Section 2 [Midwestern Greenhouse Gas Accord], paragraph (a), requires the Commissioners of Commerce and the Pollution Control Agency to submit a report to the legislature by January 15, 2009. The report must include:

• status of the development of a model rule establishing a regional cap and trade program (program) under the Midwestern Greenhouse Gas Accord;
• implementation mechanisms in the model rule;
• evaluation of if the program will operate on the time frame for reductions specified in statute;
• evaluation of legislation enacted or pending in Congress to implement a federal program;
• evaluation on whether implementation of a regional program is consistent with a federal program;
• economic, environmental, and public health impact study;
• potential cap and trade revenue study; and
• options for the state to supplement the regional agreement with state policies, join another regional program, or implement a program on its own if the model rule is not yet or unlikely to be adopted.

Paragraph (b) provides that the Legislative Greenhouse Gas Accord Advisory Group will be composed of six legislators, to be appointed as specified.

Paragraph (c) provides that any cap and trade agreements entered into are not effective in Minnesota until approved by a law enacted by the legislature.

Section 3 [Economic, Environmental, and Public Health Impact and Potential Revenue Studies], Subdivision 1 (Submission of Studies), requires the Commissioners of Commerce and the Pollution Control Agency to submit a report to the legislature by January 15, 2009 on the two studies described in this section.

Subdivision 2 (Economic, Environmental, and Public Health Impact Study) requires the Commissioner of Commerce to arrange with the Midwestern Governors Association for a study to be conducted by expert consultants that analyzes the economic, environmental, and public health costs and benefits of a program. Requires the study to specifically address the impact of a program on individual industrial sectors, the state economy, and consumers and how expenditures of auction revenues affect costs and benefits. The report must include:

• estimate of allowance prices and rates of investment in infrastructure and equipment to reduce emissions;
• estimate of the impact of the program on energy costs and of energy costs on businesses and households; recommendations to avoid regressive impacts;
• analysis of options to mitigate adverse competitive impacts on businesses and to reduce disruptive impacts on workers, businesses, and consumers;
• analysis of mechanisms to protect jobs in energy intensive industries;
• analysis of energy cost impacts to homes and businesses, job growth, new business development, energy balance of trade, and environmental and public health benefits;
• analysis of mechanisms to provide equity to communities at risk of disproportionate economic or environmental impact;
• analysis of the effect of adopting a program on the level of foreign and domestic investment in Minnesota; and
• consideration of Minnesota Climate Change Advisory Group recommendations.

Subdivision 3 (Potential Cap and Trade Revenue Study) requires the Commissioner of Commerce to arrange with the Midwestern Governors Association for a study to the conducted by expert consultants on the potential state revenues from a program and how they could be spent to mitigate economic disparities resulting from program implementation. The study must include:

• projections of revenues from auctioned allowances;
• estimate of the degree to which different levels of auction proceed expenditures affect specified outcomes;
• discussion of the potential for allocated allowances to lead to unfair economic advantage rather than reduction of consumer prices; and
• options for criteria that decision-makers can use to determine how to allocate expenditures and balance the goals set forth under section 5.

Subdivision 4 (Expenditures to be Studied) requires the studies to consider the impacts of specified expenditures including:

• direct per capita rebates to Minnesota residents;
• grants and incentives to consumers to invest in energy efficiency, renewable energy sources, and other methods to reduce emissions, consumption, and cost;
• financial assistance to businesses that install technologies that reduce facility emissions;
• investments in public infrastructure and worker training programs; and
• incentives for carbon sequestration.

Subdivision 5 (Study Criteria) requires the Economic, Environmental, and Public Health Impact Study to determine the extent to which the expenditures assist the state in its transition to a low greenhouse gas-emitting economy, increase economic gains, and reduce dislocating impacts. Requires the study to assess the extent to which expenditures meet specified goals.

Section 4 [Governance Study] requires the Commissioner of Commerce to request the Board of Regents of the University of Minnesota to prepare a study, to be submitted to the legislature by January 15, 2009, on governance options for determining expenditures of potential revenue to the state resulting from a program. Provides that the study must examine the role of the legislature, citizens, technical experts, and state agencies in decisions on allocating funds and innovative decision-making structures and processes that may be useful models.

Section 5 [Appropriation] dedicates up to $500,000 from a 2007 appropriation for the economic impact, potential revenue, and governance studies. Authorizes the Commissioner of Commerce to transfer up to $75,000 to the University of Minnesota for the study under section 4.

DS/syl

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