HF1772

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.