Subd. 1. Appropriation.

A sum sufficient to make the payments required by this section is annually appropriated from the general fund to the commissioner of agriculture and all money so appropriated is available until expended.

Subd. 1a. Ethanol production goal.

It is a goal of the state that ethanol production plants in the state attain a total annual production level of 220,000,000 gallons.

Subd. 2.

Repealed, 1995 c 220 s 141

Subd. 2a. Definitions.

For the purposes of this section, the terms defined in this subdivision have the meanings given them.

1. (a) "Ethanol" means fermentation ethyl alcohol derived from agricultural products, including potatoes, cereal, grains, cheese whey, and sugar beets; forest products; or other renewable resources, including residue and waste generated from the production, processing, and marketing of agricultural products, forest products, and other renewable resources, that:

   1. (1) meets all of the specifications in ASTM specification D 4806-88; and
   2. (2) is denatured as specified in Code of Federal Regulations, title 27, parts 20 and 21.
2. (b) "Wet alcohol" means agriculturally derived fermentation ethyl alcohol having a purity of at least 50 percent but less than 99 percent.
3. (c) "Anhydrous alcohol" means fermentation ethyl alcohol derived from agricultural products as described in paragraph (a), but that does not meet ASTM specifications or is not denatured and is shipped in bond for further processing.
4. (d) "Ethanol plant" means a plant at which ethanol, anhydrous alcohol, or wet alcohol is produced.

Subd. 3.

Repealed, 1995 c 220 s 141

Subd. 3a. Payments.

1. (a) The commissioner of agriculture shall make cash payments to producers of ethanol, anhydrous alcohol, and wet alcohol located in the state. These payments shall apply only to ethanol, anhydrous alcohol, and wet alcohol fermented in the state and produced at plants that have begun production by June 30, 2000. For the purpose of this subdivision, an entity that holds a controlling interest in more than one ethanol plant is considered a single producer. The amount of the payment for each producer's annual production is:

   1. (1) except as provided in paragraph (b), for each gallon of ethanol or anhydrous alcohol produced on or before June 30, 2000, or ten years after the start of production, whichever is later, 20 cents per gallon; and

   2. (2) for each gallon produced of wet alcohol on or before June 30, 2000, or ten years after the start of production, whichever is later, a payment in cents per gallon calculated by the formula "alcohol purity in percent divided by five," and rounded to the nearest cent per gallon, but not less than 11 cents per gallon.

      The producer payments for anhydrous alcohol and wet alcohol under this section may be paid to either the original producer of anhydrous alcohol or wet alcohol or the secondary processor, at the option of the original producer, but not to both.

2. (b) If the level of production at an ethanol plant increases due to an increase in the production capacity of the plant and the increased production begins by June 30, 2000, the payment under paragraph (a), clause (1), applies to the additional increment of production until ten years after the increased production began. Once a plant's production capacity reaches 15,000,000 gallons per year, no additional increment will qualify for the payment.

3. (c) The commissioner shall make payments to producers of ethanol or wet alcohol in the amount of 1.5 cents for each kilowatt hour of electricity generated using closed-loop biomass in a cogeneration facility at an ethanol plant located in the state. Payments under this paragraph shall be made only for electricity generated at cogeneration facilities that begin operation by June 30, 2000. The payments apply to electricity generated on or before the date ten years after the producer first qualifies for payment under this paragraph. Total payments under this paragraph in any fiscal year may not exceed $750,000. For the purposes of this paragraph:

   1. (1) "closed-loop biomass" means any organic material from a plant that is planted for the purpose of being used to generate electricity or for multiple purposes that include being used to generate electricity; and

   2. (2) "cogeneration" means the combined generation of:

      1. (i) electrical or mechanical power; and
      2. (ii) steam or forms of useful energy, such as heat, that are used for industrial, commercial, heating, or cooling purposes.
4. (d) The total payments under paragraphs (a) and (b) to all producers may not exceed $34,000,000 in a fiscal year. Total payments under paragraphs (a) and (b) to a producer in a fiscal year may not exceed $3,000,000.
5. (e) By the last day of October, January, April, and July, each producer shall file a claim for payment for ethanol, anhydrous alcohol, and wet alcohol production during the preceding three calendar months. A producer with more than one plant shall file a separate claim for each plant. A producer shall file a separate claim for the original production capacity of each plant and for each additional increment of production that qualifies under paragraph (b). A producer that files a claim under this subdivision shall include a statement of the producer's total ethanol, anhydrous alcohol, and wet alcohol production in Minnesota during the quarter covered by the claim, including anhydrous alcohol and wet alcohol produced or received from an outside source. A producer shall file a separate claim for any amount claimed under paragraph (c). For each claim and statement of total ethanol, anhydrous alcohol, and wet alcohol production filed under this subdivision, the volume of ethanol, anhydrous alcohol, and wet alcohol production or amounts of electricity generated using closed-loop biomass must be examined by an independent certified public accountant in accordance with standards established by the American Institute of Certified Public Accountants.

6. (f) Payments shall be made November 15, February 15, May 15, and August 15. A separate payment shall be made for each claim filed. The total quarterly payment to a producer under this paragraph, excluding amounts paid under paragraph (c), may not exceed $750,000. If the total amount for which all producers are eligible in a quarter under paragraphs (a) and (b) exceeds $8,500,000, the commissioner shall make payments in the order in which the portion of production capacity covered by each claim went into production. If the total amount of ethanol or wet alcohol production reported for a quarter under paragraph (e) equals or exceeds 55,000,000 gallons:

   1. (1) payments under this subdivision do not apply to the amount produced in excess of 55,000,000 gallons;
   2. (2) the commissioner shall make payments to producers in the order in which the portion of production capacity covered by each claim began production; and
   3. (3) only those producers that receive payments for the quarter, or received payments under paragraph (a) or (b) in an earlier quarter, will be eligible for future ethanol or wet alcohol production payments under this subdivision.
7. (g) If the total amount for which all producers are eligible in a quarter under paragraph (c) exceeds the amount available for payments, the commissioner shall make payments in the order in which the plants covered by the claims began generating electricity using closed-loop biomass.

8. (h) After July 1, 1997, new production capacity is only eligible for payment under this subdivision if the commissioner receives:

   1. (1) an application for approval of the new production capacity;
   2. (2) an appropriate letter of long-term financial commitment for construction of the new capacity; and

   3. (3) copies of all necessary permits for construction of the new capacity.

      The commissioner may approve the additional capacity based on the order in which the applications are received. The commissioner shall not approve production capacity in excess of the limitations in paragraph (f). Existing plants are not eligible for new capacity beyond planned expansions reported to the commissioner by February 1997.

Subd. 4. Rulemaking authority.

The commissioner shall adopt rules to implement this section.

Subd. 5.

Repealed, 1995 c 220 s 141

Subd. 5a. Expiration.

This section expires June 30, 2010, and the unobligated balance of each appropriation under this section on that date reverts to the general fund.

Subd. 6. Continued payments.

A plant in production or under construction by January 1, 1990, shall continue to receive uninterrupted payments under subdivision 3 of at least 20 cents per gallon of ethanol produced until July 1, 2000.

Subd. 7. Coordination with departments of revenue and public service.

The agriculturally derived ethanol definition and specifications in this section are intended to match the definition and specifications in sections 239.761 and 296.01.

Subd. 8. Promotional and educational materials; description of multiple sources of ethanol required.

Promotional or educational efforts related to ethanol that are financed wholly or partially with state funds and that promote or identify a particular crop or commodity used to produce ethanol must also include a description of the other potential sources of ethanol listed in subdivision 2.