1.1                          A bill for an act 
  1.2             relating to agriculture; authorizing ethanol producer 
  1.3             payments for a new ethanol plant operated using heat 
  1.4             from a municipal cogeneration facility; appropriating 
  1.5             money; amending Minnesota Statutes 1998, section 
  1.6             41A.09, subdivision 3a. 
  1.7   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.8      Section 1.  Minnesota Statutes 1998, section 41A.09, 
  1.9   subdivision 3a, is amended to read: 
  1.10     Subd. 3a.  [PAYMENTS.] (a) The commissioner of agriculture 
  1.11  shall make cash payments to producers of ethanol, anhydrous 
  1.12  alcohol, and wet alcohol located in the state.  These payments 
  1.13  shall apply only to ethanol, anhydrous alcohol, and wet alcohol 
  1.14  fermented in the state and produced at plants that have begun 
  1.15  production by June 30, 2000.  For the purpose of this 
  1.16  subdivision, an entity that holds a controlling interest in more 
  1.17  than one ethanol plant is considered a single producer.  The 
  1.18  amount of the payment for each producer's annual production is: 
  1.19     (1) except as provided in paragraph (b), for each gallon of 
  1.20  ethanol or anhydrous alcohol produced on or before June 30, 
  1.21  2000, or ten years after the start of production, whichever is 
  1.22  later, 20 cents per gallon; and 
  1.23     (2) for each gallon produced of wet alcohol on or before 
  1.24  June 30, 2000, or ten years after the start of production, 
  1.25  whichever is later, a payment in cents per gallon calculated by 
  1.26  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 clauses (1) and (3), the total payments 
  3.1   under paragraphs (a) and (b) to all producers may not exceed 
  3.2   $34,000,000 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 total quarterly payment to a producer under 
  3.29  this paragraph, excluding amounts paid under paragraph (c), may 
  3.30  not exceed $750,000.  Except for new production capacity 
  3.31  approved under paragraph (i), clause clauses (1) and (3), if the 
  3.32  total amount for which all other producers are eligible in a 
  3.33  quarter under paragraphs (a) and (b) exceeds $8,500,000, the 
  3.34  commissioner shall make payments for production capacity that is 
  3.35  subject to this restriction in the order in which the portion of 
  3.36  production capacity covered by each claim went into production.  
  4.1      (g) If the total amount for which all producers are 
  4.2   eligible in a quarter under paragraph (c) exceeds the amount 
  4.3   available for payments, the commissioner shall make payments in 
  4.4   the order in which the plants covered by the claims began 
  4.5   generating electricity using closed-loop biomass. 
  4.6      (h) After July 1, 1997, new production capacity is only 
  4.7   eligible for payment under this subdivision if the commissioner 
  4.8   receives: 
  4.9      (1) an application for approval of the new production 
  4.10  capacity; 
  4.11     (2) an appropriate letter of long-term financial commitment 
  4.12  for construction of the new production capacity; and 
  4.13     (3) copies of all necessary permits for construction of the 
  4.14  new production capacity. 
  4.15     The commissioner may approve new production capacity based 
  4.16  on the order in which the applications are received.  
  4.17     (i) After April 22, 1998, the commissioner may only 
  4.18  approve:  (1) up to 12,000,000 gallons of new production 
  4.19  capacity at one plant that has not previously received approval 
  4.20  or payment for any production capacity; or (2) new production 
  4.21  capacity at existing plants not to exceed planned expansions 
  4.22  reported to the commissioner by February 1997; or (3) up to 
  4.23  12,000,000 gallons of new production capacity at a plant that 
  4.24  has not previously received approval or payment for any 
  4.25  production capacity and is operated using heat from a municipal 
  4.26  cogeneration facility.  The commissioner may not approve any new 
  4.27  production capacity after July September 1, 1998 1999.  
  4.28     (j) For the purposes of this subdivision "new production 
  4.29  capacity" means annual ethanol production capacity that was not 
  4.30  allowed under a permit issued by the pollution control agency 
  4.31  prior to July 1, 1997, or for which construction did not begin 
  4.32  prior to July 1, 1997. 
  4.33     Sec. 2.  [EFFECTIVE DATE.] 
  4.34     Section 1 is effective the day following final enactment.