Advanced biofuel, renewable chemical, and biomass thermal production incentives provisions modifications and appropriations

1.1 A bill for an act​ 1.2 relating to agriculture; modifying provisions pertaining to incentives for advanced​ 1.3 biofuel, renewable chemical, and biomass thermal production; appropriating money;​ 1.4 amending Minnesota Statutes 2022, sections 41A.16, subdivisions 1, 2; 41A.17,​ 1.5 subdivisions 1, 2; 41A.18, subdivisions 1, 2; proposing coding for new law in​ 1.6 Minnesota Statutes, chapter 41A; repealing Minnesota Statutes 2022, sections​ 1.7 41A.16, subdivision 7; 41A.17, subdivision 6; 41A.18, subdivision 6.​ 1.8 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:​ 1.9 Section 1. Minnesota Statutes 2022, section 41A.16, subdivision 1, is amended to read:​ 1.10 Subdivision 1. Eligibility for participants on or before April 1, 2023. (a) A facility​ 1.11 eligible for payment under this section must source from Minnesota at least 80 percent of​ 1.12 the biomass used to produce an advanced biofuel, except that, if a facility is sited 50 miles​ 1.13 or less from the state border, biomass used to produce an advanced biofuel may be sourced​ 1.14 from outside of Minnesota, but only if at least 80 percent of the biomass is sourced from​ 1.15 within a 100-mile radius of the facility or from within Minnesota. The facility must be​ 1.16 located in Minnesota, must begin production at a specific location on or before April 1 June​ 1.17 30, 2023, and must not begin operating above 23,750 MMbtu of quarterly advanced biofuel​ 1.18 production before July 1, 2015. Eligible facilities include existing companies and facilities​ 1.19 that are adding advanced biofuel production capacity, or retrofitting existing capacity, as​ 1.20 well as new companies and facilities. Production of conventional corn ethanol and​ 1.21 conventional biodiesel is not eligible. Eligible advanced biofuel facilities must produce at​ 1.22 least 1,500 MMbtu of advanced biofuel quarterly.​ 1.23 (b) No payments shall be made for advanced biofuel production that occurs after June​ 1.24 30, 2035, for those eligible biofuel producers under paragraph (a).​ 1​Section 1.​ 23-02619 as introduced​01/17/23 REVISOR BD/CA​ SENATE​ STATE OF MINNESOTA​ S.F. No. 1178​NINETY-THIRD SESSION​ (SENATE AUTHORS: HAUSCHILD, Rarick, Frentz, Kupec and Dahms)​ OFFICIAL STATUS​D-PG​DATE​ Introduction and first reading​02/02/2023​ Referred to Agriculture, Broadband, and Rural Development​ 2.1 (c) An eligible producer of advanced biofuel shall not transfer the producer's eligibility​ 2.2 for payments under this section to an advanced biofuel facility at a different location.​ 2.3 (d) A producer that ceases production for any reason is ineligible to receive payments​ 2.4 under this section until the producer resumes production.​ 2.5 (e) Renewable chemical production for which payment has been received under section​ 2.6 41A.17, and biomass thermal production for which payment has been received under section​ 2.7 41A.18, are not eligible for payment under this section.​ 2.8 (f) Biobutanol is eligible under this section.​ 2.9 EFFECTIVE DATE. This section is effective retroactively from March 31, 2023.​ 2.10 Sec. 2. Minnesota Statutes 2022, section 41A.16, subdivision 2, is amended to read:​ 2.11 Subd. 2. Payment amounts; limits. (a) The commissioner shall make payments to​ 2.12 eligible producers of advanced biofuel. The amount of the payment for each eligible​ 2.13 producer's annual production is $2.1053 per MMbtu for advanced biofuel production from​ 2.14 cellulosic biomass, and $1.053 per MMbtu for advanced biofuel production from sugar,​ 2.15 starch, oil, or animal fat at a specific location for ten years after the start of production.​ 2.16 (b) Total payments under this section to an eligible biofuel producer in a fiscal year may​ 2.17 not exceed the amount necessary for 2,850,000 MMbtu of biofuel production. Total payments​ 2.18 under this section to all eligible biofuel producers in a fiscal year may not exceed the amount​ 2.19 necessary for 17,100,000 MMbtu of biofuel production. If the total amount for which all​ 2.20 producers are eligible in a quarter exceeds the amount available for payments, the​ 2.21 commissioner shall make the payments on a pro rata basis. An eligible producer may reapply​ 2.22 for payment, and the commissioner must pay, the difference between a claim for payment​ 2.23 filed under subdivision 6 and the pro rata amount received:​ 2.24 (1) until the full amount of the original claim is paid; and​ 2.25 (2) subject to available money appropriated for the express purpose of paying claims​ 2.26 not otherwise paid.​ 2.27 (c) For purposes of this section, an entity that holds a controlling interest in more than​ 2.28 one advanced biofuel facility is considered a single eligible producer.​ 2.29 EFFECTIVE DATE. This section is effective retroactively from January 1, 2020, and​ 2.30 applies to claims filed after January 1, 2020.​ 2​Sec. 2.​ 23-02619 as introduced​01/17/23 REVISOR BD/CA​ 3.1 Sec. 3. Minnesota Statutes 2022, section 41A.17, subdivision 1, is amended to read:​ 3.2 Subdivision 1. Eligibility for participants on or before April 1, 2023. (a) A facility​ 3.3 eligible for payment under this section must source from Minnesota at least 80 percent of​ 3.4 the biomass used to produce a renewable chemical, except that, if a facility is sited 50 miles​ 3.5 or less from the state border, biomass used to produce a renewable chemical may be sourced​ 3.6 from outside of Minnesota, but only if at least 80 percent of the biomass is sourced from​ 3.7 within a 100-mile radius of the facility or from within Minnesota. The facility must be​ 3.8 located in Minnesota, must begin production at a specific location on or before April 1 June​ 3.9 30, 2023, and must not begin production of 250,000 pounds of chemicals quarterly before​ 3.10 January 1, 2015. Eligible facilities include existing companies and facilities that are adding​ 3.11 production capacity, or retrofitting existing capacity, as well as new companies and facilities.​ 3.12 Eligible renewable chemical facilities must produce at least 250,000 pounds of renewable​ 3.13 chemicals quarterly. Renewable chemicals produced through processes that are fully​ 3.14 commercial before January 1, 2000, are not eligible.​ 3.15 (b) No payments shall be made for renewable chemical production that occurs after June​ 3.16 30, 2035, for those eligible renewable chemical producers under paragraph (a).​ 3.17 (c) An eligible producer of renewable chemicals shall not transfer the producer's eligibility​ 3.18 for payments under this section to a renewable chemical facility at a different location.​ 3.19 (d) A producer that ceases production for any reason is ineligible to receive payments​ 3.20 under this section until the producer resumes production.​ 3.21 (e) Advanced biofuel production for which payment has been received under section​ 3.22 41A.16, and biomass thermal production for which payment has been received under section​ 3.23 41A.18, are not eligible for payment under this section.​ 3.24 EFFECTIVE DATE. This section is effective retroactively from March 31, 2023.​ 3.25 Sec. 4. Minnesota Statutes 2022, section 41A.17, subdivision 2, is amended to read:​ 3.26 Subd. 2. Payment amounts; bonus; limits. (a) The commissioner shall make payments​ 3.27 to eligible producers of renewable chemicals located in the state. The amount of the payment​ 3.28 for each producer's annual production is $0.03 per pound of sugar-derived renewable​ 3.29 chemical, $0.03 per pound of cellulosic sugar, starch, oil, or animal fat, and $0.06 per pound​ 3.30 of cellulosic-derived renewable chemical produced at a specific location for ten years after​ 3.31 the start of production.​ 3​Sec. 4.​ 23-02619 as introduced​01/17/23 REVISOR BD/CA​ 4.1 (b) An eligible facility producing renewable chemicals using agricultural cellulosic​ 4.2 biomass is eligible for a 20 percent bonus payment for each pound produced from agricultural​ 4.3 biomass that is derived from perennial crop or cover crop biomass.​ 4.4 (c) Total payments under this section to an eligible renewable chemical producer in a​ 4.5 fiscal year may not exceed the amount necessary for 99,999,999 pounds of renewable​ 4.6 chemical production. Total payments under this section to all eligible renewable chemical​ 4.7 producers in a fiscal year may not exceed the amount necessary for 599,999,999 pounds of​ 4.8 renewable chemical production. If the total amount for which all producers are eligible in​ 4.9 a quarter exceeds the amount available for payments, the commissioner shall make the​ 4.10 payments on a pro rata basis. An eligible producer may reapply for payment, and the​ 4.11 commissioner must pay, the difference between a claim for payment filed under subdivision​ 4.12 5 and the pro rata amount received:​ 4.13 (1) until the full amount of the original claim is paid; and​ 4.14 (2) subject to available money appropriated for the express purpose of paying claims​ 4.15 not otherwise paid.​ 4.16 (d) An eligible facility may blend renewable chemicals with other chemicals that are​ 4.17 not renewable chemicals, but only the percentage attributable to renewable chemicals in​ 4.18 the blended product is eligible to receive payment.​ 4.19 (e) For purposes of this section, an entity that holds a controlling interest in more than​ 4.20 one renewable chemical production facility is considered a single eligible producer.​ 4.21 EFFECTIVE DATE. This section is effective retroactively from January 1, 2020, and​ 4.22 applies to claims filed after January 1, 2020.​ 4.23 Sec. 5. Minnesota Statutes 2022, section 41A.18, subdivision 1, is amended to read:​ 4.24 Subdivision 1. Eligibility for participants on or before April 1, 2023. (a) A facility​ 4.25 eligible for payment under this section must source from Minnesota at least 80 percent of​ 4.26 the biomass used for biomass thermal production, except that, if a facility is sited 50 miles​ 4.27 or less from the state border, biomass used for biomass thermal production may be sourced​ 4.28 from outside of Minnesota, but only if at least 80 percent of the biomass is sourced from​ 4.29 within a 100-mile radius of the facility, or from within Minnesota. Biomass must be from​ 4.30 agricultural or forestry sources. The facility must be located in Minnesota, must have begun​ 4.31 production at a specific location on or before April 1 June 30, 2023, and must not begin​ 4.32 before July 1, 2015. Eligible facilities include existing companies and facilities that are​ 4.33 adding production capacity, or retrofitting existing capacity, as well as new companies and​ 4​Sec. 5.​ 23-02619 as introduced​01/17/23 REVISOR BD/CA​ 5.1 facilities. Eligible biomass thermal production facilities must produce at least 250 MMbtu​ 5.2 of biomass thermal quarterly.​ 5.3 (b) No payments shall be made for biomass thermal production that occurs after June​ 5.4 30, 2035, for those eligible biomass thermal producers under paragraph (a).​ 5.5 (c) An eligible producer of biomass thermal production shall not transfer the producer's​ 5.6 eligibility for payments under this section to a biomass thermal production facility at a​ 5.7 different location.​ 5.8 (d) A producer that ceases production for any reason is ineligible to receive payments​ 5.9 under this section until the producer resumes production.​ 5.10 (e) Biofuel production for which payment has been received under section 41A.16, and​ 5.11 renewable chemical production for which payment has been received under section 41A.17,​ 5.12 are not eligible for payment under this section.​ 5.13 EFFECTIVE DATE. This section is effective retroactively from March 31, 2023.​ 5.14 Sec. 6. Minnesota Statutes 2022, section 41A.18, subdivision 2, is amended to read:​ 5.15 Subd. 2. Payment amounts; bonus; limits; blending. (a) The commissioner shall make​ 5.16 payments to eligible producers of biomass thermal located in the state. The amount of the​ 5.17 payment for each producer's annual production is $5.00 per MMbtu of biomass thermal​ 5.18 production produced at a specific location for ten years after the start of production.​ 5.19 (b) An eligible facility producing biomass thermal using agricultural cellulosic biomass​ 5.20 is eligible for a 20 percent bonus payment for each MMbtu produced from agricultural​ 5.21 biomass that is derived from perennial crop or cover crop biomass.​ 5.22 (c) Total payments under this section to an eligible thermal producer in a fiscal year​ 5.23 may not exceed the amount necessary for 30,000 MMbtu of thermal production. Total​ 5.24 payments under this section to all eligible thermal producers in a fiscal year may not exceed​ 5.25 the amount necessary for 150,000 MMbtu of total thermal production. If the total amount​ 5.26 for which all producers are eligible in a quarter exceeds the amount available for payments,​ 5.27 the commissioner shall make the payments on a pro rata basis. An eligible producer may​ 5.28 reapply for payment, and the commissioner must pay, the difference between a claim for​ 5.29 payment filed under subdivision 5 and the pro rata amount received:​ 5.30 (1) until the full amount of the original claim is paid; and​ 5.31 (2) subject to available money appropriated for the express purpose of paying claims​ 5.32 not otherwise paid.​ 5​Sec. 6.​ 23-02619 as introduced​01/17/23 REVISOR BD/CA​ 6.1 (d) An eligible facility may blend a cellulosic feedstock with other fuels in the biomass​ 6.2 thermal production facility, but only the percentage attributable to biomass meeting the​ 6.3 cellulosic forestry biomass requirements or agricultural cellulosic biomass sourcing plan is​ 6.4 eligible to receive payment.​ 6.5 (e) When a facility is eligible due to adding production capacity or retrofitting existing​ 6.6 capacity, the entire amount of biomass meeting the cellulosic forestry biomass requirements​ 6.7 or agricultural cellulosic biomass sourcing plan is assumed to have been used for the biomass​ 6.8 thermal production from the added or retrofitted production capacity.​ 6.9 (f) For purposes of this section, an entity that holds a controlling interest in more than​ 6.10 one biomass thermal production facility is considered a single eligible producer.​ 6.11 EFFECTIVE DATE. This section is effective retroactively from January 1, 2020, and​ 6.12 applies to claims filed after January 1, 2020.​ 6.13 Sec. 7. [41A.185] APPROPRIATION; INCENTIVE PAYMENTS.​ 6.14 (a) In fiscal year 2023 through fiscal year 2036, a sum sufficient to make the payments​ 6.15 required under Minnesota Statutes, sections 41A.16, 41A.17, and 41A.18, not to exceed​ 6.16 $15,000,000 in a fiscal year, is annually appropriated from the general fund to the​ 6.17 commissioner of agriculture.​ 6.18 (b) This section expires June 30, 2036.​ 6.19 EFFECTIVE DATE. This section is effective the day following final enactment.​ 6.20 Sec. 8. APPROPRIATION; UNPAID CLAIMS.​ 6.21 $10,000,000 in fiscal year 2023 is appropriated from the general fund to the commissioner​ 6.22 of agriculture for the express purpose of paying claims not previously paid under Minnesota​ 6.23 Statutes, sections 41A.16, 41A.17, and 41A.18. This is a onetime appropriation. The​ 6.24 commissioner must pay all claims no later than June 30, 2023.​ 6.25 EFFECTIVE DATE. This section is effective the day following final enactment.​ 6.26 Sec. 9. REPEALER.​ 6.27 Minnesota Statutes 2022, sections 41A.16, subdivision 7; 41A.17, subdivision 6; and​ 6.28 41A.18, subdivision 6, are repealed.​ 6​Sec. 9.​ 23-02619 as introduced​01/17/23 REVISOR BD/CA​ 41A.16 ADVANCED BIOFUEL PRODUCTION INCENTIVE.​ Subd. 7. Eligibility for participants after April 1, 2023. (a) A facility eligible for payment​ under this section must source at least 80 percent raw materials from Minnesota. If a facility is sited​ 50 miles or less from the state border, raw materials may be sourced from within a 100-mile radius.​ Raw materials must be from agricultural or forestry sources or from solid waste. The facility must​ be located in Minnesota, must begin production at a specific location after April 1, 2023, and before​ June 30, 2025, and must not begin operating above 23,750 MMbtu of quarterly biofuel production​ before July 1, 2015. Eligible facilities include existing companies and facilities that are adding​ advanced biofuel production capacity, or retrofitting existing capacity, as well as new companies​ and facilities. Production of conventional corn ethanol and conventional biodiesel is not eligible.​ Eligible advanced biofuel facilities must produce at least 23,750 MMbtu of biofuel quarterly.​ (b) No payments shall be made for advanced biofuel production that occurs after June 30, 2035,​ for those eligible biofuel producers under paragraph (a).​ (c) An eligible producer of advanced biofuel shall not transfer the producer's eligibility for​ payments under this section to an advanced biofuel facility at a different location.​ (d) A producer that ceases production for any reason is ineligible to receive payments under​ this section until the producer resumes production.​ (e) Renewable chemical production for which payment has been received under section 41A.17,​ and biomass thermal production for which payment has been received under section 41A.18, are​ not eligible for payment under this section.​ (f) Biobutanol is eligible under this section.​ 41A.17 RENEWABLE CHEMICAL PRODUCTION INCENTIVE.​ Subd. 6. Eligibility for participants after April 1, 2023. (a) A facility eligible for payment​ under this program must source at least 80 percent biobased content from Minnesota. For the​ purposes of this subdivision, "biobased content" means a chemical, polymer, monomer, or plastic​ that is not sold primarily for use as food, feed, or fuel and that has a biobased percentage of at least​ 51 percent as determined by testing representative samples using American Society for Testing and​ Materials specification D6866. If a facility is sited 50 miles or less from the state border, biobased​ content must be sourced from within a 100-mile radius. Biobased content must be from agricultural​ or forestry sources or from solid waste. The facility must be located in Minnesota, must begin​ production at a specific location after April 1, 2023, and before June 30, 2025, and must not begin​ production of 750,000 pounds or more of chemicals quarterly before January 1, 2015. Eligible​ facilities include existing companies and facilities that are adding production capacity, or retrofitting​ existing capacity, as well as new companies and facilities. Eligible renewable chemical facilities​ must produce at least 750,000 pounds of renewable chemicals quarterly. Renewable chemicals​ produced through processes that are fully commercial before January 1, 2000, are not eligible.​ (b) No payments shall be made for renewable chemical production that occurs after June 30,​ 2035, for those eligible renewable chemical producers under paragraph (a).​ (c) An eligible producer of renewable chemicals shall not transfer the producer's eligibility for​ payments under this section to a renewable chemical facility at a different location.​ (d) A producer that ceases production for any reason is ineligible to receive payments under​ this section until the producer resumes production.​ (e) Advanced biofuel production for which payment has been received under section 41A.16,​ and biomass thermal production for which payment has been received under section 41A.18, are​ not eligible for payment under this section.​ 41A.18 BIOMASS THERMAL PRODUCTION INCENTIVE.​ Subd. 6. Eligibility for participants after April 1, 2023. (a) A facility eligible for payment​ under this section must source at least 80 percent raw materials from Minnesota. If a facility is sited​ 50 miles or less from the state border, raw materials should be sourced from within a 100-mile​ radius. Raw materials must be from agricultural or forestry sources. The facility must be located​ in Minnesota, must have begun production at a specific location after April 1, 2023, and before​ June 30, 2025, and must not begin before July 1, 2015. Eligible facilities include existing companies​ and facilities that are adding production capacity, or retrofitting existing capacity, as well as new​ companies and facilities. Eligible biomass thermal production facilities must produce at least 250​ MMbtu of biomass thermal quarterly.​ 1R​ APPENDIX​ Repealed Minnesota Statutes: 23-02619​ (b) No payments shall be made for biomass thermal production that occurs after June 30, 2035,​ for those eligible biomass thermal producers under paragraph (a).​ (c) An eligible producer of biomass thermal production shall not transfer the producer's eligibility​ for payments under this section to a biomass thermal production facility at a different location.​ (d) A producer that ceases production for any reason is ineligible to receive payments under​ this section until the producer resumes production.​ (e) Biofuel production for which payment has been received under section 41A.16, and renewable​ chemical production for which payment has been received under section 41A.17, are not eligible​ for payment under this section.​ 2R​ APPENDIX​ Repealed Minnesota Statutes: 23-02619​