1.1 	A bill for an act
1.2 	relating to environment; imposing limits on mercury
1.3 	emissions for coal-fired electric generating
1.4 	facilities; creating a grant program to research
1.5 	mercury reduction technologies for taconite
1.6 	processing; amending Minnesota Statutes 2004, sections
1.7 	116.915, subdivision 3; 116.925, subdivision 2;
1.8 	216B.1692, subdivisions 1, 8; proposing coding for new
1.9 	law in Minnesota Statutes, chapters 116; 298.
1.10 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.11 	Section 1. Minnesota Statutes 2004, section 116.915,
1.12 	subdivision 3, is amended to read:
1.13 		Subd. 3.Progress reports.  The commissioner, in
1.14 	cooperation with the director of the Office of Environmental
1.15 	Assistance, shall submit progress reports to the legislature on
1.16 	October 15, 2001, and October 15, 2005.  The reports shall
1.17 	address the state's success in meeting the mercury release
1.18 	reduction goals of subdivision 1, and discuss whether different
1.19 	voluntary or mandatory reduction strategies are needed.  The
1.20 	reports shall also discuss whether the reduction goals are still
1.21 	appropriate given the most recent information regarding mercury
1.22 	risks. In the report due October 15, 2005, the commissioner
1.23 	shall describe the reductions made in mercury emissions since
1.24 	1990 by each individual sector, including, but not limited to,
1.25 	materials processing, energy production, and intentional use,
1.26 	and shall estimate the amount of the reduction achieved in each
1.27 	sector overall and specifically as a result of implementing a
2.1 	voluntary reduction plan.  The report must also contain revised
2.2 	estimates of mercury emissions by individual sectors in 1990,
2.3 	1995, 2000, and 2005.

2.4 	Sec. 2. [116.922] MERCURY EMISSIONS REDUCTION AT ELECTRIC
2.5 	GENERATING PLANTS.
2.6 		Subdivision 1.Application. This section applies to any
2.7 	coal-fired steam electric generating unit located in Minnesota
2.8 	that is constructed for the purpose of supplying more than
2.9 	one-third of its potential electric output capacity and 25
2.10 	megawatts or more of electrical output to any utility power
2.11 	distribution system for sale.  Any steam supplied to a steam
2.12 	distribution system for the purpose of providing steam to a
2.13 	steam-electric generator that would produce electrical energy
2.14 	for sale is also considered in determining the electrical energy
2.15 	output capacity of the unit.  For purposes of this section,
2.16 	"electric generating unit" means a coal-fired steam electric
2.17 	generating unit.
2.18 		Subd. 2.Emissions limit. (a) After December 31, 2011,
2.19 	an owner or operator of an electric generating unit utilizing
2.20 	wet scrubbers to control emissions of particulate matter shall
2.21 	operate the electric generating unit so that emissions of
2.22 	mercury are, on an annual basis, the lesser of:
2.23 	(1) 6.9 x 10-6pounds per megawatt-hour of electricity
2.24 	generated; or 
2.25 	(2) 90 percent less than total mercury emissions reported
2.26 	for the electric generating unit in calendar year 1999 in the
2.27 	report submitted under section 116.925, subdivisions 1 and 2.
2.28 	(b) After December 31, 2009, an owner or operator of an
2.29 	electric generating unit not included in paragraph (a) shall
2.30 	operate the electric generating unit so that emissions of
2.31 	mercury are, on an annual basis, the lesser of:
2.32 	(1) 6.9 x 10-6pounds per megawatt-hour of electricity
2.33 	generated; or 
2.34 	(2) 90 percent less than total mercury emissions reported
2.35 	for the electric generating unit in calendar year 1999 in the
2.36 	report submitted under section 116.925, subdivisions 1 and 2.
3.1 	(c) An owner or operator of two or more electric generating
3.2 	units at the same facility may request the agency to approve a
3.3 	plan in which the weighted average amount of mercury emissions
3.4 	meets the applicable mercury emissions limit under this
3.5 	subdivision, but which does not require that each electric
3.6 	generating unit meet that limit.  The agency may approve an
3.7 	averaging plan only if the owner or operator of the electric
3.8 	generating units included in the plan enters into an enforceable
3.9 	agreement with the agency requiring the weighted average of
3.10 	mercury emissions from the electric generating units at the
3.11 	facility to meet the applicable mercury emissions limit under
3.12 	this subdivision.
3.13 		Subd. 3.Compliance plan and report. (a) By January 1,
3.14 	2007, an owner or operator of an electric generating unit shall
3.15 	submit to the commissioner a compliance plan demonstrating the
3.16 	steps the owner or operator will take to ensure that the
3.17 	electric generating unit will meet the applicable mercury
3.18 	emissions limit of subdivision 2.  The plan shall include, at a
3.19 	minimum, the following information:
3.20 	(1) a list of each electric generating unit on which
3.21 	mercury emissions control equipment will be installed;
3.22 	(2) a list of each electric generating unit whose coal
3.23 	input will be switched to a lower mercury-content coal; and 
3.24 	(3) a description of any plans to improve the combustion
3.25 	efficiency of an electric generating unit to meet the applicable
3.26 	memory emissions limit of subdivision 2.
3.27 	(b) By January 1, 2009, an owner or operator of an electric
3.28 	generating unit shall submit to the commissioner an updated plan
3.29 	describing any changes made to the compliance plan submitted
3.30 	under paragraph (a).
3.31 	(c) By March 1 of the year following the effective date of
3.32 	the applicable mercury emission limits in subdivision 2, and no
3.33 	later than March 1 of each following year, an owner or operator
3.34 	shall submit a compliance certification report to the
3.35 	commissioner certifying that, during the preceding calendar
3.36 	year, each electric generating unit or, if an averaging plan has
4.1 	been approved by the commissioner under subdivision 2, paragraph
4.2 	(c), the weighted average of the electric generating units, was
4.3 	in compliance with the applicable mercury emissions limit under
4.4 	subdivision 2, based on the determination made under subdivision
4.5 	4.  If the mercury emissions exceed the applicable mercury
4.6 	emissions limit under subdivision 2, the compliance
4.7 	certification report must include the following information:
4.8 	(1) a determination of the amount and cause of the excess
4.9 	mercury emissions; and 
4.10 	(2) a description of actions the owner or operator has
4.11 	taken and will take to ensure that the applicable mercury
4.12 	emissions limit under subdivision 2 will be met in subsequent
4.13 	years.
4.14 		Subd. 4.Compliance determination. (a) After the
4.15 	effective date of the applicable mercury emission limits set
4.16 	forth in subdivision 2, an owner or operator of an electric
4.17 	generating unit shall conduct performance tests of the unit
4.18 	twice within a 12-month period, measuring, simultaneously, the
4.19 	amount of mercury in the gas stream at the inlet and the exit of
4.20 	the air pollution control equipment serving each electric
4.21 	generating unit.  The performance tests must be conducted
4.22 	according to Minnesota Rules, chapter 7017.
4.23 	(b) Any owner or operator who achieves and maintains
4.24 	compliance with the applicable mercury emissions limit under
4.25 	subdivision 2 for two consecutive years for an electric
4.26 	generating unit may thereafter conduct performance tests
4.27 	annually.  However, if an annual performance test fails to
4.28 	demonstrate compliance with the applicable mercury emissions
4.29 	limit under subdivision 2, the frequency of performance testing
4.30 	shall revert to that established in paragraph (a).
4.31 	(c) When a federal performance specification for a mercury
4.32 	continuous emissions monitoring system is published in the
4.33 	Federal Register, and a system capable of meeting the federal
4.34 	performance specification is available, an owner or operator of
4.35 	an electric generating unit may request approval from the agency
4.36 	to install a mercury continuous emissions monitoring system to
5.1 	determine compliance with the applicable mercury emissions limit
5.2 	set forth in subdivision 2.  The owner or operator of an
5.3 	electric generating unit must demonstrate to the agency that the
5.4 	mercury continuous emissions monitoring system that it proposes
5.5 	to install complies with the quality assurance requirements in
5.6 	the federal specification.  If the agency approves the
5.7 	installation of a mercury continuous emissions monitoring
5.8 	system, performance testing under paragraph (a) is no longer
5.9 	required, so long as the mercury continuous emissions monitoring
5.10 	system continues to comply with the quality assurance
5.11 	requirements in the federal specification and meet the
5.12 	specifications in Minnesota Rules, chapter 7017.

5.13 	Sec. 3. Minnesota Statutes 2004, section 116.925,
5.14 	subdivision 2, is amended to read:
5.15 		Subd. 2.Contents of report.  (a) A report must include:
5.16 	(1) a list of all generation facilities owned or operated
5.17 	by the utility or person subject to subdivision 1;
5.18 	(2) all readily available information regarding the amount
5.19 	of electricity purchased by the utility or person subject to
5.20 	subdivision 1, for use in the state; and
5.21 	(3) information for each facility and each electric
5.22 	generating unit owned or operated by the utility or person
5.23 	subject to subdivision 1, stating:  (i) the amount of
5.24 	electricity generated at the facility for use or for sale in
5.25 	this state at retail or wholesale; (ii) the amount, rank, grade,
5.26 	and mercury content of fuel coal used to generate that
5.27 	electricity at the facility; and (iii) the amount of mercury
5.28 	emitted in generating that electricity in the previous calendar
5.29 	year, based on emission factors, stack performance tests, fuel
5.30 	analysis, or other methods approved by the
5.31 	commissioner conducted under section 116.922. The report must
5.32 	include the mercury content of the fuel if it is determined in
5.33 	conjunction with a stack test.
5.34 	(b) The following are de minimis standards for small and
5.35 	little-used generation facilities:
5.36 	(1) less than 240 hours of operation by the combustion unit
6.1 	per year;
6.2 	(2) a fuel capacity input at the combustion unit of less
6.3 	than 150,000,000 British thermal units per hour; or
6.4 	(3) an electrical generation unit with maximum output of
6.5 	less than or equal to 15 megawatts.
6.6 	A utility or person subject to this section who owns or
6.7 	operates a combustion unit that qualifies under one of these de
6.8 	minimis standards is not required to provide the information
6.9 	described in paragraph (a) for that combustion unit.
6.10 	(c) A report need not be filed for a combustion device for
6.11 	a year in which the device has documented mercury emissions of
6.12 	three pounds or less.

6.13 	Sec. 4. Minnesota Statutes 2004, section 216B.1692,
6.14 	subdivision 1, is amended to read:
6.15 		Subdivision 1.Qualifying projects.  Projects that may be
6.16 	approved for the emissions reduction-rate rider allowed in this
6.17 	section must:
6.18 	(1) be installed on existing large electric generating
6.19 	power plants, as defined in section 216B.2421, subdivision 2,
6.20 	clause (1), that are located in the state and that are currently
6.21 	not subject to emissions limitations for new power plants under
6.22 	the federal Clean Air Act;
6.23 	(2) not increase the capacity of the existing electric
6.24 	generating power plant more than ten percent or more than 100
6.25 	megawatts, whichever is greater; and 
6.26 	(3) result in the existing plant either:
6.27 	(i) complying with applicable new source review standards
6.28 	under the federal Clean Air Act; or
6.29 	(ii) emitting air contaminants at levels substantially
6.30 	lower than allowed for new facilities by the applicable new
6.31 	source performance standards under the federal Clean Air Act; or
6.32 	(iii) reducing emissions from current levels at a unit to
6.33 	the lowest cost-effective level when, due to the age or
6.34 	condition of the generating unit, the public utility
6.35 	demonstrates that it would not be cost-effective to reduce
6.36 	emissions to the levels in item (i) or (ii); and 
7.1 	(4) be designed to reduce emissions of several pollutants
7.2 	simultaneously, including, but not limited to, mercury, sulfur
7.3 	oxides, and particulate matter.

7.4 	Sec. 5. Minnesota Statutes 2004, section 216B.1692,
7.5 	subdivision 8, is amended to read:
7.6 		Subd. 8.Sunset.  This section is effective until June
7.7 	30, 2006 expires December 31, 2009.

7.8 	Sec. 6. [298.228] TACONITE MERCURY CONTROL RESEARCH GRANT
7.9 	PROGRAM.
7.10 		Subdivision 1.Creation of account. The taconite mercury
7.11 	control research account is established.  All money appropriated
7.12 	to the account, and all fees and other money from any source
7.13 	that may be credited to the account, including interest earned
7.14 	on the account, is annually appropriated to the commissioner of
7.15 	natural resources for implementation and maintenance of the
7.16 	taconite mercury control research grant program.
7.17 		Subd. 2.Funding of account. Five percent of the taxes
7.18 	distributed to the taconite economic development fund under
7.19 	section 298.28, subdivision 9a, must be paid to the commissioner
7.20 	of natural resources prior to being allocated under section
7.21 	298.28, subdivision 9a, to be deposited in the taconite mercury
7.22 	control research account.  The deposits must be made annually
7.23 	and funds in the account must remain available until the
7.24 	commissioner makes both determinations required under
7.25 	subdivision 5.  The allocations made under section 298.28,
7.26 	subdivision 9a, are each reduced by five percent.
7.27 		Subd. 3.Program purpose. The Department of Natural
7.28 	Resources shall establish and administer a program to award
7.29 	grants for the purpose of developing technology to reduce
7.30 	mercury emissions from taconite indurating furnaces and
7.31 	direct-reduced iron furnaces to a level at least 70 percent
7.32 	below the rate of 15.88 pounds of mercury emissions per million
7.33 	long tons of taconite pellets produced, as estimated for all
7.34 	Minnesota taconite processing plants for the year 2000 in the
7.35 	Pollution Control Agency report "Estimated Mercury Emissions in
7.36 	Minnesota for 1990, 1995, and 2000," March 2004 update.  The
8.1 	department shall establish criteria for funding research and
8.2 	development projects that apply for grants under this program
8.3 	and shall award grants to projects it determines are most likely
8.4 	to achieve the purpose of the program.
8.5 		Subd. 4.Eligibility. Any private party or public
8.6 	institution within the state is eligible to receive grants under
8.7 	the program, including, but not limited to, taconite producers,
8.8 	institutions of higher education, and government agencies.  The
8.9 	Department of Natural Resources may utilize up to 20 percent of
8.10 	the funds in the account for research projects intended to
8.11 	achieve the purpose of the program and may also pay the costs of
8.12 	administering the program from the account.  All work paid for
8.13 	with grant funds must take place within the state.
8.14 		Subd. 5.Findings. When the commissioner of natural
8.15 	resources determines that a mercury control technology has been
8.16 	developed that achieves the purpose of the program set forth in
8.17 	subdivision 3 with respect to taconite indurating furnaces or
8.18 	direct-reduced iron furnaces, the commissioner of natural
8.19 	resources shall make a separate finding to that effect.
8.20 		Subd. 6.Rule adoption. Within one year of the date of a
8.21 	finding made under subdivision 5, the Pollution Control Agency
8.22 	shall adopt a rule requiring that, within three years of the
8.23 	date of the rule adoption, each taconite indurating furnace or
8.24 	direct-reduced iron furnace must reduce its mercury emissions to
8.25 	the level achievable by the applicable mercury control
8.26 	technology that is the subject of the finding made in
8.27 	subdivision 5.
8.28 		Subd. 7.Incorporation into permit. Within one year of
8.29 	the rule adoption, the Pollution Control Agency shall
8.30 	incorporate into the air quality permit of each taconite
8.31 	indurating furnace and direct-reduced iron furnace the
8.32 	requirement that each reduce its mercury emissions to the level
8.33 	achievable by the applicable mercury control technology that is
8.34 	the subject of the finding made in subdivision 5.

8.35 	Sec. 7. EFFECTIVE DATE.
 8.36 	Section 6 is effective for taxable years beginning after
9.1 	December 31, 2004.