1.1                          A bill for an act
  1.2             relating to utilities; requiring reporting and 
  1.3             reduction of mercury emissions associated with 
  1.4             electricity generation; creating incentive for 
  1.5             developing mercury control technology; establishing 
  1.6             revenue-neutral mercury emissions fee; making 
  1.7             technical change; amending Minnesota Statutes 1994, 
  1.8             section 273.13, subdivision 31; Minnesota Statutes 
  1.9             1995 Supplement, section 273.13, subdivision 24; 
  1.10            proposing coding for new law in Minnesota Statutes, 
  1.11            chapter 116. 
  1.12  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.13     Section 1.  [TITLE.] 
  1.14     Sections 2 to 7 may be referred to as the electricity 
  1.15  utility mercury emissions-reduction act of 1996. 
  1.16     Sec. 2.  [116.921] [AWARD FOR DEVELOPMENT OF MERCURY 
  1.17  EMISSIONS CONTROL TECHNOLOGY.] 
  1.18     Subdivision 1.  [AWARD.] The commissioner shall develop and 
  1.19  implement a program to award the amount collected under 
  1.20  subdivision 2 to the first person or group to develop a 
  1.21  technology for the capture of mercury emissions from electric 
  1.22  generation sources.  This program shall include the development 
  1.23  of a request for proposal that will include the following 
  1.24  criteria: 
  1.25     (1) that the effectiveness of the technology is verifiable; 
  1.26     (2) that the technology is cost effective, in that the 
  1.27  implementation of the technology costs no more than $5,000 per 
  1.28  pound of mercury captured and captures at least 75 percent of 
  2.1   the mercury in the emissions from the generation source where it 
  2.2   is implemented; and 
  2.3      (3) that the technology is applicable to a wide variety of 
  2.4   boiler types used for generating electricity in the state, or 
  2.5   that the technology is effective at capturing over 85 percent of 
  2.6   the mercury emitted from generation sources emitting the largest 
  2.7   amount of mercury. 
  2.8      The request for proposal must also include the requirement 
  2.9   that the developer of the technology, in order to claim the 
  2.10  award, must agree to share the proceeds from any sale, lease, or 
  2.11  other financial arrangement regarding the use of the technology 
  2.12  with the utilities which contributed to the award under 
  2.13  subdivision 2, with the developer receiving 90 percent of these 
  2.14  proceeds and the utilities receiving the remaining ten percent.  
  2.15  The utilities shall share these proceeds in proportion to their 
  2.16  contribution to the award under subdivision 2.  The proceeds 
  2.17  received by the utilities, if any, shall first be used by the 
  2.18  utilities to return the amount assessed against each utility to 
  2.19  the utility's ratepayers. 
  2.20     Subd. 2.  [ASSESSMENT.] The commissioner of public service 
  2.21  shall assess from electric utilities, as defined in section 
  2.22  216B.38, subdivision 5, $10,000,000 to be awarded under 
  2.23  subdivision 1.  The commissioner shall design the assessments 
  2.24  under this subdivision to: 
  2.25     (1) prorate the total assessment among electric utilities 
  2.26  in proportion to the annual kilowatt hours of electricity sold 
  2.27  in the state by each utility; and 
  2.28     (2) to allocate an individual utility's assessment over a 
  2.29  five-year period. 
  2.30     Sec. 3.  [116.922] [ELECTRIC ENERGY; MERCURY EMISSIONS 
  2.31  REDUCTION.] 
  2.32     Subdivision 1.  [MERCURY-CONTAINING 
  2.33  FUEL.] "Mercury-containing fuel" means fossil fuel, 
  2.34  refuse-derived fuel, solid waste, or any other fuel used in the 
  2.35  generation of electricity that may contain mercury. 
  2.36     Subd. 2.  [PERSONS SUBJECT TO THIS SECTION.] Each person 
  3.1   that purchases electricity for sale in the state at retail or 
  3.2   wholesale, that purchases electricity for use in the state 
  3.3   directly off the electricity transmission system, or that 
  3.4   generates electricity in the state is subject to the 
  3.5   requirements of this section if the electricity purchased or 
  3.6   generated is generated using mercury-containing fuel. 
  3.7      Subd. 3.  [MERCURY EMISSIONS REDUCTION; 
  3.8   RESPONSIBILITY.] (a) A person that generates electricity in the 
  3.9   state is responsible for reducing the total amount of mercury 
  3.10  emissions from generating that electricity, as calculated under 
  3.11  subdivision 6.  The person may achieve that reduction: 
  3.12     (1) by reducing the amount of mercury in the 
  3.13  mercury-containing fuel utilized; 
  3.14     (2) by using point source emissions controls approved by 
  3.15  the commissioner; 
  3.16     (3) by purchasing mercury emissions reduction credits from 
  3.17  another person subject to this section who achieved greater 
  3.18  reductions than required in a certain year; or 
  3.19     (4) by any other method approved by the commissioner. 
  3.20     (b) A person that purchases electricity for sale in the 
  3.21  state at retail or wholesale is responsible for reducing the 
  3.22  total amount of mercury emissions associated with generating 
  3.23  that electricity, as calculated.  The person may achieve that 
  3.24  reduction: 
  3.25     (1) by working with the generator of the electricity 
  3.26  purchased to reduce the amount of mercury emissions derived from 
  3.27  generating that electricity; 
  3.28     (2) by purchasing electricity with a lower amount of 
  3.29  mercury emissions associated with generating that electricity; 
  3.30     (3) by purchasing mercury emissions reduction credits from 
  3.31  another person subject to this section who achieved greater 
  3.32  reductions than required in a certain year; or 
  3.33     (4) by any other method approved by the commissioner. 
  3.34     Subd. 4.  [MERCURY EMISSIONS REDUCTION SCHEDULE.] (a) Upon 
  3.35  granting the award under section 116.921, each person subject to 
  3.36  the requirements of this section shall reduce the amount of 
  4.1   mercury emissions the person is responsible for by 50 percent, 
  4.2   on a per kilowatt hour basis, of the amount of mercury emitted 
  4.3   by the person in 1997.  The person shall reduce mercury 
  4.4   emissions: 
  4.5      (1) by 15 percent by the end of the second year; 
  4.6      (2) by 35 percent by the end of the fourth year; and 
  4.7      (3) by 50 percent by the end of the sixth year. 
  4.8      (b) For the first two years after the granting of the award 
  4.9   under section 116.921, a person subject to these reduction 
  4.10  requirements may choose to attain the annual reduction levels in 
  4.11  paragraph (a) by ensuring that an equivalent amount of mercury 
  4.12  is recycled or reclaimed from spent fluorescent and 
  4.13  high-intensity discharge lamps collected from households.  A 
  4.14  person who chooses to meet the reduction requirements in this 
  4.15  manner must still meet the reductions required by the end of the 
  4.16  fourth and sixth years. 
  4.17     Subd. 5.  [REPORT TO COMMISSIONER.] Each person subject to 
  4.18  this section shall certify its mercury emissions data on a 
  4.19  quarterly basis to the commissioner.  This certification must be 
  4.20  made within 30 days of the end of the quarter and must include: 
  4.21     (1) a list of all generation sources that use 
  4.22  mercury-containing fuel used by the person to generate 
  4.23  electricity in the state, or from which the person purchased 
  4.24  electricity for sale in the state at retail or wholesale, in the 
  4.25  preceding calendar year; and 
  4.26     (2) for each source listed in clause (1): 
  4.27     (i) the amount of electricity generated from that source, 
  4.28  if the source is located in the state, or the amount of 
  4.29  electricity generated from that source for sale in the state, if 
  4.30  the source is located outside the state; 
  4.31     (ii) the total mercury emitted from that source in 
  4.32  generating that electricity; 
  4.33     (iii) the total per kilowatt hour mercury emitted from that 
  4.34  source in generating that electricity; and 
  4.35     (iv) the average mercury concentration in each fuel used at 
  4.36  that source to generate that electricity. 
  5.1      Subd. 6.  [MERCURY EMISSIONS INFORMATION; 
  5.2   CERTIFICATION.] (a) Mercury emissions information may reflect 
  5.3   actual mercury emissions-monitoring data at a generation source 
  5.4   or be based on engineering estimates specific to that source.  
  5.5   Emissions and mercury fuel content information must be certified 
  5.6   as the best reasonably available data on mercury emissions from 
  5.7   each generation source by the commissioner, for generation 
  5.8   sources located in the state, or by the head of the state agency 
  5.9   responsible for pollution control in the state where the 
  5.10  generation source is located. 
  5.11     (b) If neither certified emissions data nor certified 
  5.12  engineering estimates are available for a generation source, the 
  5.13  person making the disclosure shall calculate and report the 
  5.14  emissions rate for that source assuming 100 percent of the 
  5.15  mercury content of the mercury-containing fuel is emitted. 
  5.16     Sec. 4.  [116.923] [MERCURY EMISSIONS FEE.] 
  5.17     Subdivision 1.  [FEE.] The commissioner of revenue shall 
  5.18  collect a fee of $75 per gram of mercury emitted by a person 
  5.19  that generates electricity in this state, based on the 
  5.20  information reported to the commissioner under subdivision 2.  
  5.21  The commissioner shall collect this fee quarterly, on forms and 
  5.22  in a manner prescribed by the commissioner, pursuant to the 
  5.23  commissioner's authority under chapter 289A.  The revenues 
  5.24  derived from the fee imposed under this section shall be 
  5.25  deposited in the state treasury and shall be credited to the 
  5.26  general fund.  The amount deposited in the state treasury shall 
  5.27  be reduced by any refunds and by the costs incurred by the 
  5.28  department of revenue and the pollution control agency to 
  5.29  administer and enforce the assessment and collection of the 
  5.30  fee.  The fee imposed under this section is subject to the 
  5.31  interest, penalties, and administrative provisions provided in 
  5.32  chapter 289A. 
  5.33     Subd. 2.  [REPORT TO COMMISSIONER OF REVENUE.] The 
  5.34  commissioner of the pollution control agency shall report 
  5.35  quarterly to the commissioner of revenue the amount of mercury 
  5.36  emitted by electric utilities.  In this quarterly report, the 
  6.1   commissioner may use and rely on the certified mercury emissions 
  6.2   information received by the electric utilities under section 
  6.3   116.922, subdivision 5. 
  6.4      Sec. 5.  [116.924] [REPORT.] 
  6.5      (a) Beginning January 1, 1997, the commissioner, in 
  6.6   consultation with the director of the environmental quality 
  6.7   board, the chair of the public utilities commission, and the 
  6.8   commissioner of public service, shall submit an annual report to 
  6.9   the legislature detailing: 
  6.10     (1) the progress the agency has made in implementing the 
  6.11  electricity utility mercury emissions-reduction act of 1996; 
  6.12     (2) the efforts made by the persons subject to the 
  6.13  requirements of this act; 
  6.14     (3) an analysis of the costs and benefits of the mercury 
  6.15  reductions required under the act, incorporating a total social 
  6.16  cost perspective; and 
  6.17     (4) recommendations to ensure cost-effective and 
  6.18  environmentally protective implementation of this act. 
  6.19     (b) In addition, in the first of these required reports, 
  6.20  the commissioner shall include: 
  6.21     (1) recommendations for addressing mercury emissions from 
  6.22  generation sources constructed after the implementation of the 
  6.23  reduction schedule in section 116.922, subdivision 4; 
  6.24     (2) recommendations for guidelines for the sale of mercury 
  6.25  emissions credits, as allowed under section 116.922, subdivision 
  6.26  3; 
  6.27     (3) recommendations for effective enforcement of section 
  6.28  116.922; and 
  6.29     (4) recommendations regarding an exemption from the mercury 
  6.30  emissions reduction requirements of section 116.922, or 
  6.31  alternative requirements for mercury reduction, for those 
  6.32  persons subject to that section for whom no mercury control 
  6.33  technology exists, even after the granting of the award under 
  6.34  section 116.921. 
  6.35     The commissioner shall submit this report to the house 
  6.36  committee on environment and natural resources, the house 
  7.1   committee on regulated industries and energy, the senate 
  7.2   committee on environment and natural resources, and the senate 
  7.3   committee on jobs, energy, and economic development. 
  7.4      Sec. 6.  Minnesota Statutes 1995 Supplement, section 
  7.5   273.13, subdivision 24, is amended to read: 
  7.6      Subd. 24.  [CLASS 3.] (a) Commercial and industrial 
  7.7   property and utility real and personal property, except class 5 
  7.8   property as identified in subdivision 31, paragraph (a), and 
  7.9   paragraph (b), clause (1), is class 3a.  It has a class rate of 
  7.10  three percent of the first $100,000 of market value for taxes 
  7.11  payable in 1993 and thereafter, and 5.06 percent of the market 
  7.12  value over $100,000.  In the case of state-assessed commercial, 
  7.13  industrial, and utility property owned by one person or entity, 
  7.14  only one parcel has a reduced class rate on the first $100,000 
  7.15  of market value.  In the case of other commercial, industrial, 
  7.16  and utility property owned by one person or entity, only one 
  7.17  parcel in each county has a reduced class rate on the first 
  7.18  $100,000 of market value, except that: 
  7.19     (1) if the market value of the parcel is less than 
  7.20  $100,000, and additional parcels are owned by the same person or 
  7.21  entity in the same city or town within that county, the reduced 
  7.22  class rate shall be applied up to a combined total market value 
  7.23  of $100,000 for all parcels owned by the same person or entity 
  7.24  in the same city or town within the county; 
  7.25     (2) in the case of grain, fertilizer, and feed elevator 
  7.26  facilities, as defined in section 18C.305, subdivision 1, or 
  7.27  232.21, subdivision 8, the limitation to one parcel per owner 
  7.28  per county for the reduced class rate shall not apply, but there 
  7.29  shall be a limit of $100,000 of preferential value per site of 
  7.30  contiguous parcels owned by the same person or entity.  Only the 
  7.31  value of the elevator portion of each parcel shall qualify for 
  7.32  treatment under this clause.  For purposes of this subdivision, 
  7.33  contiguous parcels include parcels separated only by a railroad 
  7.34  or public road right-of-way; and 
  7.35     (3) in the case of property owned by a nonprofit charitable 
  7.36  organization that qualifies for tax exemption under section 
  8.1   501(c)(3) of the Internal Revenue Code of 1986, as amended 
  8.2   through December 31, 1993, if the property is used as a business 
  8.3   incubator, the limitation to one parcel per owner per county for 
  8.4   the reduced class rate shall not apply, provided that the 
  8.5   reduced rate applies only to the first $100,000 of value per 
  8.6   parcel owned by the organization.  As used in this clause, a 
  8.7   "business incubator" is a facility used for the development of 
  8.8   nonretail businesses, offering access to equipment, space, 
  8.9   services, and advice to the tenant businesses, for the purpose 
  8.10  of encouraging economic development, diversification, and job 
  8.11  creation in the area served by the organization. 
  8.12     To receive the reduced class rate on additional parcels 
  8.13  under clause (1), (2), or (3), the taxpayer must notify the 
  8.14  county assessor that the taxpayer owns more than one parcel that 
  8.15  qualifies under clause (1), (2), or (3). 
  8.16     (b) Employment property defined in section 469.166, during 
  8.17  the period provided in section 469.170, shall constitute class 
  8.18  3b and has a class rate of 2.3 percent of the first $50,000 of 
  8.19  market value and 3.6 percent of the remainder, except that for 
  8.20  employment property located in a border city enterprise zone 
  8.21  designated pursuant to section 469.168, subdivision 4, paragraph 
  8.22  (c), the class rate of the first $100,000 of market value and 
  8.23  the class rate of the remainder is determined under paragraph 
  8.24  (a), unless the governing body of the city designated as an 
  8.25  enterprise zone determines that a specific parcel shall be 
  8.26  assessed pursuant to the first clause of this sentence.  The 
  8.27  governing body may provide for assessment under the first clause 
  8.28  of the preceding sentence only for property which is located in 
  8.29  an area which has been designated by the governing body for the 
  8.30  receipt of tax reductions authorized by section 469.171, 
  8.31  subdivision 1. 
  8.32     (c) Structures which are (i) located on property classified 
  8.33  as class 3a, (ii) constructed under an initial building permit 
  8.34  issued after January 2, 1996, (iii) located in a transit zone as 
  8.35  defined under section 473.3915, subdivision 3, (iv) located 
  8.36  within the boundaries of a school district, and (v) not 
  9.1   primarily used for retail or transient lodging purposes, shall 
  9.2   have a class rate of four percent on that portion of the market 
  9.3   value in excess of $100,000 and any market value under $100,000 
  9.4   that does not qualify for the three percent class rate under 
  9.5   paragraph (a).  As used in item (v), a structure is primarily 
  9.6   used for retail or transient lodging purposes if over 50 percent 
  9.7   of its square footage is used for those purposes.  The four 
  9.8   percent rate shall also apply to improvements to existing 
  9.9   structures that meet the requirements of items (i) to (v) if the 
  9.10  improvements are constructed under an initial building permit 
  9.11  issued after January 2, 1996, even if the remainder of the 
  9.12  structure was constructed prior to January 2, 1996.  For the 
  9.13  purposes of this paragraph, a structure shall be considered to 
  9.14  be located in a transit zone if any portion of the structure 
  9.15  lies within the zone.  If any property once eligible for 
  9.16  treatment under this paragraph ceases to remain eligible due to 
  9.17  revisions in transit zone boundaries, the property shall 
  9.18  continue to receive treatment under this paragraph for a period 
  9.19  of three years. 
  9.20     Sec. 7.  Minnesota Statutes 1994, section 273.13, 
  9.21  subdivision 31, is amended to read: 
  9.22     Subd. 31.  [CLASS 5.] (a) Class 5a property includes tools, 
  9.23  implements, and machinery of an electric generating, 
  9.24  transmission, or distribution system.  Class 5a has a class rate 
  9.25  of 2.7 percent of market value. 
  9.26     (b) Class 5 5b property includes:  
  9.27     (1) tools, implements, and machinery of an electric 
  9.28  generating, transmission, or distribution system or a pipeline 
  9.29  system transporting or distributing water, gas, crude oil, or 
  9.30  petroleum products or mains and pipes used in the distribution 
  9.31  of steam or hot or chilled water for heating or cooling 
  9.32  buildings, which are fixtures; 
  9.33     (2) unmined iron ore and low-grade iron-bearing formations 
  9.34  as defined in section 273.14; and 
  9.35     (3) all other property not otherwise classified. 
  9.36     Class 5 5b property has a class rate of 5.06 percent of 
 10.1   market value. 
 10.2      Sec. 8.  [EFFECTIVE DATE.] 
 10.3      Section 3, subdivision 5, is effective January 1, 1997.  
 10.4   Sections 6 and 7 are effective for taxes payable in 1997 and 
 10.5   subsequent years.