HF1772

Process established to compensate businesses for loss of business opportunity resulting from sale and closure of a biomass energy plant.
Legislative Session 94 (2025-2026)

Related bill: SF635

AI Generated Summary

Purpose

  • Establish a process to compensate Minnesota businesses that lose income or face asset losses when a biomass plant’s power purchase agreement is terminated early.
  • Create a formal claims process administered by the Office of Administrative Hearings to review and award compensation to eligible businesses.
  • Use a dedicated funds account to pay approved awards and set a sunset date for the program.

Key Definitions

  • Biomass plant: The specific biomass facility referenced in state law.
  • Early termination: The ending of the biomass plant’s power purchase agreement (PPA) before its scheduled end.
  • Operating income: A business’s revenue minus its operating expenses.
  • Authorized representative: A person who may appear for a business to present evidence.

Claims Process

  • The Chief Administrative Law Judge (CALJ) at the Office of Administrative Hearings will appoint a judge to run the claims process.
  • The judge may use financial or other consultants to evaluate claims.
  • Records submitted in the process are considered business data.
  • Any award is final and not subject to judicial review.
  • An award does not admit liability by the state for any damages.

Eligibility

  • As of May 1, 2017, the business must have been operating under a valid written contract (or a well-supported oral contract) related to supplying or handling material for the biomass plant or its related fertilizer plant.
  • The business must be located in Minnesota.
  • The early termination must cause a decrease in operating income or a loss in value of investments essential to operations with the biomass plant.

Types of Claims

  • Decreased operating income: Loss of revenue or increased costs due to the termination, compared to the business’s past five years of activity related to the biomass plant.
  • Loss of value of investments: Losses tied to property or equipment essential to the biomass contract, with consideration of how the property could be repurposed or sold.

Calculation and Evidence Requirements

  • Decreased operating income claims must show five years of past operating income from biomass-related activities and document any alternative opportunities pursued or available after termination.
  • The post-termination operating income (including any alternatives) must be less than the five-year average before termination.
  • Loss of value claims must show the essential nature of the investment, how the property could be repurposed or sold, and the nondepreciated investment value.

Limitations on Awards

  • Awards for decreased operating income cannot exceed a twice-the-calculation amount derived from the method described for calculating such losses.
  • The salvage value, sale proceeds, or scrap value of the claimed property must be deducted from the award for loss of investment value.
  • Any compensation from insurance, settlements, or other forms of relief related to the termination must be deducted from the award.

Priority and Awarding

  • The judge may give priority to claims from businesses that made strong efforts to pursue alternative opportunities or other loss-mitigation steps.
  • If the available funds are not enough to fully pay all claims, awards must be reduced proportionally based on the value of each claim.

Deadlines and Payment Schedule

  • The application process for eligible claims must be available by August 1, 2025.
  • Eligible businesses must file within 60 days of the process becoming available.
  • Preliminary awards must be made within 120 days after the filing deadline.
  • Requests to reconsider an award denial must be filed within 60 days of the preliminary award notice.
  • Final awards must be issued within 60 days after the reconsideration deadline.
  • The state’s budget office must pay all final awards within 45 days of receiving notice of the final awards.

Sunset/Expiration

  • The program and its sections expire on June 30, 2027.

Administrative Notes

  • An award is not an admission of liability by the state.
  • The process allows some in-person testimony but does not require it.
  • The awards are governed by a dedicated biomass business compensation account referenced in the bill.

Relevant Terms biomass plant; early termination; power purchase agreement; PPA; operating income; loss of value of investments; eligible business; alternative business opportunities; mitigation; administrative law judge; Office of Administrative Hearings; records as business data; final award; judicial review; compensation account; commissioner of management and budget; claims process; prioritization; sunset date; Minnesota.

Bill text versions

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Actions

DateChamberWhereTypeNameCommittee Name
March 03, 2025HouseActionIntroduction and first reading, referred toState Government Finance and Policy
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Progress through the legislative process

17%
In Committee

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