 56(d) 
36.2 	of the Internal Revenue Code does not apply. 
36.3 	(5) The special rule for certain dividends under section 56(g)(4)(C)(ii) of the Internal 
36.4 	Revenue Code does not apply. 
36.5 	(6) The special rule for dividends from section 936 companies under section 
36.6 	56(g)(4)(C)(iii) does not apply. 
36.7 	(7) The tax preference for depletion under section 57(a)(1) of the Internal Revenue 
36.8 	Code does not apply. 
36.9 	(8) The tax preference for intangible drilling costs under section 57(a)(2) of the 
36.10 	Internal Revenue Code must be calculated without regard to subparagraph (E) and the 
36.11 	subtraction under section 290.01, subdivision 19d, clause (4). 
36.12 	(9) The tax preference for tax exempt interest under section 57(a)(5) of the Internal 
36.13 	Revenue Code does not apply. 
36.14 	(10) The tax preference for charitable contributions of appreciated property under 
36.15 	section 57(a)(6) of the Internal Revenue Code does not apply. 
36.16 	(11) For purposes of calculating the tax preference for accelerated depreciation or 
36.17 	amortization on certain property placed in service before January 1, 1987, under section 
36.18 	57(a)(7) of the Internal Revenue Code, the deduction allowable for the taxable year is the 
36.19 	deduction allowed under section 290.01, subdivision 19e. 
36.20 	For taxable years beginning after December 31, 2000, the amount of any remaining 
36.21 	modification made under section 290.01, subdivision 19e, not previously deducted is a 
36.22 	depreciation or amortization allowance in the first taxable year after December 31, 2004. 
36.23 	(12) For purposes of calculating the adjustment for adjusted current earnings in 
36.24 	section 56(g) of the Internal Revenue Code, the term "alternative minimum taxable 
36.25 	income" as it is used in section 56(g) of the Internal Revenue Code, means alternative 
36.26 	minimum taxable income as defined in this subdivision, determined without regard to the 
36.27 	adjustment for adjusted current earnings in section 56(g) of the Internal Revenue Code. 
36.28 	(13) For purposes of determining the amount of adjusted current earnings under 
36.29 	section 56(g)(3) of the Internal Revenue Code, no adjustment shall be made under section 
36.30 	56(g)(4) of the Internal Revenue Code with respect to (i) the amount of foreign dividend 
36.31 	gross-up subtracted as provided in section 290.01, subdivision 19d, clause (1), (ii) the 
36.32 	amount of refunds of income, excise, or franchise taxes subtracted as provided in section 
36.33 	290.01, subdivision 19d, clause (9), or (iii) the amount of royalties, fees or other like 
36.34 	income subtracted as provided in section 290.01, subdivision 19d, clause (10). 
36.35 	(14) Alternative minimum taxable income excludes the income from operating in a 
36.36 	job opportunity building zone as provided under section 469.317. 
37.1 	(15) Alternative minimum taxable income excludes the income from operating in a 
37.2 	biotechnology and health sciences industry zone as provided under section 469.337. 
37.3 	(16) Alternative minimum taxable income excludes the income from operating in an 
37.4 	international economic development zone as provided under section 469.326. 
37.5 	(17) Alternative minimum taxable income includes the subtraction for small business 
37.6 	stock as provided under section 290.01, subdivision 19d, clause (21).
37.7 	Items of tax preference must not be reduced below zero as a result of the 
37.8 	modifications in this subdivision. 

37.9 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
37.10 	December 31, 2010.

37.11 	ARTICLE 4
37.12 	LAWSUIT REFORM

37.13 	Section 1. Minnesota Statutes 2008, section 8.31, subdivision 3a, is amended to read:
37.14 		Subd. 3a.Private remedies. In addition to the remedies otherwise provided by law
37.15 	and subject to subdivision 3d, any person injured by a violation of any of the laws referred 
37.16 	to in subdivision 1 may bring a civil action and recover damages, together with costs 
37.17 	and disbursements, including costs of investigation and reasonable attorney's fees, and 
37.18 	receive other equitable relief as determined by the court. The court may, as appropriate, 
37.19 	enter a consent judgment or decree without the finding of illegality. In any action brought 
37.20 	by the attorney general pursuant to this section, the court may award any of the remedies 
37.21 	allowable under this subdivision.

37.22 	EFFECTIVE DATE. This section is effective the day following final enactment.

37.23 	Sec. 2. Minnesota Statutes 2008, section 8.31, is amended by adding a subdivision to 
37.24 	read:
37.25 		Subd. 3d.Private remedies for Unlawful Trade Practices Act, Prevention of 
37.26 	Consumer Fraud Act, False Statement in Advertisement Act. Civil actions pursuant to 
37.27 	subdivision 3a for violations of the Unlawful Trade Practices Act (sections 325D.09 to 
37.28 	325D.16), Prevention of Consumer Fraud Act (sections 325F.68 to 325F.70), or the False 
37.29 	Statement in Advertisement Act (section 325F.67) or other laws against false or fraudulent 
37.30 	advertising may be brought only by natural persons who purchase or lease goods, services, 
37.31 	or real estate for personal, family, or household purposes. Each such person seeking to 
37.32 	recover damages for violations of these sections, either in an individual action, a class 
37.33 	action, or any other type of action, shall be required to plead and prove on an individual 
38.1 	basis that the deceptive act or practice caused the person to enter into the transaction that 
38.2 	resulted in the damages. No award of damages in an action covered by this subdivision 
38.3 	may be made without proof that the person or persons seeking damages suffered an actual 
38.4 	out-of-pocket loss. The term "out-of-pocket loss" means an amount of money equal to the 
38.5 	difference between the amount paid by the consumer for the good or service and the actual 
38.6 	market value of the good or service that the consumer actually received.

38.7 	EFFECTIVE DATE. This section is effective the day following final enactment.

38.8 	Sec. 3. [540.19] CLASS ACTIONS; INTERLOCUTORY APPEAL.
38.9 	A court's order certifying a class action, refusing to certify a class action, or denying 
38.10 	a motion to decertify a class action is appealable in the same manner as a final order or 
38.11 	judgment. While an appeal under this subdivision is pending, all discovery and other 
38.12 	proceedings in the district court must be stayed.

38.13 	EFFECTIVE DATE; APPLICATION. This section is effective July 1, 2010.

38.14 	Sec. 4. Minnesota Statutes 2008, section 541.05, is amended to read:
38.15 	541.05 VARIOUS CASES, SIX YEARS.
38.16 		Subdivision 1.Six-year limitation. Except where the Uniform Commercial Code 
38.17 	or section 541.077otherwise prescribes, the following actions shall be commenced within 
38.18 	six years:
38.19 	(1) upon a contract or other obligation, express or implied, as to which no other 
38.20 	limitation is expressly prescribed;
38.21 	(2) upon a liability created by statute, other than those arising upon a penalty or 
38.22 	forfeiture or where a shorter period is provided by section 541.07; 
38.23 	(3) for a trespass upon real estate;
38.24 	(4) for taking, detaining, or injuring personal property, including actions for the 
38.25 	specific recovery thereof;
38.26 	(5) for criminal conversation, or for any other injury to the person or rights of 
38.27 	another, not arising on contract, and not hereinafter enumerated;
38.28 	(6) for relief on the ground of fraud, in which case the cause of action shall not be 
38.29 	deemed to have accrued until the discovery by the aggrieved party of the facts constituting 
38.30 	the fraud;
38.31 	(7) to enforce a trust or compel a trustee to account, where the trustee has neglected to 
38.32 	discharge the trust, or claims to have fully performed it, or has repudiated the trust relation;
39.1 	(8) against sureties upon the official bond of any public officer, whether of the 
39.2 	state or of any county, town, school district, or a municipality therein; in which case the 
39.3 	limitation shall not begin to run until the term of such officer for which the bond was 
39.4 	given shall have expired;
39.5 	(9) for damages caused by a dam, used for commercial purposes; or
39.6 	(10) for assault, battery, false imprisonment, or other tort resulting in personal injury, 
39.7 	if the conduct that gives rise to the cause of action also constitutes domestic abuse as 
39.8 	defined in section 518B.01. 
39.9 		Subd. 2.Strict liability. Unless otherwise provided by law, any action based on the 
39.10 	strict liability of the defendant and arising from the manufacture, sale, use or consumption 
39.11 	of a product shall be commenced within fourthree years.

39.12 	EFFECTIVE DATE. This section is effective August 1, 2010, and applies to 
39.13 	actions commenced on or after that date.

39.14 	Sec. 5. [541.077] MERCHANT ACTIONS.
39.15 	(a) For the purpose of this section, "merchant" means a person who deals in goods or 
39.16 	services of the kind, or otherwise holds out as having knowledge or skill peculiar to the 
39.17 	practices, goods, or services involved in the transaction or to whom this knowledge or 
39.18 	skill may be attributed by the employment of an agent or broker or other intermediary who 
39.19 	by occupation holds out as having this knowledge or skill.
39.20 	(b) An action, whether based on a contract or tort, arising from the furnishing of 
39.21 	goods or services by a merchant in the ordinary course of business must be commenced 
39.22 	within three years from the date the cause of action accrued.

39.23 	EFFECTIVE DATE. This section is effective August 1, 2010, and applies to 
39.24 	actions commenced on or after that date.

39.25 	Sec. 6. SEVERABILITY.
 39.26 	The provisions of this article are severable. If any portion of this article is declared 
39.27 	unconstitutional or the application of any part of this act to any person or circumstance 
39.28 	is held invalid, the remaining portions of the act and their applicability to any person or 
39.29 	circumstance shall remain valid and enforceable.

39.30 	EFFECTIVE DATE. This section is effective the day following final enactment.

40.1 	ARTICLE 5
40.2 	ENVIRONMENT 

40.3 	Section 1. Minnesota Statutes 2008, section 115.07, is amended to read:
40.4 	115.07 VIOLATIONS AND PROHIBITIONS.
40.5 		Subdivision 1.Obtain permit. (a) It shall beis unlawful for any person to construct, 
40.6 	install, or operate a disposal system, or any part thereof, until plans therefor shalland 
40.7 	specifications for the disposal system have been submitted to the agency, unless the agency 
40.8 	shall have waived thewaives submission thereof to itof the plans and specifications, and a 
40.9 	written permit therefor shall have beenfor the disposal system is granted by the agency.
40.10 	(b) If a person who discharges a pollutant into the waters of the state is required by 
40.11 	statutes or rules to obtain both a national pollutant discharge elimination system permit 
40.12 	and a state disposal system permit and the permit is not for discharges under Minnesota 
40.13 	Rules, part 7090.2010, it is unlawful for the person to construct, install, or operate the 
40.14 	disposal system, or any part thereof, until plans and specifications for the disposal system 
40.15 	have been submitted to the agency, unless the agency waives submission of the plans and 
40.16 	specifications. The person is prohibited from discharging a pollutant into the waters of 
40.17 	the state until a written permit for the discharge is granted by the agency and plans and 
40.18 	specifications for the disposal system have been approved, unless the agency waives the 
40.19 	submission of the plans and specifications.
40.20 	(c) For disposal systems operated on streams with extreme seasonal flows, the 
40.21 	agency must allow seasonal permit limits based on a fixed or variable effluent limit when 
40.22 	the municipality operating the disposal system requests them and is in compliance with 
40.23 	agency water quality standards.
40.24 		Subd. 3.Permission for extension. (a) It shall beis unlawful for any person to 
40.25 	make any change in, addition to, or extension of any existing disposal system or point 
40.26 	source, or part thereof, to effect any facility expansion, production increase, or process 
40.27 	modification which results in new or increased discharges of pollutants, or to operate such 
40.28 	system or point source, or part thereof as so changed, added to, or extended, until plans 
40.29 	and specifications therefor shall have been submitted to the agency, unless the agency 
40.30 	shall have waived thewaives submission thereof to itof the plans and specifications, and a 
40.31 	written permit therefor shall have beenfor the change, addition, or extension is granted 
40.32 	by the agency.
40.33 	(b) If a person who discharges a pollutant into the waters of the state is required by 
40.34 	statutes or rules to obtain both a national pollutant discharge elimination system permit 
40.35 	and a state disposal system permit and the permit is not for discharges under Minnesota 
41.1 	Rules, part 7090.2010, it is unlawful for the person to change, add to, or extend an existing 
41.2 	disposal system or point source, or part thereof, as specified under paragraph (a) until 
41.3 	plans and specifications for the change, addition, or extension have been submitted to 
41.4 	the agency, unless the agency waives submission of the plans and specifications. The 
41.5 	person is prohibited from discharging additional or increased pollutants into the waters 
41.6 	of the state until a written permit for the discharge is granted by the agency and plans 
41.7 	and specifications for the change, addition, or extension have been approved, unless the 
41.8 	agency waives the submission of plans and specifications.

41.9 	Sec. 2. Minnesota Statutes 2008, section 116D.04, subdivision 2a, is amended to read:
41.10 		Subd. 2a.When prepared. Where there is potential for significant environmental 
41.11 	effects resulting from any major governmental action, the action shall be preceded by a 
41.12 	detailed environmental impact statement prepared by the responsible governmental unit. 
41.13 	The environmental impact statement shall be an analytical rather than an encyclopedic 
41.14 	document which describes the proposed action in detail, analyzes its significant 
41.15 	environmental impacts, discusses appropriate alternatives to the proposed action and 
41.16 	their impacts, and explores methods by which adverse environmental impacts of an 
41.17 	action could be mitigated. The environmental impact statement shall also analyze those 
41.18 	economic, employment and sociological effects that cannot be avoided should the action 
41.19 	be implemented. To ensure its use in the decision-making process, the environmental 
41.20 	impact statement shall be prepared as early as practical in the formulation of an action. 
41.21 	No mandatory environmental impact statement may be required for an ethanol plant, 
41.22 	as defined in section 41A.09, subdivision 2a, paragraph (b), that produces less than 
41.23 	125,000,000 gallons of ethanol annually and is located outside of the seven-county 
41.24 	metropolitan area. 
41.25 	(a) The board shall by rule establish categories of actions for which environmental 
41.26 	impact statements and for which environmental assessment worksheets shall be prepared 
41.27 	as well as categories of actions for which no environmental review is required under 
41.28 	this section.
41.29 	(b) The responsible governmental unit shall promptly publish notice of the 
41.30 	completion of an environmental assessment worksheet in a manner to be determined by 
41.31 	the board and shall provide copies of the environmental assessment worksheet to the board 
41.32 	and its member agencies. Comments on the need for an environmental impact statement 
41.33 	may be submitted to the responsible governmental unit during a 30 day period following 
41.34 	publication of the notice that an environmental assessment worksheet has been completed. 
41.35 	The responsible governmental unit's decision on the need for an environmental impact 
42.1 	statement shall be based on the environmental assessment worksheet and the comments 
42.2 	received during the comment period, and shall be made within 15 days after the close of 
42.3 	the comment period. The board's chair may extend the 15 day period by not more than 15 
42.4 	additional days upon the request of the responsible governmental unit.
42.5 	(c) An environmental assessment worksheet shall also be prepared for a proposed 
42.6 	action whenever material evidence accompanying a petition by not less than 25 
42.7 	individuals, submitted before the proposed project has received final approval by the 
42.8 	appropriate governmental units, demonstrates that, because of the nature or location of a 
42.9 	proposed action, there may be potential for significant environmental effects. Petitions 
42.10 	requesting the preparation of an environmental assessment worksheet shall be submitted to 
42.11 	the board. The chair of the board shall determine the appropriate responsible governmental 
42.12 	unit and forward the petition to it. A decision on the need for an environmental assessment 
42.13 	worksheet shall be made by the responsible governmental unit within 15 days after the 
42.14 	petition is received by the responsible governmental unit. The board's chair may extend 
42.15 	the 15 day period by not more than 15 additional days upon request of the responsible 
42.16 	governmental unit.
42.17 	(d) Except in an environmentally sensitive location where Minnesota Rules, part 
42.18 	4410.4300, subpart 29, item B, applies, the proposed action is exempt from environmental 
42.19 	review under this chapter and rules of the board, if:
42.20 	(1) the proposed action is:
42.21 	(i) an animal feedlot facility with a capacity of less than 1,000 animal units; or
42.22 	(ii) an expansion of an existing animal feedlot facility with a total cumulative 
42.23 	capacity of less than 1,000 animal units;
42.24 	(2) the application for the animal feedlot facility includes a written commitment by 
42.25 	the proposer to design, construct, and operate the facility in full compliance with Pollution 
42.26 	Control Agency feedlot rules; and
42.27 	(3) the county board holds a public meeting for citizen input at least ten business 
42.28 	days prior to the Pollution Control Agency or county issuing a feedlot permit for the 
42.29 	animal feedlot facility unless another public meeting for citizen input has been held with 
42.30 	regard to the feedlot facility to be permitted. The exemption in this paragraph is in 
42.31 	addition to other exemptions provided under other law and rules of the board.
42.32 	(e) The board may, prior to final approval of a proposed project, require preparation 
42.33 	of an environmental assessment worksheet by a responsible governmental unit selected 
42.34 	by the board for any action where environmental review under this section has not been 
42.35 	specifically provided for by rule or otherwise initiated.
43.1 	(f) In determining whether a proposed project has significant potential for 
43.2 	environmental effect, the responsible governmental unit may consider the extent to which 
43.3 	the environmental effects are subject to mitigation by ongoing public regulatory authority. 
43.4 	The responsible governmental unit may rely only on mitigation measures that are specific 
43.5 	and that can be reasonably expected to effectively mitigate the identified environmental 
43.6 	impacts of the project. If an applicant for a proposed project demonstrates that the project 
43.7 	can meet an environmental standard established in state or federal statute or rule, the 
43.8 	responsible governmental unit shall conclude that the standard can be reasonably expected 
43.9 	to effectively mitigate the specific environmental impact addressed by that standard.
43.10 	(f)(g) An early and open process shall be utilized to limit the scope of the 
43.11 	environmental impact statement to a discussion of those impacts, which, because of the 
43.12 	nature or location of the project, have the potential for significant environmental effects. 
43.13 	The same process shall be utilized to determine the form, content and level of detail 
43.14 	of the statement as well as the alternatives which are appropriate for consideration in 
43.15 	the statement. In addition, the permits which will be required for the proposed action 
43.16 	shall be identified during the scoping process. Further, the process shall identify those 
43.17 	permits for which information will be developed concurrently with the environmental 
43.18 	impact statement. The board shall provide in its rules for the expeditious completion of 
43.19 	the scoping process. The determinations reached in the process shall be incorporated into 
43.20 	the order requiring the preparation of an environmental impact statement.
43.21 	(g)(h) Whenever practical, information needed by a governmental unit for making 
43.22 	final decisions on permits or other actions required for a proposed project shall be 
43.23 	developed in conjunction with the preparation of an environmental impact statement.
43.24 	(h)(i) An environmental impact statement shall be prepared and its adequacy 
43.25 	determined within 280 days after notice of its preparation unless the time is extended by 
43.26 	consent of the parties or by the governor for good cause. The responsible governmental 
43.27 	unit shall determine the adequacy of an environmental impact statement, unless within 60 
43.28 	days after notice is published that an environmental impact statement will be prepared, 
43.29 	the board chooses to determine the adequacy of an environmental impact statement. If an 
43.30 	environmental impact statement is found to be inadequate, the responsible governmental 
43.31 	unit shall have 60 days to prepare an adequate environmental impact statement.

43.32 	Sec. 3. RULE AMENDMENT.
 43.33 	The commissioner of the Pollution Control Agency shall amend Minnesota Rules, 
43.34 	part 7001.0030, to comply with the amendments made under section 1. The commissioner 
43.35 	may use the good cause exemption under Minnesota Statutes, section 14.388, subdivision 
44.1 	1, clause (3), to adopt the amendment under this section, and Minnesota Statutes, section 
44.2 	14.386, does not apply except as provided under Minnesota Statutes, section 14.388.