1.1                          A bill for an act 
  1.2             relating to agriculture; expanding eligibility for 
  1.3             ethanol producer payments; amending Minnesota Statutes 
  1.4             1998, section 41A.09, subdivision 3a; Laws 1999, 
  1.5             chapter 231, section 11, subdivision 3. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  Minnesota Statutes 1998, section 41A.09, 
  1.8   subdivision 3a, is amended to read: 
  1.9      Subd. 3a.  [PAYMENTS.] (a) The commissioner of agriculture 
  1.10  shall make cash payments to producers of ethanol, anhydrous 
  1.11  alcohol, and wet alcohol located in the state.  These payments 
  1.12  shall apply only to ethanol, anhydrous alcohol, and wet alcohol 
  1.13  fermented in the state and produced at plants that have begun 
  1.14  production by June 30, 2000.  For the purpose of this 
  1.15  subdivision, an entity that holds a controlling interest in more 
  1.16  than one ethanol plant is considered a single producer.  The 
  1.17  amount of the payment for each producer's annual production is: 
  1.18     (1) except as provided in paragraph (b), for each gallon of 
  1.19  ethanol or anhydrous alcohol produced on or before June 30, 
  1.20  2000, or ten years after the start of production, whichever is 
  1.21  later, 20 cents per gallon; and 
  1.22     (2) for each gallon produced of wet alcohol on or before 
  1.23  June 30, 2000, or ten years after the start of production, 
  1.24  whichever is later, a payment in cents per gallon calculated by 
  1.25  the formula "alcohol purity in percent divided by five," and 
  2.1   rounded to the nearest cent per gallon, but not less than 11 
  2.2   cents per gallon. 
  2.3      The producer payments for anhydrous alcohol and wet alcohol 
  2.4   under this section may be paid to either the original producer 
  2.5   of anhydrous alcohol or wet alcohol or the secondary processor, 
  2.6   at the option of the original producer, but not to both. 
  2.7      (b) If the level of production at an ethanol plant 
  2.8   increases due to an increase in the production capacity of the 
  2.9   plant and the increased production begins by June 30, 2000, the 
  2.10  payment under paragraph (a), clause (1), applies to the 
  2.11  additional increment of production until ten years after the 
  2.12  increased production began.  Once a plant's production capacity 
  2.13  reaches 15,000,000 gallons per year, no additional increment 
  2.14  will qualify for the payment. 
  2.15     (c) The commissioner shall make payments to producers of 
  2.16  ethanol or wet alcohol in the amount of 1.5 cents for each 
  2.17  kilowatt hour of electricity generated using closed-loop biomass 
  2.18  in a cogeneration facility at an ethanol plant located in the 
  2.19  state.  Payments under this paragraph shall be made only for 
  2.20  electricity generated at cogeneration facilities that begin 
  2.21  operation by June 30, 2000.  The payments apply to electricity 
  2.22  generated on or before the date ten years after the producer 
  2.23  first qualifies for payment under this paragraph.  Total 
  2.24  payments under this paragraph in any fiscal year may not exceed 
  2.25  $750,000.  For the purposes of this paragraph: 
  2.26     (1) "closed-loop biomass" means any organic material from a 
  2.27  plant that is planted for the purpose of being used to generate 
  2.28  electricity or for multiple purposes that include being used to 
  2.29  generate electricity; and 
  2.30     (2) "cogeneration" means the combined generation of: 
  2.31     (i) electrical or mechanical power; and 
  2.32     (ii) steam or forms of useful energy, such as heat, that 
  2.33  are used for industrial, commercial, heating, or cooling 
  2.34  purposes. 
  2.35     (d) ~~Except for new production capacity approved under~~ 
  2.36  ~~paragraph (i), clause (1),~~ The total payments under paragraphs 
  3.1   (a) and (b) to all producers may not exceed ~~$34,000,000~~ 
  3.2   $37,000,000 in a fiscal year.  Total payments under paragraphs 
  3.3   (a) and (b) to a producer in a fiscal year may not exceed 
  3.4   $3,000,000. 
  3.5      (e) By the last day of October, January, April, and July, 
  3.6   each producer shall file a claim for payment for ethanol, 
  3.7   anhydrous alcohol, and wet alcohol production during the 
  3.8   preceding three calendar months.  A producer with more than one 
  3.9   plant shall file a separate claim for each plant.  A producer 
  3.10  shall file a separate claim for the original production capacity 
  3.11  of each plant and for each additional increment of production 
  3.12  that qualifies under paragraph (b).  A producer that files a 
  3.13  claim under this subdivision shall include a statement of the 
  3.14  producer's total ethanol, anhydrous alcohol, and wet alcohol 
  3.15  production in Minnesota during the quarter covered by the claim, 
  3.16  including anhydrous alcohol and wet alcohol produced or received 
  3.17  from an outside source.  A producer shall file a separate claim 
  3.18  for any amount claimed under paragraph (c).  For each claim and 
  3.19  statement of total ethanol, anhydrous alcohol, and wet alcohol 
  3.20  production filed under this subdivision, the volume of ethanol, 
  3.21  anhydrous alcohol, and wet alcohol production or amounts of 
  3.22  electricity generated using closed-loop biomass must be examined 
  3.23  by an independent certified public accountant in accordance with 
  3.24  standards established by the American Institute of Certified 
  3.25  Public Accountants. 
  3.26     (f) Payments shall be made November 15, February 15, May 
  3.27  15, and August 15.  A separate payment shall be made for each 
  3.28  claim filed.  ~~The~~ Except as provided in paragraph (k), total 
  3.29  quarterly payment to a producer under this paragraph, excluding 
  3.30  amounts paid under paragraph (c), may not exceed $750,000. 
  3.31  ~~Except for new production capacity approved under paragraph (i),~~ 
  3.32  ~~clause (1), if the total amount for which all other producers~~ 
  3.33  ~~are eligible in a quarter under paragraphs (a) and (b) exceeds~~ 
  3.34  ~~$8,500,000, the commissioner shall make payments for production~~ 
  3.35  ~~capacity that is subject to this restriction in the order in~~ 
  3.36  ~~which the portion of production capacity covered by each claim~~ 
  4.1   ~~went into production.~~  
  4.2      (g) If the total amount for which all producers are 
  4.3   eligible in a quarter under paragraph (c) exceeds the amount 
  4.4   available for payments, the commissioner shall make payments in 
  4.5   the order in which the plants covered by the claims began 
  4.6   generating electricity using closed-loop biomass. 
  4.7      (h) After July 1, 1997, new production capacity is only 
  4.8   eligible for payment under this subdivision if the commissioner 
  4.9   receives: 
  4.10     (1) an application for approval of the new production 
  4.11  capacity; 
  4.12     (2) an appropriate letter of long-term financial commitment 
  4.13  for construction of the new production capacity; and 
  4.14     (3) copies of all necessary permits for construction of the 
  4.15  new production capacity. 
  4.16     The commissioner may approve new production capacity based 
  4.17  on the order in which the applications are received.  
  4.18     (i) ~~After April 22, 1998, the commissioner may only~~ 
  4.19  ~~approve:  (1) up to 12,000,000 gallons of new production~~ 
  4.20  ~~capacity at one plant that has not previously received approval~~ 
  4.21  ~~or payment for any production capacity; or (2) new production~~ 
  4.22  ~~capacity at existing plants not to exceed planned expansions~~ 
  4.23  ~~reported to the commissioner by February 1997.~~  The commissioner 
  4.24  may ~~not~~ approve ~~any~~ only new production capacity ~~after July 1,~~ 
  4.25  ~~1998~~ that allows a producer who was approved for at least 
  4.26  12,000,000 gallons but less than 15,000,000 gallons of annual 
  4.27  production prior to July 1, 1998, up to 15,000,000 gallons of 
  4.28  production capacity.  
  4.29     (j) For the purposes of this subdivision "new production 
  4.30  capacity" means annual ethanol production capacity that was not 
  4.31  allowed under a permit issued by the pollution control agency 
  4.32  prior to July 1, 1997, or for which construction did not begin 
  4.33  prior to July 1, 1997. 
  4.34     (k) If, at the end of a biennium, a producer has not 
  4.35  received the full amount of its maximum claim for its approved 
  4.36  capacity and actual production due to a shortfall of production 
  5.1   in any quarter, the commissioner shall make payments to the 
  5.2   producer from available funds for that biennium in an amount 
  5.3   without regard to the quarterly limits after payments for 
  5.4   production of the immediately preceding quarter have been paid 
  5.5   in full. 
  5.6      Sec. 2.  Laws 1999, chapter 231, section 11, subdivision 3, 
  5.7   is amended to read: 
  5.8   Subd. 3.  Agricultural Marketing and Development
  5.9         6,521,000      5,410,000
  5.10  Notwithstanding Minnesota Statutes, 
  5.11  section 41A.09, subdivision 3a, the 
  5.12  total payments from the ethanol 
  5.13  development account to all producers 
  5.14  may not exceed ~~$68,447,000~~ $72,701,022 
  5.15  for the biennium ending June 30, 2001.  
  5.16  If, prior to the end of the biennium, 
  5.17  the total amount for which all 
  5.18  producers are eligible ~~in a quarter~~ 
  5.19  exceeds the amount ~~available for~~ 
  5.20  ~~payments~~ remaining in the 
  5.21  appropriation, the commissioner shall 
  5.22  make the payments for the quarter in 
  5.23  which the shortfall occurs on a pro 
  5.24  rata basis.  In fiscal year 2000, the 
  5.25  commissioner shall first reimburse 
  5.26  producers for eligible unpaid claims 
  5.27  accumulated through June 30, 1999.  
  5.28  $500,000 the first year is appropriated 
  5.29  to the rural finance authority for 
  5.30  making a loan under Minnesota Statutes, 
  5.31  section 41B.044.  Principal and 
  5.32  interest payments on the loan must be 
  5.33  deposited in the ethanol development 
  5.34  account for producer payments under 
  5.35  Minnesota Statutes, section 41B.09. 
  5.36  By July 15, 1999, the commissioner 
  5.37  shall transfer the unencumbered cash 
  5.38  balance in the ethanol development fund 
  5.39  established in Minnesota Statutes, 
  5.40  section 41B.044, to the general fund. 
  5.41  $200,000 the first year is for a grant 
  5.42  from the commissioner to the Minnesota 
  5.43  Turkey Growers Association for 
  5.44  assistance to an entity that constructs 
  5.45  a facility that uses poultry litter as 
  5.46  a fuel for the generation of 
  5.47  electricity.  This amount must be 
  5.48  matched by $1 of nonstate money for 
  5.49  each dollar of state money.  This is a 
  5.50  one-time appropriation. 
  5.51  $50,000 the first year is for the 
  5.52  commissioner, in consultation with the 
  5.53  commissioner of economic development, 
  5.54  to conduct a study of the need for a 
  5.55  commercial shipping port at which 
  5.56  agricultural cooperatives or individual 
  5.57  farmers would have access to port 
  5.58  facilities.  This is a one-time 
  6.1   appropriation.  
  6.2   $71,000 the first year and $71,000 the 
  6.3   second year are for transfer to the 
  6.4   Minnesota grown matching account and 
  6.5   may be used as grants for Minnesota 
  6.6   grown promotion under Minnesota 
  6.7   Statutes, section 17.109. 
  6.8   $100,000 the first year is for a grant 
  6.9   to the University of Minnesota 
  6.10  extension service for its farm safety 
  6.11  and health program.  This is a one-time 
  6.12  appropriation. 
  6.13  $225,000 the first year and $75,000 the 
  6.14  second year are for grants to the 
  6.15  Minnesota agricultural education 
  6.16  leadership council for the planning and 
  6.17  implementation of initiatives enhancing 
  6.18  and expanding agricultural education in 
  6.19  rural and urban areas of the state.  
  6.20  Funds not used in the first year are 
  6.21  available for the second year.  This is 
  6.22  a one-time appropriation.  
  6.23  $480,000 the first year and $420,000 
  6.24  the second year are to the commissioner 
  6.25  of agriculture for programs to 
  6.26  aggressively promote, develop, expand, 
  6.27  and enhance the marketing of 
  6.28  agricultural products from Minnesota 
  6.29  producers and processors.  The 
  6.30  commissioner must enter into 
  6.31  collaborative efforts with the 
  6.32  department of trade and economic 
  6.33  development, the world trade center 
  6.34  corporation, and other public or 
  6.35  private entities knowledgeable in 
  6.36  market identification and development.  
  6.37  The commissioner may also contract with 
  6.38  or make grants to public or private 
  6.39  organizations involved in efforts to 
  6.40  enhance communication between producers 
  6.41  and markets and organizations that 
  6.42  identify, develop, and promote the 
  6.43  marketing of Minnesota agricultural 
  6.44  crops, livestock, and produce in local, 
  6.45  regional, national, and international 
  6.46  marketplaces.  Grants may be provided 
  6.47  to appropriate organizations including 
  6.48  those functioning as marketing clubs, 
  6.49  to a cooperative known as Minnesota 
  6.50  Marketplace, and to recognized 
  6.51  associations of producers or processors 
  6.52  of organic foods or Minnesota grown 
  6.53  specialty crops.  Beginning October 15, 
  6.54  1999, and 15 days after the close of 
  6.55  each calendar quarter thereafter, the 
  6.56  commissioner shall provide to the 
  6.57  senate and house committees with 
  6.58  jurisdiction over agriculture policy 
  6.59  and funding interim reports of the 
  6.60  progress toward accomplishing the goals 
  6.61  of this item.  The commissioner shall 
  6.62  deliver a final report on March 1, 
  6.63  2001.  If the appropriation for either 
  6.64  year is insufficient, the appropriation 
  6.65  for the other year is available.  This 
  6.66  is a one-time appropriation that 
  6.67  remains available until expended. 
  7.1   $60,000 the second year is for grants 
  7.2   to farmers for demonstration projects 
  7.3   involving sustainable agriculture.  If 
  7.4   a project cost is more than $25,000, 
  7.5   the amount above $25,000 must be 
  7.6   matched at the rate of one state dollar 
  7.7   for each dollar of nonstate money.  
  7.8   Priorities must be given for projects 
  7.9   involving multiple parties.  Up to 
  7.10  $20,000 each year may be used for 
  7.11  dissemination of information about the 
  7.12  demonstration grant projects.  If the 
  7.13  appropriation for either year is 
  7.14  insufficient, the appropriation for the 
  7.15  other is available. 
  7.16  $160,000 each year is for value-added 
  7.17  agricultural product processing and 
  7.18  marketing grants under Minnesota 
  7.19  Statutes, section 17.101, subdivision 5.
  7.20  $450,000 the first year and $300,000 
  7.21  the second year are for continued 
  7.22  research of solutions and alternatives 
  7.23  for manure management and odor 
  7.24  control.  This is a one-time 
  7.25  appropriation. 
  7.26  $50,000 the first year and $50,000 the 
  7.27  second year are for annual cost-share 
  7.28  payments to resident farmers for the 
  7.29  costs of organic certification.  The 
  7.30  annual cost-share payments per farmer 
  7.31  shall be two-thirds of the cost of the 
  7.32  certification or $200, whichever is 
  7.33  less.  A certified farmer is eligible 
  7.34  to receive annual certification 
  7.35  cost-share payments for up to five 
  7.36  years.  $15,000 each year is for 
  7.37  organic market and program 
  7.38  development.  This appropriation is 
  7.39  available until expended. 
  7.40  $30,000 the first year is to assess 
  7.41  producer production contracts under 
  7.42  section 205.  This appropriation is 
  7.43  available until June 30, 2001.  
  7.44     Sec. 3.  [EFFECTIVE DATE.] 
  7.45     Section 2 is effective the day following final enactment.  
  7.46  Section 1 is effective retroactive to July 1, 1999.