To repeal sections 142.029 and 274.030, RSMo 1994, and section 142.028, RSMo Supp. 1995, relating to adding value to agricultural products, and to enact four new sections relating to the same subject, with an expiration date.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF MISSOURI,

AS FOLLOWS:

Section A. Sections 142.029 and 274.030, RSMo 1994, and section 142.028, RSMo Supp. 1995, are repealed and four new sections enacted in lieu thereof, to be known as sections 142.028, 142.029, 274.030 and 274.310, to read as follows:

142.028. 1. As used in this section, the following terms mean:

[(1) "Fuel ethanol", one hundred ninety-eight proof ethanol denatured in conformity with the United States Bureau of Alcohol, Tobacco and Firearms' regulations and fermented and distilled in a facility whose principal (over fifty percent) feed stock is cereal grain or cereal grain by-products;

(2) "Fuel ethanol blends", a mixture of ninety percent gasoline and ten percent fuel ethanol in which the gasoline portion of the blend or the finished blend meets the American Society for Testing and Materials - specification number D-439;

(3) "Missouri qualified fuel ethanol producer", any producer of fuel ethanol whose principal place of business and facility for the fermentation and distillation of fuel ethanol is located within the state of Missouri and which has made formal application, posted a bond, and conformed to the requirements of this section.]

(1) "Ethanol", 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:

(a) Meets all of the specifications in American Society for Testing and Materials (ASTM) specification D 4806-88; and

(b) Is denatured with unleaded gasoline or rubber hydrocarbon solvent as defined in Code of Federal Regulations, title 27, parts 211 and 212, as adopted by the Bureau of Alcohol, Tobacco and Firearms of the United States Treasury Department;

(2) "Wet alcohol", agriculturally derived fermentation ethyl alcohol having a purity of at least fifty percent but less than ninety-nine percent;

(3) "Anhydrous alcohol", fermentation ethyl alcohol derived from agricultural products as described in paragraph (1), but that does not meet ASTM specifications or is not denatured and is shipped in bond for further processing;

(4) "Ethanol plant", a plant at which ethanol, anhydrous alcohol or wet alcohol is produced.

2. The "Missouri Qualified Fuel Ethanol Producer Incentive Fund" is hereby created and subject to appropriations shall be used to provide economic subsidies to Missouri qualified fuel ethanol producers pursuant to this section. The director of the department of agriculture shall administer the fund pursuant to this section.

[3. A Missouri qualified fuel ethanol producer shall be eligible for a monthly grant from the fund, except that a Missouri qualified fuel ethanol producer shall only be eligible for the grant for a total of sixty months. The amount of the grant is determined by calculating the estimated gallons of qualified fuel ethanol production to be produced from Missouri agricultural products for the succeeding calendar month, as certified by the department of agriculture, and applying such figure to the per-gallon incentive credit established in this subsection. Each Missouri qualified fuel ethanol producer shall be eligible for a total grant in any calendar year equal to twenty cents per gallon for the first twelve and one-half million gallons of qualified fuel ethanol produced from Missouri agricultural products in the calendar year plus five cents per gallon for the next twelve and one-half million gallons of qualified fuel ethanol produced from Missouri agricultural products in the calendar year. All such qualified fuel ethanol produced by a Missouri qualified fuel ethanol producer in excess of twenty-five million gallons shall not be applied to the computation of a grant pursuant to this subsection. The department of agriculture shall pay all grants for a particular month by the fifteenth day after receipt and approval of the application described in subsection 4 of this section. If actual production of qualified fuel ethanol during a particular month either exceeds or is less than that estimated by a Missouri qualified fuel ethanol producer, the department of agriculture shall adjust the subsequent monthly grant by paying additional amount or subtracting the amount in deficiency by using the calculation described in this subsection.

4. In order for a Missouri qualified fuel ethanol producer to obtain a grant from the fund for a particular month, an application for such funds shall be received no later than fifteen days prior to the first day of the month for which the grant is sought. The application shall include:

(1) The location of the Missouri qualified fuel ethanol producer;

(2) The average number of citizens of Missouri employed by the Missouri qualified fuel ethanol producer in the preceding quarter, if applicable;

(3) The number of bushels of Missouri agricultural commodities used by the Missouri qualified fuel ethanol producer in the production of fuel ethanol in the preceding quarter;

(4) The number of gallons of qualified fuel ethanol the producer expects to manufacture during the month for which the grant is applied;

(5) A copy of the qualified fuel ethanol producer license required pursuant to subsection 5 of this section, name and address of surety company, and amount of bond to be posted pursuant to subsection 5 of this section; and

(6) Any other information deemed necessary by the department of agriculture to adequately ensure that such grants shall be made only to Missouri qualified fuel ethanol producers.

5. The director of the department of agriculture, in consultation with the department of revenue, shall promulgate rules and regulations necessary for the administration of the provisions of this section. The director shall also establish procedures for bonding Missouri qualified fuel ethanol producers. Each Missouri qualified fuel ethanol producer who attempts to obtain moneys pursuant to this section shall be bonded in an amount not to exceed the estimated maximum monthly grant to be issued to such Missouri qualified fuel ethanol producer.

6. No rule or portion of a rule promulgated under the authority of this section shall become effective unless it has been promulgated pursuant to the provisions of section 536.024, RSMo.]

3. The director 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 which are eighty-five percent or more owned by producers of agricultural products that have begun production by June 30, 2000. For the purpose of this section, 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) Except as provided in subdivision (2), 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, twenty cents per gallon; and

(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 eleven 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.

4. 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 subsection 3, subdivision (1), applies to the additional increment of production until ten years after the increased production began.

5. The director shall make payments to producers of ethanol or wet alcohol in the amount of one and five tenths 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 subsection 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 subsection. Total payments under this subsection in any fiscal year may not exceed seven hundred fifty thousand dollars. For the purposes of this subsection the following terms mean:

(1) "Closed-loop biomass", 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) "Cogeneration", the combined generation of:

(a) Electrical or mechanical power; and

(b) Steam or forms of useful energy, such as heat, that are used for industrial, commercial, heating or cooling purposes.

6. The total payments under subsections 1 and 2 to all producers may not exceed thirty million dollars in a fiscal year. Total payments under subsections 3 and 4 to a producer in a fiscal year may not exceed three million dollars.

7. 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 subsection 4. A producer that files a claim under this subsection shall include a statement of the producer's total ethanol, anhydrous alcohol and wet alcohol production in Missouri 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 subsection 5. For each claim and statement of total ethanol, anhydrous alcohol and wet alcohol production filed under this subsection, 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.

8. Payment 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 subsection, excluding amounts paid under subsection 5, may not exceed seven hundred fifty thousand dollars. If the total amount for which all producers are eligible in a quarter under subsections 3 and 4 exceeds seven million five hundred thousand dollars, the director 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 subsection 7 equals or exceeds fifty-five million gallons:

(1) Payments under this subdivision do not apply to the amount produced in excess of fifty-five million gallons;

(2) The director shall make payments to producers in the order in which the portion of production capacity covered by each claim began production; and

(3) Only those producers that receive payments for the quarter, or received payments under subsection 3 or 4 in an earlier quarter, will be eligible for future ethanol or wet alcohol production payments under this subdivision.

9. If the total amount for which all producers are eligible in a quarter under subsection 5 exceeds the amount available for payments, the director shall make payments in the order in which the plants covered by the claims began generating electricity using closed-loop biomass.

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

142.029. 1. Section 142.027 shall become effective only if the normal federal-aid funds apportioned to Missouri under the Federal-Aid Highway Act of 1987 exceeds the eighty-five percent minimum guarantee as defined in section 124 of that act. Section 142.027 shall become effective on July first of the year following the federal fiscal year for which the funds were apportioned.

2. Section 142.028 shall become effective July 1, 1989.

3. Section 142.027 shall expire on June 30, 1996. [Section 142.028 shall expire on December 31, 2000.]

274.030. 1. Eleven or more persons, except corporations excluded from engaging in farming under the provisions of section 350.015, RSMo, a majority of whom are residents of this state, engaged in the production of agricultural products, may form a nonprofit cooperative association without capital stock, under the provisions of this chapter, for the following purpose or purposes: To engage in any activity in connection with the marketing or selling of the agricultural products of its members or with the harvesting, preserving, drying, processing, canning, packing, grading, storing, handling, shipping or utilization thereof or the manufacturing or marketing of the by-products thereof; or in connection with the manufacturing, selling or supplying to its members of machinery, equipment or supplies; or in the financing of the above enumerated activities; or in any one or more of the activities specified herein.

2. Five or more owners or operators of a family farm or a family farm corporation as those terms are defined in section 350.010, RSMo, all of whom are residents of this state, engaged in the production of agricultural products, may form a nonprofit cooperative association without capital stock, under the provisions of this chapter, to engage in the production of livestock notwithstanding the provisions of section 350.015, RSMo, to the contrary.

274.310. 1. The department of agriculture shall provide assistance to persons engaged in agricultural production in the following areas:

(1) Cooperative marketing of agricultural products;

(2) Cooperative processing of agricultural products;

(3) Development of regional and niche markets for the marketing of agricultural products; and

(4) Dissemination of the most modern information and technology related to agricultural production, processing and marketing.

Such assistance shall have as its primary focus the provision of assistance to small, independent family-owned or operated agricultural producers or processors.

2. An annual report on the activities engaged in, number of persons served and evaluation of project effectiveness shall be submitted by the department of agriculture to the general assembly, no later than December 1, 1996, and each year thereafter by December first.