Greenhouse Gas Pollution Superfund Act

A bill for an act

relating to environment; creating greenhouse gas pollution cost-recovery program;

establishing account; requiring reports; appropriating money; proposing coding

for new law in Minnesota Statutes, chapter 116.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.
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TITLE.
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This act is known as the "Greenhouse Gas Pollution Superfund Act."

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Sec. 2.

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[116.393] DEFINITIONS.

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(a) For purposes of sections 116.393 to 116.3937, the terms used have the meanings

given in this section and section 116.391.

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(b) "Account" means the greenhouse gas pollution account under section 116.3937.

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(c) "Climate change adaptation project" means a project of the state, a local government

unit, or a Tribal government that is designed to respond to, avoid, moderate, repair, or adapt

to impacts caused by climate change and to assist human and natural communities,

households, and businesses in preparing for future climate-change-driven impacts.

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(d) "Coal" means bituminous coal, anthracite coal, and lignite.

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(e) "Controlled group" means two or more entities treated as a single employer under

section 52(a) or (b) or section 414(m) or (o) of the Internal Revenue Code. In applying

section 52(a) or (b), section 1563 of the Internal Revenue Code is applied without regard

to section 52(b)(2)(C).

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(f) "Cost-recovery demand" means a charge assessed against a responsible party for

cost-recovery payments to the account.

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(g) "Covered greenhouse gas emissions" means the total quantity of greenhouse gases

released into the atmosphere during the covered period, expressed in metric tons of carbon

dioxide equivalent, resulting from the use of fossil fuels extracted or refined by an entity.

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(h) "Covered period" means the period beginning January 1, 1995, and ending December

31, 2026.

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(i) "Crude oil" means oil or petroleum of any kind and in any form, including bitumen,

oil sands, heavy oil, conventional and unconventional oil, shale oil, natural gas liquids,

condensates, and related fossil fuels.

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(j) "Disadvantaged community" means:

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(1) an eligible community under the community energy transition grant program in

section 116J.55; or

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(2) an environmental justice area as defined in section 115A.03, subdivision 10b.

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(k) "Entity" means an individual, trustee, agent, partnership, association, corporation,

company, municipality, political subdivision, or other legal organization, including a foreign

nation, that holds or held an ownership interest in a fossil fuel business during the covered

period.

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(l) "Fossil fuel" means coal, petroleum products, and fuel gases.

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(m) "Fossil fuel business" means a business engaged in extracting fossil fuels or refining

petroleum products.

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(n) "Fuel gas" means methane, natural gas, liquefied natural gas, manufactured fuel gas,

and any other gas that is used as fuel and emits one or more greenhouse gases when

combusted.

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(o) "Greenhouse gas" means carbon dioxide, methane, nitrous oxide, hydrofluorocarbons,

perfluorocarbons, and sulfur hexafluoride from anthropogenic sources in the state.

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(p) "Notice of cost-recovery demand" means the written communication from the

commissioner informing a responsible party of the amount of the cost-recovery demand

payable to the account.

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(q) "Petroleum product" means a product refined or rerefined from synthetic or crude

oil or oil extracted from other sources, including natural gas liquids.

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(r) "Program" means the greenhouse gas pollution cost-recovery program under section

116.3935.

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(s) "Public plan" means a hazard mitigation plan, climate action plan, energy action

plan, or adaptation plan for the state, a local government unit, or a Tribal government,

including:

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(1) a plan supported by the resilient community assistance program under section 116.391

or the local climate action grant program of the Pollution Control Agency; and

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(2) approved climate mitigation and adaptation planning in a comprehensive plan under

section 473.859, subdivision 7.

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(t) "Responsible party" means an entity or a successor in interest to an entity that, during

any part of the covered period, was engaged in the trade or business of extracting fossil

fuels or refining crude oil and that is determined by the commissioner to be responsible for

more than one billion metric tons of covered greenhouse gas emissions during the covered

period. Responsible party does not include a person who lacks sufficient connection with

the state to satisfy the nexus requirements of the United States Constitution.

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Sec. 3.

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[116.3935] GREENHOUSE GAS POLLUTION COST-RECOVERY

PROGRAM.

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Subdivision 1.

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Program established; duties.

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(a) A greenhouse gas pollution

cost-recovery program is established to secure cost-recovery payments from responsible

parties and to disburse money from the account according to section 116.3937, subdivision

1.

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(b) The commissioner must:

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(1) determine proportional liability according to subdivision 2;

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(2) impose cost-recovery demands on responsible parties;

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(3) accept and collect payment for cost-recovery demands; and

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(4) disburse money from the account to pay for climate change adaptation projects

according to rules adopted under subdivision 7.

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Subd. 2.

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Liability established.

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(a) A responsible party is strictly liable for a share of

the costs to the state and its residents that have resulted from covered greenhouse gas

emissions.

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(b) For purposes of this section, entities in a controlled group are a single entity for

purposes of identifying responsible parties. All entities in a controlled group are jointly and

severally liable for paying any cost-recovery demand owed by any entity in the controlled

group.

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(c) With respect to each responsible party, the cost-recovery demand is equal to an

amount that bears the same ratio to the cost to the state and its residents, as calculated by

the state auditor according to section 116.3937, subdivision 2, from covered greenhouse

gas emissions during the covered period as the responsible party's applicable share of covered

greenhouse gas emissions bears to the aggregate applicable shares of covered greenhouse

gas emissions resulting from the use of fossil fuels extracted or refined during the covered

period.

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(d) If a responsible party owns a minority interest of ten percent or more in another

entity, the responsible party's applicable share of covered greenhouse gas emissions is

increased by the applicable share of covered greenhouse gas emissions for the entity in

which the responsible party holds a minority interest multiplied by the percentage of the

minority interest held by the responsible party.

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(e) In determining the amount of greenhouse gas emissions attributable to any entity:

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(1) an amount equivalent to 942.5 metric tons of carbon dioxide equivalent is considered

released for every 1,000,000 pounds of coal attributable to the entity;

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(2) an amount equivalent to 432,180 metric tons of carbon dioxide equivalent is

considered released for every 1,000,000 barrels of crude oil attributable to the entity; and

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(3) an amount equivalent to 53,440 metric tons of carbon dioxide equivalent is considered

released for every 1,000,000 cubic feet of fuel gases attributable to the entity.

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(f) The commissioner may adjust the cost-recovery demand amount of a responsible

party that refined petroleum products or that is a successor in interest to an entity that refined

petroleum products if the responsible party establishes to the satisfaction of the commissioner

that:

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(1) a portion of the cost-recovery demand amount was attributable to refining crude oil

extracted by another responsible party; and

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(2) the crude oil extracted by the other responsible party was accounted for when the

commissioner determined the cost-recovery demand amount for the other responsible party

or a successor in interest to the other responsible party.

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(g) The commissioner must issue in writing the cost-recovery demands that are required

under this section no later than six months after rules are adopted under subdivision 7.

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Subd. 3.

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Paying cost-recovery demand; appeal.

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(a) Except as provided in paragraphs

(b) and (d), a responsible party must pay the cost-recovery demand amount in full no later

than six months after the commissioner issues the cost-recovery demand.

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(b) A responsible party may elect to pay the cost-recovery demand amount in nine annual

installments as follows:

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(1) the first installment must be paid no later than six months after the commissioner

issues the cost-recovery demand and is equal to 20 percent of the total cost-recovery demand

amount;

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(2) each subsequent installment must be paid annually, beginning one year after the

initial payment, and must be equal to ten percent of the total cost-recovery demand amount.

The commissioner may charge reasonable interest on each installment payment or a payment

delayed for any other reason and, at the commissioner's discretion, may adjust the amount

of a subsequent installment payment or a payment delayed for any other reason to reflect

increases or decreases in the Consumer Price Index; and

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(3) if there is any addition to the original amount of the cost-recovery demand for failure

to timely pay an installment required under this subdivision; a liquidation or sale of

substantially all the assets of the responsible party, including in a proceeding under United

States Code, title 11, or a similar case; a cessation of business by the responsible party; or

any similar circumstance, then the unpaid balance of all remaining installments is due on

the date of such event or, in the case of a proceeding under United States Code, title 11, or

a similar case, on the day before the petition is filed. This clause does not apply to the sale

of substantially all of the assets of a responsible party to a buyer if the buyer enters into an

agreement with the commissioner under which the buyer is liable for the remaining

installments due under this subdivision in the same manner as if the buyer was the responsible

party.

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(c) The commissioner must deposit cost-recovery payments collected under this section

to the greenhouse gas pollution account.

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(d) A responsible party aggrieved by the issuance of a cost-recovery demand may request

a contested case hearing before an administrative law judge according to chapter 14.

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Subd. 4.

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Other remedies.

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Nothing in this section supersedes or diminishes any other

remedies available to a person or the state at common law or under statute.

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Subd. 5.

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Eligible projects.

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To be eligible for money from the account, a climate change

adaptation project must be recommended in a public plan.

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Subd. 6.

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Labor standards.

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(a) Money in the account must be expended in ways designed

to increase local employment opportunities and improve job quality.

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(b) All contracts for constructing climate change adaptation projects under this section

must pay the prevailing wage rate, as defined in section 177.42, subdivision 6, and are

subject to sections 177.27, 177.30, 177.32, and 177.41 to 177.45.

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(c) For purposes of complying with sections 177.30, paragraph (a), clauses (6) and (7),

and 177.41 to 177.435, the political subdivision constructing a climate change adaptation

project is the contracting authority and contracting agency and the project is considered a

public works project.

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Subd. 7.

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Rulemaking.

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The commissioner must adopt rules that are necessary to

implement this section, including but not limited to:

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(1) adopting methodologies to determine responsible parties and their share of covered

greenhouse gas emissions;

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(2) registering entities;

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(3) issuing notices of cost-recovery demand;

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(4) accepting payments on cost-recovery demands;

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(5) identifying public plans;

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(6) establishing criteria for climate change adaptation projects;

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(7) establishing criteria for costs qualifying for cost-recovery according to section

116.3937, subdivision 1, paragraph (c); and

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(8) adopting procedures for ensuring that at least 40 percent of disbursements from the

account are for climate change adaptation projects that benefit disadvantaged communities

according to section 116.3937, subdivision 1, paragraph (d).

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Subd. 8.

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Staffing.

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One full-time position is created in the Pollution Control Agency for

implementing this section. The commissioner may create additional positions as needed to

implement this section. The positions are a reasonable administrative expense of the program

for purposes of section 116.3937, subdivision 1, paragraph (c).

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Sec. 4.

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[116.3937] GREENHOUSE GAS POLLUTION ACCOUNT.

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Subdivision 1.

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Account created.

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(a) A greenhouse gas pollution account is created in

the environmental fund to receive payments of cost-recovery demands and to provide

cost-recovery payments under the greenhouse gas pollution cost-recovery program. Money

in the account is appropriated to the commissioner for the greenhouse gas pollution

cost-recovery program.

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(b) The account consists of:

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(1) cost-recovery payments under section 116.3935, subdivision 3;

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(2) money appropriated by the legislature;

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(3) other money received from any source dedicated for deposit into the account; and

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(4) any interest earnings or other investment income earned or received on the money

in the account.

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(c) Money in the account may be used only to pay for:

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(1) costs of climate change adaptation projects recommended in public plans, including

but not limited to costs of operation, monitoring, and maintenance; and

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(2) reasonable administrative expenses of the program, including but not limited to costs

of the Pollution Control Agency and the state auditor.

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(d) At least 40 percent of disbursements from the account must be for climate change

adaptation projects that benefit disadvantaged communities.

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Subd. 2.

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Establishing costs.

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(a) No later than two years after the effective date of this

section, the state auditor must submit to the legislative committees with jurisdiction over

environment and natural resources an assessment of the costs to the state and its residents

that have resulted from covered greenhouse gas emissions. In preparing the assessment, the

state auditor must consult with the commissioner and may consult with any other person at

the state auditor's discretion to obtain credible data and methodologies to use in making the

assessment and other estimates required by this subdivision.

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(b) The climate cost assessment under paragraph (a) must include:

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(1) a summary of the various cost-driving impacts of covered greenhouse gas emissions

on the state, including impacts on public infrastructure, emergency response, public health,

natural resources, biodiversity, agriculture, economic development, flood preparedness and

safety, housing, and any other impact that the state auditor, in consultation with the

commissioner, determines is relevant;

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(2) a categorized calculation of the costs that have been incurred by the state and that

are projected to be incurred in the future for each of the impacts identified under clause (1);

and

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(3) a categorized calculation of the costs that have been incurred and are projected to

be incurred in the future by the state and its residents to adapt to the impacts of covered

greenhouse gas emissions.

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(c) The state auditor must update the climate cost assessment no less frequently than

every four years. The state auditor must submit the updates to the legislative committees

with jurisdiction over environment and natural resources.

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Subd. 3.

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Reporting.

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(a) On or before December 31, 2030, and each even-numbered year

thereafter, the commissioner must report to the governor and the chairs of the legislative

committees with jurisdiction over environment and natural resources on:

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(1) the cost-recovery payments received and the money disbursed from the account

during the two preceding fiscal years;

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(2) the status of climate change adaptation projects funded under the program; and

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(3) the percentage of disbursements from the account made during the two preceding

fiscal years that funded climate change adaptation projects that directly benefited

disadvantaged communities.

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(b) The state auditor may conduct fiscal audits of the account and expenditures made

from the account. The periodic audits are a reasonable administrative expense of the program

for purposes of subdivision 1, paragraph (c).

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Sec. 5.
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APPROPRIATION; GREENHOUSE GAS POLLUTION COST-RECOVERY

PROGRAM.
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(a) $....... in fiscal year 2027 is appropriated from the general fund to the commissioner

of the Pollution Control Agency for implementing Minnesota Statutes, sections 116.393 to

116.3937, including costs for staffing; providing administrative, technical, and legal support;

and hiring consultants and experts.

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(b) $....... in fiscal year 2027 is appropriated from the general fund to the state auditor

for implementing Minnesota Statutes, sections 116.393 to 116.3937, including costs for

staffing; providing administrative, technical, and legal support; and hiring consultants and

experts.

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